Daily Market Insights
Global markets moved lower overnight in another quiet night in terms of news flow. A rise in technology stocks was offset by falls in energy and financials on Wall Street
Closer to home, both the ASX & NZX experienced another muted trading day, with no real catalyst to drive activity. In stock news, Mainfreight (MFT.NZ) announced a record full year profit which we discuss below.
Stock in Focus: Mainfreight (MFT.NZ)
Transport and logistics company Mainfreight reported a 16% gain in full-year profit to $101.5m, surpassing $100 million for the first time. The share price was slightly higher, reflecting the strong share price run experienced by MFT recent times and that market expectations are high for the business. Overall while it was a solid result, in our view the shares are more or less fairly priced and this was reflected in the relatively muted share price response.
Looking at some of the details, earnings growth was led by Australia (which appears to be the highlight of the result) & NZ. Sales climbed to $2.3 billion from $2.28 billion which saw operating earnings overall climb 13% to 197.5m. Mainfreight has increased its dividend by 10.8% to 41 cents a share, with a fully-imputed final payment of 24 cents.
By division, stronger trading in New Zealand, Australia and Europe made up for a disappointing performance from the company's Americas and Asia divisions. In NZ, MFT noted "very much increased" volumes in transport and logistics as the volume of customers rose and record migration and tourist inflows stoked business confidence. Australian sales rose 6.3% and operating earnings rose 24% to A$42 million, which the company said reflected sales growth and better control of costs.
Australia & New Zealand Market Movers
The Australian share market was up slightly on Tuesday (ASX 200 index +0.19%) as bargain hunting across the Bog Bank and gains in the mining sector offset falls in energy and Telco stocks. The Banks have been under pressure as investors assess the fallout from the recently announced Federal government tax on the liabilities of the banks, although yesterday there was an announcement that the first payment date of the $6.2bn tax will be delayed.
In stock news, at its AGM Sydney Airport chairman Trevor Gerber said the company can benefit from information gathered during its analysis of plans for the new Western Sydney Airport, even though it turned down the chance to operate it. The federal government will build the airport after Sydney Airport walked away over concerns the venture was too risky.
The New Zealand market was more or less flat yesterday (NZX 50 index -0.01%) with Orion Health Group dropping on capital raising news while Mainfreight gained after posting a record annual profit. Orion said it will raise $32.9 million in a discounted two-for-nine rights issue to shore up working capital after posting a $34.2 million full-year loss that reflected weaker sales in Europe, the Middle East and Africa. The news saw Orion’s share price plummet -13%. On the flipside bargain hunters bought honey company Comvita, which was the best performer on another relatively quiet trading day.
3 Things Markets Will be Watching this Week
1. Whether market calm persists and if the US market hits new all-time highs.
2. Important monthly US manufacturing and employment data is released at the end of the week.
3. The Reserve Bank of New Zealand releases its financial stability report on Wednesday.
Have a Great Day,
Team