Chris Lee & Partners Ltd

Market News 15 December 2025

Johnny Lee writes:

2026 is just around the corner, and barring a last minute change of fortunes, the market looks set to close the year with a very modest gain of around 3%. Excluding dividends, the index will be close to flat.

Despite the somewhat benign index, 2025 was absolutely a year of rebounds and disappointments.

Amongst the majors, a2 Milk took the crown as our best performing stock. A2’s share price rose around 60% this year and saw its first two dividends declared as the company sought to whittle down its cash reserves.

While the rebound in a2 Milk’s share price is a welcome reprieve following the declines over the last 5 years, shareholders will be hoping more is to come, as the company tries to make further gains in the Chinese infant formula market.

The banks also saw significant outperformance. ANZ, Westpac and Heartland Bank all closed the year higher, with the Australian banks up over 25%, and Heartland rebounding over 10%.

With interest rates perhaps bottoming out, the hunt for yield was evident throughout the year. 

Many investors with maturing term deposits preferred to migrate along the risk continuum, moving towards dividend paying shares or corporate bonds. Australian bank shares were beneficiaries of this trend.

The primary sector was a major winner in 2025. Scales, Fonterra and Synlait all had strong 2025 performances. Scales was up 50%, following an outstanding result from its apple division, Fonterra farmer shares rose 40% while Synlait climbed 60%. PGG Wrightson climbed 35% but may climb further, following recent profit upgrades.

Economists around the country are increasingly optimistic that the rural sector will play a leading role in an economic recovery next year.

Sanford deserves recognition for its turnaround this year. 2025 was a terrific year for Sanford shareholders, with the share price climbing 70% on the back of a record full year result in November. Salmon, in particular, performed very well for the company. The company elected to use its profits to reduce debt rather than increase dividends, and has signalled the same decision will be made next year, before looking to lift dividends in future years.

Tower had a great year, trading up 40% so far and reaching its highest point in over ten years. 

Strong dividends were declared, and the company now thinks it has its settings right to continue seeing growth. Tower had a difficult period in 2023 following Cyclone Gabrielle, but shareholders have now enjoyed two consecutive years of strong performance.

The seaports had a terrific year. Port of Tauranga rose 20%, while both Napier Port and Southport soared over 40%, with much of these gains seen in the latter half of the year. The strengthening primary sector was evident in these results, with throughput climbing throughout the year.

Another company that enjoyed a great year was Turners Automotive, up 40%. Rising revenues and profits have led to rising dividends, and the marketing team has turned the company into a nationwide brand.

A very late rally saw Fletcher Building emerge as a star performer, up 25% for the year. Much of this seems to be forward looking, as investors contemplate which companies are best placed to leverage off the expected economic recovery in 2026. If such a recovery comes to pass, investors will be hoping the construction sector is a major beneficiary, and that the long awaited return to dividends can finally be confirmed.

Channel Infrastructure had a fantastic year, trading up 48% and paying healthy dividends along the way. The management team has developed a business model with diverse revenue streams and a willingness to explore new avenues, while paying healthy dividends along the way.

Vector had a good year, up 17% while lifting dividends at the same time. The company remains optimistic that it is well placed for the anticipated increase in electrification over the coming years, despite some discouraging data observed in the electric vehicle sector.

The listed property trust sector mostly had a return to outperformance after several years in the doldrums. Argosy rose 23%, Kiwi Property was up 13% and Property for Industry lifted 12%. Falling interest rates and asset recycling were the two main stories across the sector this year, as almost all listed property trusts continue to track below asset backing.

The electricity sector was a mixed bag.

Contact Energy is heading for a modest decline, down 3% before dividends. These dividends rose over the course of the year and are forecast to continue rising in the years ahead.

The major news for Contact, of course, was finalising its takeover of Manawa, despite some objections throughout the process. Infratil has emerged as a significant minority shareholder of Contact courtesy of this takeover, and seems content to hold a long term view on the company for now.

Meridian’s share price will close down further following a poor November and December. Its share price is heading for a decline of around 7% for the year, shortly after completing its own acquisition, buying New Zealand Windfarms in July.

Genesis and Mercury are both heading slightly higher, with Genesis up 5% for the year while Mercury leads the sector, up 10% so far this year.

Telematics company E-ROAD had a very volatile, yet ultimately positive, year, trading up 7%. Throughout the year, the company was up 30%, 115% and 170%, but a late plummet led to the more modest overall performance.

The next few years are expected to see rule changes to the Road User Charges regime, and the industry is expecting technological solutions to be at the forefront of this new problem. E-ROAD’s positioning and marketing will be critical if the company wants to capture this new market.

