Market close: AFT Pharmaceuticals plunges after significant earnings downgrade

AFT Pharmaceuticals chief executive Dr Hartley Atkinson. Photo / NZME

The New Zealand sharemarket trod softly and finished flat in the wake of the Reserve Bank’s surprise aggressive monetary policy stance.

But there was a flicker of hope at the end of the day’s muted trading on strong signals that the United States Federal Reserve will slow the pace of its interest rate rises.

The S&P/NZX 50 Index was down just 2.09 points or 0.02 per cent to 11,321.71 after reaching an intraday low of 11,265.78.

There were 52 gainers and 76 decliners over the whole market, with 38.91 million shares worth $121 million changing hands.

Dan Stratful, investment adviser with Forsyth Barr, said the local market under-performed as a result of the 75 basis points rise in the official cash rate and the recession comments by the Reserve Bank.

“Everywhere else, the Australian, Asian and US markets were in the green apart from us. It seems the US has got inflation under control and will be slowing the rate hikes. Goldman Sachs is saying there’s a 35 per cent chance of the US going into recession.

“For New Zealand the outlook doesn’t look good with four consecutive quarters of negative growth, and there’s a chance we might under-perform global markets over the next few months,” Stratful said.

The Federal Reserve’s November meeting minutes showed support for lower rate hikes “soon” at a time when data pointed to a slowing economy, with weaker-than-expected housing, manufacturing and services activity.

Commentators now expect the Fed to lower its rate rises to 50 basis points next month, 25 basis points in January and then no more.

US stock futures were higher but there will be no lead overnight with the markets closed for the Thanksgiving public holiday.

At home, Ryman Healthcare stopped its bleeding, gaining 5c to $6.40 and is still at a nine-year low. Fellow retirement village operators Arvida was up 2c or 1.79 per cent to $1.14; Summerset Group was down 19c or 2.13 per cent to $8.72; and Oceania Healthcare declined 2c or 2.53 per cent to 77c.

Auckland International Airport was up 7.5c to $7.92; Mainfreight climbed $1.15 to $72.30; Chorus increased 12c to $8.30; and Fletcher Building added 7c to $5.09.

Synlait Milk increased 5c or 1.79 per cent to $8.705; Napier Port was up 6c or 2.19 per cent to $2.80; Vulcan Steel collected 15c or 1.75 per cent; KMD Brands added 2c or 1.83 per cent to $1.11; and Allied Farmers gained 2c or 2.86 per cent to 72c.

Ebos Group, soon to join the MSCI Small Cap index, was down 27c to $41.17; Fisher and Paykel Healthcare declined 18c to $20.72; and a2 Milk shed 7c to $6.64.

In the energy sector, Meridian gained 9c or 1.93 per cent to $4.75; Contact was up 7c to $7.47; and Vector was down 10c or 2.38 per cent to $4.10.

Sky TV decreased 9c or 3.86 per cent to $2.24; Steel & Tube was down 4c or 3.03 per cent to $1.28; Ventia Services declined 6c or 2.17 per cent to $2.70; Marsden Maritime shed 12c or 2.03 per cent to $5.80; and Green Cross Health was down 4c or 3.23 per cent to $1.20.

Property companies Argosy declined 3c or 2.48 per cent to $1.18, Goodman Trust was down 5.5c or 2.68 per cent to $2; and Property for Industry decreased 4c to $2.38. Investore, managed by Stride, was up 2c to $1.54.

Stride Property was down 6c or 3.73 per cent to $1.55 after reporting half-year revenue of $46.15m, up 7.68 per cent, and a net loss of $53.13m, mainly due to a net revaluation deduction of $51.8m on its present $3.5 billion portfolio. Stride, calling itself a maturing real estate investment manager, is selling $30m-$60m worth of properties and introducing a dividend reinvestment plan

AFT Pharmaceuticals plunged 39c or 9.77 per cent to $3.60 after significantly downgrading its full-year operating profit guidance to $18m-$23m, from $27m-$32m. The downgrade is due to deferred income because of the delay in pain relief Maxigesic IV United States registration, and a $10m investment supporting new product launches in Australia and New Zealand, including a new sales force.

AFT reported a 66 per cent fall in net profit to $1.45m on revenue of $65.75m, up 18 per cent, for the six months ending September. Sales in Australia increased 24 per cent to $36.1m and in New Zealand 35 per cent to $21.3m compared with the previous corresponding period.

Rakon, down 9c or 7.03 per cent to $1.19, reported a 15 per cent decline in net profit to $16.01m on steady income of $87.16m. It has net cash of $18.4m and expects its operating earnings (ebitda) to be $38m-$44m for the year ending March.

Cancer diagnostics company Pacific Edge, declining 1.5c or 3 per cent to 48.5c, reported a 102 per cent rise in revenue to $13.6m and a net loss of $10.57m, up from $9m, for the six months ending September. It has cash of $93.5m.

Pacific Edge’s total lab throughput increased 34 per cent to 14,917 including a 35 per cent lift in commercial tests to 12,422, a lot of it in the US market.