“Arguably, it’s at a low point for the company because they’ve had significant cost pressures and sales have been difficult across all of their markets, of which the largest is still New Zealand.”
Scales and Synlait
Elsewhere on the bourse, Scales Corporation rose 6.36% to $5.69 after it said it had agreed to increase its shareholding in its Australian joint ventures.
Goodson said the update was well-received and that the price looks “quite acceptable” and, given it is debt-funded, would lead to reasonable earnings upgrades.
Synlait shares were down 2.47% to 79 cents a day after the milk manufacturer announced it would offload its North Island assets to Abbott Laboratories for approximately $307m.
In an investor note, Forsyth Barr analyst Matt Montgomerie said Abbott had secured a “brand spanking new plant” for below asset value, which required limited expenditure.
He said it was a solid exit for Synlait, allowing it to focus on its Canterbury plant.
Gentailers and property
The Commerce Commission issued a draft determination proposing to authorise energy companies Genesis Energy, Contact Energy, Meridian Energy and Mercury NZ in a series of agreements referred to as the Strategic Energy Reserve Huntly Firming Option (HFO).
The HFO deal would see them share the costs and risks of maintaining Huntly’s Rankine 2 unit and gain rights to its generation at prices linked to its coal-based costs.
The determination comes ahead of the Cabinet’s package of energy market reforms, which is expected to be announced on Wednesday.
Mercury rose 1.67% to $6.68 and Genesis lifted 0.86% to $2.35. Travelling in the other direction was Meridian, which dipped 1.24% to $5.57.
Goodson also highlighted the performance of property stocks on the exchange, which he said had been enjoying a “phenomenal run”.
S&P’s NZX All Real Estate index is up over 12% in the three months to the end of September, with Investore Property leading the pack on Tuesday, gaining 4.20% to $1.24.
“Part of that is clearly the commercial property market is bottoming out,” Goodson said, adding that the government’s decision to change earthquake strengthening regulations would help.
“For example, Kiwi Property has spent a fortune in recent years on earthquake strengthening. Strike [Property] has a real issue, too.”
