Chris Lee & Partners Ltd

Market News 21 July 2025

David Colman writes:

Losing wealth comes in many forms. Gamblers understand this well, expecting to win or lose based on immediate outcomes.

It might be a horse, a hand of cards, or a pokies machine that delivers a loss. In an instant, you're worse off.

By contrast, losing spending power gradually is harder to detect. Incrementally rising expenses chip away at the value of your income or savings.

Inflation is sometimes called invisible because it erodes value over time. Yet for New Zealanders, it is plainly visible in the rising numbers on rates bills, power bills, insurance premiums, and grocery receipts.

In the United States, the risk of inflation is increasing. Economists have consistently warned that tariffs, whether implemented or paused, lead to higher prices across the economy.

Recent US consumer price index data showed broad-based price increases over the past month, following a period of slower inflation earlier in the year.

This is a sign that US businesses have begun passing on a variety of tariffs to consumers.

Many companies initially increased inventories in anticipation of tariffs, absorbing some of the impact on their customers, but such a strategy can only delay price increases for so long without eventually hurting margins and profitability. Tariff costs look increasingly likely to be passed on to consumers which will only push prices higher.

The One Big Beautiful Bill Act will add to inflationary pressure with associated federal spending expected to be elevated by trillions of dollars funded by borrowing more.

Inflation which had eased from higher levels in 2022 now appears to be accelerating reducing expectations of a US Federal Reserve interest rate cut.

High inflation and high interest rates are closely related as central banks look to relieve inflation pressure with higher interest rates with the intention of limiting spending power.

Long term bond yields reflect these realities with US Treasuries now at levels not seen since before the GFC.

The 30 year US treasury yield is close to 5%, which can serve as a measure of various factors.

A higher US 30 year yield reflects concerns that the US government faces increasing difficulty repaying its ever-growing debt and risks destabilising financial markets.

It is also used as a benchmark to price long-term financing including corporate bonds, mortgages, car loans, student loans and credit card rates.

Sometimes there is no avoiding certain realities, even ones you wish were invisible.

World leaders have been realising at different speeds the following truths:

- Tariffs are inflationary and foster instability

- Debt-fuelled fiscal spending raises interest costs and undermines creditworthiness

- Country’s leaders on the other end of the telephone should be judged on their actions and not their flattery - sycophancy is likely harder to identify by the self-pretentious.

I am hopeful, probably naively so, that even the most powerful, even the self-aggrandizing in positions of power, can have a change of heart in the face of certain facts that shake, or shatter previously held beliefs resulting in them taking more pragmatic action.

My hope for improvement is slim - stretched household budgets seem to be better run than government balance sheets perhaps because too few in charge have ever run a household on an income that barely covers expenses while still trying to save for the future.

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Another gradual trend that could be described as invisible is demographic change which in New Zealand and many developed nations involves an ageing population.

Last week the Reserve Bank of New Zealand (RBNZ) published a report entitled ‘The Grey Wave’.

The report by Enzo Cassino and Anoushka Divekar was described by the RBNZ as a special topic considering ways that an ageing population could affect the New Zealand financial system.

It concludes that the economic impact of an ageing population is likely to be gradual but it is important for financial entities to understand and be prepared to manage the changes and any potential risks associated with an ageing population.

The report states that by 2050, nearly a quarter of the population is expected to be aged 65 or older resulting in a shrinking working-age population as a share of the total population.

The ratio of the number of older people to workers (the old-age dependency ratio) is expected to increase which is a common trend across high-income countries.

Population ageing is driven by two factors – life expectancy and fertility rate.

Life expectancy has increased steadily since the 1950s as healthcare has improved. People born in the 2010s on average can expect to live around 12 years longer than those born in the early 1950s and this trend is projected to continue to increase in the coming decades.

Fertility rates have fallen steadily due to factors such as higher education levels, lower infant mortality and increased female labour force participation.

Like many high-income countries, New Zealand’s fertility rate is expected to reach around 1.65 births by the 2030s - well below the population replacement level of around 2.1.

Population ageing can be delayed by inward migration with most migrants to New Zealand in the working-age group of 15-64 years and tending to be more highly qualified than the New Zealand-born labour force.

