NZ shares up as earnings results loom

New Zealand's benchmark share index climbed as the stocks that drove a decline yesterday bounced back as investors jostled for position ahead of earnings updates this month.

Tuesday, November 9th 2021, 8:46PM

by BusinessDesk

The S&P/NZX 50 Index rose 50 points, or 0.4%, to 13090.58. Turnover was light at $110 million.

Mainfreight climbed back to $90, up 2.3%, ahead of what is expected to be a strong interim result on Thursday with earnings boosted by what Forsyth Barr is calling “the global freight super-cycle”.

High demand for durable goods coupled with supply chain disruptions has resulted in increased margins for freight companies.

Fisher & Paykel Healthcare is trading in a similarly volatile fashion as investors tussle over how to value the stock that is currently benefiting from increased sales.

The exporter climbed 2.2% to $32.29 today, which is near the middle of its 12-month range but higher than the valuation given by some analysts.

NZ research teams are fairly optimistic about the stock, with Jarden offering a $34 target price and Forsyth Barr suggesting $32.

However, some Australian equity research teams are less sure. Citi has been reported as giving the stock a ‘sell’ rating at $27 and UBS suggested last month the stock is only worth $22.65.

Investors will have a better idea of the earnings profile after its half-year report on Nov 25.

Pushpay Holdings dropped 1.1% to $1.85 ahead of its earnings report tomorrow morning.

Clothing and outdoor retailer Kathmandu Holdings said it had been badly impacted by ongoing covid restrictions and first-quarter profit will be down about $35m.

The stock fell 0.6% to $1.56 with the company saying it had positive momentum following the reopening of New South Wales and Victoria markets.

Shares in fleet management software firm Eroad climbed 2.6% to $5.20 after the Overseas Investment Office consented to its acquisition of Coretex.

Boutique fund manager Castle Point recently revealed it had exited its position in the company, citing concerns around the acquisition.

“Transformational acquisitions make us a bit squeamish as they have a poor success rate. We much prefer to see organic growth,” it said in a note to clients.

“While Eroad might have a bright future ahead, it is unlikely to fit our strict hurdles for investing for some time, so we sold”.

Z Energy went unchanged at $3.59 despite $7.3m worth of shares being traded through the fuel retailer today.

Investors happy to bank on a moderately safe return from Ampol’s takeover bid are buying the stock off investors wanting to reallocate capital into growth opportunities.

One of these sellers is the Accident Compensation Corporation which told the NZX today it had sold almost $20m worth of shares since mid-October – scoring an average price of $3.61 per share.

The NZ dollar was trading up about 0.5 US cents higher than yesterday at 71.51 US cents.

ASB economist Mike Jones said global interest rates had moderated last week but NZ bond yields were looking relatively high still, which was attracting buyers to the local currency.

Tags: Market Close