NZ market makes small gain despite Synlait taking hit

Property stocks staged a recovery, Synlait Milk took another hit, falling more than 5%, and out of it, the New Zealand sharemarket managed a small gain.

Monday, March 27th 2023, 6:30PM

by BusinessDesk

The S&P/NZX 50 Index rebounded in the afternoon and closed at 11,612.86, up 32.04 points or 0.28% after reaching a morning low of 11,564.55.

There were 65 gainers and 68 decliners on the main board and trading was light with 27.62 million shares worth $88.57 million changing hands.

The market was spirited along by renewed buying in the property stocks, with the All Real Estate sector easily topping the NZX index with a 2.96% rise.

Matt Goodson, managing director of Salt Funds Management, said United States property stocks were very strong at the weekend after being weak for weeks and NZ may have had a copycat reaction.

“Local property companies have come back a long way in terms of net tangible assets, discounts of 20-30% are not uncommon, and it appears buyers have entered the sector.

“But net tangible assets are historical and the market looks ahead to (latest) valuations which are falling. It is a battle with rising interest rates and cap rates and whether the companies can get rent increases through to match inflation,” Goodson said.

All the listed property stocks had solid rises. Argosy increased 3.5c or 3.29% to $1.10; Goodman Trust improved 7c or 3.5% to $2.07; Kiwi was up 2.5c or 2.96% to 87c; and Stride gained 5c or 3.94% to $1.32.

Vital Healthcare Property Trust added 7c or 3.46% to $2.24; Precinct collected 3.5c or 2.87% to $1.255; Property for Industry gained 3c to $2.25; and Investore was also up 3c or 2.16% to $1.42.

Synlait Milk lost a further 13c or 5.42% to $2.27 after confirming a sharp fall in its half-year earnings. It has fallen from $3.57 achieved on Feb 17. Synlait reported an 83% fall in net profit to $4.81m on revenue of $769.82m, down 3%, for the six months ending January.

Synlait is not paying an interim dividend and it reaffirmed its lower full-year profit guidance of $15m-$25m.

After earlier warning the market about its slowdown, Synlait said the advanced nutrition forecast demand and production have reduced, and it faced operational stability and cost challenges.

Goodson said the reaction to Synlait was interesting. “It still fell more than five percent despite the pre-warning. The market has obviously given up any hope that a turnaround will happen any time soon.

Tie broken

“A2 Milk normally trades in tandem with Synlait but it has shaken this off and increased more than one percent. It appeared to be more about Synlait’s specific issues,” he said.

Global marketer a2 Milk was up 9c or 1.43% to $6.40. The Fonterra Shareholders’ Fund increased 7c or 2.13% to $3.36.

Contact Energy increased 10c to $7.32 after launching a $200m six-year green bond, with the ability to accept $100m in over-subscriptions. Mercury was down 9c to $5.98.

There were low volumes of trade amongst the leading stocks. “It was a very quiet day,” Goodson said. “The telephone was not ringing off the hook and this happens at times.”

Ebos Group marched nearer to its high of $46.49, gaining 57c to $45.69. Freightways added 13c to $9.33; Restaurant Brands was up 20c or 3.13% to $6.60; Hallenstein Glasson gained 16c or 3.05% to $5.40; Third Age Health increased 3c or 1.95% to $1.57; and Oceania Healthcare was up 2c or 2.78% to 74c.

The Warehouse Group was down 7c or 3.48% to $1.94; Michael Hill decreased 5c or 4.59% to $1.04; Scales Corp declined 7c or 2.44% to $2.80; and My Food Bag dropped another 1.5c or 6.52% to 21.5c.

Port companies Marsden Maritime Holdings was down 14c or 2.59% to $5.26; Tauranga decreased 13c or 2.09% to $6.08; South Port NZ shed 12c to $7.55; and Napier was up 3c to $2.58.

Serko fell 10c or 4.17% to $2.30; Eroad declined 3c or 4.05% to 71c; Cooks Coffee was down 1.5c or 4.76% to 30c; Vista Group shed 4c or 3.05% to $1.27; and PaySauce decreased 1.5c or 5.66% to 25c.

AFT Pharmaceuticals, down 4c to $3.41, told the market it has registered its hand sanitiser Crystawash Extend for sale in China and has signed further licence agreements for the intravenous form of its Maxigesic pain relief in Switzerland and Latin America.

Comvita, down 1c to $34.24, has arranged a new $115m banking facility with ANZ and Westpac.

Promisia Healthcare, unchanged at 0.001c, has bought two adjoining properties to expand its rest home Aldwins House in Christchurch. Aldwins now has nearly 100 residents and Promisia has moved into a positive cashflow position.

Tags: Market Close