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Australia (ASX) & New Zealand (NZX) Market Movers – 19th June – Stock in Focus: PGG Wrightson

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

The Australian share market was marginally higher on Monday (ASX 200 index +0.17%) as weaker commodity prices weighed in the resources sector but the banks notched gains. In stock news, infant formula and goat dairy products supplier Bubs Australia has raised $40 million in a significantly oversubscribed offer of new shares at 75 cents each. Bubs says the proceeds of the capital raising will partly be used support new opportunities and growth, particularly in developing the market in China.

The New Zealand market was marginally lower yesterday (NZX 50 index -0.01%) as shares were mixed with Mercury and Fletcher Building gaining while Synlait and A2 Milk fell. In stock news, Pushpay was down slightly before the shares were halted from trading. Pushpay announced that it will be running a bookbuild for 24.8m shares as co-founder and executive director Eliot Crowther is resigning and selling all his shares in the company (which makes up about 9% of the company’s listed shares). Pushpay expects trading to re-open on Wednesday, after the bookbuild is completed (where it is looking for a price of between $4.00 and $4.10 per share).

Global markets were lower overnight as gains in energy shares eased fresh concerns over a possible trade war following China’s retaliation against US tariffs

As we touched on yesterday the threat of protectionist action from the world’s two biggest economies is keeping a lid on investor sentiment, although global markets remain relatively stable.

One of ATM’s key medium term investment themes is that a “dining boom” driven by a growing middle class in Asia will see multi-year demand growth for higher quality food and is set to be a multi-year tailwind for Australian/NZ agricultural businesses. Some of the advantages of Australian/NZ agri-businesses include the exporting nations being in close proximity to Asia, a “clean & green” image with high quality produce, and trade agreements. One stock set to benefit from this theme is agribusiness PGG Wrightson (PGW) which released updated earnings guidance last week.

Stock in Focus: PGG Wrightson (PGW:NZ)

Shares in PGW pulled back slightly last week as it reiterated its annual earnings guidance. It is worth keeping in mind that the stock has rallied of late on the back of takeover rumours.

PGW reaffirmed its forecast for annual earnings between $65 million to $70 million, saying weaker performance from its Australian and South American businesses would be offset by better trading in New Zealand. This was in line with its prior forecasts and once again highlights to us the benefits of PGW’s diverse portfolio of agricultural assets. We have been supporters of PGW for some time now as a diverse agricultural-play, and we see no change to the medium-term investment case.

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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