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.


© Scoop Media

Business Headlines | Sci-Tech Headlines


Welcome Home: Record High Migration Stokes 41-Year High Population Growth

New Zealand annual net migration hit a new high in October as more people arrived from than departed for Australia for the first time in more than 20 years. More>>


Citizens' Advice Bureau: Report Shows Desperate Housing Situation Throughout NZ

CAB's in-depth analysis of over 2000 client enquiries about emergency accommodation shows vulnerable families, pregnant women and children living in cars and garages, even after seeking assistance from the Ministry of Social Development and Housing New Zealand. More>>


Speaking For The Bees: Greens Call For Neonicotinoid Pesticide Ban

The National Government should ban the use of controversial pesticides called neonicotinoids after evidence has revealed that even at low doses they cause harm to bee populations, the Green Party said today. More>>


Science Awards: NZAS Celebrate NZ Scientific Achievements

The Marsden Medal is awarded for a lifetime of outstanding service to the cause or profession of science, in recognition of service rendered to the cause or profession of science in the widest connotation of the phrase. This year’s medal is awarded to Dr Mike Andrews. More>>


Court Rules: Affco 'Unlawfully' Locked Out Meat Workers

The note says the full court found for the plaintiffs, "that is that the defendant locked out the second plaintiffs unlawfully and that it breached s 32 of the Act by acting otherwise than in good faith towards the plaintiffs while collective bargaining was still going on." More>>


New Bill Introduced: GST On Online Services

These measures are an important first step in the Government’s efforts to deal with increasing volumes of online services and other intangibles purchased from overseas suppliers that should, under New Zealand’s tax rules, be subject to GST. More>>


Get More From Scoop

Search Scoop  
Powered by Vodafone
NZ independent news