Chris Lee & Partners Ltd

Market News 20 April 2026

David Colman writes:

On Tuesday Fonterra farmer shareholders (FCG) and Fonterra fund Unit holders (FSF) received the capital return resulting from the sale of the Mainland Group division.

The $4.2 billion sale to Lactalis of Fonterra’s brands (including Mainland cheese, Anchor milk, Kapiti cheese, Fernleaf butter and others) provided thousands of farmers with payouts with most eligible Fonterra suppliers receiving somewhere between $100,000 and $1,000,000 (in some cases more).

The payments are in addition to $700 million in Fonterra dividends including an interim dividend of 24cps and a special dividend of 16cps.

Farmers will have different priorities regarding the use of the funds received but are expected to pay down debt, purchase stock and equipment, acquire land, take holidays, and probably buy the odd bottle of champagne with the windfall gain.

New Zealand’s aging population is represented in the agriculture industry demographics, and some older farmers will have the option of using the funds to help them exit the industry.

Regions with strong ties with the dairy industry such as Taranaki and Waikato would be expected to benefit but such a large distribution of funds should be seen as providing national stimulus.

The sale proceeds and dividends amount to over 1% of New Zealand’s $445 billion GDP.

The day before the payment the company announced that Richard Allen will be the new CEO from 1 May 2026 replacing Miles Hurrell who provided six months’ notice in March and will fill an advisory role until his eventual departure from the co-operative later this year.

Miles Hurrell was appointed CEO in 2018 and moved the co-operative very much to its core business during his tenure.

Beyond the sale and his departure, Fonterra is in a strong position and will still supply Lactalis with the ingredients for the brands that were sold as well as continuing to supply customers around the world with major markets in China, Europe and South East Asia.

The significant capital released by the sale is hoped to provide a slight tailwind to the fragile New Zealand economy which data suggested, prior to the conflict in the Middle East, was strengthening.

If, when and/or how the disruption to shipping in the Strait of Hormuz ends will largely determine the course of the local and international economy for the time being.

Inflation pressure caused by higher fuel prices, even if eventually temporary, will still be felt even if the situation deescalates as there will be fears disruption to shipping can happen again and the cost to repair damaged or destroyed oil and gas infrastructure will be factored into the price of petroleum products.

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Curiously, globally influential markets in the USA reached all-time highs last week despite a costly war (adding to the already massive and rising US national debt) that has yet to be fully resolved and its ramifications still to be clearly defined.

Hopes are perhaps naively high that ceasefire talks will lead to free navigation of the Strait of Hormuz and that a tense sort of peace will emerge in the wider region, with the assumption that it appears that the conflict has deescalated and should continue to do so.

The multi trillion-dollar S&P500 climbed above 7,000 points for the first time in its 69-year history (up 33.4% from the significant dip, driven by tariff concerns, a year ago) and the Nasdaq Composite exceeded 24,000 (incredibly up 47% from a year ago) also for its first time.

For context the S&P500 is up 2.6% year to date, and the Nasdaq Composite is up 3.7% year to date.

The New Zealand market represented by the NZ50G (a gross index including dividends) has lagged US markets, and other overseas markets, for some time.

For comparison the NZ50G is up 7.94% from a year ago and down 3.7% year to date noting it hit an all-time high in February earlier this year.

Investors who have targeted having reasonable foreign exposure (for example using ETFs invested in international markets) will likely have benefitted from the pace of US stock market growth over the last few years.

The US markets aren’t just simply some of the most aggressive markets on earth, they represent the performance of US businesses (dominated by multinationals with global reach) and the US earnings season for April has so far been positive with a comfortable majority of larger companies meeting or exceeding expectations so far.

Large technology companies (such as chipmakers ASML and TSMC) and major financial firms (including BlackRock, Citigroup, Goldman Sachs, JP Morgan Chase, and Bank of America) reported better than forecast earnings.

The US first-quarter earnings season continues next week but has had a strong start.

Guidance has been mixed but consumer sentiment, geopolitical issues, rising energy costs, and other inflationary concerns have been noted and likely temper earnings expectations looking forward.

Consumers have had to grapple with increasing costs with essential expenses such as housing, electricity, fuel, rates and food climbing.

Wages have not increased at the same pace and the threat of AI to jobs causes anxiety and additional pressure on consumer behaviour.

Even if the transport of oil, gas and other commodities from the Persian Gulf to the rest of the world resumes there will still be deeply rooted enmity between Middle Eastern factions and risks of escalation to more widespread violence will remain.

The USA continues to vehemently support Israel and is tied militarily to the region, largely covered by US taxpayers perhaps partially placated by its current administration’s wavering support for both its country’s roles in NATO and Ukraine’s ongoing defence.

