Positive reporting and speculation drive sharemarket higher

Another rumour of a takeover bid for Fletcher Building, the country’s largest construction company, energised the New Zealand sharemarket for a rise of more than half a percent.

Thursday, May 23rd 2024, 6:31PM

by BusinessDesk

The S&P/NZX 50 Index had a solid day’s trading and closed at 11,809.48, up 77.2 points or 0.66% after reaching an early-morning low of 11,700.04.

There were 66 gainers and 73 decliners over the whole market on volumes of 32.15 million share transactions worth $122.92m.

Things got interesting with speculation out of Australia that American private equity investment firm Platinum Equity was carrying out a substantial amount of work on a buyout of all or parts of Fletcher, as the dual-listed stock remains under pressure.

Fletcher Building rose 27c or 9.25% to $3.19 on trade worth $12.37m after reaching an intraday high of $3.30. Over the past two years its highest share price has been $5.68.

Shane Solly, portfolio manager with Harbour Asset Management, said that during the past five years there has been a regular series of takeover rumours concerning Fletcher.

“Platinum Equity has expertise in building materials and a buyout is possible. The speculation was good enough to attract (buying) support for the Fletcher stock, especially in Australia.

“The American firm would have to get over hurdles such as Overseas Investment Office approval for the substantial land Fletcher owns, and there’s the Western Australian Iplex pipes liability. But they are not insurmountable,” Solly said.

Platinum Equity, based in Beverly Hills, specialises in mergers and acquisitions and manages more than US$48 billion (NZ$78b) worth of diversified assets.

Solly said the Reserve Bank provided a more moderate tone in its presentations after the monetary policy statement and this also lifted the market.

Gentrack increased 41c or 4.34% to a new high of $9.86; Auckland International Airport was up 12c to $7.73; Manawa Energy gained 6c to $4.25; and Infratil added 16c to $10.99.

Mainfreight collected 97c to $68; a2 Milk added 11c to $7.65; Ryman Healthcare was up 10c or 2.63% to $3.90; and Hallenstein Glasson gained 11c or 2% to $5.61.

Positive reports

Transport technology company Eroad rose 8c or 9.2% to 95c after reporting a 10% increase in revenue to $182.01m and a net loss of $346,000, down from $3m, for the year ending March.

Eroad’s guidance for the 2025 financial year is free cash flow positive with revenue of $190m-$195m and operating earnings (ebit) of $5m-$10m. Ebit for the past year was $800,000, down $1.7m in the 2023 financial year.

AFT Pharmaceuticals increased 14c or 4.67% to $3.14 on record net profit of $15.6m, up 46%, and revenue of $195.41m, up 25%, for the 12 months ending March. AFT is paying a final dividend of 1.6c a share on July 4.

Medicine sales in the international and Asian markets rose 70% and AFT’s guidance for the 2025 financial year is operating profit of $22m-$25m. Its net debt is down to $16.2m, from $29.9m.

Meal kit company My Food Bag rose 3.4c or 27.42% to 15.8c after experiencing growth in the second half of the financial year with net profit of $3.5m, up 75% on the previous corresponding period.

This meant full-year revenue was down 7.7% to $162.23m and net profit down 23% to $6.04m. My Food Bag is resuming a dividend of 0.05c a share, payable on June 20. Active customer numbers were 56,800, down from 57,500, with bargain box deliveries up 19.5%.

Tourism Holdings gained 13c or 6.91% to $2.01 after telling the market the banking syndicate has approved amendments to its covenants that better reflect current trading conditions. The change only applies to the June quarter.

Smartpay Holdings was up 4.5c or 3.56% to $1.31 after announcing an agreement with Sydney-based Cuscal to provide increased payment processing services in New Zealand.

Fisher & Paykel Healthcare was down 13c to $28.49; The Warehouse Group eased 4c or 3.28% to $1.18; SkyCity declined 7c or 3.8% to $1.77; Skellerup decreased 9c or 2.24% to $3.93; and Serko fell 20c or 6.06% to $3.10.

Among leading banks, ANZ was down 78c or 2.48% to $30.64, and Westpac declined 66c or 2.23% to $28.95.

Other decliners were Delegat Group shedding 18c or 3.58% to $4.8;KMD Brands easing 1.5c or 3.3% to 44c; Move Logistics decreasing 2c or 5.13% to 37c; T&G Global falling 8c or 4.37% to $1.75; and Millennium & Copthorne Hotels NZ down 8c or 4.35% to $1.76.

Tags: Market Close