Positive Gentrack result gives sharemarket a boost

A surging Gentrack gave the New Zealand sharemarket and the company reporting season a positive tone with strong revenue growth and an earnings upgrade.

Monday, May 20th 2024, 6:20PM

by BusinessDesk

After reaching a morning low of 11,661, the S&P/NZX 50 Index closed at 11,720.8, up 35.92 points or 0.31% – despite two further earnings downgrades, this time from Michael Hill and Comvita.

There were 74 gainers and 64 decliners on the main board with 28.5 million shares worth $97.55m changing hands.

Mark Lister, investment director with Craigs Investment Partners, said the market has had a string of “not-so-good announcements, and it was nice to see one go the other way with Gentrack’s upgrade".

“With a bit of luck, it’s a reminder to investors that among all the results over the next two weeks, there will be some good news from companies which are performing like Gentrack.

“The market is still a little subdued and all eyes will be on the Reserve Bank meeting this week before we roll into more results.”

Lister said the Reserve Bank is likely to keep the official cash rate unchanged at 5.5%, but its forecasts and commentary will be crucial.

“Everyone is hopeful they will see moderation in inflation and the Reserve Bank can take pressure off businesses and households which are struggling under the weight of a tough economy.”

Utilities software firm Gentrack rose $1.48 or 18.59% to an all-time high of $9.44 after reporting a 21% increase in revenue to $102.02m and net profit of $5.33m, down 32.32%, for the six months ending March.

Gentrack raised its full-year revenue guidance 18% to $200m, from $170m, and operating earnings (ebitda) to $23.5m-$26.5m, from $20.5m-$25.5m, thanks to customer wins in Britain and the Middle East, and customer upgrades.

Manuka honey producer Comvita was down 2c to $1.70 after downgrading its earnings guidance for the third time and allowing a suitor to undertake due diligence.

Comvita said the takeover offer from a credible offshore party represented a significant premium to the current share price. Comvita revised full-year revenue forecast to $211m-$218m, from $225m-$235m, and operating earnings (ebitda) to $23m-$28m, from $30m-$35m because of “prolonged weakness of consumer demand in the China market”. The company said the 2025 ebitda target of $50m was now unachievable.

All that glitters is not gold

Retail jeweller Michael Hill International fell 11c or 16.67% to 55c after telling the market that expected second-half trading momentum had not materialised and margins were still under pressure.

NZ sales for the 45 weeks ending May 12 declined 11.1% compared with the previous corresponding period; Canada was down 0.4%; and Australia increased 12.3% driven by the Brevilles brand. Overall group sales were up 4.7% but the Michael Hill core brand was still negative.

Infratil gained 35c or 3.21% to a new high of $11.25 on the eve of reporting; Fletcher Building increased 8c or 2.75% to $2.99; Ryman Healthcare added 8c or 2.04% to $4; SkyCity rose 8c or 4.85% to $1.73; and The Warehouse recovered 32c or 2.5% to $1.23.

Manawa Energy gained 9c or 2.07% to $4.44 after reporting steady revenue of $473.11m and net profit of $23.65 for the 12 months ending March. It is paying a final dividend of 11c a share on June 14.

Generation volume was down 1% to 1901GWh, and Manawa has more than 1,200MW development options in solar and wind. Operating earnings (ebitdaf) were up 6% to $145m and 2025 financial year guidance was $130m-$150m, with capital expenditure of $40m-$45m.

Meridian was up 10c to $6.20; Genesis Energy gained 4c or 1.79% to $2.27; Colonial Motor Co added 20c or 2.5% to $8.20; Scales Corp increased 7c or 2.12% to $3.37; and NZME was up 2 or 2.47% to 83c.

In the property sector, Stride rose 11c or 9.32% to $1.29; Property for Industry was up 4c or 1.9% to $2.14; and Investore was down 2c or 1.87% to $1.05.

Ebos Group was down 32c to $35.17; Auckland International Airport decreased 15c or 1.97% to $7.47; Mainfreight declined $2.10 or 3.04% to $67.90; and Hallenstein Glasson eased 10c or 1.82% to $5.40.

Carbon Fund fell 11c 7.43% to $1.37; Arvida Group shed 3c or 3.03% to 96c; Millennium & Copthorne Hotels NZ declined 8c or 4.19% to $1.83; and Third Age Health was down 10c or 6.71% to $1.39.

Tags: Market Close