Chris Lee & Partners Ltd

Market News 11 August 2025

David Colman writes:

On Wednesday, Property for Industry Limited (PFI) provided a leasing and development update and dividend guidance for full year 2026.

PFI specialises in industrial properties and has a portfolio of 91 properties across New Zealand leased to over 120 tenants.

The company advised that it has received the early surrender of GrainCorp Foods NZ Limited’s (GrainCorp) lease at 92-98 Harris Road, East Tamaki. 

The lease was due to expire on 3 November 2028, with one further 5-year right of renewal available to Graincorp, but now the lease ends today, 11 August 2025.

The property will not be leased to another tenant immediately as it has joined PFI’s development pipeline with all the existing buildings and other infrastructure on the site scheduled for demolition.

GrainCorp will pay a $5 million surrender fee to PFI as compensation for surrendering the lease early, allowing for operating expenses, and the removal and demolition of plant and equipment left on site.

PFI is expected to gain an after-tax benefit to full year 2026 Adjusted Funds from Operations (AFFO) of approximately $3.5 million (approximately 0.7cps).

PFI has considered the property to be a future development site beyond GrainCorp’s tenancy for some time, mainly because the site is considered relatively underutilised.

The combined building footprint of approximately 7,200 sqm represents only a little above 27% of the 26,300 sqm site.

Plans for the redevelopment of the property include preliminary designs allowing for a large-format industrial facility of approximately 14,500 square metres, with associated office, canopy, yard, and parking areas.

PFI’s website includes the property on its developments page and will provide further updates as its plans take shape.

The project is subject to feasibility, tenant engagement and consents, and could involve an investment of approximately $45 million (excluding land) with the new development targeting a 5 Green Star rating in line with PFI’s sustainability commitments.

PFI also announced an update to its full year 2026 dividend guidance, with dividends now expected to total at least 8.90 cents per share (cps) – at the higher end of guidance between 8.80 and 8.90 cps, representing an increase of between 2.3% to 3.5% on full year 2025 dividends.

The early lease surrender, along with the inclusion of the New Zealand Government’s Investment Boost tax changes (which allows businesses to deduct upfront 20% of the cost of new assets or improvements to existing assets for tax) has resulted in an increased forecast full year 2026 Adjusted Funds from Operations (AFFO).

Full year cash dividends of at least 8.90 cps will be below PFI’s dividend policy pay-out ratio range and will be approximately 85% of AFFO on a one-year basis.

For PFI to pay higher FY26 cash dividends than 8.90 cps will depend on progress on several key efforts including:

- successfully leasing the speculative component of Stage 2 of the 78 Springs Road redevelopment

- confirming development plans and timing for 92-98 Harris Road development

- progress in addressing material full year 2027 lease expiries during full year 2026.

PFI will release its FY25 annual results on 25 August 2025.

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The August results season has begun with T&G Global releasing its half year results.

T&G Global (TGG) started as Turners and Growers more than 125 years ago and is now part of the Global Produce division of the German BayWa conglomerate.

TGG is present in 13 countries and distributes fresh produce to customers and consumers in over 55 countries.

The company’s Half Year Results 2025 highlights:

- Revenue: $920.6 million, up from $820.1 million

- Operating profit: $18.1 million, compared to a loss of $2.6 million

- Net profit before tax: $2.3 million, compared to a loss of $8.2 million

- Net profit after tax: $1.7 million, compared to a loss of $18.6 million

Higher revenue and a return to profitability for the six months ending 30 June 2025 was a significant improvement with the Chair Benedikt Mangold noting that the company is beginning to see the results of its long-term growth and investment strategy.

The company has focused on productivity, efficiencies and cost control across the whole business.

Global demand for its premium apple brands is growing in line with its volumes, and across the business TGG has worked to strengthen customer and grower relationships and optimise its value chain.

Despite global volatility the company has shown resilience.

T&G’s Apples business delivered a sustained uplift in performance, with revenue increasing 15%, to $675.3 million, compared to $589.0 million in the comparable 2024 half year period.

Operating profit increased 99% to $47.2 million, compared to $23.7 million in the corresponding 2024 period.

These improvements reflect significant investment in the company’s long-term Apples strategy.

A high-quality crop was observed across North America and in New Zealand with significant plantings of ENVY™ apples over the past few years described as contributing to a record year for branded apple volumes.

Asian retail programmes were said to be driving new growth with TGG opening a Taiwan office as part of its expansion.

Revenue in T&G Fresh increased to $229.2 million, compared to $218.3 million in the comparable 2024 period, and operating profit increased to $3.7 million, from a loss of $11.3 million in the corresponding 2024 period.

T&G’s VentureFruit business saw its revenue from external customers decrease to $2.9 million, compared to $4.0 million in the comparable 2024 period, due to changes in the timing of invoicing planting fees.

