Question 1: CSL seems to be sinking. Why? Are you still bullish on CSL?
Answer: I am definitely out of tune with the market, with CSL hitting a 52-week low today at just over $262. That follows a somewhat disappointing trading update (with higher costs and margin pressure), and the health sector being generally out of favour both here and in the USA. But I am not losing faith and the analysts agree. According to FN Arena, the consensus target price is $328.17, 24.8% higher than the last ASX price of $262.86. The range is tight, from a low of $315.00 through to a high of $340.00. There are 5 ‘buy’ recommendations and 1 ‘neutral’ recommendation – zero ‘sells’.
Question 2: With increasing interest rates, Centuria Capital Group (CNI) has lost just over half its value over the past 18 months. In your opinion, what is the likelihood of a meaningful recovery in its price in the current financial year?
Answer: Centuria Capital (CNI) has been hit hard by the increase in interest rates, with its share price of $1.67 roughly half of what it was a few years’ back. This is a little surprising, given that its gearing is fairly low and most of its income is of a recurring nature (management and development fees). It does feel the impact through reduced transaction fees, and arguably performance fees. It is also a part owner of two listed real estate trusts (Centuria Office REIT (COF) and Centuria Industrial REIT (CIT)), and if they are under pressure, CNI also feels the heat.
In terms of what to do, given that CNI has met its distribution guidance, is reducing debt and appears to be travelling ok, I would tend be guided by the broker analysts. According to FN Arena, the consensus target price is $2.00, some 19.6% higher than the last ASX price of $1.67. The range is a low of $1.70 through to a high of $2.50.
If interest rates fall, or at least stabilise and nose down, Centuria Capital will come back into favour. I think this is more than likely within the next 12 months……so I think a move back to around $2.00 is possible.
Question 3: What is the new property trust that will shortly list on the ASX?
Answer: Abacus Property Group (ABP) is spinning out (via a demerger) the Storage King business to form Abacus Storage King. It will trade under the ticker ASK and is due to list on the ASX on 1 August.
Question 4: Have there been any changes by the Government to super pensions this year?
Answer: Yes. Firstly, the transfer balance cap has been increased from $1.7m to $1.9m. This governs the amount you can move into the pension phase of super. And secondly, the minimum pension withdrawals revert to pre Covid levels. Effectively, the minimum amount that you need to withdraw from an account-based pension doubles. If for example you are aged 70, you must take at least 5% of the account balance as a pension in 23/24. In 22/23 (and for each of 19/20, 20/21 and 21/2), this was 2.5%.
