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

 

Housing Policy: Auckland Densification As Popular As Ebola, English Says

Finance Minister Bill English said calls by the Reserve Bank Governor for more densification in Auckland’s housing were “about as popular in parts of Auckland as Ebola” would be. More>>

ALSO:

Crown Accounts: NZ Government Deficit Smaller Than Expected In First Half

The New Zealand government's operating deficit was smaller than expected in the first six months of the financial year, as the consumption and corporate tax take rose ahead of forecast in December, having lagged estimates in previous months. More>>

ALSO:

Fruit & Veg Crackdown: Auckland Fruit Fly Find Under Investigation

The Ministry for Primary Industries (MPI) is investigating a find of a single male Queensland fruit fly in a surveillance trap in the Auckland suburb of Grey Lynn... MPI has placed legal controls on the movement of fruit and some vegetables outside of a defined circular area which extends 1.5km from where the fly was trapped in Grey Lynn. More>>

ALSO:

Scoop Business: Westpac NZ Reaches $2.97M Swaps Settlement

Westpac Banking Corp’s New Zealand unit has agreed to pay $2.97 million in a settlement with the Commerce Commission over the way the bank sold interest rate swaps to farmers between 2005 and 2012. More>>

ALSO:

Going Dutch: Fonterra Kicks Off $144M Partnership With Dutch Cheese Maker

Fonterra Co-operative Group, the world’s largest dairy exporter, has commissioned a new dairy ingredients plant in Heerenveen, in the north of the Netherlands, its first wholly-owned and operated ingredients plant in Europe. More>>

ALSO:

Scoop Business: NZ Retail Sales Beat Estimates

New Zealand retail sales rose more than expected in the fourth quarter, led by vehicle-related transactions, food and beverages, adding to evidence that cheap credit and a growing jobs market are encouraging consumers to spend. More>>

ALSO:

Delivery Cuts Go Ahead: 'Government Money Grab' From NZ Post

"It's a money grab by the Government as the shareholder of New Zealand Post" says Postal Workers Union advocate Graeme Clarke about the changes announced by NZ Post. More>>

ALSO:

Get More From Scoop

 
 
Standards New Zealand

Standards New Zealand
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news