Migration numbers are not expected to be high enough to completely counteract the effects of an ageing population and in the longer term, migrants will also add to the ageing population.

Another offset is that older people are working for longer before retiring.

There are many potential factors associated with an ageing population that will likely change the nature of the financial system potentially exposing vulnerability.

As more people enter retirement, labour will become increasingly scarce, leading to shortages of workers in many industries.

Productivity growth may slow due to labour scarcity encouraging firms to substitute workers for more capital, such as machinery and new technology, possibly increasing investment demand.

The key findings of the report included:

- Overall savings are expected to increase as older workers prepare for retirement.

Increased national saving from an ageing population could improve the current account balance and the net international investment position, with foreign exchange implications but the size of this impact will depend on the rate of increase in national saving in New Zealand relative to the increase in savings in other countries.

Other countries are facing similar conditions.

- Changes in savings behaviour will impact interest rates.

An older population has contributed to lower neutral interest rates in recent decades and is expected to continue putting downward pressure on them in the near term.

Other factors could offset this impact, making projections of the neutral interest rate uncertain.

The size of savings drawdowns is difficult to estimate, as individuals may not have clarity over how long they need their savings to last, or whether some will be left as inheritance for younger generations.

Ageing populations have contributed to lower interest rates in recent decades, and this is expected to continue in the near term in New Zealand and other wealthy countries with interest rates here influenced by interest rates in larger economies.

Older investors are more likely to invest in lower risk assets, such as term deposits, or switching from higher risk to lower risk KiwiSaver funds due to the need for a steady income stream and to protect against having to sell assets at a time when prices are low.

Low interest rates might however encourage investors to undertake riskier investments or alter investor behaviour such as with older Japanese retail investors who borrow yen at low interest rates and invest in foreign currency that pays higher interest rates.

Beyond the next decade, the impact of population ageing on interest rates is more uncertain as more people retire, aggregate savings will eventually be run down, which will push interest rates up with any changes to interest rates dependent on the magnitude and pace of savings withdrawals, and how much deposits grow in the next few decades.

As life expectancy increases, individuals may become more inclined to explore other options to ensure a stable flow of income during their retirement, such as reverse mortgages or annuities.

Currently, only two New Zealand banks (Heartland Bank and SBS) offer reverse mortgages with around $1 billion in loans compared to the total value of housing loans of around $360 billion.

- The strength and speed of monetary policy transmission to the real economy may change. Increased expenditure on healthcare and superannuation will impact fiscal policy.

Monetary policy strategy may change with considerable uncertainty about the direction of future changes in the neutral interest rate.

If the neutral rate does decline, this may make it harder to provide enough stimulus through Overnight Cash Rate (OCR) cuts in situations where expansionary monetary policy is necessary.

As a result, the probability of having to use non-traditional monetary policy tools, such as large-scale asset purchases, in a business cycle may increase. The Bank of Japan for example has bought equity-based exchange traded funds for years to add to its asset base.

Older people are more likely to have paid off their mortgages and are less likely to be in employment which means that the negative impact of tighter monetary policy on household cashflow might be limited.

Fiscal policy may be more constrained with The Treasury projecting health expenditure to grow from around 7 percent of GDP in 2021 to over 10 percent by 2061 under a scenario based on historical trends.

Gross expenditure on superannuation is expected to increase over this period from 5% of GDP to 7.7% of GDP.

Tax revenue is expected to decline as labour force participation declines.

Withdrawals from the New Zealand Superannuation Fund (NZSF) will contribute to fund superannuation expenditure but most superannuation expenditure will still be funded by tax revenue.

The government may be forced to increase debt, increase taxes, or reduce expenditure.

As a result, there is a risk that the government’s ability to support economic activity with fiscal policy may be more constrained in response to an adverse shock, such as the COVID-19 pandemic increasing risks to macroeconomic stability perhaps requiring more stabilisation from monetary policy managed by the RBNZ.

The NZ Super Fund (NZSF) is described as playing a ‘tax smoothing’ role in funding superannuation expenditure. By 2060, the NZSF is expected to contribute only around 6.6% of the cost of superannuation, net of tax.

- Lower interest rates could increase prices of assets such as housing and equities, but lower risk appetite of older investors may increase demand for less risky assets. The types of houses in demand could change.

