Market close: NZ shares take a tumble on interest rate worries

My Food Bag fell 1.7c or 8.1 per cent to 19.3c. Photo / File

Companies producing solid financial results – this time Gentrack – are being rewarded, but the New Zealand sharemarket tumbled nearly 1 per cent on interest rate worries.

The S&P/NZX 50 Index fell sharply in the morning and then steadied in the afternoon to close at 11,993, down 106.73 points or 0.88 per cent.

There were 46 gainers and 83 decliners over the whole market with 35.77 million shares worth $130.2m changing hands.

The Reserve Bank delivers its latest monetary policy statement on Wednesday with an expected 25 basis points increase in the official cash rate (OCR) to 5.5 per cent – though the market hasn’t forgotten the surprise 50 basis points rise in April.

There are still inflationary pressures around, particularly from increasing immigration, food prices, wage growth and extra spending in the Budget. And one or two commentators are now predicting the OCR will reach 6 per cent before pausing.

Matt Goodson, managing director of Salt Funds Management, said there is a slight fear that the Reserve Bank may increase 50 basis points.

“If they do 25 basis points, then this shouldn’t have much effect on the market.

“But if it’s zero or 50 basis points, that’s when you’ll see the market move. Strangely, if it does go 50, then two to three-year rates may fall because the economy will be seen to be slowing,” Goodson said.

The local market was led down by heavyweights Fisher and Paykel Healthcare, falling 50c or 1.87per cent to $26.30; and Fletcher Building decreasing 18c or 3.58 per cent to $4.85.

The retirement sector run stalled. Summerset Group was down 27c or 2.98 per cent to $8.80; Ryman Healthcare decreased 13c or 2.15 per cent to $5.93; and Arvida was down 2c to $1.17.

Port of Tauranga shed 10c to $6.38; Napier Port was down 6c or 2.24 per cent to $2.40; Investore declined 4c or 2.76 per cent to $1.41; and My Food Bag fell 1.7c or 8.1 per cent to 19.3c.

Restaurant Brands was up 27c or 4.01 per cent to $7, and Synlait Milk gained 5c or 3.29 per cent to $1.57.

Gentrack, which provides software solutions for utilities and airports, soared 88c or 25.81 per cent to $4.29 after increasing revenue 47.71 per cent to $84.3m and turning around a previous loss of $5.8m to a net profit of $7.88m for the six months ending March.

Gentrack upgraded its full-year revenue guidance $157m-$160m, up from $147m-$150m, including $25m from insolvent UK customers. The revenue forecast for the 2024 financial year is expected to be similar this year.

The software company is expanding from its core markets of UK, Australia and New Zealand to Europe, Middle East and Asia, having opened an office in Singapore and signing up a large local energy retailer.

Goodson said Gentrack had been an extremely volatile stock but became a favourite today of the small-cap growth investors. The company had a moderate revenue upgrade and strong profit leverage.

AFT Pharmaceuticals rose 22c or 6.29 per cent to $3.72 after reporting record annual revenue of $156.64m, up 20 per cent, and steady operating profit of $19.7m for the year ending March.

Net profit was down 46 per cent to $10.65m and AFT is paying a maiden dividend of 1.1c a share on July 4. Operating profit guidance for the 2024 financial year is $22m-$24m. AFT’s flagship Maxigesic pain relief medicines are now sold in 61 countries.

Sanford increased 12c or 2.93 per cent to $4.22 after producing a solid six-month result, a 2.46 per cent increase in revenue to $277.57m and an 81.51 per cent rise in net profit to 11.1m. Sanford is paying an interim dividend of 6c a share on June 90.

The seafood company told the market that labour shortages and cost pressures meant the seafood company had not yet returned to pre-Covid levels of profitability.

Utilities investor Infratil was down 29c or 2.98 per cent to $9.455 after reporting a 11.9 per cent increase in proportionate earnings (ebitdaf) to $531.5m for the year ending March. It is paying a final dividend of 12.5c a share on June 13.

Infratil is forecasting proportionate earnings of $570m-$610m for the 2024 financial year, and presently has access to $1.4b to fund growth, including $600m cash. Shareholder returns were 14.2 per cent and an average of 18.6 per cent over the 29 years it has been listed.

Goodson said Infratil produced some decent numbers but there was a slightly weaker-than-expected guidance.

“One of its key businesses, One New Zealand (formerly Vodafone), was slightly above the top end of expectation, reflecting the present purple patch for mobile phone players with the return of roaming.”

Kiwi Property, unchanged at 90c, reported a 13.9 per cent increase in net rental income to $203.7m and gross operating profit of $129.6m, up 11.3 per cent, for the 12 months ending March. Occupancy is 99.3 per cent.

Net loss was $227.7m, mainly because of a $139.3m reduction in the value of its portfolio in the second half. Kiwi Property’s Sylvia Park, LynnMall and The Base (Hamilton) shopping centres recorded more than $1.7 billion in sales, up 34.8 per cent on the 2019 full-year (pre-Covid).