Z Energy revenues plummeted during lockdown but the company's financial result satisfied the market. Photo / Warren Buckland
Keeping you up to date with the latest market moves, in association with Investment firm Jarden
New Zealand: Aged-care operator Oceania Healthcare has released its full year result. See the Herald's coverage of the result here.
Australia: NAB Business Confidence results are released today for the second quarter of 2020. Given this is the period most affected by lockdown, results will be of key interest.
International: The American initial and continuing jobless claims are out tomorrow, which will be an important window into the effects of the additional lockdown procedures throughout late June.
Tesla and Google still to report in aftermarkets today. Tomorrow Twitter, AT&T, Intel, Citrix, and Blackstone will report earnings.
NZX Market Wrap-Up
The NZX 50 ended down slightly despite solid performances from Z Energy and the healthcare sector, with declines from Fisher & Paykel Healthcare, A2 Milk and the gentailer sector dragging the index down.
Retirement village stocks Oceania Healthcare, Summerset and Ryman Healthcare continued their momentum, and many stocks are in the sector now back to pre-Covid price levels.
Sky TV was the most traded stock of the day, ending flat, and Z Energy had heightened trading activity in its shares after its positive first quarter result.
Meridian posted a mixed monthly update for June, which highlighted increased sales in all segments compared to the previous year, albeit with a muted generation outlook. On the electricity sales side, corporate sales were up 26.3 per cent, agriculture +19.4 per cent, large business +18.8 per cent, residential +6 per cent and SME +4.3 per cent.
However, on the generation side, national hydro storage is at 75 per cent of historical average, and inflows for June were at 78 per cent of historical averages – suggesting revenues from wholesale sales of electricity may be affected.
Z Energy's first quarter positive
Z Energy rose 5.1 per cent yesterday after releasing first quarter results for their 2021 financial year which, although poor compared to last year, were above market expectations. The report covered Z's performance between March 31 and June 30, encompassing most of the alert level 4 lockdown.
Total revenue was $594 million, down 53 per cent from last year's $1257m. This was primarily because lockdown reduced fuel sales by 39 per cent. As expected, jet fuel was hit the hardest: volumes were 53 per cent lower than last year. Volumes in the less-impacted diesel sector dropped by 19.5 per cent, and petrol volumes were down 40.8 per cent. Cost-saving procedures meant Z's statutory loss for the quarter was limited to $49m.
Z is looking to further cut expenses, with a recurring $48m to be cut from structural operating costs, and a one-off $26m to be cut from cost of goods sold and operating expenditure.
Refining New Zealand update
Refinery and Refinery to Auckland pipelines were at 55 per cent and 60 per cent of pre-Covid capacity because of the impact of travel restrictions on demand for fuel. By the end of June, gasoline and diesel had recovered to 95 per cent and 100 per cent of pre-Covid demand. Jet fuel demand remained low, at 35 per cent of previous levels, as expected with international domestic flights still suspended indefinitely.
Gross refining margins were improved at US$4.59 a barrel, which is historically high, and total revenues from processing were NZ$23.3 million. One note that may be pleasing to analysts is that Refining New Zealand's net debt remained flat at NZ$250 million, which suggests the company has been successfully operating on a cash neutral basis as proposed in earlier announcements.
International Markets
The Shanghai index rose 0.33 per cent with government scepticism for the bull market dampening spirits.
At the time of writing the Dow Jones was up 0.2 per cent, the S&P500 was up 0.12 per cent and the Nasdaq was down 0.27 per cent, as all markets move between the green and red.
Trade tension continues between China and America, as the US Government orders the closure of the Chinese Consulate in Houston.
Covid-19 is also weighing on citizens' minds as total cases now surge past 15 million, with deaths over 620,000.
Pfizer and BioNtech signed a deal for Covid-19 vaccines with the American Government, worth close to US$2 billion. The deal is set at US$19.50 per dose, which may set a ceiling price for other manufacturers unless new vaccines are dramatically better with fewer side effects.
The American existing home sales data showed sales increased 21 per cent in June compared to May. This signalled the largest month-on-month growth since stats began. However, sales are still down 12 per cent on a year-on-year basis. With mortgage rates near record lows, demand is soaring with a lack of supply, causing prices to also rise during the period.
At the time of writing WTI Oil was down slightly by 0.1% to US$41.87 a barrel. Gold was up near record highs for the year at US$1865 per ounce. The US 10-year treasury yield was down again by 3 basis points to 0.597.
ASX Market Wrap
The S&P/ASX200 fell 81.2 points yesterday to 6075.1 points after tumbling from the highs of Tuesday as Victoria reported a record number of 484 new cases.
All sectors fell, with the exception of Energy, trading relatively strongly and gaining 0.6 per cent. Health care and technology battled on the day to close down 3.2 and 2.4 per cent respectively.
A number of blue-chip stocks declined yesterday as CSL dipped 3.6 per cent to A$282.72, BHP Group slid 3.4 per cent to A$37.50 and National Australia Bank had the greatest fall of the banks stumbling 0.8 per cent to A$18.11.
Healthcare companies Mesoblast and Pro Medicus were the worst performers of the ASX200 index, falling more than 6 per cent to A$3.45 and A$24.49, respectively.
After strong movements in crude oil and gold overnight Tuesday, miners and oil and gas companies performed favourably on Wednesday.
Resolute Mining was the best performer on the index rising 12.9 per cent to A$1.40. Beach Energy also rose 4.7 per cent off the back of a quarterly earnings update.
Though Beach's 2020 financial year ebitda is now set to be marginally lower than guidance, consensus from analysts indicate the market had already priced this in. Large-cap miner, Newcrest Mining capitalized on the strong gold price as it rose 1.3 per cent to A$34.13.
Other Australian news:
Consumer spending in June continued to build on May's recovery, growing 2.4 per cent as the Australian Bureau of Statistics released preliminary figures. The data indicated some early evidence of stockpiling food in Victoria as levels in supermarkets were elevated. However, spending in general remains below June 2019 levels.
Transportation and Industrial group Downer EDI successfully complete their A$339mn equity raise, while audio technology group Audinate look to raise $40mn through both an institutional placement of A$28 million and a share purchase plan of A$12 million
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'The inclination is not to do too much,' Forsyth Barr analyst Peter Sigley said.