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Australia (ASX) & New Zealand (NZX) Market Movers – 22nd June – Stock in Focus: Fletcher Building

Australia and New Zealand Market Movers is provided by: Australasian Trading Management.

The Australian share market continued to rally on Thursday (ASX 200 index +0.96%) as a broad range of heavyweights made strong gains with the index hitting its highest level since the start of 2008. Income tax cuts passed through federal parliament provided a big boost to the local sharemarket in terms of boosting sentiment. In stock news, APN Outdoor’s shares jumped +12% after French outdoor advertising giant JCDecaux made a $1.1 billion offer for the company worth $6.52 a share. Bellamy’s Australia jumped as it announced three new strategic organic milk deals that allow it to have greater control over its supply-chain and cost structure. On the flipside, Ramsay Health Care was forced to slash its earnings guidance following a downturn in National Health Service volumes in the UK.

The New Zealand market rallied yesterday (NZX 50 index +1.04%) as the NZX 50 set a new record high after Fletcher Building detailed its five-year strategy and affirmed guidance. Market heavyweights Sky Network Television, A2 Milk, Auckland International Airport and Fisher & Paykel Healthcare all experienced solid gains. In other stock news, Fonterra said it was satisfied with steps taken by Chinese partner Beingmate Child & Baby Food in addressing labelling issues highlighted by Chinese authorities. First quarter GDP data showed a growth of 0.5% for the quarter, below the RBNZ’s prediction of 0.7%. The GDP result shows a slowdown in New Zealand’s economy and provides further evidence that the end of the migration and housing booms are taking their toll on the economy.

Global markets sold off overnight as oil prices slid before this weekends OPEC meeting, industrials dropped on worries over US-China trade concerns and Amazon led a decline in online retailers after the Supreme Court let states force the companies to collect sales tax.

In the US, States may force online retailers to collect potentially billions of dollars in sales taxes, the US Supreme Court said in a major ruling on Thursday that undercut an advantage many e-commerce companies have enjoyed over brick-and-mortar rivals.

Closer to home, both the Australian and NZ markets were up about +1% yesterday as investors digested tax cuts in Australia and slower than expected quarterly economic growth (GDP) data in NZ.

Stock in Focus:Fletcher Building (FBU:NZ / FBU:AX)

Shares in Fletcher Building (FBU) jumped +4% yesterday as new chief executive Ross Taylor set out his five-year strategy to refocus on core businesses, stabilise the construction division, expand in Australia and exit non-core operations.

 

Investors were cheered by the lack of any further provisions against the troubled Building + Interiors (commercial construction) unit, with guidance for group full-year operating earnings reiterated at $680 million to $720 million and the construction divisions loss affirmed at $660 million. Given the string of downgrades, we are pleased to see that no more provisions were made at this update, indicating the worst may potentially be over.

It is pleasing to see that Taylor is being active in attempt to restructure the business, and he also said he expects to slash $30 million from annual overheads through restructuring, which will see about 90 jobs eliminated, a process that started three months ago.

3 Things Markets Will be Watching this Week

1.  Investors will be watching the widening trade dispute between the US and China.
2. Minutes from the last Reserve Bank of Australia meeting are released on Tuesday, while NZ economic growth (GDP) data is published on Thursday.
3. OPEC and its oil allies meet in Vienna this Friday and Saturday to review their production agreement..

Australia and New Zealand Market Movers is provided by Australasian Trading Management. ATM is an independent research house covering stock analysis across major markets including the ASX, NZX and US markets. We make our research easy to understand and concise, taking complex issues and simplifying them so that you can make informed and accurate decisions. We have no conflicts of interest and our only goal is to generate positive returns for our members. We run transparent model portfolios to track performance and invest where we see the most value, in companies of all sizes across all industries, and often in smaller companies.

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Categories: Australian Stocks, New Zealand Stocks

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