The Middle East region exhibits localised cold war conditions with members of the GCC (Gulf Cooperation Council) having increased their military spending in recent years creating burgeoning local defence industries of their own, but the USA will continue to be a major source of sophisticated military hardware and expertise to Saudi Arabia, Kuwait, Bahrain, Oman, Qatar, and the UAE.

Inflation remains persistent in the USA, and elsewhere, but forecasts continue to point to it slowing (this is more likely if oil prices continue to fall from the recent spike and as shipping disruption is reduced).

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Ryman Healthcare released a reasonable fourth, and final, quarter trading update on Wednesday.

Total sales of retirement living occupational rights agreements (ORAs) increased by 10% on the fourth quarter the year before (Q4 FY25) and included 81 new sales and 250 resales for a total of 331.

Excluding 39 relocations Ryman achieved total sales of 1,371 ORAs for the full year ending 31 March 2026. This included 348 new sales and 1,062 resales and was in line with guidance of between 1,300 to 1,400 provided when it released its half year results.

CEO Naomi James said, “We’re pleased with our final quarter trading results and encouraged by sustained improvement across lead indicators, including net sales applications exceeding turnover levels for the first time since we made changes to our contract terms in late 2024. Our new DMF (Deferred Management Fee) of 30% is now widely accepted, and we continue to see evidence our targeted sales and marketing strategies are working, with growth in move-ins from external customers on these terms.”

New sales of independent units eased versus recent quarters which was expected as fewer new unit were completed for sale, while new sales of serviced apartments were robust.

Ryman completed stages at Keith Park in February, bringing total FY26 development completions to 330 units and beds, in-line with market guidance.

Total resales volumes were below the prior quarter due to lower internal transfers.

External resales volumes increased on the prior quarter, across both independent living units and serviced apartments throughout many locations.

Demand for Ryman’s care offering was described as strong in line with underlying demographic data.

Established care centre occupancy was 96.1% for the fourth quarter, similar to 96.0% in the previous quarter.

Four of the five developing care centres which opened in the last two years are performing ahead of expectations moving to 80% occupancy.

The company is committed to disciplined capital management and maintaining prudent gearing levels. Debt was $1.57 billion as at 31 March 2026 (down from $1.66 billion in September 2025).

Ryman has an active development programme limited to two sites under active construction at year end which is expected to significantly reduce exposure to construction cost inflation.

Ryman’s free cash flow for full year 2026 is expected to be approximately $180 million, driven by strong cash flow performance in the second half.

Ryman will report its full year 2026 results on 26 May 2026.

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Travel

22 April - Auckland (Ellerslie) - Edward Lee

23 April - Auckland (Albany) - Edward Lee

28 April - Wellington - Edward Lee

6 May - Christchurch - Johnny Lee

28 May - Kerikeri - David Colman

29 May - Whangarei - David Colman

Chris Lee & Partners Limited

Market News 13 April 2026

Johnny Lee writes:

The Reserve Bank left the Official Cash Rate at 2.25% last week, as it attempts to navigate an increasingly unpredictable geopolitical environment.

The RBNZ finds itself in a difficult position, with inflationary pressures emerging from non-economic drivers, alongside a rapidly evolving conflict that continues to influence financial markets.

Indeed, the RBNZ statement was immediately out of date. Just an hour prior to its release, the US administration had announced a ceasefire, leading to a 15% decline in the price of oil and a surge in share prices across the globe, including New Zealand. The theme of unpredictability continues.

The statement included internal assumptions surrounding the short-term outlook for the price of oil, including an assumption that crude oil prices drop below $100 per barrel by July. It is already below this point, at time of writing.

The RBNZ Committee discussed the oil price impact at length, particularly the risk of “second-round inflationary effects”. Such an eventuality “would require decisive and timely increases in the OCR to re-anchor inflation expectations”.

The Committee also weighed the possibility of “pre-emptive” and “early monetary policy response”. Such a response would have been a shock for many but should remind investors that until we reach a period of geopolitical stability, all options are on the table - hikes, cuts and prolonged pauses.

Investors should take the overall tone as hawkish and assume interest rates will head higher rather than lower. This is now being reflected in bank forecasts, with ANZ expecting three OCR increases this year, beginning as early as July.

With a geopolitical situation that is seemingly changing day to day, economic factors seem to be less relevant at the moment. For now, the OCR has been held steady at 2.25%, and all eyes are turning back to the Middle East.

A2 Milk

A2 Milk has settled its long-standing shareholder class action suit, paying $62 million Australian dollars to put the case to rest.

Importantly, the amount will be met from insurance proceeds and will not impact the company’s earnings. With class actions seemingly on the rise, one imagines the demand for this insurance will see a commensurate rise.

A2 Milk made no admission of liability. The New Zealand claim is not included in the settlement.

The claim covers a matter of disclosure and alleged that the company “engaged in misleading or deceptive conduct and breached its continuous disclosure obligations”, with the allegations dating back to August 2020. 

