Mainfreight leads NZX50 higher as outlook soothes unease

Mainfreight led New Zealand’s S&P/NZX 50 index higher as investors welcomed the prospect of a smoother second-half for the logistics firm after its margins came under pressure in the September period, although the improving outlook in New Zealand didn’t spill over to bellwether stock Freightways, which posted the steepest decline on the day.

Retirement companies Oceania Healthcare and Summerset Group Holdings gained after Forsyth Barr analysts noted a turning tide in favour of the agedcare sector, with those two firms carrying ‘outperform’ ratings from the investment house.

Meanwhile, Infratil gained ahead of its first-halt result on Thursday, where investors will be closely watching the CDC data centres business as global sentiment on the artificial intelligence boom waxes and wanes.

And outside the benchmark index, Comvita sank with early voting indicating shareholders have rejected the 80 cents per share offer from Mark Stewart’s Florenz, raising the prospect of a capital raising to clear the honey products firm’s burdensome bank debt.

Keep rising

The NZX 50 rose 67.18 points, or 0.5%, to 13,671.72, with 22 stocks gaining, 16 declining and 12 unchanged. Turnover across the main board was $131.2 million, of which Fisher & Paykel Healthcare accounted for $23.3 million as it rose 0.5% to $38.29.

Mainfreight led the bourse higher, climbing 6.8% to $63 after reporting a 19% decline in first-half pre-tax profit and a 1.4% decline in revenue as the logistics firm’s margins were squeezed and it contended with slowing trans-Pacific trade flows.

Still, the firm expects its Australian and New Zealand businesses to have a stronger second half, and said it’s been stripping out costs elsewhere to improve margins.

“People saw the outlook statement as a positive, and they are expecting improvements in New Zealand and Australia,” said Peter McIntyre, an investment adviser at Craigs Investment Partners. “The market’s expecting the second half to be stronger, and maybe it’s just at the bottom of the cycle.”

That didn’t translate to courier operator Freightways, which is often seen as a bellwether for the New Zealand economy, with the stock falling 2.7% to $13.91, posting the biggest decline on the NZX50.

Infratil increased 0.6% to $12.67 ahead of its first-half result on Thursday. The infrastructure investor affirmed its annual guidance at its September investor day, and analysts will be looking for updates on CDC’s contracted capacity as investors around the world start second-guessing the AI tailwinds for the sector. One New Zealand’s revenue growth will also be in view.

Spark New Zealand rose 0.4% to $2.31.

Aged revival

Among other gainers, Oceania Healthcare was up 2.5% at 82.5 cents and Summerset Group Holdings advanced 2.4% to $12.22, with the companies Forsyth Barr’s picks to outperform as the agedcare sector recovers. Ryman Healthcare was unchanged at $2.99, while Radius Residential Care increased 1.4% to 37 cents.

Retailers were broadly stronger as KMD Brands rose 3.6% to 29 cents and Hallenstein Glasson Holdings gained 3.1% to $10.20. Briscoe Group was unchanged at $5.40.

Kiwi Property Group increased 0.5% to $1.075 after the commercial landlord agreed to sell 6.4 hectares of land at its new Drury development to Costco Wholesale for the retailer’s second store.

Chorus was unchanged at $9.48 after S&P Global Ratings reaffirmed the BBB credit rating on the broadband network operator and raised the outlook to positive – giving it a one-in-three chance of an upgrade within the next two years – due to the firm’s strong cashflow and balance sheet. The government’s planned sale of its preference shares and debt could moderate that support, as could a push into unregulated areas.

Separately, the network company said it plans to buy up to €300 million of notes coming due next year, and may offer up to €400 million of new seven-year debt.

Concrete news

Fletcher Building rose 0.9% to $3.55 after Statistics New Zealand figures showed ready-mixed concrete volumes grew in the September quarter, albeit in just the third quarterly increase since December 2021.

Outside the benchmark index, Comvita shares sank 13% to 60 cents as early voting on the $56 million takeover bid by Mark Stewart’s Florenz indicates the scheme will fail, with more than 25% of total shares on issue opposing the bid, meaning it won’t be able to pass the threshold of securing three-quarters of votes cast to succeed.

Rakon declined 2% to 75.5 cents after Lorraine Witten announced her departure from the board of the components maker, with former chief Brent Robinson – of the founding Robinson family – set to take up the chair on Nov 28. The company’s gone through a boardroom reshuffle after Robinson rallied support from Taiwan’s Siward Crystal Technology and long-time shareholder Mike Daniel to block an earlier succession plan.

Promisia Healthcare gained 3% to 51 cents after lifting first-half underlying earnings 31% to $2.5 million and said it’s in early talks for a potential acquisition that aligns with its model of large-scale integrated care and village facilities in regional locations.

The kiwi dollar traded at 56.53 US cents at 5pm in Auckland from 56.46 cents yesterday.

Reporting by Paul McBeth. Image from Curious News.