Pavan Sharma

Technical Analysis: We see BHP shares rise strongly benefiting from multi-year rise in commodity prices, while volatility kicked in post covid as iron ore price surged to above $200/tonne mid last year, to more than halve in a span of 4-months.

BHP has been on a rebound recently, partly on hopes of China eventually reopening as well as added stimulus to their property sector to boost construction activity – all benefactors to iron ore pricing. Commodity prices have also held up well due to supply and demand dynamics, but also as an inflation hedge. The latter likely to ease, and we believe added pressure from a tightening economic activity we are near the end of the current commodity cycle boom.

The New Zealand market (NZX 50 Index, +0.8%) rose on Tuesday, buoyed by a dramatic lift in Fisher & Paykel Heathcare (+10.1%) and Gentrack (+18.3%). See our Stock in Focus section for more on Fisher & Paykel. Gentrack reported revenue of $126.3 million for its 2022 full-year results, up 19.5% on its full year 2021. Aged care provider, Arvida Group (+4.2%) also surged after reporting its half year Net profit after tax of $89.2 million, up 18% from the previous corresponding period. 

Ryman Healthcares slumped 17% since less than two weeks since delivering its 2023 half year result. Cashflow issues arising from a less liquid housing market meant net debt rose +$400m over the half to $3 billion. Net profit after tax fell –31% from last year to $193.9m, after reporting a much lower gain on its investment portfolio.

The New Zealand market (NZX 50 Index, -0.7%) fell even as aged care stocks partially recovered losses from last week on the back of the government announcement concerning pay rises for the sector’s nurses. Leading aged care stocks were Oceania Healthcare (+6.4%), and Arvida Group (+4.4%), and Summerset Group (+2.8%). 

We downgrade EA from BUY to HOLD. The company reported Q2 earnings that missed analyst estimates ($1.25 vs. an expected $1.35) a slight drop in revenue to $1.78B.

Warner Music Group (WMG) reported stellar results for Q4; the stock rallied +14% post-results. The company reported revenues of $1.5B vs. estimates which sat in the low 1.4B range, whilst earnings per share sat at $0.28 vs. the street’s estimates of $0.12. We reiterate our BUY rating.

The New Zealand market (NZX 50 Index, 0.5%) advanced by half a percent on Friday.  EROAD (-1.7%) fell after the release of its half year earnings. The company’s revenue increased from $48.0 million in the previous corresponding period to $85.4 million. The results noted that the company “remains on track for Normalised Revenue of between $154m – $164m” for the full year.   Ryman Healthcare (+7.0%) pared some of its recent losses, and other aged care providers rose, including Summerset (+3.8%), Oceania (+1.3%), Arvida (+0.9%). This morning, the Government has announced its intention to boost aged-care nurses’ pay by $200 million a year in an attempt to close the wage gap with hospital-employed nurses.

The New Zealand market (NZX 50 Index, 0.0%) closed flat on Thursday despite some lacklustre earnings results.   AFT Pharmaceuticals (-9.8%) cratered after reporting its half-year operating profit of $3.5 million, a 36% drop from the previous corresponding period due to “lower licensing income and increased Australasian investment to capitalise on growth opportunities”. At the same time, the company reported a 18.4% jump in revenue. Rakon (-7.0%) fell similarly after reporting its result for the six months to 30 September 2022. Total revenue for the components manufacturer rose 2% to $87.2 million with core business growth and a weak NZ dollar helping offset the decline in unusually high demand that proceeded the post-covid chip shortage.