Skellerup rallies on robust earnings as market revels on lower rates - Market close

Rubber goods maker Skellerup climbed 4.2% to $4.67. Photo / NZME

New Zealand shares extended their gains as investors continued to enjoy the prospect of lower interest rates reviving a moribund economy, with Skellerup rallying on solid earnings in a tough environment.

The S&P/NZX 50 Index rose 138.04 points, or 1.1%, to 12,710.57. Across the main board, 94 stocks gained, 46 fell and 39 were unchanged. Turnover was $122.4 million, with 11 companies trading on volumes of more than a million.

Investors remained upbeat after Wednesday’s earlier-than-expected rate cut by the Reserve Bank, stoking demand for companies held for their reliable dividends and those set to benefit from increased activity. Landlord Stride Property led the benchmark index higher, rising 4.5% to $1.40 on a volume of 1.4 million shares, while Fletcher Building extended its rally, gaining 4.2% to $3.46 on a volume of 1.4 million.

“The market is still feeling the love from the RBNZ decision,” said Greg Smith, head of retail at Devon Funds Management. “There’s a tip of the hat for (governor) Adrian Orr for recognising that the economy has deteriorated since May.”

There’s potentially a further 50 basis points of cuts, lowering the official cash rate to 4.75%, by the end of the year, which helps domestic-focused areas of the economy, he said.

Spark NZ rose 1.1% to $4.45 on a volume of 2.3 million, Kiwi Property Group gained 2.1% to 95.5c with 2 million shares traded and Precinct Properties NZ advanced 2.4% to $1.30 with 1 million shares changing hands.

Rubber goods maker Skellerup climbed 4.2% to $4.67 after reporting a 1% increase in earnings before interest and tax of $72.7m and increasing its dividend, meeting expectations in a tough trading environment. Its industrial delivered a record result, offsetting a slowdown in its agricultural divisions.

Smith said the company improved its performance in the second half of the financial year and is set to benefit from weaker currency, with 79% of its revenue generated overseas.

Fisher & Paykel Healthcare, which generates most of its revenue internationally, rose 1.9% to $33.10.

Goodman Property Trust increased 1.4% to $2.11. Cornerstone shareholder and former manager Goodman Group today reported a 14% increase in operating earnings, and said its pivot towards datacentres will change the shape of its portfolio in the coming five years. Datacentres account for 40% of its A$13 billion in development projects.

Infratil, which counts the CDC datacentres business in its portfolio, rose 1.9% to $10.80.

Meridian Energy gained 1.9% to $6.815 on a volume of 1.1 million. The country’s biggest electricity generator’s July operating report showed monthly generation was 6.9% lower than a year earlier, although its wholesale price sold to retailers was more than twice the prior year period.

Genesis Energy was unchanged at $2.26 after securing a site in the Bay of Plenty for a solar development.

Contact Energy increased 1.4% to $8.82, while Mercury NZ fell 1% to $6.735 and Manawa Energy dropped 2.4% to $4, the biggest decline on the benchmark index.

Auckland International Airport gained 0.9% to $7.65 after its monthly traffic update showed total passenger numbers increased in July from a year earlier, but were still 88% of pre-covid levels.

Devon’s Smith said tourism numbers seem to have plateaued after the initial post-Covid boom.

“To get further altitude with their passenger run rate, they’re going to need new spaces from existing airlines or new airlines,” he said.

Air NZ rose 1.8% to 56.5c on a volume of 1.8 million shares.

The a2 Milk Co was among the day’s decliners, falling 0.9% to $7.42. Weaker Chinese investment and house price data today raised fears about the strength of the world’s second-biggest economy, which is a major export destination for a2. Synlait Milk, which processes formula for a2, was unchanged at 30c and Fonterra Shareholders’ Fund units declined 0.2% to $4.19.

Vista Group International fell 1.9% to $3.07, having enjoyed a strong run over the past week since reporting its first-half result.

Arvida Group, which is under a takeover offer at $1.70 a share, was the most traded major stock, rising 0.6% to $1.64 on a volume of 5.2 million. Ryman Healthcare was unchanged at $4.90 on a volume of 1 million, while SkyCity Entertainment Group gained 0.6% to $1.56 on a volume of 3.4 million.