The operating loss increased to a loss of $7.2 million, from a loss of $3.4 million, due largely to phasing of operating expenditure.

The company continues to scale its new premium JOLI™ apple brand, ahead of its consumer launch in 2027.

380,000 trees have been licensed to grow in New Zealand, and test blocks established across Europe this year.

TGG closed up 15c (+6.7%) at $2.40 on Friday and is up an impressive 60% YTD (year to date) comparing well to its peers (NZ listed companies with horticultural exposure) such as Seeka (up 20% YTD) and Scales (up 18% YTD)

Seeka (SEK) and Scales (SCL) release half year results on 20 August and 25 August respectively.

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On Friday, Infratil and the New Zealand Superannuation Fund (NZ Super) announced that they have entered into a binding agreement to sell their 100% interest in RetireAustralia to Invesco Real Estate (the global real estate arm of Invesco Ltd) for A$845 million.

Infratil and the NZ Super Fund each owned a 50% interest in RetireAustralia (both shareholders’ interests managed by Morrison, a global infrastructure investment manager).

RetireAustralia is a privately-held retirement operator in Australia with 4,000 independent living units and apartments across 27 villages in three states (New South Wales, Queensland and South Australia).

The sale is conditional, including FIRB (Foreign Investment in Australia) approval, and is expected to complete in the last quarter of the 2025 calendar year.

Infratil expects to receive proceeds of approximately A$300 million (NZ$328 million), after adjustments for transaction and completion costs.

The sale is expected to result in an accounting loss of NZ$80 million – the difference between Infratil’s 31 March 2025 carrying value of $404 million for RetireAustralia and the approximate NZ$328 proceeds, however when taking into account capital contributed and distributions received the forecast sale proceeds are expected to preserve almost all contributed capital, with an internal rate of return (IRR) close to zero over the 11 year holding period.

The sale also marks the end of Infratil’s interests in the retirement sector which began when it bought a 19.91% stake in Metlifecare at $3.53 per share in 2013. 

It later sold the Metlifecare stake in 2017 at $5.61 per share.

Infratil has a market capitalisation that exceeds NZ$11 billion and is seen to have grown out of its smaller investments.

The company continued to have a positive outlook for RetireAustralia, but the Infratil team found it increasingly difficult to justify an investment of RetireAustralia’s size as able to deliver a meaningful return to Infratil shareholders.

Infratil’s decision to sell RetireAustralia is consistent with its strategy to divest businesses, unlikely to scale under its ownership, and the funds increase balance sheet flexibility for reinvestment. 

Infratil is working towards a $1 billion divestment target so it is inevitable that there will be other assets, with limited scalability, sold in due course (potentially a part of a larger investment such as a One NZ asset, or the sale of its 66% shareholding in Wellington Airport).

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Travel

Our advisors will be in the following locations on the dates below.

20 August – New Plymouth – David Colman

21 August – Wairarapa – Fraser Hunter

22 August – Lower Hutt – David Colman

28 August – Christchurch – Fraser Hunter

Please contact us if you wish to make an appointment.

David Colman

Chris Lee & Partners Limited

Market News 4 August 2025

David Colman writes:

On Friday 1 August, Synlait Milk Limited (SML) provided an update on its performance for the financial year ended 31 July 2025 (FY25).

Synlait experienced manufacturing challenges at its Dunsandel facility across a range of product segments, resulting in one-off costs.

The issues have since been resolved and the Dunsandel plant has undergone routine winter maintenance and is now in new season production.

SML’s overall performance has improved, and the final full year 2025 result is forecast to deliver the following:

- underlying EBITDA (Earnings Before Interest Taxes Depreciation and Amortisation) of $100 to $110 million compared to $45.2 million in FY24

- breakeven underlying NPAT (Net Profit After Tax) compared to -$60.4 million in FY24

- a reported net loss after tax of -$27 to -$40 million compared to -$182.1 million in FY24

- reported EBITDA of $50 to $68 million (-$4.1 million in FY24)

SML is targeting a closing net debt balance of $300 million, and the company remains in compliance with its banking covenants.

The preliminary update remains subject to year-end procedures being completed including audit.

SMI’s share price closed at $0.61, up 1c or 1.7%, the day after the update and is impressively up almost 40% year to date.

The company will announce its FY25 result on Monday 29 September 2025.

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On Wednesday 30 July, NZ Windfarms Limited (formerly listed under NWF) advised that the scheme of arrangement relating to the acquisition by Meridian Energy Limited (MEL) of all of the remaining shares in NZ Windfarms, that it did not already own, was implemented resulting in Meridian acquiring 100% of the shares in NZ Windfarms.

NZ Windfarm shareholders were paid, as part of the Meridian scheme, consideration of 25 cents per share in cash at 5.00pm on 23 July 2025.

Incidentally, Manawa bondholders will be paid as part of Contact Energy’s scheme tomorrow (Tuesday 5 August 2025).

