NZ sharemarket down, Synlait reaches new all-time low

The New Zealand sharemarket had a down day following the Easter break, with Synlait Milk reaching a new all-time low after posting a nearly $100 million half-year net loss.

Tuesday, April 2nd 2024, 6:22PM

by BusinessDesk

The S&P/NZX 50 Index fell at the opening after a mixed day on Wall Street and recovered gamely in the afternoon to close at 12,095.85, down 9.44 points or 0.08%.

There were 85 gainers and 62 decliners over the whole market on volumes of 25.99m share transactions worth $99.48m.

Matt Goodson, managing director of Salt Funds Management, said there were some interesting moves on the local market in the closing match on Thursday – “everywhere you looked" – and many of these stocks retraced to where they were before the madness at the quarter’s end.

Increased bond yields rattled the United States markets after the Core Personal Consumption Expenditures Price Index, the Federal Reserve’s preferred inflation gauge, increased 0.3% in February, down from 0.5% in January but higher than late last year. Consumer spending jumped 0.8%, ahead of the 0.5% estimate.

The Dow Jones Industrial Average was down 0.6% to 39,566.85 points; S&P 500 declined 0.2% to 5,243.77; and Nasdaq Composite was up 0.11% to 16,396.83.

Still, the indices ended the March quarter well ahead. The S&P 500 rose 10.2%, the best quarter since 2019; the Nasdaq Composite increased 9.1%; and Dow Jones was up 5.6%.

At home, Synlait Milk, which listed in July 2013, fell 5c or 6.67% to 70c after reporting a 3% increase in revenue to $793.5m and a net loss of $96.2m for the six months ending January. Synlait had a total of $90.2m written down on assets and inventory.

Operating earnings (Ebitda) were $19.9m compared with $36.1m in the previous corresponding period, and Synlait’s full-year Ebitda guidance was downgraded to $45m-$60m (in the previous year, $90.7m). The forecast milk price increased from $7.50 to $7.80 per kg/MS.

Synlait’s net debt is $559m, up 8%, and its banking syndicate has agreed to an extension for repaying $130m to July 15 and providing an additional $30m short-term funding to June 27.

Goodson was surprised Synlait’s share price was down only 7%.

“There was a whopping great downgrade to its earnings guidance, and we don’t know whether the guidance includes the sale of the Pokeno and Dairyworks plants.

“Synlait has a complex financial restructuring, and there has to be some hard-nosed negotiation between Bright Dairy (the majority shareholder) and the banks. The market pricing of the senior debt suggests the lenders may have to take some loss.”

Goodson said Synlait’s bonds were trading at a marked discount of nearly 40%, 79c in the $1, and the $180m worth needs to be repaid by Dec 17.

Gentrack fell 40c or 4.49% to $8.50, and Heartland Group was down 6c or 4.69% to $1.22, both big risers on Thursday.

Port of Tauranga declined 9c to $5.31; Napier Port gave up 9c or 3.67% to $2.36; a2 Milk was down 13c or 1.92% to $6.65; Serko decreased 14c or 3.6% to $3.75; Arvida Group shed 3c or 2.7% to $1.08; and Restaurant Brands was down 8c or 2.29% to $3.42.

The Warehouse was down 5c or 3.23% to $1.50; Hallenstein Glasson declined 12c or 1.86% to $6.33; Tourism Holdings fell 15c or 4.72% to $3.03; Stride Property decreased 5c or 3.7% to $1.30; and Vital Healthcare Property Trust was down 5c or 2.24% to $2.18.

Fisher and Paykel Healthcare was up 52c or 2.03% to $26.17; Freightways collected 10c to $8.95; Manawa Energy increased 8c or 1.76% to $4.63; Michael Hill rose 3c or 4.11% to 76c; KMD Brands rebounded 2c or 3.64% to 57c; and NZME gained 2c or 2.27% to 90c.

Comvita increased 4c or 1.9% to $2.14; Third Age Health improved 3c or 1.79% to $1.71; Accordant Group was up 2c or 3.57% to 58c; PaySauce gained 2c or 10% to 22c; and Colonial Motor Co rose 23c or 2.82% to $8.38.

Radius Care, up 1.1c or 8.59% to 13.9c, has refinanced short-term borrowings with ASB, resulting in cost savings of about $1m a year.

Me Today, down 0.001c to 8.3c, has raised $3.1m, including $300,000 oversubscriptions, from its rights issue as part of a debt restructure plan.

Tags: Market Close