Serko leads NZX50 in broad rally; Vista falls as Potentia exits

New Zealand’s S&P/NZX 50 index was back in positive territory with gains from blue-chip stocks Fisher & Paykel Healthcare, Mainfreight and Auckland International Airport offsetting declines among the clutch of companies such as Meridian Energy shedding rights to their dividends.

Local tech companies were mixed after the strong lead from Wall Street, where Alphabet got a reprieve in its Chrome antitrust case. Travel software firm Serko led the NZX50 higher, while Gentrack posted the day’s biggest decline.

Meanwhile, Vista Group International waved goodbye to one-time activist shareholder Potentia Capital, which notched up a solid gain from its 15-month holding.

And Statistics New Zealand figures showed construction activity shrank in the June quarter, with a steeper decline in house building that in the lumpier commercial work.

Turnaround

The NZX 50 rose 58.39 points, or 0.5%, to 13,133.2, with 28 stocks gaining, 17 declining and five unchanged. Turnover across the main board was $264.9 million, of which Vista accounted for $140 million after Potentia Capital sold its 19% stake in the cinema analytics firm.

Potentia hired Jarden to move its stake, selling at $3 a share having bought into the software firm at $2.10 in May last year. The Australian investment firm had sought to get board representation, but was stymied in its attempt and called off a special meeting last year. The shares closed today at $3.03, above Potentia’s sale price and down 4.1% on the day. With a volume of 46.8 million, Vista was easily the most heavily traded stock on the day.

“We’re hands-on investors who prefer to engage in detail with management teams on developing and executing strategy,” Potentia partner Amit Chand said in a statement. “Given the strong financial performance since our initial investment, we determined that the best course of action was to realise a strong return, and look to invest in other great, local software businesses.”

Serko led the local market higher, climbing 6.7% to $2.70 and was one of the few New Zealand tech companies to follow Wall Street’s lead when the Nasdaq rallied on a softer antitrust punishment meted out to Google-parent Alphabet than some in the market had feared.

Meanwhile, Gentrack posted the biggest decline on the day, falling 4.5% to $9.58.

Tech firms fared better across the Tasman, with Xero up 4.6% in late trading, while WiseTech gained 0.6% and Block increased 1.4%.

New Zealand’s benchmark index was buoyed by heavyweights as Mainfreight rose 1.6% to $63.88, Auckland airport increased 0.8% to $7.575 and F&P Healthcare gained 0.8% to $37.13.

Those blue-chip gainers helped offset some of the weakness coming from companies shedding rights to dividends, with Meridian the biggest drag on the index as it declined 3.1%, or 18 cents, to $5.72 after shedding rights to its 14.85 cents per share distribution.

The dividend right

Sky Network Television slipped 2.2%, or 7 cents, to $3.13 after shedding rights to its 13.5 cent dividend, and Ebos Group declined 2%, or 65 cents, to $31.75 having shed rights to its 61.5 cent dividend. Kiwi Property Group decreased 0.5%, or 0.5 cents, to $1.04 as it shed rights to a 1.4 cent dividend, while Precinct Properties NZ was unchanged at $1.295 having shed rights to a 1.69 cent dividend and Vector rose 0.7% to $1.68 have shed rights to its 13 cent dividend.

Stats NZ figures showed the volume of building work put in place shrank 1.8% in the June quarter, with residential activity down 2.9% and the more volatile non-residential work falling 0.4%.

Wesley Tanuvasa, an economist at ASB Bank, said the contraction wasn’t as severe as he’d anticipated, although it was worse than the market expected, with large falls coming from the interest rate sensitive residential sector.

“The sector is retracing from the stimulus-driven highs of 2021/22,” Tanuvasa said in a note. “However, the sector has taken longer than assumed to stabilise in the context of 250 basis points of OCR (official cash rate) cuts being delivered thus far, particularly given the magnitude of interest rates cuts, and it is hard to ignore the human cost that a weak construction pipeline has on long-term prosperity.”

The kiwi dollar traded at 58.67 US cents at 5pm in Auckland from 58.61 cents yesterday, while the yield on New Zealand’s 10-year government bond fell 5 basis points to 4.44%.

Fletcher Building increased 0.3% to $3.32.

KMD Brands was unchanged at 25 cents after telling investors it’s aiming to annual cut costs by $25 million, with chair David Kirk saying the board believes the retailer remains materially undervalued.

Reporting by Paul McBeth. Image from Curious News.