Market heavyweight drags NZX 50 down
The weight of expectation pushed Fisher and Paykel Healthcare down more than 6% on the New Zealand sharemarket, which finished the week with a sharp 1% fall.
Friday, May 26th 2023, 6:49PM
by BusinessDesk
Led by market leader Fisher and Paykel Healthcare, the S&P/NZX 50 Index was down 129.82 points or 1.09% to 11,830.03 and fell 2.5% for the week.
The index is still ahead 3% so far this year and up about 6.5% over the past 12 months.
There were 52 gainers and 74 decliners on the main board with 32.94 million shares worth $159.17m changing hands.
Respiratory devices manufacturer Fisher and Paykel Healthcare has been a covid pandemic beneficiary, with strong growth. But, as the situation normalises and the company’s earnings slow, it has been trimmed on the sharemarket, just like Mainfreight the day before.
Fisher and Paykel fell $1.67 or 6.51% to a five-month low of $23.98 on trade worth $37.03m after reporting a 6% decline in revenue to $1.58 billion and 34% drop in net profit to $250.3m for the year ending March. It is paying a final dividend of 23c a share on July 7.
The company told the market that its people, suppliers and customers worked tirelessly to meet global demand surges during three financial years impacted by the covid pandemic.
The second-half result was encouraging – operating revenue grew 14% to $890.5m – as markets progressed towards more of a normal state. Full-year hospital product revenue was down 15% to $1.02b and homecare was 18% higher than the previous year with a record $5534.8m.
Fisher and Paykel forecast operating revenue of $1.7b for the 2024 financial year.
Shane Solly, portfolio manager for Harbour Asset Management, said Fisher and Paykel’s cautious outlook disappointed the market, as did the gross margin improvement forecast of 2%, down from an expected 3%.
“Fisher and Paykel’s result was okay but it is a highly priced stock and it needs to have the earnings engine behind it. This time it was not quite enough.”
Not the only decline
Mainfreight was down 41c to $68; Chorus declined 10.5c to $8.23; Mercury Energy decreased 8.5c to $6.30; a2 Milk shed 7c to $5.783; and Ebos Group was down 70c to $42.48.
Other decliners were Channel Infrastructure, down 4c or 2.68% to $1.03; Michael Hill, decreasing 3c or 2.83% to $1.03; Sanford, shedding 9c or 2.12% to $4.15; Solution Dynamics, falling 10c or 4.26% to $2.25; and Savor, down 2c or 5.13% to 37c.
Stride Property gained 4c or 3.05% to $1.35 after reporting a better-than-expected distributable profit of $57.6m for the 12 months ending March, compared with $54.2m the previous year. Net rental income was $71.1m, up from $65.8m.
Stride had a net loss of $116.74m, mainly because of a $118.5m reduction in the value of its portfolio. It is forecasting a combined cash dividend of 8c a share for the 2024 financial year, similar to the present year. Investore Property, managed by Stride, was down 3c or 2.08% to $1.41.
NZ Rural Land increased 3c or 3.53% to 88c after telling the market it is suspending its dividend payment and instead is buying back shares on-market because the company considers its share price undervalues its assets and cashflow.
NZ Rural, which recently bought two forestry estates for $70.2m, upgraded its adjusted funds from operations (AFFO) guidance to $8m-$8.5m or 5.25c-5.75c a share, up from 5c-5.5c, for the 2024 financial year. This year’s AFFO guidance remains at $6m-$6.5m.
Infratil hit $10 with a gain of 12c; Synlait Milk increased 4c or 2.63% to $1.56; Seeka collected 5c or 1.79% to $2.84; Gentrack added 9c or 2.14% to $4.30; and Sky TV was up 5c or 1.97% to $2.59.
Eroad improved 3c or 5.26% to 60c; ikeGPS gained 2c or 2.67% to 77c and Greenfern Industries was up 0.009c or 17.31% to 6.1c.
Tower, down 0.005c to 60c, had earlier reported a net loss of $5.1m for the six months ending March, compared with a $3m profit in the previous corresponding period. Insurance claims rose three and a half times because of the recent flooding and cyclone.
Gross written premiums increased 15% in the half year to $245m, and Tower expects full-year growth of 15-20%.
Software firm TradeWindow, up 0.005c to 36.5c, has formed a partnership with Export Council Australia to accelerate the adoption of digital solutions for trade.
The latest ANZ NZ Roy Morgan survey showed consumer confidence in May was flat and the proportion of people who believed it was a good time to buy a major household item fell 3 points to minus 34. Inflation expectations eased from 5.2% to 4.8% – the second time since mid-2021 they have dipped under 5%.
| « Sharemarket flat as Mainfreight slips | US debt deal boosts NZ sharemarket » |
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