Auckland Airport has pushed back on claims the fees of about $20 million for its $1.4 billion equity raise was “money for jam”.’
Outgoing chair Patrick Strange told shareholders that it was easy after the fact to take a pop at the base and incentives fees paid to underwriters Jarden Partners and Macquarie Securities.
In response to questioning from activist shareholder Stewart Mayne – who described the fees as “juicy”, – Strange said some could look back and say they made a lot of money but they did take a lot of risk.
“It’s always easy after the game to say people didn’t take any risk. If someone underwrites – in the world which is a shaky place at the moment – [and it] goes west, the underwrite no longer looks cheap.
“It was difficult to go out to shop around for lower fees,” he said.
“You don’t have the opportunity of going out and running a beauty show to choose your investment bankers because you’ve got a confidentiality problem. It’s very important that we keep this very quiet.’’
The airport had investment banking experience on its board.
“We did very carefully choose who the underwriters and the bankers were [and they were] put under a lot of pressure,’’ said Strange.
At the airport’s annual shareholders meeting, he shone a positive light on how quickly the $1.2b institutional offer was filled by Jarden and Macquarie.
’’They started talking to people at half past eight in the morning and it was covered by lunch. That is a huge expression of support for your airport and I say it’s important for New Zealand too.
’’We’re not easy taskmasters, I’ve got to say, and looking back with hindsight, it was a highly successful raise.’’
The Government is trying to lure more private investment in the country but the airport was attracting plenty already, he said.
The funds will be used for the airport’s big rebuild.
’’A good part of that $1.4b came from international investors who are prepared to put their money into the airport,’’ said Strange, who is stepping back from corporate governance roles in NZ.
Sky Network Television’s renewed partnership with Warner Bros Discovery (WBD) securing existing and additional content at a slightly lower cost lends support to the company’s dividend policy, although there’s still some risk attached to the stock, according to Craigs Investment Partners.
Sky TV announced this week it had effectively headed off the danger of HBO’s Max app launching here with an expanded WBD deal with Sky remaining the exclusive home of Max content.
The company will also offer WBD’s classic franchises including Friends for Neon, while also featuring a library from brands including the DC Universe, Warner Bros, Discovery, TLC, Animal Planet, Cartoon Network and Harry Potter.
Sky said the new agreement will see a one-off, non-cash acceleration of programming amortisation of $6-$7m, and, at the same time, Sky will receive a cash payment of $4-$5m from WBD for prepaid content at the October 30, 2024, launch date.
Programme cost savings may be modest at around $1m but Craigs analyst Rob Morrison says it will help contribute towards the approximate $41m of free cash flow required to meet the 30cps FY26 dividend target (FY25 at least 21cps).
“In this context, even low single-digit million-dollar content savings are meaningful,” Morrison said in a research note.
He noted the WBD agreement provided further confidence in Sky’s ability to negotiate favourable content deals – with the key NZ Rugby deal expected to be announced before the end of this calendar year, also expected to be struck on more favourable terms.
The analyst reiterated his “overweight” recommendation on the stock and lifted his target price by 3% to $3.27 a share.
Sky shares moved up 1.1% to $2.76 following the announcement and recently traded at $2.80.
The key risk for Sky remains the ability to retain content, however, along with technology execution, costs associated with operational change and satellite/ARPU decline, Morrison said.
“We think the loss of WBD content from Sky’s core platform and Neon remains a risk.”
Investors are seeing gold in Michael Hill once again, with analysts from Craigs Investment Partners and Jarden upgrading their ratings thanks to positive early trading signs for FY25.
During the company’s annual general meeting, it reported total group sales growth of +4.3% year-on-year for the first 14 weeks, up from the +3.2% run rate reported in the first eight weeks.
Michael Hill was particularly enthusiastic about the Australian and Canadian segments of the business, with group same-stores sales (SSS) up 6.3% and 4.7% respectively on the year prior.
New Zealand continues to underperform, down 4.2% compared to last year, however, Michael Hill expects it to gradually recover over FY25.
Craigs’ research analyst Kieran Carling believed that while its consumer spending and gross margins will remain under pressure over the festive trading period, Michael Hill’s trading momentum and market share gains are encouraging. He assessed that the risks facing Michael Hill, including long-term industry headwinds, are more than priced into its assessment.
While its target price of $0.64 remains unchanged, he upgraded Michael Hill’s rating from Neutral to Overweight, Craigs’ first rating upgrade since April 2023.
Jarden analysts Guy Hooper and Nick Yeo upgraded their rating from Overweight to Buy, Jarden’s first upgrade to Michael Hill’s rating since January 2022. They said the company had passed an inflection point, highlighting that its sales are not coming at the expense of margin.
Hooper and Yeo highlighted how the company’s exit run rate of +5% was comfortably ahead of its updated FY25 estimated group sales forecast of +2.5%. Jarden has therefore lifted its FY25 sales assumptions in Australia and Canada to full year growth rates of +4.5% and +3.1% respectively.
Jarden’s analysts upgraded their target price on the stock from 78c to 80c. Its shares opened at 57c on Thursday.
Investors appear to have taken Vulcan’s first-quarter downturn in their stride.
This week, the dual-listed Australian and New Zealand steel distributor’s September quarter revenue fell 13%, year-on-year, to NZ$263.1m.
Earnings before interest depreciation and amortisation (Ebitda) fell 30% to $33.1m in the quarter.
Vulcan’s managing director and CEO, Rhys Jones, said that following a challenging end to 2024, business conditions for the industry in the first quarter remained soft and deteriorated, especially in New Zealand.
These conditions were expected to continue for the balance of calendar 2024 but 2025 was looking encouraging.
Forsyth Barr said Vulcan’s update highlighted near-term volume and margin pressure has continued to a greater degree than it had forecast.
”Whilst near-term risks remain, there are signs Vulcan is nearing the end of the downgrade cycle, with lower interest rates and improved business confidence.
”We make material cuts to our 2025 earnings, but more modest adjustments to 2026 and 2027.
”We still view Vulcan as a high-quality company that is well positioned to benefit from: (1) a cyclical recovery in demand, and (2) self-help initiatives, but believe this is largely in the price, with the stock trading on a FY27 PE of about 14 times,” Forsyth Barr said.
Vulcan shares trade at around $9, having gained 12.7% over the last 12 months.
-Reporting by Grant Bradley, Jamie Gray, Duncan Bridgeman and Tom Raynel
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