Aussie investors spot value in A2 Milk

New Zealand's main share index rose as an Australian stockbroker recommended investors buy shares in A2 Milk saying demand for its products was showing signs of recovery.

Tuesday, April 13th 2021, 6:25PM

by BusinessDesk

The S&P/NZX 50 Index rose 137.71 points, or 1.1%, to 12,656.42. Within the index, 27 stocks fell, 18 rose and five were unchanged. Turnover was $190.8 million.

The index’s biggest stock, Fisher & Paykel Healthcare, drove much of the headline gain as the volatile stock jumped 3.8% to $33.39, also driven by buying from Australian investors.

A2 Milk had the day’s more significant change as its shares climbed 3.7% to $8.89, with more than 1 million shares changing hands. The stock is up more than 6% in the past week.

Brokerage and advisory firm, Bell Potter today said daigou trade channels are showing signs of life after being effectively shut down during the pandemic.

A2 Milk’s profit expectations have plummeted without the ‘grey market’ exporters who are a key sales channel for the milk marketing firm.

Bell Potter said infant milk formula exports to China had increased for two consecutive months which was “positive signal” that demand for A2 Milk’s products may be returning.

The broker added more than $700 million to its valuation of the company, recommending a share price of A$9.50, or $10.30 in New Zealand dollars.

Pushpay Holdings had the day’s biggest decline, falling 2% to $1.93, as investors continued to digest a highly critical report from Forsyth Barr which said the church donation platform had missed its chance to win market share during the pandemic.

Shares in SkyCity Entertainment declined 1.2% to $3.43. The casino operator today announced it will stop dealing with junket operators to avoid being caught up in money laundering schemes.

The decision is in reaction to Crown Resorts, Australia's largest gambling group, being found declared “unfit” to operate a A$2.2 billion gaming resort after it was linked to international criminal gangs.

NZ Refining has also caught the attention of regulators, with NZX’s independent arm asking the oil company why it hasn’t updated shareholders on its negotiations with Z Energy and Mobil about converting the refinery into an import terminal.

The market seemed less concerned, and its shares increased 1.1% to 48 cents.

The kiwi dollar was trading 70.08 US cents at 5pm in Wellington, down from 70.24 cents yesterday.

The trade-weighted index was at 73.74 at 5pm, from 73.93 yesterday. The kiwi traded at 92.23 Australian cents from 92.41 cents, 76.90 yen from 76.97 yen, 58.94 euro cents from 59.10 cents, 51.02 British pence from 51.34 pence, and 4.5889 Chinese yuan from 4.6031 yuan.

Tags: Market Close