In New Zealand, listed companies have obligations to inform the market when it becomes aware of information that may be material to shareholders.

These obligations, while important and necessary, have caused friction for decades now. One specific rule, as written in the NZX Listing Rules, requires companies to release “material” information promptly and without delay through the NZX market announcement platform.

There are exceptions. These include when releasing information breaches the law, when the information is confidential, when the information “contains matters of supposition” or when “a reasonable person would not expect the information to be disclosed.”

Understanding and adhering to these rules is a crucial part of a director’s role. Those who choose to withhold critical information should be challenged by law and punished. 

In this instance, a2 and its insurer have elected to simply pay $62m AUD to put the matter to bed without accepting fault. Investors will make of this what they will.

A similar claim in New Zealand remains ongoing, after a brief pause to allow the Australian claim to reach a conclusion. The affected shareholders that have joined the New Zealand class actions will hear from law firm Hamilton Locke in due course.

Postscript: A2 Milk has also released a trading and outlook update today, which has been poorly received by the market, with the share price down sharply.

The company is facing a range of supply chain challenges. These include freight disruption linked to the Middle East conflict, production constraints, extended customs clearance times, and low inventory levels following earlier manufacturing issues. 

These factors are expected to materially impact performance in the near term. The company has downgraded its FY26 outlook, with lower revenue growth, reduced margins, weaker cash conversion, and earnings now expected to be flat to down on last year. 

Goodman Property Trust 

Goodman Property Trust unitholders would have noticed a change to their portfolio last week, as the company commenced its corporatisation and new stapled structure. As part of this, the company’s stock code changed from GMT to GNZ.

Shareholders now own stapled securities, represented as one share in Goodman New Zealand and one in Goodman Property Services. There has been no immediate impact on value.

This stapled structure will be familiar to shareholders of Precinct’s new stapled securities. 

Effectively, Goodman is now made up of two distinct businesses, one focused on property ownership and the other on property management. Shareholders should receive two dividends each quarter, one from each business, with the property ownership security treated as a PIE for tax purposes.

One cannot buy shares in these underlying companies. They trade as a single security conveying ownership equally across the two businesses, hence the “stapled” moniker.

Retaining the PIE status was the key rationale for this change. The company believed it could not pursue the best strategy for shareholders while retaining this tax advantage, thus necessitating the change to a stapled, corporatised structure.

The Listed Property Trust sector has a poor year, particularly since the beginning of the Middle Eastern conflict and the corresponding leap in swap rates. NPF, the New Zealand Property ETF, has declined 10% this year.

Many shares within the sector are trading at lows. Listed Property Trusts tend to trade against the interest rate cycle, performing well when rates are low, and struggling when rates head higher. At the moment, interest rate expectations are higher due to the inflationary impact of the oil price rise.

However, dividends have been consistent and met expectations. Most of the major Listed Property Trusts now trade at gross yields above 6%. Some are already forecasting a lift in distributions this year.

The question for investors may be the value of a 6% gross return in this environment. Those fearing a rapid rise in interest rates will be waiting for a more permanent solution to the geopolitical climate before making their move. Hopefully, such a solution is forthcoming.

Travel

14 April – Hamilton – Johnny Lee

15 April – Tauranga – Johnny Lee

16 April – Lower Hutt – David Colman

17 April – Napier – Johnny Lee

22 April – Auckland (Ellerslie) – Edward Lee

23 April – Auckland (Albany) – Edward Lee

6 May – Christchurch – Johnny Lee

Chris Lee & Partners Limited

Market News 7 April 2026

Johnny Lee writes:

KMD Brands has found itself at a major crossroads this week, following the announcement of a massively dilutive capital raising to shore up its balance sheet.

KMD Brands, formerly known as Kathmandu, is raising $65.3 million from new and existing shareholders at a value of only 6 cents per share (NZD). This will mean the addition of over a billion new shares, to its already 711 million shares on issue.

The specific ratio applied to the offer is 1 new share for every 0.73 existing shares held, meaning a shareholder with 1,000 shares is entitled to 1,369 additional shares at a cost of $82.14. The capital raising is being conducted as an “AREO” or accelerated renounceable entitlement offer. The offer opens on the 7th and closes on the 16th of this month.

The renunciation refers to the shortfall bookbuild occurring at the end of the process. There will be no public listing of the rights. Today, such listings are rare and generally viewed unfavourably by issuers compared to a bookbuild process.

Kathmandu’s story on our exchange has been a less than positive one. Founded by Jan Cameron and John Pawson, Cameron later sold her stake in the company to Goldman Sachs JB Were and Quadrant Private Equity in 2006, reportedly for $275 million. Jan Cameron, who was appointed a Companion of the New Zealand Order of Merit in 2010 for services to business and philanthropy, was found guilty in a Hobart court in 2024 of making a false or misleading statement and disqualified from managing companies for five years.

