MARKET WRAP: NZ shares fall on mixed day trading

Harbour Asset Management analyst Shane Solly says the New Zealand equity market is "taking a breather".

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New Zealand shares fell today in anticipation of several key data points throughout the week.

The S&P NZX 50 index was down 22.39 points to 9061.65, on turnover of $99 million.

Harbour Asset Management analyst Shane Solly says New Zealand's equity market, which was one of the best-performing markets in the world over the June quarter (rising 8.8%), seems to be “taking a breather”.

On the market today, Pacific Edge shares gained 3.77% to 27c.

“There’s a bit of anticipation that the business is working towards closing deals with Kaiser Permante and Centres for Medicare & Medicaid services.

“This is really crucial in terms of the company being able to book revenue [but] it’s possibly taken a bit longer than many people expected,” Mr Solly says.

TIL Logistics Group shares dropped 2.94% to $1.65 after it announced it expects to miss the earnings forecast in its listing document for the year ended June. However, it has also successfully renegotiated a key contract with Z Energy, its largest customer.

Air New Zealand had a minor ascent after recent turbulence related to oil price weakness. Its shares gained 1.26% to $3.20.

“It’s been under the cosh a bit from the oil prices running up, [but] the business continues to do very well,” Mr Solly says.

Orion Health shares rose 2.73% to $1.13.

Last week the company today said it will sell a majority stake in its core Rhapsody business and a quarter stake in its Population Health division to UK private equity firm HgCapital. Mr Solly says Orion investors have been waiting patiently for improvement in the stock.

Friday’s boost for Sky TV appears to be short-lived after its shares fell 5.07% to $2.62.

“The company is still facing some structural problems. There are some great assets under it all and some great content, we just need to see it continue to extract the value out of that,” Mr Solly says.

Tourism Holdings shares fell 2.54% to $6.51. Mr Solly says the stock might have got ahead of its earnings growth.

Kathmandu shares dipped 1.01% to $2.93. Shares soared recently after the company said it expects net profit after tax to be in the range of $48-52m (up from $38m last year), for the year ended July 31, 2018. Mr Solly says the share price is just “plateauing” after its recent climb.

Looking ahead

Tomorrow New Zealand’s electronic card transactions will be revealed and Germany’s ZEW survey should reveal what’s happening in the European economy.

Looking further ahead, expectations are running high for the company reporting season in the US which is about to get underway.

Heavyweights JP Morgan, Citigroup and Wells Fargo are all due to report June quarter earnings on Friday.

Analysts are expecting the S&P 500 Index companies will report a collective revenue growth of 8.8% and earnings growth of 20%, which will make it the second consecutive quarterly earnings growth at such a pace.

The latest monthly housing report from the Real Estate Institute of New Zealand (REINZ) is also likely to be released late in the week.

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2 Comments & Questions

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Mr Solly either knows lots about PEB or nothing

NZX March 2018 -
In the period from the last disclosure, as part of normal on-market trading activity under discretionary investment mandates, Harbour Asset Management Limited purchased 4,584,472 PEB shares for a gross consideration of $1,805,485.74 and sold 145,000 PEB shares for total consideration of $55,825. As a result of these transactions, Harbour Asset Management Limited has, at the date of this notice, a relevant interest in 72,275,530 (15.499%) PEB shares.

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Thl share price can’t be ahead of the growth. Pe is only 15 and growth rate is over 20%.

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