Weighing up who’s in and out
The re-weighting of the S&P/ NZX indices will be revealed today and the bets are on that honey product maker Comvita will be out and movie software company Vista Group will be back in the NZX50.
Falling out of the index will be the latest blow for Comvita which has suffered from a poor honey harvest and a takeover bid which never came to fruition this year.
Vista has been in the index before but fell out due to lack of liquidity. But analysts are picking it will meet the threshold again this time round.
Vista has a market capitalisation of around $580 million which means it will go in at around number 39 or 40.
Mark Brown, chief investment officer at Devon Funds Management, said it had already seen a number of brokers begin to cover Vista in anticipation of its inclusion.
And with Trade Me set to leave the market — provided its takeover goes ahead — Vista could be one of the largest profitable technology stocks left on the NZX.
Still, Vista won’t be anywhere near Trade Me’s size, which sits around the 10th largest listed company.
Brown says Comvita’s fall out of the index is “unfortunate” but Trade Me’s pending departure could open up a spot for the honey company to come back into the index again.
Ironically if Comvita goes, the smallest stock left in the NZX50 will be the stock exchange operator itself the NZX.
Index tracking funds and other investors which hug the benchmark will have until December 21 to make the changes to their portfolios which could see Vista shares enjoying a pre-Christmas bump.
Vista shares are up 32 per cent in the past year and last traded at $3.60.
Sector shake-up
There’s a lot going on in the Australasian food and beverage sector, over and above Fonterra’s efforts to streamline its operations.
Among other things, Fonterra is looking at the possible sale of its Tip Top business to get the co-op back to basics.
Across the Tasman, The Australian newspaper this week said expectations are growing that Singapore’s Wilmar International will go to full control of Goodman Fielder by buying the remaining 50 per cent that it does not already own from Hong Kong’s First Pacific.
Wilmar and First Pacific paid about A$1.3 billion ($1.36b) for Goodman Fielder nearly four years ago.
Goodman Fielder has a substantial operation in New Zealand, running 13 manufacturing sites and employing 1800 people. The local operation produces a wide range of dairy, baked and grocery items for Kiwis. The company also exports Meadow Fresh UHT milk.
Neither Wilmar nor First Pacific responded to Stock Takes requests for comment.
Staying with Aussie, Japan’s Kirin Holdings said it is reviewing options including a possible sale of its substantial Australian dairy business.
Various corporate initiatives have coincided with tough times for Australian dairy farmers, who have struggled with drought and a difficult local consumer market, dominated by Coles and Woolworths.
Early this year, Canadian dairy giant snapped up Fonterra’s Australian equivalent — Murray Goulburn — after the co-op suffered near crippling losses last year.
This month, the Australian Federal Court ordered former Murray Goulburn managing director Gary Helou to pay A$200,000 in penalties for being knowingly concerned in Murray Goulburn’s false or misleading claims about the farmgate milk price it expected to pay dairy farmers in the 2015-16 milk season.
As part of the resolution of the proceedings, Helou gave an undertaking to the court that he would not be involved in the dairy industry for three years.
Teething issues
First New Zealand Capital's takeover of ANZ's online trading platform went official this week with the handover going live on Monday.
The deal to buy ANZ Securities platform, which has reverted back to its former name Direct Broking, has been a year in the making.
But that didn't stop some initial teething issues. Comments on the sharetrader forum show users had frustrations with NZX announcements not appearing in a timely manner and problems getting through on the phone line. That seems to have been remedied and FNZ will be hoping its new clients are forgiving of the initial hiccup.