Mainfreight will give an update on the impact of Covid-19 on its business at Thursday's annual meeting. Photo / File
Mainfreight will give an update on the impact of Covid-19 on its business at Thursday's annual meeting. Photo / File
Investors are hoping to get a steer on how Mainfreight's Australian business has been affected by the latest outbreak of Covid-19.
Daily cases of the virus have continued to hit new records in Australia - particularly in the state of Victoria, where Melbourne is in a six-week lockdown.
In itsend of financial year update on May 27 Mainfreight noted the first lockdown in Australia had been largely positive for it provided steady revenue increases and market share gains.
But there are some nerves about what the latest outbreak will mean for the freighting company.
Mainfreight chief executive Don Braid told Continuous Disclosure it intended to give the market a full update at its annual meeting on Thursday.
Australia is a vital market for Mainfreight, making up 25.7 per cent of its total revenue in the year to March 31 - just beating out New Zealand as its largest revenue earner.
Revenue from its New Zealand business was $753 million compared with $804m from Australia for its 2020 financial year.
The stock is seen as a good buy by analysts, with three out of five analysts having a buy/outperform rating on the stock and the other two neutral on it.
Mainfreight has an average 12-month target price of $42.59. Its shares were trading around $42.45 at lunchtime on Monday.
Laybuy moves forward
Kiwi buy now pay later company Laybuy is expected to take another step towards its listing on the ASX this week.
A management presentation was due to go to investors on Monday this week ahead of a bookbuild which closes on Wednesday.
It is open to New Zealand investors via brokers Bell Potter, Cannacord Genuity and Forsyth Barr.
The New Zealand company, which was set up by Gary Rohloff and his son Alex in 2016, allows consumers to shop using a six-week interest-free instalment system available either online or in-store.
It operates in New Zealand, Britain and Australia.
A $10m pre-IPO capital raising was undertaken a fortnight ago with those investors set to cornerstone the IPO itself by putting in a further A$30m of the A$80m Laybuy is looking to raise.
Buy now pay later allows shoppers to spread their payments over a number of weeks. Photo / Michael Cunningham
It is understood the she shares had been priced at A$1.41 ($1.51) apiece for the deal.
The group is expected to raise about A$80m in the IPO which will value the company around $220m.
Laybuy has previously said it hoped to have Laybuy trading on the ASX by the end of the third quarter this year.
The company will be hoping to capture some of the enthusiasm surrounding the sector which has seen shares in rival Australian buy now pay later company Afterpay - which also operates in New Zealand - soar in recent months.
Afterpay shares plummeted to A$8.90 at the end of March but are now trading around A$69.22, valuing that company at about A$19.4 billion.
Kiwi companies head to ASX
Laybuy is just one of several New Zealand tech companies said to be headed for the ASX after proving popular with Aussie investors.
Kiwi bio-tech Aroa Biosurgery debuted on the ASX last Friday with a doubling in the value of its shares.
Its initial public offer was done at A75c apiece, with shares getting as high as A$1.56.
On Monday it was trading at A$1.42, valuing the company at $405m.
Aroa was founded in 2008 and its soft-tissue regeneration technology, derived from sheep forestomach, was developed to improve the rate and quality of healing in complex wounds and soft-tissue reconstruction.
Its range of five products has been used in more than four million procedures to date in a market worth US$1.5b ($2.2b). A pipeline of new products, including breast implants and reconstructive devices, will add an estimated US$1b to that potential market once commercialised.
Agricultural banks: betting the ranch
Farming is a risky proposition. Storms and pestilence play havoc with output and geopolitics can eliminate demand. In the US, farm debt has grown to 1980s levels on an inflation adjusted basis. Plenty of farmers the world over do not make a bean beyond government subsidies.
Little surprise then that lenders servicing the $5tn sector have either thrown in the towel or evolved into more universal banks like France's Crédit Agricole and the Netherlands' Rabobank. Newcomer Oxbury is going against the grain in its bid to become the UK's first dedicated agricultural bank in a century.
UK farmers should rejoice. They command little attention from today's financiers, accounting for just a per cent or so of the big banks' balance sheets. Nor have they been singled out for attention from any of the new generation of fintech and other challengers. Why would they? Farming working capital moves to its own seasonal beat. Disease can wipe out crops or livestock. Trade wars can hurt demand.
The numbers illustrate bankers' distaste for the sector. Throughout the developed world agriculture commands a lower share of bank loans than it does of economic output. In the UK loans have fallen by a quarter in the decade to 2018, the latest figures available.
Instead, the financing burden has shifted to the supply chain, in the form of trade credit — up a third since 2008. Those trends are unlikely to shift this year amid post-Brexit trade deals, a new subsidy regime and pandemic-skewed supply and demand dynamics.
Agriculture is on the wane across much of the developed world, not least the UK where there are now just 280,000-odd farms. An estimated 70 per cent increase in demand for food by 2050 will necessitate at least $80bn in annual investments, the World Bank reckons.
For investors, agricultural banks can bear many of the hallmarks of their non specialist peers. Agricultural Bank of China is the biggest player. Its market cap even exceeds that of universal players like Citigroup. Shares move pretty much in lockstep with the nation's other big three banks.
Japan's Norinchukin, meanwhile, has given the raciest Wall Street banks a run for their money — though not in a good way. It was forced to raise billions of dollars after making bets on US subprime mortgages in 2008 and has retained a taste for CLOs, holding Yen 7.7 trillion worth in "senior, triple-A rated" paper as at end-March. That at least is one risk that Oxbury's backers, mostly agricultural players, will not be taking. - Lex, Financial Times
