NZ shares steady despite Air NZ's descent

New Zealand's sharemarket was flat on Thursday, even though Air NZ fell to a two-year low after announcing its deeply discounted capital raise.

Thursday, March 31st 2022, 6:10PM

by BusinessDesk

The S&P/NZX 50 Index rose 11 points, or 0.1%, to 12,110.26. Turnover was high at $277.2 million.

A huge chunk of this volume was traded through Air NZ with investors swapping almost 11m shares at a value of just under $14m.

Shares in the airline fell 6.2% to $1.29, which is a significant drop but small relative to the 35% discount – at 53 cents – offered in the $1.2 billion capital raise announced last night.

Hobson Wealth director, Brad Gordon, told BusinessDesk the shares were attracting buyers as they still carry the right to participate in the capital raise until the close of trading on Friday.

The renounceable rights offer means existing shareholders are given the right to purchase two Air NZ shares for each share they currently hold.

This means they are still trading as if they haven’t been diluted by the coming capital raise, which will result in the number of shares on issue tripling.

When trading opens next week, those shares are likely to fall further, Gordon said. Factoring in the dilution effect, Air NZ shares were trading at the equivalent of 81 cents on Wednesday night.

Analysts at Jarden and Craigs Investment Partners have given the stock a new target price of 60 cents and 64 cents, respectively.

The second most traded stock was Auckland International Airport, which had 7.3m shares worth $57m change hands.

The share price climbed 1.7% to $7.83, with some investors likely predicting Air NZ's return to the skies will mean improving cash flow for the country’s primary airport.

Z Energy, which sells jet fuel, might have seen a reaction on a normal day, but its share price is anchored to Ampol’s takeover bid at $3.78.

Its market price was unchanged today at $3.75, even after the Takeovers Panel gave the deal its stamp of approval, meaning another key hurdle has now been cleared.

Shares in NZ King Salmon recovered 1.1% to 92 cents after reiterating its earnings guidance, while also delaying the release of its earnings results.

The company said covid self-isolation had delayed some elements of the auditing process and it was granted a waiver to defer its full-year results until on or around April 13.

Tourism Holdings shares fell 3% to $2.86 after the Australian competition regulator delayed its ruling about whether the company would be permitted to purchase ASX listed Apollo Tourism & Leisure.

The NZ regulator, the Commerce Commission, has also expressed concern over the deal which some have interpreted as reducing the likelihood it will go ahead.

Pushpay Holdings had the biggest gain on the NZX 50, up 3.6% at $1.14, followed by Synlait Milk which rose 3.1% to $3.31.

The index’s largest stock, Fisher & Paykel Healthcare, dropped 1.9% to $24.35.

The NZ dollar crept toward 70 US cents, trading at 69.75 at 3pm in Wellington, up from 69.47 cents yesterday.

Tags: Market Close