ASX 200 (XJO) down another 1%, IAG cancels dividend

The ASX 200 (ASX: XJO) has fallen another 1% this morning.

Victoria has announced another 300 COVID-19 cases and six more deaths while NSW has seen seven new cases.

IAG’s (ASX: IAG) tough year, dividend cancelled

IAG has given investors a preview into its FY20 result.

Gross written premium (GWP) growth was 1.1% which included negative effects of exiting businesses in FY19 and lower pricing as well as COVID-19 impacts in the second half of FY20.

IAG achieved an underlying insurance margin of 16%, down from 16.6% in FY19. In the second half of FY20 the margin was 15.1% because of higher reinsurance costs, lower investment returns and lower performance from some Australian commercial portfolios.

The company’s reported insurance margin was 10.1% in FY20, down from 16.9% last year. That includes a net natural peril claim cost of $904 million compared to guidance of $850 million.

IAG is not going to pay a final dividend, with the top end of IAG’s 60% to 80% cash earnings payout policy already fulfilled by the interim dividend of 10 cents per share which was paid in March.

Vicinity’s (ASX:VCX) portfolio is now worth 11.3% less

The property business said it has recently done independent valuations of 60 of its directly-owned retail properties. This resulted in a net valuation decline for the overall portfolio of $1.79 billion, equating to an 11.3% drop. This is within the range of the 11% to 13% decline announced last month.

The flagship portfolio, which includes Chadstone, Premium CBD and DFO outlet centre properties, saw a net valuation loss of 8.8%. Vicinity said that the valuers had focused closely on the underlying cashflows of the centres due to the lack of property transactions since the COVID-19 outbreak.

Aside from Victoria, many centres have seen customer visitor numbers return close to pre COVID-19 levels. Excluding Victoria, customer visitation is 80% of last year’s numbers. With Victoria included the number drops to 68%.

City Chic’s (ASX: CCX) capital raising, acquisition and FY20 update

City Chic announced that it has been selected as the ‘Stalking Horse’ bidder for the eCommerce assets of Catherines from the Ascena Retail Group which has filed for bankruptcy.

According to City Chic, Catherines is a well recognised US-based specialty retailer of plus-size apparel targeting ‘mature value-conscious women’.

In the 12 months to April 2020 it made online sales revenue of US$67 million, which is one third of Catherines total sales. However, City Chic expects a reduction in online sales due to the closure of the 300 stores as well as due to going into bankruptcy.

City Chic has entered into a binding asset purchase agreement, as long as it’s the highest bidder at the auction and and it’s approved by the US bankruptcy court. There’s no guarantee it will win the auction. It may need to bid higher than the current bid of US$16 million.

To fund the acquisition, the company is doing a capital raising. It’s looking to raise $80 million in a fully underwritten placement to institutional investments.

The placement price is $3.05 per share, a 4.7% discount to the last closing price.

The retailer said that trading has continued to improve since 25 May 2020 with most of the store network opening up again. The Avenue website continues to be resilient.

City Chic said that FY20 sales revenue was $194.5 million, which represents 31% total sales growth and comparable sales growth of 0.4%.

Australian and New Zealand sales fell by 4.8% due to COVID-19 impacts and closures. US online websites (City Chic USA, Avenue and Hips and Curves) contributed $65.2 million, up from $10.7 million in FY19.

Unaudited underlying EBITDA (click here to learn what EBITDA means) came in at $26.5 million.

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At the time of publishing, the author of this article does not have a financial or commercial interest in any of the companies mentioned.

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