SkyCity halts trading on capital raising rumours; NZX50 dips

SkyCity Entertainment Group entered a trading halt late in the day after reports emerged across the Tasman the casino operator is considering raising A$200 million to shore up its balance sheet.

New Zealand’s S&P/NZX 50 index joined Australian shares lower as CSL slumped 16% after signalling plans to cut 15% of its global workforce and spin out its vaccine unit into a separately listed company.

Meanwhile, The a2 Milk Co extended its rally after its upbeat result on Monday, which included the prospect of a special dividend once it wraps up its manufacturing rejig, and Synlait Milk gained after saying it’s in talks to sell its Pokeno site.

And Mercury NZ rose after its earnings beat analysts’ expectations, while other power companies were mixed in the face of tougher regulation.

Cold snap

The NZX50 snapped a four-day rally, falling 41.96 points, or 0.3%, to 12,928.68, with 24 stocks declining, 15 gaining and 11 unchanged. Turnover across the main board was $154.5 million.

The local bourse fell in tandem with Australia’s S&P/ASX 200 index, which was down 0.8% in late trading as health heavyweight CSL slumped 16% after announcing plans to lay off 3,000 people in an effort to strip A$550 million of annual costs from the business. The company will also spin out its CSL Seqiris vaccines unit as a separately listed firm.

The kiwi dollar traded at 59.26 US cents at 5pm in Auckland from 59.39 cents yesterday, while the yield on New Zealand 10-year government bonds climbed 5 basis points to 4.51%. New Zealand’s Reserve Bank will review monetary policy on Wednesday, and is expected to cut the official cash rate a quarter-point to 3%.

SkyCity Entertainment Group fell 1% to a $1 before seeking a trading halt after Australian media reports pre-empted a planned capital raising to be announced with its annual result on Thursday, which the casino operator said would be in line with earlier guidance. The Australian newspaper’s DataRoom column reported SkyCity could seek as much as A$200 million.

The company said it expects to seek another trading halt if it goes ahead with a transaction to complete an institutional component.

“SkyCity's international convention centre is about to get off the ground and now’s the time to get rid of any deadwood and start afresh,” said Jeremy Sullivan, an investment adviser at Hamilton Hindin Greene.

Among heavyweights weighing on the index, Fisher & Paykel Healthcare fell 1.3% to $36.95 and Auckland International Airport declined 0.7% to $7.615.

Power struggle

Meridian Energy fell 1.5% to $5.525, with power companies mixed after the Electricity Authority said it will impose mandatory non-discrimination obligations on the four large generator-retailers, and threatened regulation of wholesale hedging products if trading volumes don’t grow.

Contact Energy slipped 0.8% to $8.98 while Genesis Energy rose 0.8% to $2.45.

Mercury NZ advanced 1.6% to $6.495 after its 10% decline in earnings to $786 million was smaller than expected. The gentailer forecast earnings of $1 billion in the 2026 year.

KMD Brands led the NZX50 lower, falling 3.9% to 24.5 cents, while Hallenstein Glasson Holdings slipped 1.8% to $8.10 and Briscoe Group decreased 0.4% to $5.50.

Among companies reporting on Wednesday, Fletcher Building declined 2.2% to $3.07 and Spark New Zealand fell 2% to $2.48 on a volume of 2.1 million, the most for the day.

The a2Milk Co posted the biggest gain on the benchmark index, rising 4.1% to $9.32, extending its rally after yesterday’s result. The infant formula maker is rejigging its manufacturing base, selling Mataura Valley Milk and buying Yashili New Zealand, after which it said there’s scope for a special dividend.

Synlait Milk jumped 7% to 61 cents after saying it’s in talks to sell its Pokeno factory in the North Island.

Reporting by Paul McBeth. Image from Curious News.