NZX 50 dips as Auckland Airport overshadows solid earnings day

New Zealand’s S&P/NZX 50 index dipped in a mixed day across Asia, with Auckland International Airport’s cautious outlook providing a cool backdrop in a day when most companies reporting received a positive response.

Spark New Zealand hit a four-month high as it delivered earnings in line with expectations and hinted at a potential higher dividend with its forecast for free cash in the current financial year.

Meanwhile, NZX, Skellerup Holdings, SkyCity Entertainment Group, Heartland Group Holdings and Seeka all rallied after reporting earnings largely in line with analysts’ predictions.

Power companies were broadly weaker, with ASX electricity futures continuing to soften, while exporters dipped with the kiwi’s rally against a broadly weaker greenback in the wake of US Treasury secretary Scott Bessent’s latest intervention to settle down bond markets.

And Advent International has agreed to buy a majority stake in New Zealand Clinical Research Group, with local private equity shop Waterman Capital keeping a minority position, in a deal the Australian Financial Review reported as valuing the medical research firm at $1 billion.

Earnings glut

The NZX 50 snapped two days of gains to dip 0.85 points, or 0.1%, to 13,919.82, with 28 stocks declining, 17 gaining, and five unchanged. The S&P/NZX 20 index futures contract for September was untraded, while the NZX 20 slipped 0.1% to 7,845.95.

Turnover across the main board was $155.2 million, of which Auckland Airport accounted for $18.9 million as the country’s major gateway fell 1.5% to $8.75. The airport operator was one of the bigger drags on the NZX 50 after it reported earnings growth of 3% in line with expectations, but reiterated concerns about the way the Commerce Commission planned to treat the cost of capital in setting the regulated pricing paths.

“Auckland Airport has voiced significant concerns about the Commerce Commission's draft cost of capital decision, and the uncertainty it creates for them, their funders, and investors,” Amova Asset Management research analyst Tim O’Loan said in a note. “Alongside this, the company must fund a $1 billion-to-$1.3 billion annual capex programme which exceeds the cash the business generates.”

The power companies also weighed on the benchmark, as Meridian Energy fell 1.8% to $5.55, while Contact Energy declined 1.1% to $8.90 and Genesis Energy dipped 0.4% to $2.68. Mercury NZ advanced 1.9% to $7.08.

Ebos Group gave back some of yesterday’s gain, falling 1.3% to $23.25 with some brokers trimming their target price on the health products maker. Forsyth Barr analysts Ben Crozier and Matt Montgomerie raised their target price by 75 cents to $24.75, while keeping their ‘neutral’ rating on the stock, which was trading around a forward earnings multiple of about 17 times.

“While earnings growth from FY28 should be strong, we view this multiple as fair given its returns are only marginally above its cost of capital, and it is in line with the market median, which Ebos has had a close long-term relationship with,” Crozier and Montgomerie said in a note to clients.

Stride Property posted the steepest decline on the day, falling 3.6% to $1.08, while Napier Port Holdings declined 3.5% to $3.61.

Taming bonds

Exporters were broadly weaker as the kiwi dollar climbed to 59.51 US cents at 5pm in Auckland from 58.73 cents yesterday, as the greenback was knocked by the US Treasury’s efforts to bring down long-dated government bond yields from multi-decade highs by expanding its bond repurchase programme.

Sanford fell 2.4% to $6.83 while a2 Milk Co declined 2.1% to $8.06.

Stock markets across Asia were generally stronger as investors digested the US Treasury’s latest moves, with South Korea’s Kospi surging 5.7% in late trading and Japan’s Nikkei gaining 1.2%. Australia’s S&P/ASX 200 index gained 0.3% with mining stocks spurred on by the overnight gain in gold prices.

The kiwi dollar rose to 83.66 Australian cents from 83.02 cents yesterday after the unemployment rate across the Tasman unexpectedly rose to 4.5% last month, while Australia’s federal government debt crossed the A$1 trillion mark for the first time.

Back in New Zealand, Spark hit a four-month high, climbing 6.4% to $2.15 as it posted the biggest gain on the NZX 50, and was the most heavily traded stock on the day with a volume of 5.3 million shares. The telecommunications company lifted adjusted earnings 23% with a strong result from its core mobile business as revenue beat expectations.

Heartland gained 2.5% to $1.25 after the lender almost doubled underlying profit as it widened its net interest margin. The dual-listed Australian lenders were weaker, with Westpac Banking Corp down 3.1% at $40.25 and ANZ Group falling 3.3% to $43.78.

NZX advanced 2.7% to $1.52 after the stock market operator reported first-half earnings growth in line with expectations, with revenue outpacing analysts’ forecasts. It reaffirmed annual guidance to be in the middle of its forecast range.

SkyCity rose 0.9% to 59.5 cents after the casino operator returned to profit, and said it would review its Adelaide site.

Skellerup climbed 1.4% to $7.30 after the rubber goods maker notched up another record year, with a low level of net debt allowing for 20 cents per share final dividend to be declared.

Outside the benchmark index, Seeka rose 1.8% go $5.19 after the kiwifruit grower navigated a smaller crop and higher input costs to lift first-half earnings 3%, and raised its forecast for annual pre-tax profit.

Reporting by Paul McBeth. Image from Curious News.