Thrills and spills for small cap stocks

NZ’s benchmark index fell in a sleepy session ahead of Easter, while smaller stocks Rakon and AFT Pharmaceutical surprised investors with revised earnings.

Thursday, April 1st 2021, 5:56PM

by BusinessDesk

The S&P/NZX 50 Index fell 72.39 points, or 0.6%, to 12,488.31. Within the index, 15 stocks rose, 29 fell and six were unchanged.

Turnover was $148.5 million, a little lighter than usual as some traders had already focused their attention on the four-day weekend.

Mark Smith, an economist at ASB Bank, said offshore markets traded with a generally positive tone overnight, ahead of a speech by US President Biden on infrastructure spending early this morning.

This positivity failed to filter through to the New Zealand market which gave back much of yesterday's gains.

Vista Group International led the index lower, falling 3.6% to $2.12, while Meridian Energy had the day’s biggest gain, climbing 3.5% to $5.58.

However, all the excitement was happening outside the top 50 index where announcements from smaller stocks sent share prices flying in both directions.

Shares in AFT Pharmaceuticals plunged 11.5% to $4.38 after it suddenly slashed its profit guidance in half. The company had forecast profit of $14m to $18m as recently as November, now it expects between $9m and $11m.

Managing director Hartley Atkinson said the company suffered a broad range of pandemic-related disruptions that together slowed earnings during the final quarter. AFT will report full-year earnings in May.

Rakon shares leapt 6.4% hitting $1 for the first time since 2011, after the electronic component maker forecast earnings would be between $27m and $32m in the 2022 financial year.

The company is expected to earn between $20m to $22m in the year ending this March but said it has secured significant orders that will boost revenue by 20% in 2022.

Rakon has reported increasing demand as the telecommunications sector builds out 5G networks and as its technology is put to use in the burgeoning space industry.

Evolve Education fell 1.6% to $1.25 as it came off a trading halt following a successful capital raise. The company pulled in A$21.7m from institutional investors at A$1.10 per share.

The money is earmarked for future acquisitions in Australia where the company is expanding its portfolio of childcare centres.

The newly dubbed Savor Group – formerly called Moa Group until it divested the brewery – also completed a capital raise. The raise was only open to shareholders who bought $3.6m worth of shares, leaving another $2.4m worth to be picked up by the underwriters.

The capital raised will be used to fund the recently announced acquisition of Britomart restaurants, Amano, Ortolana and The Store, and to shore up the balance sheet.

Jarden analysts initiated coverage of My Food Bag, giving it a target price of $1.90 and effectively backing up the IPO price. The buy recommendation did little to support the battered stock, which closed the day unchanged at $1.60.

The kiwi dollar was trading 69.64 US cents at 5pm in Wellington, down from 69.80 cents yesterday.

The trade-weighted index was at 73.50 at 5pm, from 73.63 yesterday. The kiwi traded at 92.03 Australian cents from 91.81 cents, 77.10 yen from 77.37 yen, 59.41 euro cents from 59.62 cents, 50.54 British pence from 50.84 pence, and 4.5719 Chinese yuan from 4.5786 yuan.

Tags: Market Close