Changing demographics could impact on asset valuations and demand as consumer preferences change with age.

Lower interest rates would be expected to put upward pressure on house prices in the near term but in the future, as retirees begin to draw down on their savings, this may put upward pressure on interest rates and downward pressure on house prices.

Savers benefit from higher interest rates, but older individuals will still be impacted by the effect of interest rate changes on asset prices.

Preference for the types of housing may also change as the population ages as older households will likely prefer single storey dwellings, or smaller properties.

Slower growth in the working age population would lower growth in demand for larger houses potentially affecting the composition of new housing construction.

As more savings are shifted into more stable investments like deposit accounts, this may see reduced participation in equity markets perhaps offset by the impact of lower interest rates noting older investors may also continue to invest in equities to benefit from the better expected returns than in bank deposits.

- Banks’ lending and funding may be impacted. Deposit funding may increase, while credit demand for housing could decline. If demand for housing loans declines, banks may increase other types of lending or expand provision of other services, such as wealth management.

An ageing population could impact banks’ balance sheets as deposit supply increases and demand for credit declines with a shift of savings into bank deposits, this could see an inflow of funding for banks reducing demand for funding from overseas wholesale markets.

Older bank customers have less need to borrow as they are more likely to own their houses outright and are less likely to start a new business than younger bank customers.

Consumption may shift away from goods and towards the services sector as individuals get older, further reducing the need for credit.

Lower credit demand from households and businesses may mean that banks expand their purchases of other assets such as government bonds.

Banks may also increase their provision of other services and products to households and businesses such as increasing wealth management services to meet the demand from an older population.

As banks increasingly provide their services through digital platforms, older bank customers may find it harder to adopt new technology with older bank customers more inclined to use cash for transactions.

This may become less of an issue going forward as more people will grow up using digital banking technology.

The RBNZ is working on the future of money, including how access to cash will be impacted by technological changes, such as growth in electronic payments and closure of physical bank branches with a goal of encouraging innovation in payments systems while still supporting continued access to cash.

The report clearly indicates demographic change is a longer-term trend that will have implications for investors over the decades ahead.

Monitoring longer term indicators such as fiscal imbalances, household asset allocations and trends in sectoral credit demand will be important for analysing the impact of an ageing population on the financial system.

If significant vulnerabilities develop, the RBNZ will assess the potential impact on the financial system and consider whether changes to its prudential policy settings are needed.

The risk of inflation and the effects of demographic change will continue to be an important part of investment strategy - a strategy that will have to include the effects of the above trends and other factors relative to the specific investor.

Targeting returns at a rate above the Consumer Price Index (CPI) would not be an ideal strategy to cover a particular investor’s rising costs as in reality a household’s costs can often rise well above the RBNZ’s measure of inflation. 

Seeking to achieve returns that cover rises in costs, with investments that can adapt to changing economic conditions, for someone with their own specific needs will continue to be an important task.

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Transpower Bond Offer

Government-owned Transpower has announced its intention to launch a new senior bond offer to retail investors.

The bond is expected to offer a fixed interest rate of approximately 4.20 - 4.30% per annum, with a 5-year term.

Please note that Transpower will not be covering transaction costs for this offer, so brokerage will apply.

If you would like to be pencilled in for an allocation, pending further details, please let us know.

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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:

23 July – Christchurch (AM only) – Fraser Hunter

24 July – Auckland – Edward Lee

25 July – Auckland – Edward Lee

20 August – New Plymouth – David Colman

21 August – Wairarapa – Fraser Hunter

28 August – Christchurch – Fraser Hunter

Chris Lee & Partners Limited

Market News 14 July 2025

David Colman writes:

Xero (XRO.ASX), headquartered in Wellington, recently announced the US$2.5billion acquisition of US-Israeli bill paying company, Melio.

Funding the acquisition involves a capital raising including an already successfully completed A$1.85 billion Institutional Placement, with approximately 10.5 million new shares issued at A$176 per share, and a Share Purchase Plan allowing eligible shareholders to apply for up to A$30,000 worth of new shares at the lower of the same price as the placement (A$176) or a 2% discount to the 5 day volume weighted average price (VWAP) of Xero shares up to and including the closing date (currently scheduled for Monday, 21 July).