Santana Minerals’ share price rise will be of no mystery to readers of our newsletters. The share price climbed 74% over the year, following a significant rise in the price of gold, a number of resource upgrades and, of course, the progress seen in the consent process. Investors will be hoping all three of these trends continue next year as progress is made towards developing the mine.

Unfortunately, 2025 also saw significant underperformance from a number of companies.

The most impactful decline this year has been that of EBOS Group, which fell 26%. The company had traded well until its August results, which saw the company take an abrupt turn for the worse.

The announcement placed future growth below market expectations, suggesting that it may take some time, years perhaps, for historical growth rates to return.

Sky City saw a significant transformation throughout 2025. Faced with difficult trading conditions and rising debt, the company made the choice to raise capital from its shareholders, raising $240 million through an issue at 70 cents per share. This led to a significant decline in the share price, which traded down 38% for the year, and saw dividends cancelled for the foreseeable future.

Ryman had a poor 2025. The share price fell 32%, largely prompted by its own decision to conduct a dilutionary capital raising to repay debt. The company raised $688 million in March at a price of $3.05. Unlike the Sky City capital raising, this price was not held and soon fell as low as $2.05. Ryman is another company hoping that 2025 was the year of the reset, and 2026 the start of the turnaround.

Spark was another company that struggled this year, declining 23%. This time, the catalyst for the fall was poor first half results in February, which prompted a large scale sell off of its shares. While the price has since seen a modest rebound, the question all shareholders will be asking is where the dividend lands in the coming years, and whether the pattern of consecutive downgrades has ended.

Another disappointment has been The Warehouse Group. It is no secret that the retail sector has struggled in 2025, with The Warehouse down 27%, Kathmandu and Michael Hill down 38%, and even Briscoes down 2%. However, the next few years should show investors whether the decline seen in the retail sector is cyclical or structural, and whether the emergence of international competitors from China and the US has simply changed the game in retail.

Hallenstein Glasson managed to buck the trend, trading up 22%. This is not the first time Hallenstein has outperformed in a difficult market, with the company even electing to increase its dividend.

Utility technology provider Gentrack struggled throughout the year. Its share price fell 26% over the course of the year, although the company affirmed its strong guidance late in the year to staunch the decline.

2025 also marked a challenging year for the NZX. While the company’s share price showed no signs of distress, up 1% while paying a healthy dividend, the continuing trend of a shrinking number of investment opportunities persisted throughout the year.

2025 saw seven departures from our exchange.

New Zealand Windfarms was taken over by Meridian Energy, Restaurant Brands was bought out by Finaccess, Marsden Maritime was purchased by a New Zealand based consortium that included Port of Tauranga, Manawa was acquired by Contact Energy, Vital Group (not the property trust) was purchased by Tait, Smartpay was taken over by Shift4 and Greenfern was placed into receivership.

An eighth delisting is expected shortly, with Bremworth, formerly Cavalier Carpets, expected to depart soon following a takeover offer from Mohawk Industries.

On the positive side of the ledger, 2025 also saw three new listings, with Uvre (now Minerals Exploration), Manuka Resources and Locate Technologies joining the local exchange. The combined market capitalisation of these three totals around $150 million, less than 10% of Manawa’s departing value.

Overall, our sharemarket is set to end the year modestly higher, with a sense of cautious optimism for the year ahead. Early economic signals look promising and, with the rate cut cycle seemingly at an end, investors will be looking for clues from the Reserve Bank regarding its next moves, which may be a lengthy plateau at current levels.

Our office closes for the year this Friday, 19 December. We re-open on 7 January. We wish readers a safe and Merry Christmas.

Chris Lee & Partners Limited

For those who wish to follow us on LinkedIn, please find a link to our page below: https://www.linkedin.com/company/107542123/

Market News – 8 December 2025

Ryman Healthcare’s half year result has been well received, with the share price rising 5% following the result. It remains well down from its historical highs, trading near $2.90.

Ryman’s result showed the company has finally achieved positive free cash flow for the first time in over a decade, producing $56.2 million. While the headline result of a $45.2 million loss will look alarming to shareholders, Ryman expects these negative property revaluations to have stabilised and bottomed out.

Its core focus remains better cost control and the sell down of existing stock. Development investment is being scaled back, while further efforts are being made to reduce vacant stock, which currently sits at 1,335 units.

Much of the focus for investors is on the balance sheet. Ryman raised significant capital in March of this year, via a rights issue, and had been criticised for taking on too much debt.

Gearing now sits around 28.5%, with debt at $1.65 billion. Following earlier refinancing, the RYM010 bond is the next major debt facility to reach maturity. Bondholders are due for repayment on the 18th of December next year. If refinanced, one imagines the coupon of 2.55% will see some upward movement.

