Shane Solly, portfolio manager with Harbour Asset Management, said the index swings were the combination of Infratil’s $500m sell-down in Contact Energy shares and the start of the latest reporting season.
“The market was nervous about the earnings results, but so far, they have been constructive – we haven’t seen any disappointing ones.
“Oceania Healthcare had a solid update with a good turnaround in activity, good cost control and good cash generation,” Solly said.
“The retirement village sector has been beaten up as the market has been anxious about whether the operators can sell down units in a tougher sales environment.
“Well, the team at Oceania showed you can, and they have done a lot of work to improve performance. They haven’t been waiting for the housing market to improve – they’ve built a business that can perform in tough times,” Solly said.
Oceania increased 6c or 9.23% to 71c after reporting a 3% increase in full-year revenue to $267.14m and a fall in net profit to $119,000 from $30.4m, reflecting lower property revaluation.
Operating earnings (ebitda) rose 20% to a record $97.7m, and net debt was reduced by $121.4m to $506.7m. Oceania’s net tangible assets per share were $1.62, up 7.3%. Sales volumes reached 603 units, up 16%, with a gross value of $375m.
Fellow retirement stocks Summerset rose 39c or 5.34% to $7.70, and Ryman Healthcare gained 13c or 6.34% to $2.18.
Oceania’s share price is down 24% so far this year. Ryman, which reports on Tuesday, has declined 26%, and Summerset has fallen nearly 36%.
“The Ryman release will be the proof in the pudding for the sector,” Solly said.
On Wall Street, the Dow Jones Industrial Average reached a new high after increasing 0.55% to 50,285.66 points.
Brent Crude oil was down to US$104.70 (NZ$178.17) a barrel (5.45pm NZ time) as markets waited expectantly for a resolution to the US-Iran war.
Local stocks
At home, Mainfreight increased $2.38 or 4.27% to $58.13 ahead of its latest result on Thursday.
Serko was up 9c or 5.81% to $1.64; Tourism Holdings increased 18c or 8.96% to $2.19; AFT Pharmaceuticals gained 8c or 2.11% to $3.88; Hallenstein Glasson added 21c or 2.15% to $10; and Delegat Group improved 9c or 2.42% to $3.81.
Infratil, reporting on Tuesday along with Fisher & Paykel Healthcare, was unchanged at $15.90. Fisher & Paykel was up 26c to $34.10.
Solly said there was talk that American investment firm Bain Capital will make an A$800m (NZ$972.7m) bid for Qscan, in which Infratil holds a 57.2% shareholding.
“If that happens, Infratil would get another windfall of A$450m, and would have raised nearly $1 billion after selling down its Contact shares – not a bad week’s work.
“That money would support growth in Infratil’s data centre and renewable energy investments.”
Turners Automotive was down 18c or 2.1% to $8.40; Tower declined 6c or 3.12% to $1.86; and Vista Group shed 5c or 2.15% to $2.28.
Fletcher Building, up 5c to $3.06, told the market the sale of its construction division to Paris-based VINCI will be completed on May 29 at an increased price of $334m, up from $315.6m.
The sale price rose after Higgins Contractors signed the East Waikato, Bay of Plenty, and Hawke’s Bay integrated delivery contracts.
Investore, which owns bulk retail buildings, was up 2c or 1.94% to $1.05 after earlier reporting a 5.15% increase in revenue to $65.45m and a 17.33% drop in net profit to $31.7m for the 12 months ending March.
The portfolio value increased 14% to $1.1b, and net tangible assets per share were $1.62, up from $1.160.
Elsewhere in the sector, Property for Industry was up 11c or 4.72% to $2.44, and Kiwi Property was up 0.53% to 94c.
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