F&P Healthcare sends NZX 50 lower as covid restrictions lift

Fisher & Paykel Healthcare dragged New Zealand’s benchmark equity index lower on Wednesday as it warned revenue would be reduced as covid comes under control.

Wednesday, March 23rd 2022, 6:21PM

by BusinessDesk

The S&P/NZX 50 Index fell 153 points, or 1.3%, to 12,051.59. Turnover was $115 million.

F&P Healthcare, the largest stock on the index, did the most damage. It dropped almost 8% to $25.68 – its lowest price since March 2020 – after warning full year revenue would be down roughly 13% on the prior year.

Greg Smith, head of retail at Devon Funds, said his fund had been underweight on F&P Healthcare for a while, in anticipation of falling future earnings.

“The company had always said to watch hospitalisation rates for a read on earnings,” he told BusinessDesk. “Well, that light has been flashing red for some time now”.

Hospitalisation rates in the United States were down about 80% from their peak and those cases that were hospitalised stayed half as long due to less severe illness, he said.

Smith said this signalled the covid era was gradually coming to an end and the stocks which benefited from the pandemic would begin to normalise.

“It is ironic that the day Fisher & Paykel falls 8%, is the same day the government effectively consigned vaccine mandates to history,” he said.

Prime minister Jacinda Ardern today announced another relaxation of covid rules, dropping the vaccine pass requirement and increasing gathering limits under the red traffic light.

Under orange, the only restriction remaining is to wear masks in indoor environments with 95% of eligible Kiwis now vaccinated.

Air New Zealand sent its own signal about moving past the pandemic, with the relaunch of its direct flights to New York which will resume mid-September.

Chief executive, Greg Foran said it would be remembered as the moment the airline was back “up and running”.

The company is expected to go ahead with a billion-dollar capital raise in the coming days to repay debt and fund the rebuild. Its shares were down 0.7% at $1.41 today.

Other detractors from the index included Pushpay Holdings, down 2.6% at $1.13, Restaurant Brands, down 2% at $13.73, and Heartland Group Holdings off 1.8% at $2.23.

On the other side of the board, Sky Network Television jumped 3% to hit $2.75 and NZME rose 2.1% to $1.48.

Serko shares dropped another 0.9% to $4.45, but Fisher Funds appears to view the stock as good value – the fund manager bought another $5.5m worth of shares this month.

Similarly, Mainfreight founder Bruce Plested bought just under $1m of shares in the logistics company during the past week for an average of $79.79 each. They were trading at $79.90, up 1.1% today.

KMD Brands – formerly known as Kathmandu – fell 0.8% to $1.32 today after reporting a net loss of $5.5m but promised a wave of growth with stores no longer hampered by covid shutdowns.

The NZ dollar took off overnight, jumping to 69.61 US cents from 68.72, and hit its highest level since November.

ASB economist Mike Jones said the currency was climbing “like it’s 2015” against the Japanese yen, currently trading at 84.29 at a seven-year high.

The strong dollar was attributable to an improved global appetite for risk, Jones said.

“The rally in the NZD/USD that began in early February is now worth around four cents,” he said.

“Perhaps slightly surprising, given the fiercely hawkish turn from the Federal Reserve and the lack of any material break-through in Russia-Ukraine ceasefire talks.”

Tags: Market Close