The next maturity is not expected until 2030.

Guidance for next year has been increased from a midpoint of 1,200 ORA sales to 1,350. Further cost savings are expected, while capital expenditure is also expected to moderate further.

Ryman intends to provide a major update to shareholders on February 3, including a discussion on a return to dividends.

Genesis Energy hosted an Investor Day, outlining its progress for the year and plans for the year ahead.

Genesis shareholders have enjoyed a reasonable 2025, with modest share price gain and a slowly growing dividend. Across the electricity sector, Mercury has seen the greatest share price improvement this year, while Meridian and Contact have both declined throughout the year.

Genesis changed direction in November 2023, when the company announced its Gen35 strategy. Leadership made the decision that the best pathway forward was to shift profits from Kupe, the gasfield off Taranaki, towards renewable energy, particularly solar. This led to a reduction in the dividend, which was not popular among shareholders.

Two years on, the company has finished the first stage of this transformation. Its three retail brands, Genesis, Frank and Ecotricity, are now one brand. Its development team has grown, and a strategy is now in place for its largest asset, the Huntly Power Station.

Much of the announcement related to this and the future of Huntly.

For now, coal and gas remain the best available options. Genesis has successfully sold some of its future generation to competitors, by way of Firming Options. These give other companies the right to generation from Huntly and help Genesis reduce risk from its position as the backup generator.

Part of Huntly’s future will involve batteries. The first stage of a Battery Energy Storage System in the Huntly precinct is underway, with a second stage being considered for a 2027 decision.

Biomass was also discussed. Trials have confirmed that using wood pellets to replace the existing coal plants is viable.

The advantages of making this change are compelling. The price of coal is set internationally and exposes Genesis to price risk, while a domestic wood pellet market would offer more stable pricing.

The switch to biomass would also extend the life of Huntly’s Rankine generators, as coal faces declining viability from cost and regulatory change.

The two main concerns of this strategy have long been supply and economics.

On the supply front, Genesis now has early stage agreements with Carbona, Natures Flame and Foresta. These agreements matter for both sides. Genesis does not want to invest in technology without reliable fuel supply, and producers do not want to expand production without certainty of demand.

The economics are not yet settled. Much will depend on the price of coal and carbon pricing.

The use of the balance sheet was also discussed.

Capital recycling will form an important part of Genesis’ balance sheet management. Not every asset needs to be owned permanently. The company has a strong balance sheet and development capability.

The company remains optimistic about its target of mid to upper $500 millions by the 2028 financial year. Achieving this would give Genesis optionality, including faster development, external investment or higher dividends. While three years away, it provides a clear benchmark for judging progress.

The electricity sector remains one of our core industries, with reliable dividends, long histories of profitability and relatively low correlation to discretionary spending. Like Contact Energy, Genesis expects considerable growth in electricity demand, mostly from electric vehicles, and is preparing for this uplift.

Channel Infrastructure has announced a new strategic acquisition with the purchase of 25 % of the Somerton jet fuel pipeline.

The Somerton pipeline is part of Melbourne Airport’s jet fuel supply chain and is operated by ExxonMobil, who is also a joint owner. The pipeline supplies about half of Melbourne Airport’s jet fuel throughput.

The 25% stake cost $14.2 million AUD and was funded through Channel’s existing debt facilities. No equity injection was needed.

Channel is confident that the acquisition has long term growth potential. Melbourne Airport intends to add a third runway next decade, which will lead to more aircraft movements. Melbourne is one of Australia’s fastest growing cities and is forecast to become Australia’s largest city next year.

The Somerton pipeline will be owned by four groups, being Channel at 25%, ExxonMobil at 37.5%, and bp and Viva Energy at 18.75% each. The seller was CVC DIF, a European infrastructure fund manager.

The transaction is expected to be cashflow accretive by 2027. The acquisition also diversifies Channel’s assets and provides earnings exposure in AUD.

Channel noted the possibility of international acquisitions in its 2025 half year result. The company had highlighted Australia as a likely market for expansion.

Channel’s journey over the last five years has been impressive. Former chief executive Naomi James and current chief executive Rob Buchanan have guided the company through a significant transition. It is now a diversified and profitable business, paying increasing dividends with debt under control.

The strong share price performance over the last twelve months, up 51%, shows confidence in Channel’s strategy. The company has several other opportunities under review, and shareholders can expect an active period ahead.

Johnny Lee

Chris Lee & Partners Limited 

For those who wish to follow us on LinkedIn, please find a link to our page below:https://www.linkedin.com/company/107542123/