Latest / Best of Business / Jeremy Hutton: Milford Asset Management expert on the market reactions to Fletcher Building

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Jeremy Hutton: Milford Asset Management expert on the market reactions to Fletcher Building · Best of Business

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  Speaker 2: Jeremy Hutton Milford Asset Management is with me, Hi, Jeremy.
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  Speaker 3: Good evening, Heather.
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  Speaker 2: Right, so we've had a bunch of results. Let's start
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  Speaker 2: with Fletcher Building. What's the market reaction being to this announcement.
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  Speaker 3: Yeah, it was a reasonably subdued reaction today from the
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  Speaker 3: market for Fletcher Building. The share price was largely flat.
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  Speaker 3: I would not just note that the share price had
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  Speaker 3: had a pretty strong run over the back part of
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  Speaker 3: last year. I was up around twenty twenty five percent,
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  Speaker 3: and a lot of investors were being early movers on
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  Speaker 3: the New Zealand cyclical recovery story. Now I would note
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  Speaker 3: again at the results, they're still highlighting that the construction
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  Speaker 3: market in New Zealand is still very subdued. So perhaps
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  Speaker 3: the share market had got a little bit ahead of itself.
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  Speaker 3: But investors are looking really closely at the space. I mean,
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  Speaker 3: the listed companies exposed there, flitch As being one of them,
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  Speaker 3: are of a lot of interest to see that cyclical recovery.
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  Speaker 3: And I think if you see some of that evidence
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  Speaker 3: come through in the hard data, then the share prices
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  Speaker 3: of these companies should react pretty strongly.
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  Speaker 2: They said that they are not expecting things to improve
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  Speaker 2: very much until twenty twenty seven, So investors are going
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  Speaker 2: to have to be patient, aren't they.
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  Speaker 3: Yeah, yeah, they will have to remain patient at this point.
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  Speaker 3: I mean, the business has another strategy of just simplifying things,
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  Speaker 3: you know, focusing on their core strengths, which is the
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  Speaker 3: building materials products. You know, this is hopefully putting a
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  Speaker 3: little bit less risk, a bit more predictability into into
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  Speaker 3: the earnings, and in the theory, the market should reward
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  Speaker 3: this with a high evaluation. And they have taken some
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  Speaker 3: steps towards this. I mean, some of their legacy issues
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  Speaker 3: that's plagued the business in the past appear very contained,
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  Speaker 3: and they've sold their construction division, which which has been
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  Speaker 3: a little bit of a headache. But I think the
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  Speaker 3: main thesis for investors they will hope that the economic
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  Speaker 3: cycle will improve things from here. But you know, the
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  Speaker 3: business is doing a good job, you know, positioning itself
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  Speaker 3: to take advantage of any upswing. Yeah.
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  Speaker 2: And then on Spark, we were just speaking to the
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  Speaker 2: ce as another company that's been struggling what's the market
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  Speaker 2: thinking about this result?
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  Speaker 3: Yeah, very in line results from Spark today, and I
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  Speaker 3: think given some of the disappointing updates they've had, they'll
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  Speaker 3: probably take this one. But they do produce some really
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  Speaker 3: interesting read throughs for the wider economy, I mean the
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  Speaker 3: mobile market that's still growing really really slowly. I mean,
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  Speaker 3: low immigration isn't helping. But also unfortunately for Sparky, they
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  Speaker 3: are still losing a little bit of market share and
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  Speaker 3: mobile to cheaper alternatives. So you are you are seeing
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  Speaker 3: trading down in the mobile market. And then you know,
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  Speaker 3: the business and government spending still still pretty weak and
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  Speaker 3: continues to pull back, so you know, continues to highlight
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  Speaker 3: Kiwi's businesses. They are remaining very tight with their spending.
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  Speaker 2: Still, is this the bottom do you think for Spark?
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  Speaker 2: Is Spark now an attractive option for investors?
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  Speaker 3: Yeah, it will be attractive to some investors. I mean
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  Speaker 3: it's traditionally viewed as a very steady business and that
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  Speaker 3: pays a big dividend, and it was important that they've
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  Speaker 3: stabilized the financials. I think they've done. One result of this,
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  Speaker 3: they're retained therefore earnings guidance and cash flow number, so
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  Speaker 3: that's important. And as long as they continue to defend
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  Speaker 3: that dividend, I mean it is trading it at multi
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  Speaker 3: year highs that dividend yield, so that will be attractive
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  Speaker 3: and if they can put a string of good results
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  Speaker 3: together then it should get back in favor again.
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  Speaker 2: That's stuff, Jeremy, always good to talk to you. Thank
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  Speaker 2: you so much, mate, Jeremy Hutton of Milford Asset Management.
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