Hawkish Fed Minutes | Fisher and Paykel Result

26 November 2021

Global markets were quiet overnight as US markets were closed for Thanksgiving holiday. Minutes from the latest US Federal Reserve meeting indicated a more hawkish tone stating Fed members “would not hesitate” to raise interest rates “sooner than participants currently anticipated” in response to inflation.

European Markets (Stoxx 600 index +0.4%) closed higher despite covid headwinds dragging travel and leisure stocks lower, thanks to gains solid gains for technology sector.  

Asian markets were mixed after digesting the Fed’s recent minutes. South Korea’s Kospi slid -0.5% after the Bank of Korea raised interest rates and upgraded its 2022 inflation forecast, while China’s Shanghai Composite shed -0.2% and Hong Kong’s Hang Seng gained +0.2%.

Fisher & Paykel Healthcare (FPH:NZX / FPH:ASX)

Fisher & Paykel Healthcare jumped +4.9% yesterday after delivering their 2022 half year result, as investors anticipated a larger tailing off in demand from last years peak pandemic boost.

FPH managed to deliver revenue down -1% from last year, and profit -2% lower on last year. More or less inline number with the previous year came in thanks to better-than-expected hardware sales and gross margins, while the Delta strain has provided stronger-for-longer demand for Hospital products.

Looking ahead we anticipate a softer second half as hospitalisation rates start to decline, and believe the stock is fairly priced based on a near-term view.  We continue to view FPH as a quality company and that the stock is not exactly ‘cheap’ but with a strong medium to long-term growth potential we still rate it as a BUY for patient investors that can navigate through some volatility. 

Australia & New Zealand Market Movers

The Australian market was up yesterday (ASX 200 index +0.1%). 

The highlight of the day was EML Payments surging +31% after winning a favourable regulatory Ireland removing the broad based reductions in limit controls on its products, that had weighed down on the stock.

Most of the market was subdued, with Materials getting a boost from another positive day for the price of iron ore followed by real estate sector.

Kogan.com fell -4.3% as it suffers with industrywide delivery issues, and seeks to perform the deliveries in-house. 

The New Zealand market was up on Thursday (NZX 50 index +0.2%) helped by a strong result from market heavy weigh Fisher and Paykel Healthcare.

Pacific Edge also released their half year result which wasn’t as well received falling -5.8%, reporting a larger loss, with revenue growth of ‘only’ +66% that was softer than expected – with management continuing to cite covid related restrictions limiting growth.  There were also higher costs associated with investment in sales team and general support, that is needed to support PEB's medium term ambitions.

Gentrack rose +11.7% after hitting its earnings guidance for the 2021 financial year.  

Stride property managed to deliver a sound full year result and entered into a trading halt as it looks to raise +120m of fresh capital to be used to pay down debt. 

3 Things Markets will be Watching this Week

  1. Key events this week in Japan and the US who will reportedly make a joint announcement on the release of oil reserves as soon as this week.
  2. Locally, RBNZ will may an OCR review on Wednesday and latest retail sales print in Australia.
  3. Earnings release from Kiwi Property Group, Metro Performance Glass, Webjet and Fisher & Paykel Healthcare.
Global markets were quiet overnight as US markets were closed for Thanksgiving holiday.

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