A2 shares on dizzying trajectory
Spike after Mengniu purchase, then slump on lack of tidbits at company presentation
Another day, another big swing in a2 Milk’s share price. Barely a day passes without shares in a2 Milk — one of the NZX’s biggest companies by market capitalisation — moving sharply in one direction or another.
Early in the week a2 Milk rallied by 4.4 per cent after news emerged that Chinese dairy giant Mengniu would pay a 59 per cent premium to buy one of a2’s closest peers, Bellamy’s Australia.
Australian fund managers regularly lump Bellamy’s — which specialises in making organic infant formula — with a2 Milk, which makes formula using milk containing just the a2 beta protein.
A2 is seen as being the superior of the two because of the licences it has to sell infant formula in China — something that Bellamy’s has struggled to achieve.
There was much anticipation this week in Shanghai, where a2 Milk hosted an investor presentation, that the company might drop some market-moving nuggets.
When nothing materialised, the stock slumped, reversing all those Mengniu-inspired gains.
“There was some great, high-level detail released from the company that provide real comfort about longer-term growth potential, but anyone who had gone for a quick ‘nowcasting’ update may have been out of luck,” said one New Zealand fund manager. Shares in a2 Milk closed yesterday at $13.36, down from $14.28 at the end of last week. The stock peaked at $18.02 in July.
Birthday bash
More than 500 people turned out for the NZX’s big 150th birthday bash in Auckland last week yet Stock Takes noted there was something missing.
Despite the country being governed by a centre-left government there was not a centreleft politician in sight.
Conversely the National Party was out in force.
Former Prime Minister Sir John Key was the speaker for the event but it was also attended by former MPs Steven Joyce and Sir William Birch as well as current National MP Paul Goldsmith.
Sir John likened the event to a National Party convention and joked that if he and his National Party cohorts worked together he was sure they could raise at least $8 million from the room.
NZX spokesman and legal counsel Hamish Macdonald said the event was just part of a series it had held to commemorate the celebrations and politicians from the left had attended other events.
Green Party leader James Shaw was the keynote speaker in Dunedin while Labour’s Kris Faafoi stood in for Minister of Finance Grant Robertson at the Wellington event after Robertson made a last-minute dash to see the Black Caps play at the Cricket World Cup final.
Macdonald said Prime Minister Jacinda Ardern was unable to attend the Auckland event because of a speaking engagement on the same night which clashed.
The previous National Government was celebrated by the capital markets for bringing the mixed ownership model to the fore
Anyone who had gone [to the a2 presentation] for a quick ‘nowcasting’ update may have been out of luck.
and floating the big power companies — making a lot of market players wealthier in the process.
But the recently released Capital Markets 2029 report suggests there is a big focus on KiwiSaver and getting the Government to bring in a host of changes to the retirement savings scheme as well as changing the law to encourage local councils to float off assets and set up infrastructure investments. That’s not going to happen very easily unless the political left is coming to the party.
Reynolds IPO
Reynolds Consumer Products Inc — the consumer products business unit of Kiwi billionaire Graeme Hart’s Reynolds Group Holdings — has submitted registration documents to the US Securities and Exchange Commission for an initial public offering (IPO) of its common stock.
The number of shares to be offered and the price range for the proposed offering have not yet been determined, Reynolds said.
The IPO is is expected to commence after the SEC completes its review process, subject to market and other conditions.
Reynolds Consumer Products provides household products ranging from aluminium foil to oven bags.
Kathmandu rallies
Kathmandu Holdings shares rallied sharply after the company reported annual profit at the top end of its guidance, including a standout performance in the US.
The outdoor equipment chain said net profit was $57.6m in the year ended July 31, versus $50.7m in the prior year. Total sales rose 9.7 per cent to $545.6m.
In August the company said it expected net profit of $56.5-$58m.
The key driver was a positive contribution from the Australian business and rapid sales and profit growth from Oboz in North America as well as increased penetration of the online channel, chief executive Xavier Simonet said.