Gentrack takes another hit as NZX 50 trades down 0.3% to start week

The benchmark S&P/NZX 50 fell 0.36% to 12,684.00 points to start the week, with 33.1 million shares worth $117m changing hands.

Paul Robertshawe, Octagon's chief investment officer, highlighted Gentrack Group, which fell 3.16% to $10.12 and is down over 20% in the last 30 days.

Robertshawe said both Craigs and Forsyth Barr had downgraded the stock. Australian investment house Jefferies has likewise downgraded, from 'buy' to 'hold', in recent days.

"[Gentrack] have lost a couple of tenders, and now they've lost one of their own existing customers," Robertshawe said. "So, people will be going: 'Is that growth rate that we've got built in really achievable if your existing customers are churning off?"

Going in the other direction was Mainfreight, which rose 0.96% to $60.07 on volumes worth more than $5m in volume traded.

Mainfreight shares fell 10% last week after the business told attendees of its annual shareholders’ meeting that it had a "slow and disappointing" start to the financial year.

Robertshawe noted an NZX disclosure notice on Friday that showed managing director Don Braid had bought 10,000 shares for just above $58 per share.

"That's got to be an endorsement," he said. "That was a disappointing result, but he's viewing this as a cyclical problem rather than any change to the long-term plan, and he's backing it with his own money."

Announcements

In an update for the three months to July 27, Briscoe Group said second-quarter sales rose 2.07% to $192.9m compared with the same period last year.

Managing director Rod Duke said a bounce in the homeware segment, up 3.97% in the quarter, followed a weak start to the financial year. Shares we unchanged at $6.01.

Forsyth Barr equity analyst Paul Koraua said the result was a "good improvement", but because the share price has risen nearly 15% since the company was added to the NZX 50 index in June, the investment case has changed.

A month ago, Forsyth Barr set its target price for Briscoe Group at $5.95 and downgraded it to 'underperform' from 'neutral'.

Rakon shares dipped 2.47% to 79 cents after former executive and shareholder Brent Robinson said he would not support Mark Bregman, Lisbeth Jacobs and Jon Raby to join the board at its scheduled meeting later this month.

Rakon said its 12.19% shareholder, Taiwanese company Siward Crystal Technology Co, and its board appointee, Jung Meng Tseng, were also against the independent board appointments, which included Bregman becoming chair.

M&A Action

Tourism Holdings (THL) shares rose 0.49% to $2.06 after it told the market that an unsolicited indication of interest from a consortium to buy it for $2.30 a share was an “opportunistic and undervalued offer”.

“Based on careful consideration and external analysis, the board has come to the view that the value of the company is well north of $3.00 per share,” it said.

In June, it received an indication of interest from a consortium comprising BGH Capital and the family interests of Luke and Karl Trouchet, directors of the company.

"[THL] want to get people interested, doing their due diligence and becoming interested in the company, but they're not going to sell it less than what they think it's worth," Robershawe said.

"They'll be hoping that BGH and the insider reassess what bid they can pay, and that it's materially higher than $2.30, but this could take a long time to play out."

Staying with acquisitions, prospective SmartPay buyer Shift4 Payments obtained the necessary consent under the Overseas Investment Act for its proposed acquisition of SmartPay.

The scheme of arrangement, under which Shift4 would acquire all the shares in Smartpay for $1.20 per share in cash, is now one step closer to completion.

SmartPay shares gained 1.79% to finish the day at $1.135.