Kathmandu dual-listed across the NZX and ASX in 2009, with Goldman Sachs JB Were and Quadrant Private Equity selling their stake to the public at a valuation of around $420 million.

Today’s valuation, post-dilution, is nearer $100 million.

Of course, the world is a very different place since 2009. Prior to COVID, the company was profitable, paying consistent, growing dividends and even managed to attract investment from major retailer Briscoes, which took a 19.9% stake in the company back in 2015.

COVID, unfortunately, changed the company’s trajectory entirely. The share price fell 75% in the space of a month, and while it did see the same post-COVID recovery that most shares enjoyed at that time – fuelled by a very low-interest rate environment – it never found its footing and has been in constant decline since 2022. No dividend has been paid in the last two years.

All of this background brings us to the aforementioned crossroads.

A capital raising at 6 cents may signal desperation for some shareholders and is obviously not the action of a company with multiple options. KMD Brands needs to rebuild its balance sheet, in the hope of a better tomorrow.

6 cents may also reflect the cost of underwriting. The offer is fully underwritten, meaning that the company will raise the $65 million regardless of existing shareholder support.

However, even 6 cents was not enough to garner full support. The institutional placement, which closed last week, received only 79% take up. Retail shareholders will need to apply for the shortfall, or the underwriters will be writing a cheque.

Early market response has been positive. KMD shares are out of trading halt and are changing hands above 9 cents, a 50 percent premium. With the shares now trading ex-rights, shareholders now have the option of selling their shares at this higher price and buying them back in the 6 cent offer.

These steeply discounted capital raisings – usually followed by a significant share consolidation – can work. Sky Television would be a recent example, when it raised $157 million at 12 cents per share, then initiated a ten for one consolidation shortly after. The shares now trade north of $3 and pay dividends twice a year.

For those shareholders who believe in Kathmandu and a retail sector rebound, the opportunity to help rebuild its balance sheet at a price of 6 cents per share will be compelling. At 6 cents per share, 1.7 billion shares imply a valuation of barely $100 million. Just 3 years ago, Kathmandu posted a net profit of $40 million. By most definitions of the word, 6 cents per share feels cheap. Indeed, 6 cents per share was the 2023 annual dividend, although this was paid on a smaller number of issued shares.

However, the opposing view simply needs to look around the market. The retail sector is clearly undergoing a period of significant, structural change, and consumer confidence in equity markets has tumbled since the start of the recent conflict in the Middle East. Investors with a heavy exposure to retail have had a mixed bag over the last few years, with Hallenstein Glasson doing much of the heavy lifting for the sector.

Some directors have already confirmed their participation, with outgoing Chair and former All Black captain David Kirk committing to apply for an oversubscription in the offer.

KMD Brands shareholders have a decision to make. With a share price at record lows, this is not an instance of a company raising capital to invest in the business. Instead, this money will be used to fix the company’s balance sheet and give it a chance of survival.

With underwriters already on board, the funds are secure. The question for shareholders is whether they will commit further to the company and see if the business can turn itself around. The offer is open now and closes on the 16th. Applications should be made online.

The capital raising was not the only announcement from KMD Brands last week. The retailer also announced its first half results for the 2026 financial year.

The company reported a $13 million NPAT loss for the half. Last year's figure was a $20 million loss. Both Kathmandu and Oboz produced negative earnings, but both improved on last year. Ripcurl was again the sole positive contribution, but saw its earnings decline.

While sales were stronger, margins remain under intense pressure across the business, with consumers clearly feeling the pinch at the moment. This has been a common theme with retailers this year, with many forced to steepen discounts to move stock.

The company continued its “Next Level Journey” strategy. While the headline of 15 store closures and 10 senior staff changes may look grim, the company is determined to cut costs as part of its strategy to survive the current economic difficulties.

Outlook was modestly positive. The first six weeks of second half have been positive compared to last year, with both sales and margins modestly higher.

The strategy now is to buy time for these conditions to ease and consumers to re-engage with local retailers. The capital raise will give the company time. The question is whether shareholders will support this strategy, after a torrid period of underperformance from the company.

Local Government Funding Agency

LGFA has set its interest for its 8-year bond at 4.75%. These bonds are AAA rated by S&P and mature on the 15th of May 2034. Clients interested in this bond are welcome to contact us.

Travel

13 April – Taupo – Johnny Lee

14 April – Hamilton – Johnny Lee

15 April – Tauranga – Johnny Lee

16 April – Lower Hutt – David Colman

17 April – Napier – Johnny Lee

22 April – Auckland (Ellerslie) – Edward Lee

23 April – Auckland (Albany) – Edward Lee

Chris Lee & Partners Limited