Sky TV leads NZX 50 higher

New Zealand's headline share index was little changed even as some positive sentiment returned for investors waiting nervously for more hard data on omicron.

Tuesday, December 7th 2021, 7:04PM

by BusinessDesk

The S&P/NZX 50 Index rose 12 points, or 0.1%, to 12,609.88. Turnover was $182.5 million.

The NZ dollar held steady at its new low price of 67.46 US cents at 3pm in Wellington, down slightly from 67.48 cents yesterday.

Market sentiment has been wavering for days and the level of volatility suggests there is still quite a bit of caution among investors.

The United States’ chief medical advisor Antony Fauci has said the early data suggests the omicron variant may not be terribly severe.

Current thinking is that the variant may evade some of the current vaccine’s protections but is unlikely to cause more severe illness than previous variants.

Castle Point Funds wrote in a note today that equity markets had been knocked by the new virus strain and the short-term volatility was to be expected.

“The pandemic is now what you might call a ‘known unknown’. There is still plenty of uncertainty, but it is being thoroughly scrutinised, analysed and worried about,” it said.

Pay television operator Sky Television led the modest gains on the NZX 50 today. The stock jumped 17.7% to $2.06 after hiking its profit guidance by more than 90%.

Sky has completed its cost review and hacked $26m of recurring costs out of the business, dramatically improving its earnings and profit metrics in the process.

As a result, earnings guidance increased from a midpoint of $123m to $155m and net profit guidance increased from a midpoint of $22.7m to $44m.

UBS analysts said a recent survey showed consumers were viewing Sky as better value for money than previously and were more willing to sign up.

“Over the next 12 months we expect to see an improvement in consumers wanting to join Sky as part of its broadband bundling strategy and new set-top box which is being launched mid-2022,” they said in a note.

The equity research team gives the stock a ‘buy’ rating and a $2.50 target price.

SkyCity Entertainment Group was up 3.3% at $3.12 after the same UBS survey found the average casino spend was its highest level in the seven years the research has run.

While the number of people visiting casinos is down on both the first half of 2021 and pre-covid levels, the amount each visitor is spending has climbed from $164 to $233.

“The survey suggests casino expenditure in Auckland will exceed pre-covid-19 levels in the next 12 months driven by higher spend rates,” UBS said.

Air New Zealand, another covid-affected stock, climbed 3% to $1.54 in sync with Vista Group which rose 2.2% to $2.33 and Serko up 1.9% at $6.45.

Covid-beneficiary Fisher & Paykel Healthcare fell 1.3% to $31.86 despite its earnings being tightly linked to infection numbers which could rise with omicron.

Fletcher Building today said it was launching a retirement living business called Vivid, which will build supported living accommodation that is integrated with the surrounding community – rather than gated off from it in a closed village.

Rival village developer Ryman Healthcare had the day’s biggest fall, down 2.7% at $11.87, while Fletcher shares declined 0.7% to $6.90.

Tags: Market Close