Michael Hill storms higher on positive earnings upgrade
A strong trading update for Michael Hill International provided some post-Christmas cheer as investors returned from the holiday break in a positive mood.
Wednesday, December 29th 2021, 6:30PM
by BusinessDesk
The S&P NZX50 was up 0.4%, or 52 points, at 12,940.42 on the first day of trading since Dec 24, with financial stocks taking their cues from across the Tasman. Turnover was $135 million.
Trading closed before the Ministry of Health said a border-related case of omicron was briefly active in the community. The person was in Auckland's CBD on Dec 26 and 27 before testing positive on day nine of their self-isolation period. A number of close contacts have been identified and have returned negative tests so far.
Dual-listed Michael Hill jumped 11.4% to $1.37 after it said it expects to deliver first-half earnings “well above” the A$44.6m it posted a year earlier, having been able to open all stores through the Christmas period.
“It was a positive update, which is fantastic. It has been upgrade after upgrade for those guys and the share price has performed accordingly,” said Hobson Wealth director Brad Gordon.
Still, retailers were mixed as investors await more trading updates. The Warehouse rose 2.5% to $4.10 and Briscoe gained 1.3% to $6.82 while Kathmandu slipped 0.7% to $1.49 and Hallenstein Glasson fell 0.1% to $7.04.
Outside of Michael Hill, investors may have been spurred by a better day across the Tasman.
While US markets were fairly tepid overnight – weighed by worries about the omicron variant – the S&P/ASX 200 Index was up 1.3% at 5pm in Wellington.
Financial stocks continued to benefit with ANZ up 0.7% to $29.50 and Westpac adding 0.4% to $22.80.
Heartland Group increased 4.7% to $2.45, leading the benchmark index.
According to Gordon, Heartland was largely benefiting from taking pole position as the most popular choice for 2022 in the NZ Herald’s Brokers’ Picks.
It was picked by four participants, including Hobson Wealth.
Gordon said that Hobson Wealth sees it as being “well-positioned” both from a market share potential and given its reverse mortgage business.
Heartland also has a stake in fintech Harmoney, which today announced a A$20m corporate debt facility to drive growth of its Australian loan book. Harmoney was unchanged at $1.90.
Ongoing jitters around the impact of omicron also saw steady interest in the healthcare sector, with Fisher & Paykel Healthcare rising 0.5% to $33 and Ebos Group up 3.5% at $41.50.
Gordon noted that Ebos’s pre-Christmas placement and deal had been well received.
Ebos is finishing off the retail component of raising A$742m (NZ$784m) to help fund its A$1.17 billion acquisition of medical products distributor LifeHealthcare.
In Australia covid-19 infections continued to climb, hitting 11,201 in New South Wales on Wednesday and 3,767 for Victoria. Hospitalisations, however, remained low.
There were 46 new cases in the community in NZ today, with 48 people in the hospital. A total of 71 omicron cases have been identified at the border.
Exporters like Fisher & Paykel may have been held back by the slightly stronger NZ dollar, which was trading at 68.11 US cents at 5pm in Wellington versus $68.21 Friday.
Among other stocks, My Food Bag added 4.4% to close at $1.18 while Gentrack Group was up 5.9% at $2.15.
ArborGen Holdings lifted 3.8% to 27.5 cents after it said completing the sale of its NZ and Australian businesses would result in annual interest savings of approximately US$400,000.
Blis Technologies and Pushpay Holdings saw the highest volume of trading.
Blis Technologies ended unchanged at 4.8 cents after falling more than 6% at one point. The stock has been under pressure since it reported a $1.8 million net loss in the six months to Sept 30, weighed by challenging market conditions in the US.
Pushpay Holdings has also been out of favour since reporting soft half-year earnings. It added 0.8% to close at $1.31.
Spark NZ also saw high volume, also adding 0.8% to $4.59.
According to Gordon, the main driver over the next few sessions will likely be offshore sentiment.
He did say, however, that travel stocks such as Auckland International Airport may continue to garner some interest, in particular given the news that omicron may not be as severe.
Auckland Airport added 1.1% to $7.68.
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