Market commentaries
WELLINGTON: New Zealand shares hit another record amid a slew of earnings reports, as Trade Me Group and a2 Milk Co gained on their annual accounts while Fletcher Building dropped.
The S&P/NZX50 Index rose 46.83 points, or 0.5%, to 9162.61. Within the index, 28 stocks rose, 17 fell and five were unchanged. Turnover was $140 million.
Trade Me Group rose 6.2% to $5. The online auction company is distributing $100 million via a 22c per share special dividend. It turned over more than $250 million for the first time, to deliver a 3.9% increase in net profit for the year to June 30 of $96.6 million.
‘‘It surprised a little bit on the quantum and timing of its capital return — the result itself looked to be pretty much in line with expectations,’’ James Lindsay, senior portfolio manager at Nikko Asset Management, said.
‘‘It gives a signal the board isn’t so concerned and doesn’t feel they need to reinvest hugely into the business any more than they currently are.’’
A2 Milk jumped 6.1% to $11.81. The milk marketer more than doubled net profit to $195.7 million in the June 2018 year, as it widened margins and increased infant formula sales.
Revenue rose 68% to $922.7 million and earnings before interest, tax, depreciation and amortisation also more than doubled to $283 million. A2 already gave that revenue figure last month, just beating its $900 millionto$920 million forecast from May. At the time it said ebitda was about 30% of sales, implying a figure of about $277 million.
‘‘It was a minor beat on the revenue and earnings line, which has helped the performance of the stock,’’ Mr Lindsay said. ‘‘It’s probably a bit of a relief rally as well — it has been growing so fast that people have been worried and they’ve had the change in labelling, etc. There has been some concern in the market it had the potential to disappoint and it’s proven people wrong.’’
Despite those results, the best performing stock yesterday was Pushpay Holdings, up 10.3% to $3.76. The stock had dropped 18% since August 1, when the company delivered firstquarter revenue within guidance and reshuffled its senior management after another abrupt executive exit.
Mr Lindsay said the stock was benefiting from a positive research note by a broking house, and was coming off a ‘‘bad few weeks’’.
Meridian Energy gained 1.1% to $3.285. New Zealand’s biggest power generator reported a slight lift in fullyear earnings to $201 million, despite weak hydro conditions for much of the period.
Chief executive Neal Barclay said the result reflected a recovery in the firm’s hydro storage in the final quarter of the year and good management throughout the firm’s toughest year for generation since 2013. The company also signalled it may return $250 million to investors over two years once the current capital management programme ends in 2020.
‘‘It was a solid result. Hydrology is the principal driver of all the genretailers,’’ Mr Lindsay said. ‘‘They have extended out the capital management programme a couple of years, likely on the basis things are performing pretty well for them and confidence around the Tiwai smelter.’’
Fletcher Building was the worst performer on the index, down 5.7% to $6.51, a threemonth low. The construction company reported a net loss of $190 million for the 12 months to June 30, from a profit of $94 million in the previous year.
Operating earnings before significant items — excluding Building + Interiors — were $710 million, within the $680 million to $720 million range the company forecast.
‘Mercury NZ dropped 3.1% to $3.30, Australia and New Zealand Banking Corp fell 1.9% to $32.03, and Westpac Banking Corp declined 1.7% to $31.96.
Spark New Zealand fell 0.8% to $3.95. The country’s biggest telecommunications company posted a 7.9% decline in annual profit to $385 million as it booked restructuring costs on its efforts to become the lowest cost operator.
A solid run of upbeat profit results failed to keep Australian shares aloft, as political uncertainty and the abandonment of big business tax cuts dominated news of the day. The benchmark S&P/ASX200 index ended the day down 18.4 points, or 0.29%, at 6266.0 points while the All Ordinaries index was down 9.2 points, or 0.14%, at 6373.8 points.
Attention was focused on Canberra, as the Government’s final tax cuts package for big businesses was rejected in the Senate and Prime Minister Malcolm Turnbull said the policy would not be taken to the next election.
The tax cuts failed as leadership speculation continues around Mr Turnbull, who may soon face another challenge from former minister Peter Dutton after narrowly winning a party room faceoff on Tuesday.
Away from Canberra, falls in the mining and banking sector pushed the market lower.
BHP Billiton shed 1.4% to $32.08, adding to falls incurred on Tuesday after it missed analyst expectations on fullyear underlying profit.
Rio Tinto dropped 1.8% to $71.69 and Fortescue fell 3.1% to $4.06 as iron ore futures fell.
Doubts on the outcome of USChina trade talks swayed sentiment, while US futures fell yesterday as markets assessed the possible impact of a guilty plea from US President Donald Trump’s former personal lawyer and the conviction of former Trump campaign chairman Paul Manafort.