Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 

Few bargains fairly valued NZ market: Morningstar

Stock selection important in fairly valued NZ market, Morningstar says

By Pam Graham

July 9 (BusinessDesk) – Bargains are hard to find in the New Zealand share market as it is fairly valued overall and the electricity sector has recovered to be trading close to fair value, according to Morningstar.

The research company has ‘hold’ recommendations on 76 percent of the stocks it covers and has no ‘buy’ or ‘sell’ recommendations, though it has seven ‘reduce’ recommendations.

Morningstar sees Telecom is its “best idea”, and says the market may be underestimating the value of the company’s turnaround strategy. The shares rose 0.2 percent to $2.695 today.

“We think the strategy will work and initial signs are promising,” Morningstar said.

It expects the company to maintain momentum in the mobile market with an aggressive pricing strategy, which is important as mobile contributes 33 percent of retail revenue and is a key for future growth. The sale of AAPT has cleaned up the group structure and reduced risk.

“A strong balance sheet provides scope for the company to consider new capital management initiatives during the next 12 to 24 months, assuming delivery of operational and cost savings target,” Morningstar said.

Fletcher Building is the most expensive stock Morningstar covers, trading at 1.36 times fair value.

Energy is the most expensive sector, with Z Energy and New Zealand Oil & Gas trading well above Morningstar’s fair value estimates.

The health sector has good long-term fundamentals due to the ageing population but Ryman Healthcare and Ebos Group are expensive. Fisher & Paykel Healthcare looks to be reasonable value because it is trading at 0.94 of Morningstar’s fair value estimate.

Stock selection is important in a share market that is currently fairly valued, the research company said.

The consumer discretionary sector is a mixed bag with SkyCity Entertainment Group, The Warehouse Group and Trade Me Group looking to be reasonable value.

SkyCity looks to be the best value but is not rated as a best idea by Morningstar.

“We still believe the market is underestimating the benefits of the Adelaide and Auckland casino expansions,” Morningstar said.

(BusinessDesk)

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

NZ's Space Programme: Rocket Lab Makes It To Space (But Not Orbit)

Electron lifted-off at 16:20 NZST from Rocket Lab Launch Complex 1 on the Mahia Peninsula in New Zealand. It was the first orbital-class rocket launched from from a private launch site in the world. More>>

ALSO:

Earlier:

Budget: Irrigate (Good Times, Come On!)

Additional grant funding of $26.7 million over the next three years plus a capital boost of $63 million towards irrigation investments in Budget 2017 will deliver economic and environmental benefits through better use of water... More>>

ALSO:

Silver Fern Farms: Proposal To Close Fairton Sheepmeat Plant

Silver Fern Farms has advised its people of the proposal to permanently close the site, and has discussed potential transfer options to its other sites in the region as part of the consultation process...
More>>

ALSO:

MPI: Myrtle Rust Appears In Taranaki

The nursery in Waitara (just north of New Plymouth) reported suspected myrtle rust symptoms on young plants to the Ministry’s 0800 number yesterday (Tuesday). More>>

ALSO: