Jeremy Hutton: Milford Asset Management expert on when we can expect to see the economy recovering

It's been a tough couple of years for the economy, but there's hope things will pick up sooner rather than later.

There's been an improved outlook on the NZX and NZME recently posted that it had upgraded its earnings forecast.

Jeremy Hutton from Milford Asset Management explained further.

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Episode Transcript

Speaker 1 (00:00):
Heather duplicy Ellen, I've just lost another wicket. Captain Kaine
is out. I'll get you the details and to take
eighteen past six. Jeremy Hutton Milfed Asset Management is with
us a Jeremy.

Speaker 2 (00:11):
Good evening, Heather.

Speaker 1 (00:12):
Now, as we know, the economies had a few tough years,
hasn't it. But are we finally starting to see the
start of hard data improvements coming through?

Speaker 2 (00:19):
Yeah, that's right. A lot of the economic improvements so
far has been in the more soft data, So this
is more feeling and surveys and you know, people indicating
that next year they'll probably will feel a bit better
or spend some more money. But some of the harder
data is starting to come through too, which is good
and confirms that positivity. And one such story today is
on the injed X we had a non agri business

(00:43):
upgrade their earnings forecast and that was in Z to
me and a company you will know very well. But pleasingly,
it was the revenue line which contributed to the beat
or the upgrade and earnings. And we know that media
and advertising can be at the point end of the economy,
and we know have cut back materially on advertising spend
where the demand has been quite weak. So perhaps in

(01:06):
me's upgrade is indicating that there's a little bit more spend,
a little bit more activity going on in the wider economy.

Speaker 1 (01:12):
Some jobs data improving too from Stats New Zealand.

Speaker 2 (01:16):
Yeah, Stats New Zealand. Yesterday they had their fulled jobs data.
This is effectively all the jobs in the New Zealand economy,
and that's increased for two months in a row. You know,
not maybe not quite a trend, but you know, getting better,
and it is good that the economy is starting to
add some jobs again. I'd also note that in terms
of activity is house sales volumes, so you know, this

(01:37):
is activity and liquidity in the market has been pretty
consistently increasing each and every month this year, So more
activity in the housing market. But I would just know,
you know, we are coming off the bottom, so there
is still certainly a way to go here.

Speaker 1 (01:49):
Yeah. Now, listen on this restaurant brand's takeover offer. Do
you reckon the independent value or report is going to
disappoint some of the some of the shareholders.

Speaker 2 (01:57):
Yeah, potentially, you know, fin Access, there are Mexican private
equity owner or investor they've owned seventy five percent of
restaurant brands for about seven years now, and they submitted
a takeover offer for the remaining twenty five percent of
the business and they want to take it private and
take it off the listed market. And you know, on
face value, their offer was pretty attractive. It was five

(02:19):
five dollars and five cents and that was a big
seventy percent premium versus what the share price was before.
But the company has had a really disappointing few years.
The share price has fallen eighty percent over the past
few years, so, you know, a tough going for shareholders.
But the independent value report that came out yesterday as well,
and the midpoint actually indicated a value of five seventy

(02:41):
two so obviously a lot more than what furn Access
is offering. So perhaps the getting that remaining twenty five
percent a little bit cheaply and some New Zealand investors
could be missing out here.

Speaker 1 (02:51):
Have we seen any impact from the CGT proposal?

Speaker 2 (02:57):
Yeah, not too much at this point. I mean you
might goes to say the listed real estate companies or
the retirement companies that could be impacted. You know, the
retirement one's an easier one. You've had the bright line
test for a few years. We've had various proposals of
capital gains and retirement's always been excluded from those, so
imagine that would be the same for Labour's twenty twenty
seven tax. But REATS, you know some impact. New Zealand

(03:21):
does have a key differential currently with Australia and property
for investors. You know, we don't have capital gains tax
or stamp duty or land taxes, so perhaps one of
our relative attractiveness points has gone there. But you know,
REATS they do deliver some of their gains through share
price appreciation and that is obviously excluded. So you know

(03:42):
there's some attractiveness to the listed rots and you know
investors want that property exposure. It could be better than
incurring a capital gains tax on a direct property investment.

Speaker 1 (03:51):
Interesting. Hey, thank you very much. Jeremy has always appreciated
Jeremy Hutt and wulf Ford Acid Management. For more from
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