Latest / Best of Business / Jeremy Hutton: Milford Asset Management expert on the winners and losers from NZX results season

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Jeremy Hutton: Milford Asset Management expert on the winners and losers from NZX results season · Best of Business

• 0:09
  Speaker 1: You're listening to a podcast from News Talk zed B.
• 0:12
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• 0:16
  Speaker 2: A busy reporting season has just finished for the ins
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  Speaker 2: and exlisted companies. We'll talk about the winners and the
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  Speaker 2: losers from the last four weeks. Jeremy Hutton from Milfed
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  Speaker 2: Asset Management is with us right now. Hey, Jeremy, good evening, Heather,
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  Speaker 2: Hey on, very well, thank you. One of the big
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  Speaker 2: winners has got to be A too Milk.
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  Speaker 3: Yeah, A two Milk. They had another bumper reporting season.
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  Speaker 3: Investors absolutely loved it. They sent the share price up
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  Speaker 3: over twenty one percent in August alone, and the stock
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  Speaker 3: is now up sixty percent so far year to date
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  Speaker 3: in twenty twenty five. The A two Milk story, it
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  Speaker 3: really can be boiled down to the fact that the
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  Speaker 3: company is doing really well in a tough market. And
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  Speaker 3: we know Chinese birth rates have been declining for a
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  Speaker 3: number of years and that is a substantial headwind for
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  Speaker 3: infant formula players and A two as well to overcome.
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  Speaker 3: But now by market share, A two is the fourth
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  Speaker 3: biggest player in the massive Chinese infant formula market. It's
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  Speaker 3: bigger than huge competitors like Nesle and me Johnson and
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  Speaker 3: other large Chinese and Western brands as well. So A
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  Speaker 3: two continue to perform really well in a tough market.
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  Speaker 2: Market really loved that transaction. The purchase of the plant
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  Speaker 2: in Poconoa.
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  Speaker 3: Yeah, that's right, So the acquisition of the local Ushile
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  Speaker 3: dairy plant and Pocono. The markets got really excited about this.
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  Speaker 3: Now it wasn't so much about the financials of the deal,
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  Speaker 3: but more that the site comes with these extra China
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  Speaker 3: market registrations and these are effectively a license to operate
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  Speaker 3: your brand or product in the Chinese market. And A
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  Speaker 3: two they currently only have one of these registered China
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  Speaker 3: label products and it has been holding them back versus competitors,
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  Speaker 3: they all have multiple products in the market. So they
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  Speaker 3: get these two extra slots from the Pocono plant and
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  Speaker 3: that means A two you know, they can continue to grow,
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  Speaker 3: bring out some new products and innovate and really de
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  Speaker 3: risk the brand story a lot here.
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  Speaker 2: Okay, on the other side of the equation, what happened
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  Speaker 2: with Ebos.
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  Speaker 3: Yeah, Ebos a very tough start for their new CEO.
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  Speaker 3: In his first update, the share price was down over
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  Speaker 3: twenty percent and this is very surprising for EBOS. It
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  Speaker 3: is a great company. It's performed really well and always
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  Speaker 3: consistently grows, has done so over the past decade on
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  Speaker 3: the nz X. But their forward guidance this time round
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  Speaker 3: for the next financial year was for flat earnings and
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  Speaker 3: the market got really caught off side by this. They
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  Speaker 3: had to downgrade a lot of their outlooks for earnings.
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  Speaker 3: But one could say it's a bit of a harsh
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  Speaker 3: reaction as there is still confidence in the EBOS story.
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  Speaker 3: Their core businesses of Australian pharmacies and animal care products
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  Speaker 3: are still growing reasonably reasonably well medium term. But sometimes,
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  Speaker 3: particularly when it's a new CEO in the chair, the
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  Speaker 3: market can shoot first and ask questions later, particularly if
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  Speaker 3: they get the framing or the pitch wrong.
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  Speaker 2: Now now that the Reserve Bank is leaning on reducing
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  Speaker 2: the OCM or what's the outlook for the rest of
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  Speaker 2: the year, do you.
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  Speaker 3: Think Yeah, supportive Reserve Bank and OSA interest rate tracks
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  Speaker 3: should be positive for the New Zealand market. The local
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  Speaker 3: market has lagged key pairs substantially this year, but we
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  Speaker 3: are considered a defensive, yield driven market. We don't have
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  Speaker 3: the racy tech or AI stocks like they do overseas,
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  Speaker 3: We've got more solid high dividend payers like telecoms, companies, infrastructure,
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  Speaker 3: real estate, and these should perform well in a falling
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  Speaker 3: interest rate environment. And then secondly I'll just call out
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  Speaker 3: also the cyclical sectors, which is sort of the next leg,
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  Speaker 3: like construction companies, retail exposed companies. They've really had a
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  Speaker 3: tough time as we know in New Zealand, but again
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  Speaker 3: should start to perform better when some of the economic
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  Speaker 3: activity and data starts to improve.
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  Speaker 2: Good stuff. Hey, Jeremy, thanks as always for talking us
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  Speaker 2: through that. Jeremy Hutton, Milford Asset Management.
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