Retirement village stocks show signs of life

Retirement stocks have found a new lease of life and Serko surged on a better-than-expected annual result but the New Zealand sharemarket remained subdued.

Wednesday, May 17th 2023, 6:52PM

by BusinessDesk

The S&P/NZX 50 Index closed 5.78 points or 0.05% ahead at 11,951.66 after reaching an intraday low of 11,898.96.

There were 52 gainers and 69 decliners on the main board, and on another light trading day 23.86 million shares worth $86.96 million changed hands.

Paul Robertshawe, chief investment officer with Octagon Asset Management, said: “We are ramping into the reporting season and there’s a bit more activity and conversation. I think the market is looking for glimmers of optimism.”

Online business travel provider Serko rose 67c or 29.13% to $2.97 after reporting a 154% increase in revenue to $48.02m and reducing its net loss by 15% to $30.54m for the year ending March. Serko is forecasting $63m-$70m revenue for the next financial year.

Boosted by its partnership with Booking.com, Serko told the market that business travel demand is tracking strongly, with online bookings increasing 93% to 4.1m, from 2.2m. It has $87.7m tucked away in the bank and average monthly cash burn has fallen from $3.3m to $2.7m.

Serko confirmed its goal of reaching $100m revenue in the 2025 financial year. Its share price is still some way off its high of $8.32 achieved on September 3, 2021.

Robertshawe said Serko had beaten its revenue and cash burn guidance and it was a positive result built on the business with Booking.com. There has been a recovery in travel around the world, although China is lagging.

The retirement village sector was strong for the second day running, despite an investigation by the Commerce Commission for any potential issues under the Fair Trading Act.

Ryman Healthcare, which reports on Friday, rose 24c or 4.44% to $5.64; Summerset Group was up 14c to $8.40; Oceania Healthcare increased 4c or 5.63% to 75c; and Arvida Group also gained 4c or 3.67% to $1.13.

Robertshawe said the sector is coming back into favour because of increasing migration and talk from two banks that the fall in house prices is easing.

“You can never pick the bottom (of the housing market) but trading volumes have increased in the (retirement) sector and some investors are moving early. Fletcher Building has risen from $4.40 to $4.90 lately for the same reason.”

He said Ryman’s annual result will be closely followed in terms of its dividend guidance, development pipeline and debt ratio for the 2024 financial year following its $902m capital raise.

Port of Tauranga was up 6c to $6.45; Vulcan Steel gained 11c to $8.10; Sky City Entertainment collected 4c or 1.75% to $2.32; Synlait Milk recovered 3c to $2.13; and Vista Group increased 5c, or 3.73%, to $1.39.

Turners Automotive was up 10c, 2.84%, to $3.62; Bremworth rose 2c (5.71 %) to 37c; Michael Hill gained 2c (1.87%) to $1.09; Task Group added 1.5c (3.57%) to 43.5; and Channel Infrastructure improved 3c (2.07%) to $1.48.

Mainfreight was down 79c to $69.20; Ebos Group by 16c to $43.99; Chorus by 9c to $8.42. Skellerup Holdings shed 6c to $4.76; and Restaurant Brands gave up 13c or 1.75% to $7.30.

Seeka declined 11c or 3.99% to $2.65; NZME was down 2c or 1.96% to $1; and Air New Zealand decreased 1c to 76c.

Argosy Property, down 2c or 1.8% to $1.09, reported net property income of $112.8m, up 7.3%, and a net loss after revaluations of $80.8m for the year ending March. The loss is attributed to the $146.6m devaluation of its property portfolio. As a result, net tangible assets per share fell to $1.58, from $1.74.

Argosy has a 99.3% occupancy rate for its buildings and rents increased 3.6% on an annual basis.

There is trading interest in SkyCity, Chorus and Precinct Properties, which will be removed from the MSCI Small Cap Index at the end of the month.

Robertshawe said some pre-trading has taken place but it won’t be as dramatic as Hallenstein Glasson.

The clothing retailer rose from $5.30 to $6.91 in two weeks prior to joining the NZX top 50, and has since fallen to $5.86.

New NZX chair

John McMahon has been appointed chair of NZX, replacing James Miller who served 13 years on the board. NZX’s share price was unchanged at $1.15.

Chatham Rock Phosphate, unchanged at 16c, has extended the closing date of its private placement to investors. Chatham is seeking to raise $4.62m at 15.4c per unit.

Good Spirits Hospitality, unchanged at 2.3c, has now arranged a waiver with its lender Pacific Dawn for the interest payments due for the March quarter and part of the June quarter.

Tags: Market Close