F&P Healthcare weighs on NZX50 ahead of earnings

New Zealand’s S&P/NZX 50 index fell late in the day with exporters broadly weaker ahead of Fisher & Paykel Healthcare’s annual earnings on Tuesday and as Channel Infrastructure followed oil prices lower amid growing optimism that the US and Iran might be close to reaching a peace deal.

Commercial landlords were also on the red side of the ledger ahead of Goodman New Zealand’s earnings on Tuesday, even as government bond yields eased as the prospect of a lasting Middle East ceasefire cools some of the heat in inflation expectations.

Oceania Healthcare was at the top of the leaderboard after its latest result got a generally favourable review from brokers, with two research houses raising their target price on the aged care operator.

And outside the NZX50, Pacific Edge nudged higher after saying it will put more emphasis on profitability on the presumed return to Medicare coverage, while Eroad tumbled as it fell short of expectations, with its board facing a challenge by New York hedge fund Ampfield Management.

Late stumble

The NZX50 declined 21.03 points, or 0.2%, to 12,970.28, with 32 stocks declining, 14 gaining, and four unchanged. The S&P/NZX 20 index futures for June rose 0.3% to 7,405 with 70 lots traded for a value of $520,000. The NZX20 increased 1.5 points to 7,382.89.

Turnover across the main board was $157.3 million, of which Contact Energy accounted for $28.4 million as it rose 1.1% to $9.45.

F&P Healthcare accounted for $16.5 million, slipping 1.3% to $33.66 ahead of reporting its annual result on Tuesday, with gross margins in focus as the market watches how it manages the cost of raw materials.

Other exporters were broadly weaker, with Fonterra Shareholders’ Fund units dipping 1.7% to $7.04, a2 Milk Co slipping 1.6% to $6.80 and Sanford decreased 0.7% to $7.55.

Gentrack led the benchmark lower, sinking 7.3% to $3.71, while Vista Group International declined 1.3% to $2.25.

Asian markets were broadly stronger as Brent crude oil futures dropped 5.3% to US$94.92 a barrel on hopes that the US and Iran would reach a lasting peace deal. The Polymarket prediction market was pricing in a 25% chance of an agreement by the end of May and a 50% chance by the end of June.

Australia’s S&P/ASX 200 index was up 0.4% in late trading, while Japan’s Nikkei 225 jumped 3.1% and Hong Kong’s Hang Seng advanced 0.9%. The kiwi dollar was little changed at 58.77 US cents at 5pm in Auckland from 58.75 cents last week.

“Markets are broadly positive that there does seem to be the prospect of a deal,” said Peter McIntyre, an investment adviser at Craigs Investment Partners. “Everything’s in positive territory.”

New Zealand’s benchmark index turned late in the session, with property stocks among those weighing on the bourse ahead of Goodman’s earnings on Tuesday and the Reserve Bank’s policy review on Wednesday. The central bank is expected to keep the official cash rate at 2.25% at the meeting.

Property flows

Kiwi Property Group fell 2.1% to 92 cents, Investore Property slipped 1.9% to $1.03, Property for Industry declined 1.6% to $2.40 and Vital Healthcare Property Trust decreased 1.6% to $1.81.

Goodman was one of the few property stocks to gain, up 0.3% at $1.945, with the yield on the 10-year government bond falling 6 basis points to 4.64%.

Oceania posted the biggest gain on the day, up 2.8% at 73 cents after Macquarie and Forsyth Barr analysts raised their target prices on the aged care operator to $1.06 and $1.05 respectively. Jarden analysts trimmed their target price 14% to 72 cents.

Ryman Healthcare gained 0.5% to $2.19 ahead of its result on Tuesday.

Outside the benchmark index, Pacific Edge rose 3.7% to 28 cents after confirming the slide in revenue and widening loss as it sought to regain coverage under the US Medicare programme. The bladder cancer test operator planned to moderate its growth aspirations and focus on profitability.

Meanwhile, Eroad sank 8% to 92 cents after annual revenue fell short of guidance and earnings missed analysts’ estimates.

The transport software and hardware developer’s directors are facing a challenge by their biggest shareholder, Ampfield, who is seeking to take control of the board at next month’s annual meeting.

TruScreen was the most heavily traded stock on the day with a volume of 4.1 million shares, rising 5.9%, or 0.1 of a cent, to 1.8 cents, having been halted to facilitate a $1.8 million placement.

Reporting by Paul McBeth. Image from J.f Manzanero on Unsplash.