NZ shares settle after action packed earnings season

New Zealand shares edged higher as some of the winning and losing stocks of a volatile few weeks of trading consolidated into normalised positions.

Thursday, September 2nd 2021, 8:42PM

by BusinessDesk

The S&P/NZX 50 Index rose 36.98 points, or 0.3%, to 13,280.47. Turnover was $185 million.

Earnings season injected some life into the sleepy index, which has climbed as much in the past 11 days as it did in the six months prior.

Today, some stocks that missed out on the rally were making gains while a few top performers fell subject to some profit taking.

Dairy processor Synlait Milk led the index higher, up 3.1% at $3.33, as it recovered from the three-month low it hit on Friday, after key customer A2 Milk indicated a negative outlook.

A research note from Jarden said Synlait had been down more than 11.5% this month after A2 delivered “one of the only disappointing results of the season.

“Outlook commentary with the results did emphasise the macro headwinds much more than previous communications,” they said.

Shares in A2 Milk dropped as much as 15% following the result and recovered just 1.8% today to reach $6.05.

Fisher & Paykel Healthcare, another stock which had some selling this month, climbed 1.8% to $33.40 – on the higher end of its recent range.

Sky TV climbed another 1.6% to 19.6 cents, now up a fifth in the past five days, after it convinced investors it may return to growing revenue next year.

“For Sky TV, there is some optimism it could be nearing an inflection point for the year ahead, coupled with the WarnerMedia deal being refreshed,” Jarden analysts said.

Jarden research said the stock market had a limited reaction to the latest covid lockdown, as companies have stronger balance sheets and investors are more confident about reopening.

Heartland Group Holdings – a stock which had its valuation cut in half during the 2020 lockdown – has climbed more than 10% this month, advancing 2.2% to $2.30 today.

Some of the biggest declines on the market today were stocks that have seen strong performance in recent days.

Sanford dropped 5.7% to $5.09, as it normalised after Ngāi Tahu Holdings’ on-market bid to buy a 20% stake at $5.50 per share re-rated the stock yesterday. It is still up 13.6% from before the iwi investment group bought the minority stake.

Similarly, Mainfreight declined 2% to $96.51, leaving a push above $100 for a future session as the stock settled back towards analysts’ valuations.

Jarden set its target price for the stock at $97, up from $85, following its recent trading update.

“Mainfreight delivered a result that was 10% ahead of the required run-rate for our previous financial year 2022 forecast,” they said in a note.

Investors are optimistic about the company growing internationally in large target markets, but the stock has also been enjoying some buying ahead of its inclusion in an index later this month.

Plexure shares jumped 11.1% to 60 cents after it completed a bookbuild, which will raise A$15 million, at 52 cents per share, from institutional investors to fund an acquisition.

The mobile marketing firm said the share placement attracted bids “well in excess” of the amount on offer. It has opted to have the A$5 million retail shareholder offer underwritten, as a result.

The New Zealand dollar rallied with its Australian counterpart as the currencies were boosted by a risk-on mood in US markets and strong economic data in Australia.

Tags: Market Close