Hart’s US giant delivers the goods
Revenue and earnings both rise for NZ billionaire’s packaging company
Graeme Hart’s US packaging giant, Pactiv Evergreen, enjoyed a lift in revenue and earnings in the first quarter. Net revenue came to US$1.5 billion ($2.3b) for the quarter, up 28 per cent on the same period a year earlier, and ahead of Bloomberg consensus estimates of US$1.34b.
Net income from continuing operations of US$43 million for the first quarter of 2022 compared to a net loss of US$11m in the year before.
Adjusted earnings before interest, tax, depreciation and amortisation (Ebitda) from continuing operations were US$182m for the quarter compared to US$77m a year earlier.
The company is maintaining its Ebitda guidance of US$705m for 2022.
Pactiv Evergreen chief executive Michael King said the company finished 2021 strongly and had a solid start to 2022.
Pactiv Evergreen’s volumes were down 5 per cent in the quarter, primarily because of labour challenges.
Looking ahead, labour challenges were expected to subside.
King said Pactiv Evergreen was making good progress on improving its mill operations and managing inventory levels.
“We remain cautious and prepared as high levels of inflationary pressure and volatility remain in the market,” he said.
The Nasdaq-listed Pactiv Evergreen is part of Hart’s private investment company, Rank Group.
Pactiv and Evergreen Packaging were brought together in 2020 by Rank’s Reynolds Group and the combined entity was launched as an IPO at US$14.00 a share late that year.
The stock last traded at US$9.81.
Xero’s comeback?
One analyst is backing a bounce-back in the Xero share price after its recent sell-off.
Jarden’s Elise Kennedy has a 12-month target price of A$150 on the Kiwi accounting software company, which is listed on the ASX but still has its head office in Wellington.
Like other tech stocks, Xero shares have fallen in recent months as investors move away from growth companies as interest rates rise.
After hitting a high of A$156.65 in
November, it touched A$88.14 this week.
But Kennedy has a buy rating on the company, whose results are due out next Thursday.
In a note this week, she said the recovery of small and medium-sized entities may not be as strong in Australia/New Zealand and the UK as expected by the market, but this would be partially offset by the churn in Xero’s clients remaining low compared to expectations.
“It is not clear to us that Xero has pulled back on spend versus other global tech stocks similarly impacted by rising costs. In short, there may be risk on the downside; however, it is uncertain how much is in the price already (given the stock is down >41 per cent from its November 2021 high).
“We continue to see Xero as a longterm buy, given it is a global market leader in a A$74 billion enterprise resource planning finance TAM [technology acceptance model] and with IT adoption at greater than 20 per cent, it provides a long runway for growth. We see regulation, platform revenue growth and acquisitions as potential catalysts for the share price.”
Mainfreight down
Brokers Forsyth Barr have dropped their target price for Mainfreight from $94 a share to $84 after a re-rating of the freight sector.
Analysts Andy Bowley and Matt Noland said in a note this week that Mainfreight’s key competitors had collectively gone through a 40 per cent price-to-earnings de-rating over the past year.
Mainfreight shares got as high as $98.52 in September last year, prompting some to predict they would become New Zealand’s first $100 stock.
But they have since fallen back and were trading at just over $80 a share yesterday afternoon.
The analysts said that while Mainfreight shares had also followed global peers downwards, they remained at a 20 per cent premium, driven partly by the company’s positive earnings growth and expectations of an earnings upgrade at its annual result announcement on May 26.
“While current investor focus is on Mainfreight’s air and ocean operations, both transport and warehousing are enjoying abovetrend growth and will help to mitigate medium-term profit growth headwinds as the freight rate supercycle unwinds.
“We expect freight rate pressure to play out over the next few years albeit at a slower pace than previously envisioned and to a higher level of ‘new normal’ rates than those of pre Covid-19 times, thereby helping to cushion the impact on Mainfreight’s profit outlook.”
The analysts lifted their profit before tax forecast for the 2022 full year by 1 per cent and by 6 per cent in FY23, and have a neutral rating on the stock.
NZX trade slows
The NZX said its trading had been slower over the month of April but the S&P/NZX 50 index was holding up well compared to global markets.
“We remain in a complex market with a focus on high inflation levels, rising interest rates and significant geopolitical concerns,” the NZX said in a monthly review.
Total value traded across the exchange was $3.17b, a decrease of 37 per cent on the previous month.
Wholesale market total trades decreased by 27 per cent from March to April, and retail trades dropped by 9 per cent. The falls followed a strong March, particularly for wholesale.
April saw strong capital raising activity, with equity capital raises from Air New Zealand, New Zealand King Salmon, Chatham Rock, and New Zealand Oil & Gas, as well as debt capital raising announcements from Vector, Precinct Properties, Mercury and Kāinga Ora.
Cannabis goes cold
This Saturday is New Zealand’s 30th annual J-day, with pro-marijuana activists taking to the field to protest for legal cannabis.
Kiwi investors, though, aren’t so sure that the future is green.
While cannabis stocks enjoyed a huge surge in interest in the first half of last year, digital broker Stake has seen a dramatic drop-off in interest in the area in late 2021 and early 2022, suggesting Kiwis are no longer confident that weed is their ticket to a portfolio high.
Stake’s chief executive Matt Leibowitz, said marijuana stocks seem to be a trend that has come and gone for Kiwi investors. “Trade volumes have taken a dive from a peak in early 2021, and investors aren’t holding the stocks for long — they’re selling it at about the same rate as they’re buying.
“While the boom in legal recreational and medicinal cannabis may have been seen as a Pineapple Express to growth, investors have mellowed out on it.
“Elon may have taken his 4/20 joke to a new level with his Twitter takeover bid, but it looks like Kiwis have moved on to greener pastures.”
Craigs profit up
Craigs Investment Partners has reported a 57.3 per cent increase in its annual net profit to $42.8m in 2021, according to a filing lodged with the Companies Office.
Operating revenue increased by 11 per cent to $251.2m and the company paid $27.9m in dividends. The broking firm is owned by staff through holding company CIP Holdings. In 2020, CIP Holdings bought the 49.9 per cent that it did not already own from its strategic partner of 10 years — Deutsche Bank — for $55m. The investment banking and institutional equities firm is headed by by chief executive Simon Tong.