Infratil leads NZX50 lower with investors wanting more

Infratil led New Zealand’s S&P/NZX 50 index lower as the infrastructure investor dropped to a month-low, joining a group of firms punished for not delivering on hyped up expectations in the data centre space. Similarly, homegrown accounting software giant Xero sank across the Tasman as investors latched on to the growing cost line coming from its acquisition of the Melio payments business, in a broadly weaker day for the S&P/ASX 200 as robust jobs figures cooled expectations for a rate cut. Meanwhile, a strong inflow of Australian tourists failed to spur on local travel and tourism companies, with Auckland International Airport, Air New Zealand and Tourism Holdings all on the red side of the ledger, although casino operator SkyCity Entertainment Group and Auckland hospitality firm Savor Group were gainers on the day. And Mainfreight jumped to a five-month high as the logistics firm continued to rally after its first-half earnings result predicting a stronger second half. Headscratcher The NZX50 dropped 73.86 points, or 0.5%, to 13,597.87, with 30 stocks declining, 16 gaining and four unchanged. Turnover across the main board was $157.6 million, of which Infratil accounted for $26.1 million as it led the benchmark index lower, falling 5.5% to $11.97. The infrastructure investor said it sold its 20% stake of mobile tower operator Fortysouth and a property leftover from the old NZ Bus division for a combined $250 million, while reporting a 7% increase in its share of the first-half underlying earnings of its suite of businesses. The company also affirmed annual guidance and kept its interim dividend at 7.25 cents per share. “It was a bit of a headscratcher with the reaction to Infratil in what seems to be a pretty good result,” said Greg Smith, investment specialist at Generate Investment Management. “Infratil remained committed to doubling CDC’s earnings, but people might’ve hoped for more contract announcements.” Heartland Group Holdings declined 1.4% to $1.08 after the lender told shareholders at today’s annual meeting in Ashburton that it’s been selling non-core assets at a faster pace than anticipated and affirmed guidance for annual underlying profit of at least $85 million. Dual-listed lender ANZ Group Holdings dropped 4.9%, or $2.20, after shedding rights to an 83 Australian cent dividend, in a broadly weaker day for the Australian banks. Westpac Banking Corp fell 3% to $45.30, while across the Tasman, National Australia Bank was down 1.6% in late trading and Commonwealth Bank of Australia was up 0.9% – snapping a four-day slide. We can be heroes Across the Tasman, Xero sank 8.4% to A$128.22 in late trading as investors were unnerved by the rise in costs as it integrates the recently acquired Melio payments business, looking past the 18% increase in first-half revenue and a 27% gain in free cashflow combined for a result of almost 45% on the Rule of 40 metric favoured by software firms. Australia’s ASX 200 was down 0.9% in late trading after a stronger jobs report cooled expectations for the Reserve Bank of Australia to cut the target cash rate next month. The kiwi dollar fell to 86.26 Australian cents at 5pm in Auckland from 86.65 cents yesterday, and traded at 56.56 US cents from 56.53 cents. That soft trans-Tasman cross-rate has helped make New Zealand a more attractive destination for Australian visitors, with Statistics New Zealand figures showing the neighbouring nation drove gains in September visitor arrivals. That didn’t really spill over to local travel and transport companies, with Auckland International Airport declining 1.6% to $7.87, Air New Zealand falling 1.6% to 61.5 cents and Tourism Holdings slipping 1.6% to $2.51, although SkyCity Entertainment Group gained 6.4% to 83.5 cents – on the day’s biggest volume of 3.3 million shares, and Auckland hospitality operator Savor Group climbed 4.2% to 25 cents. Retailers were mixed after Stats NZ figures showed spending on credit and debit cards rose 0.2% in October, with consumable items such as the weekly groceries accounting for all of the uplift while expenditure on discretionary goods dipped. Hallenstein Glasson Holdings fell 1.6% to $10.04 and Briscoe Group was unchanged at $5.40, while KMD Brands dropped 3.5% to 28 cents. Outside the benchmark index, Warehouse Group advanced 1.3% to 85 cents and Michael Hill International rose 1.3% to 41 cents, while. Awash with water Power companies were mixed after Meridian Energy’s latest monthly update showed national hydro storage had grown to 143% of the historical average as at Nov 10, with twice the normal monthly inflows through October. Meridian dropped 1% to $5.88 and Genesis Energy decreased 0.4% to $2.50, while Mercury NZ advanced 1.2% to $6.56 and Contact Energy increased 1% to $9.70. Mainfreight posted the biggest gain on the NZX50, jumping 8.7% to $68.50, its highest level since June, continuing the rally from its first-half result on Wednesday, when it said it was optimistic about the New Zealand and Australian markets, and had stripped out costs elsewhere. Used car operator 2 Cheap Cars fell 2.5% to 57.5 cents after the company shaved a little off its first-half dividend 2.15 cents as profit and revenue declined in New Zealand’s subdued economy. Shares of Black Pearl Group were halted as the company prepares to raise $11.8 million in a placement to new institutional investors ahead of its secondary listing in Australia later this month. The shares will be sold at 86.5 Australian cents each, or NZ$1, a 13% discount to their closing price of $1.155. Comvita decreased 0.8% to 59.5 cents with the latest voting update showed the proposed 80 cents per share takeover by Mark Stewart’s Florenz is increasingly unlikely, with almost 40% of votes cast opposing the offer, accounting for 32% of all shares on issue. Reporting by Paul McBeth.