Markets wrap: Pushpay $1.6b takeover approved, Synlait touches fresh low

Thursday, 27 April 2023

Pushpay is expected to leave the sharemarket next month.

The $1.6 billion takeover of digital donation service Pushpay looks to have finally made it over the line after shareholders voted in favour of a higher offer.

In total, 93.7% of all votes cast were in favour of the scheme, the company said in a statement following a meeting on Thursday.

Pushpay's two biggest shareholders had to increase their offer to $1.42 a share from $1.34 after the initial offer was rejected by six big New Zealand investment funds. The company’s shares closed up 0.7% to $1.41.

The firm was founded in 2011 by Chris Heaslip and Eliot Crowther as a fast and easy way to make donation payments to churches. Its shares are expected to be delisted from the sharemarket late next month.

* Synlait Milk shares slump to record low after profit warning

* Pushpay shares soar 24% as potential suitors emerge; NZX 50 slips

This is the good, bad and ugly of what it's like to make Air NZ's top tier of frequent flyer.

The benchmark S&P/NZX 50 Index slipped 0.1%, or 16.763 points, to 11,918.22 on Thursday. On the broader market 65 stocks rose and 74 fell with $109 million shares traded.

Air New Zealand’s uplift in profit forecast failed to excite investors, with its shares closing unchanged at 77 cents.

The airline is benefiting from robust demand for travel and constrained supply coming out of the pandemic, as well as lower than expected jet fuel prices.

It now expects profit before tax and one-time items of $510m to $560m in the year to the end of June, up from its February forecast of $450m to $530m and a turnaround from a pre-tax loss of $725m last year.

The airline said it has continued to experience strong levels of demand on both the domestic and international networks, although its capacity still lags behind pre-Covid levels.

Prices for domestic air transport jumped 53.7% in the first three months of this year compared with the same time last year, while prices for international air travel rose 16.7%, according to the latest inflation data from Stats NZ.

Synlait Milk’s shares continued to trade around record lows hit on Wednesday, closing unchanged at $1.56 after touching a fresh intraday low of $1.52.

Synlait Milk’s shares have touched record lows after the company’s second profit downgrade in the space of six weeks. (File photo)

The milk processor’s shares are in the doldrums after it downgraded its earnings forecast for this year by about $20m, and said it may be unprofitable.

In a note titled “Stuck in the Mud”, Forsyth Barr analyst Matt Montgomerie said the company’s second profit downgrade in the space of six weeks provided a timely reminder of the significant operating leverage in the business and the high concentration, and therefore high risk, nature of its operations.

Montgomerie cut his forecast for Synlait’s earnings over the coming three years to reflect lower production volumes, higher operating expenditure and higher financing costs.

Synlait had previously outlined a recovery plan that would see it return to similar levels of profitability as the years leading into its 2021 financial year, about $75m, but Montgomery said that was now “highly unlikely”.

He lowered his 12-month target price for the company’s shares to $1.70 from $2.75.

Montgomerie also lowered his earnings outlook for The a2 Milk Company, Synlait’s largest customer, citing slightly lower revenue.

On Wednesday, a2 Milk said its revenue growth for this year would be at the lower end of its previously announced expectations for low-double digit percentage growth, at about 10%. English label infant formula revenue was expected to be down to mid-single digits, partially offset by strong double-digit growth in China label infant formula, it said.

Still, Montgomerie upgrading his rating on the stock to “neutral” from “underperform”, following recent share price weakness, and increased his target price to $5.65 from $5.35.

A2 Milk shares slipped 0.5% to $5.87.

Campervan company Tourism Holdings slipped 0.5% to $4.17 after announcing its manufacturing business, Action Manufacturing, had agreed to buy Transcold New Zealand for $5.4m.

Action Manufacturing chief executive Chris Devoy said Transcold was a leader in New Zealand’s transport refrigeration industry, providing refrigeration and tail lift solutions for truck and trailer vehicles, and was complementary to Action’s other brands, Fairfax and Freighter.