Harbour Asset Management portfolio manager and research analyst Shane Solly says a key area he'll be focusing on during reporting season is how management teams have been managing cost structures and capital investment.
"Earnings margins can be suppressed by over-enthusiastic investment or poor control of costs," Solly says. "So far through the cycle New Zealand companies have generally managed their balance sheets well so I'll also be watching to make sure overall debt and interest cover levels remain reasonable."
MARKETING FAIL
Analysts at UBS don't rate the copycat marketing campaign being conducted by brewing and food giant Lion that aims to scupper NZX-listed A2 milk's Australian growth.
Lion recently relaunched its Pura milk brand in Australia with a label that states: "Naturally contains A2 protein."
A2 sources its milk from cows chosen to produce the A2 beta-casein protein, which is claimed to provide health benefits over the more common A1 variety.
Its success across the Tasman - its market share grew from 0.9 per cent in 2010 financial year to 2.8 per cent in the first half of the 2014 year, according to UBS - seems to be of great concern to its competitors.
In addition to Lion's efforts, Italian multinational Parmalat, which owns Australia's Pauls milk brand, engaged high-powered PR agency Crosby Textor in an effort to discredit A2's science this year.
In a note UBS analysts Craig Stafford and Jordan Rogers argue that consumers with a perceived intolerance to A1 purchase A2's products because they are completely free of A1, not a mix of the two proteins.
"While the statements on Lion Dairy's milk bottles appear factually correct, the products are not the same as A2 milk and we believe it is purely a competitive response to the A2 milk brand's rapid market share increase in Australia ... We do not expect A2 milk's market share to fall based on the changed bottles," they say.
However, the UBS analysts warn that the first patent protecting A2's product expires in May 2016 and after rival herds are formed and technical issues overcome, the company is likely to face "genuine product competition".
UBS has a "buy" rating on A2 and an 87c target price on the stock, which closed down 1c yesterday at 65c.
NEW HORIZONS
First NZ Capital's long-serving investment banking head, Rob Hamilton, is leaving the brokerage to become casino and hotel operator SkyCity's chief financial officer.
SkyCity's chief financial officer, Rob Hamilton
Hamilton, who has been with First NZ and its earlier incarnations for more than 20 years, says it's time for a new challenge.
"I've had a wonderful time in investment banking and achieved everything and more than I could have hoped to," he says. "I'll miss the people and the team [at First NZ]. I feel very fortunate to have worked with some wonderful people both inside and outside the firm."
He will fill the vacancy left by former SkyCity CFO James Burrell, who had been seen as a potential successor to chief executive Nigel Morrison but resigned suddenly for family reasons in May.
Hamilton, who starts in his new role in October, says he isn't eyeing the top job at SkyCity.
"The CFO role is a new one for me and my challenge is to do as good a job as I can for the numerous stakeholders in SkyCity."
SOLID DEBUT
Cinema software developer Vista Group's newly listed stock has had a successful first week of trading on the NZX.
Shares in the Auckland-based company, which debuted on Monday, closed at $2.60 last night, a 10.6 per cent premium to the $2.35 offer price.
After lacklustre early performances from a number of recent IPOs it's been good to see Vista get off to a solid start.
Meanwhile, shares in mobile payments firm Pushpay closed up 48c at $1.48 yesterday after the company carried out a compliance listing - which did not raise any cash from the general public - on the NZAX alternative market.
Eroad, which develops technology used by transport firms for managing and paying road user charges and tracking fleets, will list on the NZX main board this morning. Another NZAX compliance listing, mobile technology developer Lateral Corporation, is scheduled for Monday.
A pause in the IPO activity is expected until after the dust settles following next month's general election.
MORE DELAYS?
NZX boss Tim Bennett says the launch of the exchange's long-awaited new market - targeted at fast-growing firms in the $10 million to $100 million market capitalisation range - could be delayed until early 2015 if the geopolitical environment continues to worsen this year.
Announcing its half-year result on Monday, the Wellington-based exchange operator said it expected the new market to be up and running by the fourth quarter of 2014, subject to regulatory approval of the looser set of rules under which it will operate.
But Bennett says the launch could be delayed if market conditions take a turn for the worse.
"From our perspective we need to make sure we have some companies we can list [on the new market]," he says, adding there are at least two firms that could potentially float on the new board when it launches. "With those smaller companies we just need to make sure that we're not launching a market at a time when there's political or global uncertainty."
Given the ongoing conflicts in the Middle East and Ukraine it's hard to imagine the geopolitical environment improving any time soon. But Bennett is still optimistic.
"I would hope [the launch] will happen this year," he says. "We've got a good deal of interest from a broad range of companies for that market."
The new market, which will eventually replace the NZAX, was initially expected to go live in the middle of this year.
