NZX 50 inches lower, avoids Asia’s stumble on Samsung earnings

New Zealand’s S&P/NZX 50 index dodged a cool wind across most of Asia, with South Korea’s Kospi tumbling 8% as Samsung Electronics’ surging profit failed to impress hyped expectations.

The local index was fractionally weaker as power companies weighed on the bourse, while Infratil gave back some of Monday’s gains on the uplift in value for its CDC data centre business.

The a2 Milk Co dipped after saying earnings and revenue were largely in line with its downgraded guidance in April, while Sky Network Television rallied on securing the rights to the NRL rugby league competition for another seven years.

And retailers were broadly stronger after Westpac NZ’s internal card data showed household spending perked up in June on cheaper fuel prices.

Flatlining

The NZX 50 decreased 0.3 of a point to 13,762.79, with 22 stocks declining, 17 gaining and 11 unchanged. The S&P/NZX 20 index futures contract for September dipped 0.1% to 7,739, with 42 lots traded for a value of $325,000, while the NZX 20 edged down 0.1% to 7,792.26.

Turnover across the main board was $126.3 million, of which Fisher & Paykel Healthcare accounted for $17.7 million as the medical device maker rose 1.3% to $40.88.

The local market outperformed most of Asia after Samsung’s 19-fold surge in quarterly profit didn’t match the ebullience of investors. South Korea’s Kospi sank, with Japan’s Nikkei 225 down 2.1%, Australia’s S&P/ASX 200 index down 0.4% and Hong Kong’s Hang Seng slipping 0.5%.

Infratil slipped 0.2% to $15.39 after this week’s upgrade to the value of its CDC data centre business. Forsyth Barr analysts retained their ‘outperform’ rating on the stock and target price of $18.90, noting greater near-term data leasing capacity than they’d anticipated.

“At current construction costs and rental rates, development gains are meaningful,” Forsyth Barr analyst Ben Crozier said in a note. “While likely to moderate as supply increases, we still believe there is a multi-year period of excess development gains to be earned.”

Power companies were the biggest weight on the local index, with Contact Energy falling 1.7% to $9.19, Meridian Energy down 0.5% at $5.67 and Mercury NZ decreasing 0.4% to $6.87. Genesis Energy was unchanged at $2.60.

The a2 Milk Co dropped 1.7% to $9.19 after the milk marketing firm said its supply chain issues were largely addressed, and that revenue and earnings were slightly ahead of its April guidance. Supplier Synlait Milk was unchanged at 39 cents, while Fonterra Shareholders’ Fund units were also unchanged at $7.19.

Retiring outlooks

Summerset Group Holdings dipped 0.7% to $8.79 after the retirement village operator posted an 11% lift in second-quarter sales of occupation rights, with flat sales of new units and an increase in resales. The company trimmed its forecast build rate for the year by 50 homes to between 600 and 650 in New Zealand, while sticking to a forecast of 100-to-150 new homes built in Australia.

Oceania Healthcare dropped 2.7% to 73 cents, the sharpest decline on the NZX 50 for the day.

Sky Network Television led the benchmark higher as it gained 2.4% to $3.40 after the pay-TV operator won a seven-year extension to its exclusive broadcast rights to Australia’s NRL rugby league competition, which needs shareholder approval given it’s valued at more than half Sky’s $443.8 million market capitalisation. That implies an annual cost of at least $31.7 million, with reports that the figure was A$50 million, or $60.9 million.

Retailers were generally stronger after Westpac’s internal card transaction figures showed its customers lifted their spending 0.4% in June, with travel marking the biggest increase in the month.

Satish Ranchhod, a senior economist at Westpac NZ, said the drop in fuel prices gave households more to spend, but that the broader trend since February was still tracking sideways.

Briscoe Group rose 2.3% to $4.85 and Hallenstein Glasson Holdings gained 0.6% to $10, while KMD Brands was unchanged at $1.75. Warehouse Group increased 2.7% to 58 cents and Michael Hill International dropped 3.6% to 40.5 cents.

Outside the benchmark index, AFT Pharmaceuticals jumped 4.9% to $3.89 after the Maxigesic maker reaffirmed its $300 million revenue target and for the March 2027 year, with ongoing growth across the business since the start of the period.

PaySauce climbed 14% to 28 cents after lifting annualised recurring revenue 8% to $9.5 million in June from a year earlier, with processing fee revenue up 11% from the prior period.

Bremworth was unchanged at 75 cents after the carpetmaker’s board said it would stop pursuing a sale of its business to rival Godfrey Hirst’s parent after shareholders owning 38% of the firm said they opposed the deal, which last week won Commerce Commission approval. The carpetmaker didn’t generate positive cashflow or a profit in the second half of its June financial year.

The kiwi dollar traded at 56.95 US cents at 5pm in Auckland from 56.89 cents yesterday.

Reporting by Paul McBeth. Image from Curious News.