New Zealand Market Movers
The New Zealand Market (NZX50 Index) was flat again on Wednesday, on a busy day of news flow.
Tourism Holdings rose +5.1% after providing their full year guidance for 2023 financial year, profit for the larger merged business came in at $48m, with a 5-month contribution from Apollo – we viewed this at a solid upgrade and integration going well benefiting from strong demand and reiterate our BUY recommendation.
Sky City Entertainment was up +4.9% as its post-covid recovery commences, in spite of the regulatory overhang. It reintroduced its dividend which was well received by investors.
Flecther Building had a more muted response given its downgrade from earlier in the week, revealing an 18 cents per share interim dividend for investors.
Scales Corporation fell another -5.6% after noting they were concerned with the flooding across its Hawkes Bay orchard. A full assessment will be addressed in the coming days. For now Mr Apple’s packhouses and cool stores remain fully operational.
Australia Market Movers
The Australian market (ASX200 Index, -1.1%) saw its largest single day decline since November.
The major drag was from market heavyweight CBA, despite delivering a solid result which met market expectations. Mgmt suggested margins may have peaked earlier than expected.
Wesfarmers gained +1.3% as Bunnings continues to deliver solid growth, whilst meaningful contributions from Kmart and Office meant the conglomerate delcared a 80 cent per share interim dividend.
US Market Movers
The S&P 500 remained flat at +0.8% a markets digested strong retail sales data. US retail sales for January rose +3% vs. economist’s expectations of ~1.8%. We’re wary of reading too much into the data because of the so-called “January effect”: consumer goods companies tend to hike prices around January, so much of the “increased spend” really is just increased prices — we think it’s better to wait for February’s numbers to get a better read. We read this alongside spending data from Visa and Mastercard: it’s clear the consumer continues to spend, though the mix has shifted from goods to services somewhat.
The Iranian-American billionaire Jahm Najafi is launching a $3.75B bid for Tottenham Hotspur, the UK football club. It’s a sign that sports teams are a hot asset to acquire as high net worth individuals explore ways to diversify their holdings, and it’s a very positive sign for our favourite “acquisition” story, Manchester United, which gained +2.68% today (we recommended buying the stock around ~$22.00, and again at ~$21.00).
Airbnb gained 13.34% as it reported its first ever profit – $1.9B for the year. It’s one of the few former unicorns to achieve profitability, and it’s a positive read-through for our favourite stock in the accommodation sector Booking Holdings, which gained +1.84% today. We reiterate buy for Booking Holdings.
Stock in Focus: Ryman Healthcare (RYM.NZX)
Ryman Healthcare was put in a trading halt yesterday to announce a $902m capital raise, intended to pay down its debt, lowering gearing (LTV) from 45.3% to 33.9%. Shareholders will be offered one share for every 2.81 at $5.00 each, at a 22% discount to the previous trading price. Ryman has historically avoided capital raises, prefer to use debt, but as the company is already quite highly geared mgmt has no choice but to go the capital raising route.
The capital raise is dilutive, and we prefer to avoid the stock, mainly due to its inflated valuation and ever-expanding debt pile. Our preferred retirement village exposures are still Summerset and Oceania.
What Markets will be Watching this Week (UTC +13)
Monday
Contact Energy Earnings
CSL Earnings
Tuesday
Westpac Consumer Confidence Index
CBA Earnings
FMG Earnings
James Hardie Earnings
Wednesday
US and UK Inflation (CPI) Data for January
Wesfarmers Earnings
Treasury Wines Earnings
Fletcher Building Earnings
SkyCity Earnings
Thursday
Telstra Earnings
QBE Insurance Earnings
Friday
US Building Permits Data