Top NZX Performers and Businesses Coping With COVID-19

  • Apr 17, 2020 NZST
  • Team Kalkine
Top NZX Performers and Businesses Coping With COVID-19

The COVID-19 pandemic is triggering large-scale loss of life and serious human suffering worldwide. It is the largest public health crisis in living memory, which has also generated a major economic crisis, with a halt in production in affected countries and a collapse in consumption and confidence. Additionally, the impact of COVID-19 has significantly impacted equity markets.

The magnitude of the shock has actually made the forecasting of financial numbers a challenging task and some of the market participants are of the view that the impact of the disease could result in global recession.

The OECD report stated that, in recent weeks, several international organisations have issued studies on the economic impact of the coronavirus pandemic. For example, UNCTAD has calculated that the impact of the coronavirus in China has cost global value chains 50 billion USD in exports.

There are few stocks in the New Zealand market, which have outperformed the S&P/NZX 50 Index in the past one month. Let us have a look at those stocks and how they are coping up with changing dynamics amid COVID-19 pandemic.

Source: Thomson Reuters

Synlait Milk Limited (NZX: SML)

Synlait Milk Limited is a young, pioneering company which is based in New Zealand and is shifting perceptions and is driving value via new thinking and new attitude.

SML Recognised as an Essential Service Provider

FY20 EBITDA is expected to be stronger than FY19 due to higher sales of consumer packaged infant formula and lactoferrin offset by increased operational costs. Synlait has a strong and growing core business which has put in the position of being able to invest for the future. Historically:

  • Consumer packaged infant formula sales are higher in the second half than the first;
  • Lactoferrin sales are seasonal due to production phasing, both volume and pricing to increase on last year;
  • Synlait Pokeno will be operational for the final six months of FY20 compared with four months in HY20, due to commissioning and regulatory approvals.

 

Synlait receives approval for Dairyworks acquisition

The company has received the approvals to acquire Dairyworks. Some key highlights are as follows:

  • Dairyworks specializes in the packaging, marketing, and processing of dairy goods;
  • Dairyworks sells New Zealand customers with about one-fourth of the country’s butter, half of its cheese, and ice cream and milk powder;
  • It is the frontrunner in the Everyday Dairy segment.

 

Stock Overview

At 2:26 pm on April 17, 2020, the stock of SML was trading at $7.570 per share. The company has a market capitalisation of $1.35 billion.

Pushpay Holdings Limited (NZX: PPH)

Pushpay Holdings Limited offers a donor management system, which includes finance tools, donor tools and a custom community app, for the non-profit organisations, faith sector and education providers in Canada, the US, Australia, and New Zealand.

Minimal Impact of COVID-19 on Operations

The company does not expect any material impact on its performance for the year ending 31st March 2020 as a result of the impacts from COVID-19. There has been an increase in overall demand for its services and it is also well-prepared to assist customers to leverage digital technology and drive continued congregation participation through the usage of the mobile app.

The company has reiterated its full-year guidance, and is expecting operating revenue between US$121.0 million and US$124.0 million, with gross margin of more than 63%.

Stock Overview

At 2:31 pm, on April 17, 2020, the stock of PPH was trading at $4.240 per share. The company has a market capitalisation amounting to $1.16 billion.

Scales Corporation Limited (NZX: SCL)

Scales Corporation Limited happens to be a diversified agribusiness company, and it comprises 3 operating segments: Logistics, Horticulture and Food Ingredients.

Business of SCL Classified as Essential Service

The company’s business units are classified as essential services and they do need to complete strict MPI registration processes to maintain that status, and subject to that, they will continue operating.

For the apple season of 2020, the harvest has continued with roughly 40% of the crop harvested and either in storage or shipped. Subject to market circumstances, currently the company has enough resources to cover harvest, packing, coolstorage and shipping.

The impact of coronavirus pandemic remains unclear on the company, and it is too soon to evaluate if the latest developments will significantly affect the company’s earnings for FY20 and whether any adjustment to guidance for FY20 is necessary.

Stock Performance

At 2:38 pm, on April 17, 2020, the stock of Scales was trading at $4.850 per share. The market capitalisation of SCL amounted to $686.65 million.

Port of Tauranga Limited (NZX: POT)

Port of Tauranga Limited is New Zealand’s largest port and international freight gateway. The location of the port is central to key export commodity sources.

POT in Strong Position to Encounter Pandemic

The company is in a solid position to withstand the impact of the pandemic. Most of key exports, which includes meat, kiwifruit, and dairy products, are considered as essential cargoes. Imports of food, oil products and medical supplies are also essential cargoes. The company is categorized as an essential service and continues to work under the Covid-19 Level 4 restrictions which are imposed by the government. However, some of its customers are categorized as non-essential services and will suspend the shipping during the course of lockdown.

Stock Overview

At 2:41 pm, on April 17, 2020, the stock of Port of Tauranga Limited was trading at $6.960 per share. The company’s market capitalisation amounted to $4.73 billion.

   
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