NZ sharemarket rallies strongly after four days of falls

The New Zealand sharemarket surged more than 2% with renewed buying in blue-chip stocks on a day retailing icon The Warehouse reported one of its most challenging annual results.

Thursday, September 26th 2024, 6:26PM

by BusinessDesk

The S&P/NZX 50 Index traded strongly in the afternoon and closed at 12,491.58, gaining 267.05 points or 2.18% and snapping four successive days of falls.

It was the second-biggest single-day rise this year after the index rose 2.68% to 11,867.29 on May 31.

Trading was again heavy on volumes of 48 million shares worth $167.49m.

Greg Smith, head of retail with Devon Funds Management, said the local market staged a big relief rally. The recent capital raisings had taken a lot of wind out of the market’s sails as investors freed up cash.

“There’s been a healthy demand for the raisings, but a lot of the blue chips faced selling pressure and the buyers came back in today,” Smith said.

Fisher and Paykel Healthcare rose $1.55 or 4.45% to $36.40; Infratil was up 43c or 3.6% to $12.38; Ebos Group gained 82c or 2.29% to $36.57; Spark added 9c or 2.94% to $3.15; Mainfreight collected $1 to $71.50; and Chorus increased 27c or 3.17% to $8.79.

Ryman Healthcare rebounded 20c or 4.71% to $4.45; Contact Energy was up 30c or 3.78% to $8.24; a2 Milk increased 20c or 3.39% to $6.10; and Auckland International Airport gained 8c to $7.275.

Contact completed its $250m 30-year green bonds offer that included $50m oversubscriptions. The interest rate for the first five years is 5.67% per annum.

Retailer woes

The Warehouse Group, established 42 years ago, was unchanged at $1.23 after reporting a 6.2% decline in operating revenue of $3.037 billion and a net loss of $54.18m (last year a profit of $29.8m) for the 12 months ending July.

Outdoor clothing retailer Torpedo 7, which was sold for $1, had a loss of $60.5m. The Warehouse store sales were down 5.3% to $1.8b, Noel Leeming also declined 5.3% to $1b and Warehouse Stationery fell 6.7% to $231.9m.

Chair Dame Joan Withers described the last financial year as one of the most challenging in the company’s history. The retail environment remains tough but “our category strategy was off the mark, our execution was poor, and our customer offer was inconsistent.”

Smith said The Warehouse result was not as weak as expected – it was at the lower end of the guidance range. “Grocery sales are doing pretty good and helped the overall picture. Strip that out and sales would have been down 12%.”

He said The Warehouse would provide a trading update on Nov 8 and this was a critical time for retailers as they head into the holiday season.

SkyCity Entertainment increased 8c or 5.88% to $1.44 after settling the anti-money laundering proceedings with the Internal Affairs Department. The High Court imposed an agreed civil penalty of $4.16m.

Smith said SkyCity has been under regulatory pressure in both New Zealand and Australia and this settlement clears another issue.

“SkyCity is making incremental progress and investors reacted.”

Fonterra Shareholders’ Fund climbed 23c or 4.87% to $4.95 following the dairy co-operative's solid annual result.

PGG Wrightson increased 4c or 2.21% to $1.85; Restaurant Brands gained 8c or 2.2% to $3.71; Santana Minerals was up 11.5c or 4.46% to $2.695; and Pacific Edge bounced back 1.6c or 11.85% to 15.1c.

KMD Brands shed 3.5c or 7.07% to 46c; Serko fell 17c or 5.45% to $2.95; Rakon declined 3c or 4.29% to 67c; Eroad shed 6c or 4.76% to $1.20; Foley Wines decreased 3c or 3.85% to 75c; and Cooks Coffee fell 4c or 13.79% to 25c.

Air NZ, up 1c or 1.9% to 53.5c, outlined to shareholders at the annual meeting the impacts of a tougher economy: driving softness in demand, inflationary cost pressures, aircraft availability issues and significant competition in the United States network.

The national airline said it expected the trading conditions to remain similar through the first half of the 2025 financial year and given the ongoing uncertainty it was not providing earnings guidance at this time.

Vector, up 5c to $3.80, told shareholders at its annual meeting that Auckland electricity network growth was likely to slow over the next year with around 12,000 new connections, on top of the existing 624,000 connections.

Regarding recent high energy prices and lack of generation, Vector said: “We’ve long called for an energy strategy that takes a whole-of-system approach, rather than piecemeal approach. This is because no part of the system can operate in isolation anymore to deliver secure, reliable, affordable energy to meet consumer needs now and into the future.”

Tags: Market Close