This year of consolidation in the electricity sector, with both Manawa and NZ Windfarms bought by larger operators, leaves just four NZX listed electricity companies (in order of market capitalisation):

Meridian (MEL) worth $14.9billion

Contact (CEN) worth $8.9billion

Mercury (MCY) worth $8.8billion

Genesis (GNE) worth $2.6billion

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Sir Michael Hill passed away last week and in the same week his retail company, Michael Hill Jeweller (MHJ) released a full year trading update providing a glimpse at how the company is tracking in a tough global economic environment.

Well before he was knighted, Sir Michael Hill introduced himself to me, and other television watching kiwis, in the 1980s through a particularly simple and effective advertising campaign.

The primetime television ads consistently included his appearance and iconic line ending ‘Michael Hill, Jeweller’ which meant his distinctive bespectacled face, name, occupation, brand, and business were cemented in the mind of the viewer in just three words.

The update provided key points based on preliminary and unaudited numbers:

- Expectations that full year (FY25) Group earnings will be comparable with estimated EBIT1 range of $14 million to $16 million (FY24: $15.9 million).

- Group total sales and Group same store sales were both flat on last year. In the second half, same store sales improved across all segments, with Group same store sales up 2.4% on the same period last year. 

- Gross margin is expected to be approximately 60.5% for the year, broadly in line with the prior year (FY24: 60.6%) with the impacts of continued aggressive promotional trading conditions and record high gold prices being largely offset by the introduction and mix of higher margin products.

- Inventory levels remain well-managed, closing at approximately $199 million (FY24: $196 million).

- Closing net debt of approximately $42m (FY24: $39m).

- The Group finished the year with 287 stores (FY24: 300) with10 stores permanently closed in Australia and 4 in Canada, two Australian stores were converted to Bevilles, and 2 new stores were opened with 1 in Canada and 1 in New Zealand. There are 250 Michael Hill stores and 37 Bevilles stores,

Interim MHJ CEO, Andrew Lowe commented that despite retail trading conditions remaining challenging in all markets (which has been a familiar theme for retailers for a few years), the business delivered full year earnings and gross margin broadly in line with the prior year.

A relentless focus on store productivity was described as providing a second half lift in same store sales of 2.4% with the Canadian segment again delivering record sales demonstrating a degree of resilience.

The recent positive momentum Is hoped to continue into the important Christmas trading period.

MHJ intends to release its full year FY25 results for the 52-week year ended 29 June 2025 after the ASX market closes on Friday 22 August 2025.

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On Thursday Kiwibank received Government approval to raise capital to support growth and released the following note:

In December 2024, the Government announced it was exploring a private placement of capital to continue to accelerate Kiwibank’s growth.

Since then, Kiwibank’s parent company, Kiwi Group Capital (KGC) and the Treasury have been assessing investor interest in such an initiative.

Following this process, Cabinet has approved for KGC to proceed to the next phase of a potential capital raise of up to $500 million with timing and amount to be determined by KGC, and subject to final approval of terms and conditions by shareholding Ministers.

The transaction is expected to occur prior to 30 June 2026.

David McLean, KGC Chairman, said: “The Government has reaffirmed its commitment to supporting Kiwibank as a competitive, New Zealand-owned alternative to the larger banks, ensuring better outcomes for all New Zealanders.

“The capital raise process aims to provide Kiwibank with capital to continue its above market growth and enhance its competitive position while ensuring all funds raised are invested into New Zealand’s future. There will be no return of capital to the Crown, and no changes for Kiwibank customers.”

Steve Jurkovich, Kiwibank’s Chief Executive, said, “Kiwibank exists to challenge the status quo and to disrupt the banking sector for the good of Kiwi. We are working to create a future where banking is stronger and fairer than ever before.

“Delivering on our Purpose of Kiwi making Kiwi better off is what differentiates Kiwibank and drives our performance, and that is what we continue to be focused on. Any capital raise would be structured to ensure Kiwibank’s continued role to improve services and pricing for consumers.”

The capital raising process is targeting New Zealand-based KiwiSaver funds, investment institutions, and professional investment groups.

Kiwibank will remain 100% New Zealand-owned following the completion of any private placement.

Kiwibank half year 2025 highlights

- Net profit after tax of $92 million for the six months to 31 December 2024.

- Net lending growth of $2 billion growing its lending book by 6% to $34.4 billion.

- Home lending grew 2.1 times faster than the market

- Business lending more than 6 times faster than the market.

- Deposits increased $1.8 billion growing by 6% to $30 billion (1.6 times faster than market growth)

For now, it does not seem that the capital raising will be relevant to retail investors.

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Travel

Our advisors will be in the following locations on the dates below.  Please contact us if you wish to make an appointment:

20 August – New Plymouth – David Colman

21 August – Wairarapa – Fraser Hunter

28 August – Christchurch – Fraser Hunter

Chris Lee & Partners Limited