Gentrack helps put New Zealand shares on positive path - Market close

Gentrack says it's well placed to capture the opportunities created by changes to the utilities and airport sectors.

A surging Gentrack gave the New Zealand sharemarket and the company reporting season a positive tone with strong revenue growth and an earnings upgrade.

After reaching a morning low of 11,661, the S&P/NZX 50 Index closed at 11,720.8, up 35.92 points or 0.31 per cent – despite two further earnings downgrades, this time from Michael Hill and Comvita.

There were 74 gainers and 64 decliners on the main board with 28.5 million shares worth $97.55m changing hands.

Mark Lister, investment director with Craigs Investment Partners, said the market has had a string of “not-so-good announcements, and it was nice to see one go the other way with Gentrack’s upgrade”.

“With a bit of luck, it’s a reminder to investors that among all the results over the next two weeks, there will be some good news from companies which are performing like Gentrack.

“The market is still a little subdued and all eyes will be on the Reserve Bank meeting this week before we roll into more results.”

Lister said the Reserve Bank is likely to keep the official cash rate unchanged (at 5.5 per cent) but its forecasts and commentary will be crucial.

“Everyone is hopeful they will see moderation in inflation and the Reserve Bank can take pressure off businesses and households which are struggling under the weight of a tough economy.”

Utilities software firm Gentrack rose $1.48 or 18.59 per cent to an all-time high of $9.44 after reporting a 21 per cent increase in revenue to $102.02m and net profit of $5.33m, down 32.32 per cent, for the six months ending March.

Gentrack raised its full-year revenue guidance 18 per cent to $200m, from $170m, and operating earnings (ebitda) to $23.5m-$26.5m, from $20.5m-$25.5m, because of customer wins in Britain and the Middle East, and customer upgrades.

Manuka honey producer Comvita was down 2c to $1.70 after downgrading its earnings guidance for the third time and allowing a suitor to undertake due diligence. Comvita said the takeover offer from a credible offshore party represented a significant premium to the current share price.

Comvita revised full-year revenue to $211m-$218m, from $225m-$235m, and operating earnings (ebitda) to $23m-$28m, from $30m-$35m because of “prolonged weakness of consumer demand in the China market”. The company said the 2025 ebitda target of $50m was now unachievable.

Retail jeweller Michael Hill International fell 11c or 16.67 per cent to 55c after telling the market that expected second-half trading momentum had not materialised and margins were still under pressure.

New Zealand sales for the 45 weeks ending May 12 declined 11.1 per cent compared with the previous corresponding period; Canada was down 0.4 per cent; and Australia increased 12.3 per cent driven by the Brevilles brand. Overall group sales were up 4.7 per cent but the Michael Hill core brand was still negative.

Infratil gained 35c or 3.21 per cent to a new high of $11.25 on the eve of reporting; Fletcher Building increased 8c or 2.75 per cent to $2.99; Ryman Healthcare added 8c or 2.04 per cent to $4; SkyCity rose 8c or 4.85 per cent to $1.73; and The Warehouse recovered 32c or 2.5 per cent to $1.23.

Manawa Energy gained 9c or 2.07 per cent to $4.44 after reporting steady revenue of $473.11m and net profit of $23.65 for the 12 months ending March. It is paying a final dividend of 11c a share on June 14.

Generation volume was down 1 per cent to 1901GWh, and Manawa has more than 1200MW development options in solar and wind. Operating earnings (ebitdaf) were up 6 per cent to $145m and 2025 financial year guidance was $130m-$150m, with capital expenditure of $40m-$45m.

Meridian was up 10c to $6.20; Genesis Energy gained 4c or 1.79 per cent to $2.27; Colonial Motor Co added 20c or 2.5 per cent to $8.20; Scales Corp increased 7c or 2.12 per cent to $3.37; and NZME was up 2 or 2.47 per cent to 83c.

In the property sector, Stride rose 11c or 9.32 per cent to $1.29; Property for Industry was up 4c or 1.9 per cent to $2.14; and Investore was down 2c or 1.87 per cent to $1.05.

Ebos Group was down 32c to $35.17; Auckland International Airport decreased 15c or 1.97 per cent to $7.47; Mainfreight declined $2.10 or 3.04 per cent to $67.90; and Hallenstein Glasson eased 10c or 1.82 per cent to $5.40.

Carbon Fund fell 11c 7.43 per cent to $1.37; Arvida Group shed 3c or 3.03 per cent to 96c; Millennium & Copthorne Hotels NZ declined 8c or 4.19 per cent to $1.83; and Third Age Health was down 10c or 6.71 per cent to $1.39.