Mainfreight edges close to becoming NZX's only $100 stock

Mainfreight shares are on a roll. Photo / Supplied

Shares in global logistics specialist Mainfreight were a whisker off $100 after the company issued an earnings update.

By mid-afternoon the stock was at $99.31 - up $5.31 or 5.6 per cent - having gained nearly $49 or 91 per cent over the last 12 months.

The stock had earlier hit a peak of $99.78.

Mainfreight was already on a firming trend on the back of news that it would enter the influential FTSE mid-cap index on September 17.

In today's update for the first 22 weeks of its financial year, Mainfreight said its profit before tax came to $142.28 million, up 83 per cent, on a 43 per cent lift in revenue to $2.2 billion.

Post the latest New Zealand lockdown, domestic transport trading had seen a decrease in revenue of about 30 per cent, which was less than expected, the company said.

Activity in its warehousing business had been consistent with prior weeks as the arrival of import containers continues to restock customers' inventory.

Mainfreight's air and ocean division had seen ongoing demand for its services, with no effect on trading as a result of lockdown restrictions.

"The move to alert level 3 outside of Auckland/Northland regions will bring increased activity for all three divisions, particularly transport," it said.

Harbour Asset Management portfolio manager Shane Solly said the update was ahead of market expectations.

"Certainly, things like higher freight rates appear to be supporting that," Solly said.

"It's reasonable to ask how long that can be sustained.

"The industry is in a broad sense saying that congestion globally will be with us for 12 to 18 months at least, so that means freight rates are likely to stay higher for longer," he said.

"It is very likely that we will see analysts' forecasts increased for the next 12 months," Solly said.

The stock was also clearly benefiting from the news that it is to be included in the FTSE mid cap index.

"Is it reasonable to expected the company to go through $100? The answer is yes.

"Whether that happens today or not, we will see."

In a research report issued in February, when the stock was at $68, brokers Forsyth Barr asked whether Mainfreight could soon become a $100 stock because of its "high-quality growth story with an enviable track record".

Mainfreight's half year results for the six months to September 30 will be released on November 11.