NZ sharemarket rises on back of positive news

An upbeat a2 Milk, providing an earnings upgrade and a welcome dividend, spurred the New Zealand sharemarket to its highest close in nearly two years.

Friday, November 22nd 2024, 6:26PM

by BusinessDesk

The S&P/NZX 50 Index began a steep climb at midday and broke through the 13,000 mark after closing at 13,041.9, rising 276.66 points or 2.17%. The index gained nearly 2.8% for the week and is up more than 11% for the year.

It was the highest close since Jan 5, 2022 when the index reached 13,150.38. It was also the biggest single-day gain in six weeks, with the index rising 310 points or 2.68% on May 31.

Trading was heavy with 47 million shares worth $196.6m changing hands.

Shane Solly, portfolio manager with Harbour Asset Management, said it’s been a ripper of a day. The realisation that interest rates will be cut next week combined with the a2 Milk announcement ignited the market.

“There aren’t many stocks down and it’s made investors wake up. Next week is also big with the Fisher & Paykel Healthcare result and with what we’ve seen with a2 Milk today, some may think they should have more shares in stocks like Fisher & Paykel,” Solly said.

Global marketer a2 Milk, which held its annual meeting, surged 96c or 18.01% to $6.29 on trade worth $5.89m after reaching an intraday high of $6.53.

The company told shareholders that revenue to date is ahead of plan because of increased ingredient sales from Mataura Valley Milk and the higher Global Dairy Trade prices.

A2 Milk has upgraded its full-year revenue guidance to mid-high single-digit growth, from a mid-single digit increase. In February, the company will also be declaring its first interim dividend in its 20-year history and will continue to pay out 60-80% of net profit.

A2 Milk reported a 5.2% increase in revenue to $1.675 billion for the year ending June and it had nearly $970m in cash. It told shareholders that it might consider special dividends over time.

Solly said a2 Milk had a significant upgrade that was better than expected – there was a risk the update would be disappointing as the Chinese birth rate has not recovered and the company had to continue growing its market and lifting prices.

“The English-label infant milk formula is going well and the introduction of the dividend against expectation is a sign of a2 Milk’s confidence.”

The NZ dollar continued to weaken, with the Kiwi trading at US58.4c against the American greenback and going under A90c to A89.5c against the Australian, helping exporters.

On the rise

Fisher & Paykel Healthcare bounced $1.59 or 4.3% to $38.55; Fletcher Building increased 12c or 3.96% to $3.15; Auckland International Airport gained 23c or 3.05% to $7.76; and Spark improved 7c or 2.33% to $3.08.

Mainfreight increased $1.34 or 1.82% to $75; Skellerup was up 10c or 2.06% to $4.95; Genesis Energy gained 7.5c or 3.43% to $2.26; Eroad rose 6c or 6.67% to 96c; Westpac Bank added 73c or 1.97% to $37.70; and SkyCity was up 4c or 2.86% to $1.44.

Oceania Healthcare was down 4c or 5% to 76c after reporting steady revenue of $132.6m and a net loss of $17.06m, from a net profit of $35.2m for the previous corresponding period, in the six months ending September. Underlying operation earnings (ebitda) were $38.6m, up 2.7%.

Oceania said it has made progress rebalancing its portfolio and modernising facilities to support its premium-quality care for residents. The retirement village operator sold four properties in the six months, and is adding 118 apartments in Hamilton and West Auckland by the end of the year.

Hallenstein Glasson decreased 17c or 2.17% to $7.65; South Port NZ was down 15c or 2.8% to $5.20; Winton Land shed 4c or 1.98% to $1.98; Green Cross Health declined 4c or 5.13% to 74c; and Seeka eased 6c or 2.11% to $2.78.

WasteCo, down 0.004c or 12.5% to 2.8c, has a $9m conditional agreement to buy Hamilton-based Civic Waste, which is expected to contribute $20m in revenue in 12 months.

WasteCo is supported by investors Simon and Paula Herbert, who have subscribed to a $15m convertible note issue. They would hold 46.92% in WasteCo if the convertible note was converted into 750m shares at 0.2c a share.

Tags: Market Close