Latest / Best of Business / Andrew Curtayne: Milford Asset Management on Fletcher Building's potential sale of their construction division

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Andrew Curtayne: Milford Asset Management on Fletcher Building's potential sale of their construction division · Best of Business

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  Speaker 2: With Me now as Andrew Kurtain Milfed Acid Management.
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  Speaker 3: Hey Andrew even in Heather.
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  Speaker 2: So what do you make of that update yesterday from
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  Speaker 2: Fletcher Building on the potential sale of the construction division.
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  Speaker 3: Yeah, it didn't come as a complete surprise because they
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  Speaker 3: had an invest a day about a month ago where
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  Speaker 3: they allocated this division, which is Construction Division, including Brian Perry,
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  Speaker 3: Sibil and Higgins, and they allocated that it's been a
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  Speaker 3: non core division, so basically saying it's not strategically important
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  Speaker 3: to the future of the business, which is essentially a
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  Speaker 3: signal to the market saying look, we may be willing
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  Speaker 3: to sell this business. I guess what maybe is a
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  Speaker 3: little bit surprising is only a month later that come
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  Speaker 3: out and said we're now launching a formal process. So
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  Speaker 3: it sounds like they've had some expressions of interest coming
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  Speaker 3: from some external buyers. Postsets at update a month ago,
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  Speaker 3: which maybe is a little bit earlier than people were expecting.
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  Speaker 3: This division is sort of recovering from a lack of
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  Speaker 3: roading infrastructure spend over the last few years, so some
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  Speaker 3: investors thought it might take a little bit longer for
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  Speaker 3: interest to build. But it seems like the forward looking
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  Speaker 3: expectation on sort of higher or more roading expensure. But
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  Speaker 3: that seems sort of push forward by the national government
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  Speaker 3: has got interest in this division.
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  Speaker 2: Share price reaction to it has been fairly muted, hasn't it.
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  Speaker 3: Yeah, it's a pretty it's a material but smallish division.
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  Speaker 3: It's around about ten percent of the value of Flecture Building,
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  Speaker 3: so it's not huge and it's sort of hard to
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  Speaker 3: put a number on things. At the moment. We don't
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  Speaker 3: have a formal bid and it's going to take many
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  Speaker 3: months for this process to run, and I think investors
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  Speaker 3: already going to look for a little bit more color
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  Speaker 3: on what price the bids might come out before they
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  Speaker 3: sort of make too many assumptions about share rights reaction.
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  Speaker 2: Now on the international markets, you had the second quarter
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  Speaker 2: results season which has kicked off in the US and Europe. Obviously,
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  Speaker 2: is there anything that you're seeing worth calling out so far?
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  Speaker 3: Yes. Result season is always important for the stock market direction,
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  Speaker 3: and particularly at the moment with the share market at
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  Speaker 3: all time high, as having rallied for about twenty five
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  Speaker 3: percent from April lows. Everyone's very focused to see what's
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  Speaker 3: going to be coming on results, what's going to be
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  Speaker 3: the news on sort of tariff impacks, early indications, And
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  Speaker 3: this is sort of before we have all the super
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  Speaker 3: large megacap companies reporting. But over the last week, the
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  Speaker 3: indications have shown that the market has given just enough
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  Speaker 3: kind of confidence and earnings and outlook to support the market.
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  Speaker 3: The large banks such as Japen, Morgan City Bank, Wells
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  Speaker 3: Fargo had decent results last week, pointed to an economy
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  Speaker 3: that's ralatively resilient, not too much weakness. One result that
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  Speaker 3: was a little bit more negative was Netflix, such as
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  Speaker 3: a sort of a top twenty company in the US
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  Speaker 3: stock market now had fantastic numbers, but the share price
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  Speaker 3: sold off five percent, So that sort of indication that
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  Speaker 3: the market's got pretty over at skis and needed sort
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  Speaker 3: of super strong results to support the share price.
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  Speaker 2: Yeah, and what are the key results to focus on
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  Speaker 2: over the next week or so.
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  Speaker 3: We've got the megacaps coming out, So tomorrow's Google and Tesla,
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  Speaker 3: they were always very important results. And then in the
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  Speaker 3: next week got Microsoft, Amazon and Meta which owns Facebook
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  Speaker 3: and really the markets could be focused on what these
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  Speaker 3: companies are saying about artificial intelligence, so they're going to
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  Speaker 3: keep spending on it, and the market kind of wants
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  Speaker 3: to see that they are going to spend to sort
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  Speaker 3: of justify this big rally was seen a lot in
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  Speaker 3: these AI stocks, so if they sort of show a
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  Speaker 3: bit of caution, then that could be negative for the market.
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  Speaker 2: It's stuff Andrew really appreciate it. Enjoy evening, Andrew Curtain
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  Speaker 2: Wilfred Ascent Management.
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