New Zealand Market Movers
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%).
Task Group (formerly Plexure) (+16.4%) found buying activity after announcing half-year group revenue of $26.6 million, up 97% on the previous corresponding period, which reflects the merged revenue of Plexure and TASK.
Smartpay (+6.7%) also rallied after delivering its earnings for the six months to September 30. Revenue for the company rose +68% to $35.4 million with Australian transaction revenue doubling.
Australia Market Movers
The Australian market (ASX 200 Index, -0.4%) fell on Monday, with the Materials (-0.9%) sector hit by unrest in China and Energy (-1.7%) hit by Crude Oil dropping to its lowest level all year.
Retail sales in Australia for the month of October fell –0.2% from the previous month, reporting its first monthly decline since December 2021, as consumers act more cautiously.
The Bank of Queensland (-5.6%) sank after the market learned of Chief Executive George Frazis’ resignation.
Europe Market Movers
European markets (Stoxx 600 Index, -0.7%) closed lower on Monday with Oil and Gas (-1.4%) stocks leading sectorial losses.
US Market Movers
US markets (S&P 500 Index –1.5%) failed to advance on Monday as unrest in China and weak oil outlook weigh on global markets. Over the weekend, demonstrations in mainland China broke out in response surging Covid cases and the country’s zero-Covid policy. This has spooked markets that were getting used to the idea that China was on its way to reopening. Company’s relying on Chinese manufacturer have come under pressure with Apple (-3.9%) tumbling on the day.
Further weighing on markets is St. Louis Federal Reserve President’s notes on Monday suggesting that the markets may be underestimating the chance that the central bank stays or becomes more aggressive in its tightening.
Stock In Focus: Kiwi Property Group (KPG.NZX)
Kiwi Property Group shares slipped after delivering their 2023 half year result. Reported net loss came in at -$151.1m, due to incurring a non-cash revaluation loss of its portfolio of $213.3m, which was flagged earlier reflecting higher interest rate environment softening cap rates on investment properties.
Net tangible asset fell from $1.45 down to $1.31, with KPG trading at a large discount to account for further weakening over the near-term which appears likely.
Operating profit before tax rose +4.2% from last year to $65.1m, helped by improved rental performance at Sylvia Park post restrictions, allowing the group to pay a 2.85 cent per share dividend for the half (split over two quarters) and reiterated full year dividends of 5.7 cents per share (implies a ~9% gross dividend – pre-tax).
We remain BUY rated on Kiwi Property Group as one of our preferred REIT’s as it trades at an attractive discount to its NTA, and offers investors an attractive gross dividend of ~8%, which accounts for a –10% cut from current level in light of difficult trading ahead, and believe majority of the downside is priced in.
What Markets will be Watching this Week (UTC +13)
Monday
NZ Kiwi Property Group earnings
Tuesday
NZ Fisher & Paykel Healthcare earnings
EA Economic Sentiment NOV
Wednesday
EA Inflation Rate YoY November
Thursday
US ADP Employment Change November
US JOLTS Job Openings October
US Salesforce earnings
EA Unemployment Rate October
Friday
US Personal Income MoM OCT
Saturday
US Non Farm Payrolls November