NZX tracks US futures down as Gentrack misses expectations - Market close

Gentrack Group shares fell 3.16% to $11.63 after the utilities software company reported a net profit after tax increase of 34.7% for the six months to March 31 . Photo / NZ Herald

After a solid start to May, New Zealand’s benchmark chased American futures down after credit ratings agency Moody’s stripped the United States of its triple-A rating.

The S&P/NZX 50 fell 1.23% on Monday to 12,629.07 points on volumes amounting to $98 million in value traded.

Senior research analyst at Craigs Investment Partners Mohandeep Singh said the downgrade to AA1 is likely weighing on the market by increasing the likelihood of a “choppy month”.

At 5pm, futures for the US blue-chip index, the S&P 500, were down 1.06% with Nasdaq Composite futures down 1.33%.

Singh said the downgrade should not be overstated given Fitch Ratings and S&P Global Ratings already downgraded the US in 2023 and 2011 respectively.

“It’s not super material,” he said. “It’s more just a reminder that the US financial situation is not that strong.”

Losses

On the NZX mainboard, decliners outnumbered gainers 78 to 56.

Gentrack Group shares fell 3.16% to $11.63 after the software company reported a net profit after tax (npat) increase of 34.7% for the six months to March 31 to $7.2m.

Singh said Gentrack’s full-year guidance on earnings and revenue were below consensus expectations but pointed out the stock had bounced back from an initial 9% drop triggered by the announcement.

“Some of the market has gone ‘It’s timing of contracts related, rather than anything fundamentally broken here’, which is why you’ve seen the stock pay back some of those losses.”

The Warehouse Group shares were down 6.67% to 84 cents on light volumes, edging back towards the historic low of 79 cents reached earlier in May.

Singh highlighted that in August last year, Warehouse shareholders did not support a buyout from Australian private equity firm Adamantem Capital Management at a price range of between $1.50 and $1.70 per share.

Fisher & Paykel Healthcare shares led volumes with over $10m of shares changing hands. The stock lost 3.13% to $35.90, but remains over 10% up over the last 30 days.

Spark confirmed a deal to outsource jobs to its mobile network partner, Nokia, a move first reported by the Herald on Friday. After starting the year at $2.95 and plummeting as low as $1.94 in March, the telco finished the day down 1.13% at $2.185.

Kingfish Limited, a listed investment company with a fund managed by Fisher Funds, rose 0.75% to $1.34 after it reported a total shareholder return of 12.5% before expenses, fees and tax.

Before the storm

Earnings season picks up pace later this week with several companies, including Serko, Tower, Oceania Healthcare and My Food Bag to report later between Tuesday and Friday.

Singh noted the market would have to wait for next week until larger constituents such as Fisher & Paykel Healthcare, Infratil, Mainfreight and Ryman Healthcare disclose.

He also pointed to a flurry of property companies such as Kiwi Property, Argosy Property and Goodman Property which will file results.

“The sector’s discount to net tangible assets (NTA) provides some level of valuation safety net assuming these NTAs do not deteriorate materially from current levels,” he said.

Singh added he did not expect budget announcements to materially affect NZ equities.

“There’ll be a few things at the fringes, but we know it’s not going to be a lolly scramble by any means.”