Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 


Kiwi Income cut to ‘hold’ on stalling income, Craigs says

Kiwi Income Property cut to ‘hold’ as rental income, earnings seen stalling in 2016, Craigs says

By Tina Morrison

May 21 (BusinessDesk) - Kiwi Income Property Trust, which yesterday posted a 7.8 percent drop in annual profit, was cut to ‘hold’ from ‘buy’ by Craigs Investment Partners.

The brokerage revised its forecasts to show earnings and dividends are likely to stall in 2016 as Kiwi Income steps up its tax payments and rental income is crimped as its Unisys House office tower at 56 The Terrace in Wellington is vacated for 21 months as part of a $67 million refurbishment for the Ministry of Social Development.

“The Unisys House redevelopment will result in little or no income over FY15F and FY16F versus $5.4m in FY14,” Craigs analyst Chris Byrne said in a note. “This underpins a significant decline in FY16F distributable profit and earnings per unit.”

Byrne reduced his 12-month price target for the stock to $1.20 from $1.21 and downgraded his recommendation, noting at $1.16 the units are trading at a 3 percent discount to the target.

Craigs pulled back its expectation for 2016 rental income by 5 percent to $152.2 million, from an estimated $152 million in 2015, and reduced its expectation for 2016 earnings before interest and tax by 12 percent to $133.7 million from an estimated $133.9 million in 2015.

Distributable profit, from which the company pays unitholders, is likely to fall to $70.6 million in 2016 from $74.7 million in 2015, while payments to unitholders will probably remain unchanged at 6.5 cents in 2016, according to Craigs.

Meantime, Kiwi Income’s sale of its property at 205 Queen St, Auckland, will reduce the trust’s 2015 net rental income by about $7 million, Craigs said.

Auckland-based Kiwi Income said yesterday net income fell to $101.3 million in the year ended March 31, from $109.8 million a year earlier, as costs from exiting its management contract with Commonwealth Bank of Australia outweighed benefits from valuation gains and insurance payments.

Craigs said it had previously expected Kiwi Income to pay no tax in 2015 but now expects a $6 million charge because only $11 million remains of a deferred tax credit from a payment to take its management contract inhouse. The brokerage also increased its normalised tax rate assumption for 2016 to 20 percent from 15 percent, compared with an estimated rate of 8 percent in 2015.

(BusinessDesk)

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

BusinessDesk: APN's NZME Sees Future In Paywalls, Growth In Digital Sales

APN News & Media has touted a single newsroom concept for its NZME unit in New Zealand, similar to what Germany's Die Welt uses, saying an 'integrated sales proposition' is helping it win market share, including ... More>>

Labour Party: Global Milk Prices Now Lowest In 6 Years

The latest fall in the global dairy price has brought it to the lowest level in six years and shows there must be meaningful action in tomorrow’s Budget to diversify the economy, says Labour’s Finance spokesperson Grant Robertson. “Dairy prices ... More>>

BusinessDesk: NZ Inflation Expectations Creep Higher In June Survey

May 19 (BusinessDesk) - New Zealand businesses lifted their expectations for inflation over the next two years, sapping any immediate pressure on the Reserve Bank to cut interest rates, and prompting the kiwi dollar to jump higher. More>>

BusinessDesk: Lower Fuel Costs Drive Down NZ Producer Input, Output Prices

May 19 - Producer input and output prices fell in the first quarter, mainly reflecting lower fuel costs and weakness in prices of meat and dairy products. More>>

Media: Fairfax Media NZ Announces Senior Editorial Team

Fairfax Media New Zealand has today confirmed its new editorial leadership team, as part of a transformation of its newsrooms aimed at enhancing local and national journalism across digital and print. More>>

Science: Flavonoids Reduce Cold And Cough Risk

Flavonoids reduce cold and cough risk Research from the University of Auckland shows eating flavonoids – found in green tea, apples, blueberries, cocoa, red wine and onions – can significantly reduce the risk of catching colds and coughs. The research, ... More>>


BusinessDesk: RBNZ House Alert Speech The Catalyst For Government Action

Prime Minister John Key all but conceded that pressure from the Reserve Bank of New Zealand for concerted action on rampant Auckland house prices was one of the main catalysts for the government's weekend announcements about tightly ... More>>

BusinessDesk: How To Fall Foul Of The New Housing Tax Rules: Tips From IRD

Just because you rented out your investment property doesn't absolve you from paying tax, says the Inland Revenue Department in a summary of commonly made mistakes by non-professional property investors when it comes to their tax liability.More>>

Legal: Superdiversity Law, Policy And Business Stocktake Announced

Mai Chen, Managing Partner at Chen Palmer New Zealand Public and Employment Law Specialists and Adjunct Professor of Law at the University of Auckland, today announced the establishment ... More>>

Housing: More House Price Gains Expected

House price expectations remain high, with a net 56% of respondents expecting house prices will increase. Fears of higher interest rates are fading, consistent with the RBNZ’s signals this year. Affordability and a lack of houses for ... More>>

TDDA: State-Of-The-Art Drug Testing Laboratory To Open In Auckland

World leading drug testing agencies, The Drug Detection Agency (TDDA) and Omega Laboratories, open New Zealand laboratory More>>

Network: Bigpipe Launches Ultra-Fast Broadband Into Wellington

Bigpipe Launches Ultra-Fast Broadband into Wellington Naked broadband provider Bigpipe has extended its national reach, announcing today, the launch of its unlimited UFB offering into Wellington. The Spark Venture business is giving Wellingtonians the ... More>>

Get More From Scoop

 
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news