NZ market gains on back of KMD's 'impressive result'
A more confident New Zealand sharemarket posted a half percent gain on the comfort of record first-half earnings from retailer KMD Brands and a feeling that the offshore banking crisis is under control.
Wednesday, March 22nd 2023, 6:37PM
by BusinessDesk
The S&P/NZX 50 Index had a late surge in the last half-hour matching session and closed near the day’s high at 11,586.93, up 55.63 points or 0.48%.
There were 74 gainers and 57 decliners over the whole market on improved volume of 35.18 million shares worth $131.77m. Auckland International Airport, up 6c to $8.88, dominated the individual trading with $37.76m worth of its shares changing hands.
Greg Smith, head of retail with Devon Funds Management, said the markets were more confident that officials have a handle on the banking crisis and that it won’t disintegrate into something more serious.
“There have been lots of relief measures put in place in Europe and United States, and Treasury Secretary Janet Yellen indicated the US government was prepared to take further action to safeguard bank deposits, with a backstop for smaller banks if needed.”
One of the regional banks in the firing line, First Republic, rose 30% after its share price fell 47% the day before.
Smith said overnight the US Federal Reserve is expected to step down to a 25 basis points increase in interest rates and it will have to communicate some message around the banking situation.
“If Fed pauses the rate rises, then that may do more harm than good because it would suggest they are somewhat nervous about the banking sector.”
Smith said the minutes of the last Reserve Bank of Australia (RBA) meeting signalled they were near the end of the monetary tightening process, and they would reconsider the case for a pause in rate hikes at their next meeting.
“The RBA appreciates there is a lag effect with rate increases, particularly with mortgages, and it will be interesting to see if we get any of the same sentiment from the Reserve Bank.”
Wall Street had a relief rally, with Dow Jones Industrial Average up 0.98% to 32,560.6 points; S&P 500 gaining 1.3% to 4002.87; and Nasdaq Composite increasing 1.58% to 11,860.11 and up 13.32% so far this year.
Apple, gaining 22% this year, and Microsoft, up 13%, now make up more than 13% of the S&P 500. Tesla increased 7.82% to US$197.58 after Moody’s rating agency upgraded the company from its junk-rated credit.
Across the Tasman, the S&P/ASX 200 Index was up 0.9% to 7018.1 points at 6pm NZ time.
At home, KMD Brands increased 2c or 2.02% to $1.01 after reporting a 352% rise in net profit of $13.97m on revenue of $547.92m, up 34.5%, for the six months ending January. It is paying an interim dividend of 3c a share on June 30.
KMD told the market the positive first-half momentum continued through February with group sales up 31.9% compared with the same month last year.
For the first half, gross margin increased 100 basis points to 58.7%, Rip Curl sales rose 18.8% to $306.4m, Kathmandu’s up 51% to $194m, and Oboz’s gained 124% to $47.5m.
Smith said KMD produced an impressive result, helped by the return of international travel and tourists buying surf wear as they get back to places like Hawaii and Queensland. Increasing the gross margins in the face of cost inflation was also impressive.
The Warehouse Group, which indicated in December that trading was a bit weaker, is the next to report its annual result and its share price was up 5c or 2.13% to $2.40.
Fellow retailers Briscoe Group, which went ex-dividend, was down 8c to $4.56, Michael Hill declined 2c or 1.87% to $1.05, and Hallenstein Glasson was up 4c to $5.39.
The local market was driven higher by Ebos Group, up $1.23 or 2.77% to $45.70; and Fisher and Paykel Healthcare gained 60c or 2.39% to $25.75.
Ventia Services increased 13c or 5.06% to $2.70; Restaurant Brands rose 30c or 4.84% to $6.50; Turners Automotive gained 6c or 1.8% to $3.40; and Air New Zealand was up 1.5c or 1.99% to 77c.
NZME gained 3c or 3% to $1.03; Rakon increased 4c or 4.44% to 94c; Smartpay Holdings added 6c or 5.26% to $1.20; and My Food Bag was up 2c or 8.89% to 24.5c.
Mercury Energy declined 6c to $6.08; Freightways was down 7c to $9.33; Synlait Milk tumbled a further 8c or 3.17% to $2.44; Summerset Group drifted 15c to $8.65; and Arvida Group decreased 3c or 3.09% to 94c.
Scales Corp, also ex-dividend, was down 6.5c or 2.19% to $2.90; Serko fell 13c or 5.58% to $2.20; Sanford declined 8c or 1.96% to $4; Napier Port decreased 9c or 3.41% to $2.55; and NZ Oil & Gas was down 1.5c or 3.75% to 38.5c.
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