Second class suit stops A2 in its tracks

A2 Milk's shares dropped after reports of a second class action took the wind out of the firm’s sails in a largely flat market.

Thursday, October 21st 2021, 6:27PM

by BusinessDesk

The milk marketing firm posted the day’s biggest decline on the S&P/NZX 50 Index, down 2.6% at $7.48, having been on a tear in recent weeks as investors slowly regained confidence that China’s informal daigou channel was on the mend. Supplier Synlait Milk fell 0.5% to $3.80.

A2 Milk noted reports that Shine Lawyers is investigating a potential class action against the firm, but hasn’t been notified of any case. It already faces a claim filed by Slater & Gordon Lawyers.

“Investors had a little bit of good news over the last few weeks but the handbrake’s been put back on again today,” said Grant Davies, an investment adviser at Hamilton Hindin Greene.

The NZX50 increased 11.74 points, or 0.1%, to 13,125.98, in relatively quiet trading with turnover of $129 million across the broader market.

Meridian Energy posted the day’s biggest gain on the top 50 index, up 3.5% at $5.04. The country’s biggest electricity generator yesterday said its hydro storage increased in September. Contact Energy, which also has significant South Island hydro generation, rose 0.7% to $8.19.

Gains among blue chip companies helped drag the index higher late in the day, with Mainfreight up 1.6% at $90.10, Ebos rose 1.5% to $35.84 and Port of Tauranga advanced 1.2% to $6.78.

NZX rose 1.2% to $1.74 after the stock market operator welcomed the latest addition to the bourse, Greenfern Industries. The third medicinal cannabis firm jumped 66% to 41.5 cents on debut, bringing its price in line with listed rivals Rua Bioscience unchanged at 41 cents and Cannasouth, which slipped 1.3% to 39.5 cents.

Auckland International Airport increased 0.1% to $7.855 after hosting its annual meeting today, where chair Patrick Strange pushed back against the government’s rent relief package saying it had already offered $185m of relief to its tenants.

Exporters remained on the backfoot as the currency continued to push higher, with the NZ dollar climbing above 72 US cents for the first time in more than four months.

Fisher & Paykel Healthcare, which derives more than half its revenue in US dollars, fell 1.9% to $30.30, cinema software developer Vista Group International declined 0.4% to $2.49, fishing group Sanford was down 0.2% at $5.05, and rubber goods manufacturer Skellerup slipped 1.2% to $6.03.

Eroad, which is mounting a strong push in the US, fell 7.4% to $5.10 after reporting a decline in contracted units in North America after losing an enterprise customer.

Restaurant Brands decreased 0.8% to $15.46 after the fast-food operator posted a 1.6% increase in September quarter sales to $243.6m. The company said sales lost through covid store closures was more than offset by the two additional months of trading from the California stores it bought last year.

Davies said the currency was getting pushed up on the expectation of higher interest rates, which also undermined investor appetite for firms typically offering reliable dividends.

Stride Property declined 2.1% to $2.38, Property for Industry was down 0.7% at $2.95, and Spark NZ slipped 0.4% to $4.57.

Tourism Holdings was unchanged at $2.69. It hosted its annual meeting, where chief executive Grant Webster said the delta lockdowns mean its first-half earnings will lag behind the prior year, but it expects a significant improvement in the second six months of the financial year.

Scott Technology jumped 10.4% to $3.08 after reporting a 16% lift in annual revenue and fattening its margins. It also announced a new US$20m contract to deliver an appliance production line.

Tags: Market Close