Sharemarket ekes out small gain; Summerset touches new record

Tuesday, 24 August 2021

The sharemarket edged up, led by retirement village operator Summerset which posted a leap in first-half profit to $263.8 million, and reassured investors it could get through a long lockdown if necessary.

The benchmark S&P/NZX 50 Index advanced 7.787 points, or 0.06 per cent, to 13,071.86 on Tuesday.

Summerset closed up 4.6 per cent to $13.80, after touching a record high of $14.05.

Chief executive Scott Scoullar said the company was seeing strong demand and nearly 60 per cent of villas in its developing villages nationwide were pre-sold. The company sold 545 units in the six months to the end of June 30, a record for a half year.

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Summerset at Pohutukawa Place in Bell Block is one of the company’s new villages.

“It’s an exceptionally solid result, with good numbers in a sector which is still growing,” said Craigs Investment Partners adviser Peter McIntyre. “They have really printed a strong number and outlined their growth strategy. Investors want to buy and own that stock, so it’s up very strongly today.”

Pushpay, which provides digital payment services for churches, rose 4.2 per cent to $1.75, taking its gain over the past two days to 6.1 per cent.

Craigs upgraded the stock to ‘overweight’ with a target price of $1.95 after Pushpay announced on Monday that it was buying streaming service Resi Media for US$150m to accelerate its growth in the United States.

Transport and logistics company Mainfreight edged up 0.3 per cent to $90.30. The stock touched a record $92.91 on Monday on news it would be included in the FTSE global mid-cap index, prompting funds that track the index to buy the shares.

Investors which track the index, which could include institutions or exchange-traded funds, had until September 17 to rebalance, which would drive volumes, McIntyre said.

Corporate travel technology company Serko and investor Stride Property have also benefited on news they would be added to the FTSE small-cap index.

Serko fell 1.9 per cent to $7.80, after touching a record $8 on Monday. Stride gained 1.2 per cent to $2.63 after touching a record $2.65 on Monday.

Steel & Tube, which manufactures and distributes steel products, rose 1.8 per cent to $1.14 after posting an annual profit of $16.1m, from a $60m loss the previous year. The company returned to paying dividends in 2021, after no dividends were paid in the 2020 year, and said it was investigating potential capital management activities.

Media business NZME gained 2.2 per cent to 95 cents. The company reported an 85 per cent rise in first-half profit to $5.6m and announced a conditional deal to sell its daily deals site GrabOne for $17.5m.

Z Energy fell 1.7 per cent to $3.42. The stock jumped 14 per cent on Monday after confirming it had received a bid from Australian fuel retail Ampol at $3.78 per share. Z Energy’s board did not believe the offer was high enough and had given Ampol four weeks to complete due diligence and have the opportunity to raise its offer.

McIntyre noted that any deal would require overseas investment approval and may require Ampol to divest assets in New Zealand.

“It’s a reasonable offer for Z Energy, but some investors may be thinking it might not go through and are taking some money off the table now,” he said.

Asian shares gained on Tuesday, boosted by a near-record rise on Wall Street, though the momentum began to fizzle out over worries about the economic fallout from surging coronavirus infections in the region.

On Wall Street on Monday, the S&P 500 rose 0.9 per cent, lifted by technology, communication and financial stocks, after spending much of the day within striking distance of its own record high. The benchmark index ended less than 0.2 per cent below its all-time high set a week ago.

– With AP