Australian Equities sub-portfolio
Sandfire (positive impact) this week announced it has been granted a Mine Operating Permit (MOP) for its 85% owned Black Butte Copper Project (located in Montana, USA). All permitting is now in place for the development and mining of the site. The Black Butte Copper Project is a key prospective project in Sandfire’s development pipeline.
Southern Cross (positive impact) will benefit from support announced by the Federal Government this week. The government announced a suspension of content quotas and a one-year waiver of broadcast spectrum fees. The company raised capital last week to strengthen its balance sheet. We participated on clients’ behalf, with its shares now trading at a 30% premium to its post-raise diluted share price.
Appen (positive impact) provided an update to the market regarding operations, performance and its response to COVID-19. The nature of Appen’s business means that demand for its services has been relatively resilient and its labour force can effectively work from home (with its global crowd workers already doing so pre-crisis). As such, it has not changed the estimate for its operating profit in 2020 – one of a few companies to do so.
QBE (neutral impact) announced a capital raising early this week. The company is looking to create a buffer to ensure it can comfortably meet its capital requirements. We participated in the raise on clients’ behalf.
Healius (positive impact) provided a trading update this week. With current isolation measures in place (including a restriction on elective surgeries) the company has seen a decline in activity. This includes a decline in radiology and pathology volumes. However, patient visits at its medical clinics remain strong, with the company providing telehealth consultations at its medical clinics. Furthermore, pathology volumes have been supported by COVID-19 testing services, with non-COVID-19 volumes showing improvement as patients begin obtaining remote referrals (via telehealth consultations).
Costa Group (neutral impact) provided an update to the market. The company has seen a positive start to the year, with its trading performance for the first 3 months significantly ahead of last year. However, like a majority of companies, it has withdrawn its guidance for profit in FY-20. This is due to the uncertainty surrounding COVID-19 and the impact on its operating performance.
Two new positions have been added over the past few weeks:
Mirvac Group (ASX:MGR)
- Diversified property group
- Developer, owner and asset manager
- Portfolio consists of assets spanning office, retail, industrial and residential sectors
Investment thesis/what we like
- Low gearing level – ability to capitalise on any opportunities over this period
- Property portfolio weighted towards office/industrial property with small retail portfolio
- Residential exposure is diversified (apartments, build to rent and land subdivision) with dislocation/stress in residential markets likely leading to attractive long-term opportunities
- Excessively discounted by the market
Centuria Industrial REIT (ASX:CIP)
- Largest Australian pure-play industrial REIT
- Portfolio of 49 Industrial properties
- Key tenants include large listed and non-listed companies (Arnotts, Woolworths, Visy)
Investment thesis/what we like
- Pure exposure to industrial property
- Sector has favourable long-term dynamics (benefits from a shift to e-commerce, strong demand for assets in the current environment, stable underlying growth due to exposure to consumer staples)
- Purchased at a discount in recent capital raising