Market closes on sour note from Synlait Milk

The New Zealand sharemarket closed for Christmas on a flat note with Synlait Milk and Move Logistics providing gloomy trading updates.

Friday, December 22nd 2023, 6:03PM

by BusinessDesk

The S&P/NZX 50 Index finished at 11,634.43, up 6.44 points or 0.06% in the half-day trading session.

As expected, turnover was light with 12.25 million shares worth $33.99m changing hands, and there were 75 gainers and 47 decliners on the main board.

Shane Solly, portfolio manager with Harbour Asset Management, said Father Christmas didn’t quite deliver the presents, despite a solid recovery in the United States.

“We had an ugly downgrade from Synlait and Move Logistics was facing headwinds in its sector,” he said.

“We’ve had a few downgrades lately and this reflects lower consumer activity and spending in a slowing economy which is all music to the Reserve Bank. It takes away the bank’s need to be hawkish and poses the question of when do we see rate cuts,” Solly said.

In the US, the Dow Jones Industrial Average was up 0.87% to 37,404.35 points; the S&P 500 increased 1.03% to 4746.75; and the Nasdaq Composite rose 1.26% to 14,963.87.

At home, Synlait Milk fell 6c or 6.06% to a new low of 93c after telling the market the sale of Christchurch-based Dairyworks cannot be assured even though discussions with potential buyers are continuing.

Synlait is talking with the banking syndicate about a plan to reduce its debt and repay at least $130m by March 28 next year. Synlait acknowledged it has been a challenging year, and is working to reset its business.

The dairy company is also embroiled in arbitration with a2 Milk, up 2c to $4.60, following a2 Milk’s move to cancel the exclusive arrangement with Synlait for manufacturing and supplying infant formula in China.

Synlait said it expects to continue manufacturing the a2 Milk Chinese-label products through to September 2027 as it holds the China regulatory licence attached to its Dunsandel processing plant.

Move Logistics declined 3c or 5.17% to 55c after revising its first-half operating earnings (ebitda) to $11.5m-$12.5m because of lower customer demand. Move said economic and sector headwinds continue to impact customer volumes, costs and growth opportunities.

The energy sector underpinned the market, with Mercury rising 10c to $6.47; Meridian gaining 7c to $5.48; and Manawa up 5c to $4.21.

The two Hawke’s Bay stocks had strong days. Napier Port increased 14c or 5.83% to $2.54, and apple and pet ingredients exporter Scales Corp rose 20c or 6.47% to $3.29.

Delegat Group rebounded 20c or 3.33% to $6.20; Arvida Group increased 3c or 2.97% to $1.04; PGG Wrightson was up 6c or 1.82% to $3.36; Allied Farmers added 3c or 3.95% to 79c; and 2 Cheap Cars gained 2c or 2.35% to 87c.

Utility pole measurement provider ikeGPS rose 5c or 10.64% to 52c after telling the market it has signed a new $3.7m contract with a Fortune 500 company in the United States.

Over the next five years more than 1000 engineers will use ikePGS’ new software platform, representing a tenfold increase in annual recurring revenue from this customer, with subscription revenue of $700,000 a year.

Freightways was down 13c to $8.25; Heartland Group declined 4c or 2.76% to $1.41; Green Cross Health shed 3c or 2.63% to $1.11; KMD Brands decreased 2c or 2.78% to 70c; and Tourism Holdings was down 5c to $3.80.

AFT Pharmaceuticals, declining 5c to $3.35, has formed a partnership with Belgium’s Hyloris Pharmaceuticals to develop a product for the treatment of burning mouth syndrome.

MHM Automation, unchanged at $1.65, has been advised that Bettcher Industries has received Overseas Investment Office consent to acquire its 100% shareholding.

Health and wellness company Me Today, unchanged at 2c, has arranged continued BNZ financing support through to the end of June 2026, as well as extending the repayment of the Jarvis Trust loan to that date.

Tags: Market Close