Xero provided its strategic rationale for the acquisition with the following points:

- Solves Critical Customer Need – Accounting and payments are critical for US Small to Medium Businesses (SMBs) which is a large and growing total addressable market. 

- Strategic Fit – Xero is targeting growth with a ‘3x3 strategy’ which includes 3 key markets (Australia, UK, and the USA) and 3 core products (accounting, payroll, and payments). The strategy aims to deliver integrated solutions for the needs of small businesses in those regions. Melio extends Xero’s USA payments business as part of its broader US growth strategy.

- Melio’s Team and Platform have achieved consistent growth, are well regarded by customers and the industry, and extend reach to millions of US SMBs.

- Synergies include that the Melio platform is highly complementary to Xero’s and improves prospects for US investment seeking scale and long-term global growth. 

The closing date for applications is 21 July but New Zealand based shareholders that choose to participate may wish to apply earlier to limit the risk of missing out due to any complications or delays they might experience with the application process.

The purchase of Melio joins a lengthy line of acquisitions the company has completed in recent years as the company pursues growth opportunities and greater market share.

Xero has been an exceptionally successful New Zealand originated company which initially listed on the NZX in June 2007 at NZ$1.00 per share to raise $15 million and is now traded exclusively on the ASX after delisting from the NZX in 2018 and now has a market capitalisation of close to A$29 billion (NZ$31.5 billion).

XRO shares traded on Friday 11 July at below A$176 which was the price for the placement raising the possibility that the 2% discount to VWAP calculation may apply for the Share Purchase Plan if the shares continue to trade similarly.

Clients with XRO.ASX shares are welcome to contact us to discuss the Share Purchase Plan. 

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On July 4, USA’s Independence Day, the US House of Representatives voted for the One Big Beautiful Bill Act (OBBBA) to be implemented.The OBBBA is a budget reconciliation law determining US federal tax and spending policies.

The bill is controversial and was only narrowly voted for with concerns that it will result in accelerating US national debt increases which would likely incur higher interest costs.

So far New Zealand companies have been reasonably quiet in regard to how the OBBBA may affect them with Infratil (IFT) being an exception.

Infratil was following the changes to US tax policy, federal spending priorities, including changes to tax incentives for renewable energy projects closely due to potential issues its US based Longroad Energy company would need to cater for.

Infratil noted that while the legislation scales back incentives introduced under the Inflation Reduction Act of 2022 and concluded that the amended legislation is more favourable for Longroad than expected at the time of its annual results in May which referenced the original House version.

Infratil’s announcement included a table that highlighted certain OBBBA provisions and their effect on Longroad compared to the original house version.

Provision: Tax Credit Eligibility (ITC / PTC)

Original House Version: Projects must have started construction within 60 days of enactment and be placed-in-service (PIS) by 31 December 2028.

Final Version: Projects that have started construction within 12 months of enactment maintain full eligibility to tax credits and have four years to be PIS. Projects starting after the 12 months must be PIS by 31 December 2027.

Provision: Transferability of Tax Credits

Original House Version: Eliminated for projects not PIS by 31 December 2028.

Final Version: Transferability preserved for most credits.

Provision: Foreign Entity of Concern (“FEOC”) Rules

Original House Version: FEOC restrictions begin 1 January 2026. Projects using components from FEOCs (e.g., China, Russia, North Korea, and Iran) are ineligible to claim tax credits.

Final Version: Applies to projects that have started construction after 31 December 2025. Eligibility is subject to defined material assistance thresholds (starting at 40% for solar and 55% for BESS and increasing from 2026 onwards).

Provision: Wind / Solar Excise Tax

Senate Version: Up to 50% excise tax for wind and up to 30% for solar for violating FEOC material assistance rules.

Final Version: No excise tax. In summary, projects now have longer to safe harbour (12 months vs. 60 days) and longer to build (4 - 5 years vs. ~2.5 years), tax credit transferability remains intact, and FEOC requirements are more navigable with the ability to safe harbour to provide more time to transition alongside local efforts to increase U.S. manufacturing capacity.

Infratil expects more clarity on implementation following an executive order signed on 7 July 2025 which directs the U.S. Treasury to issue updated guidance within 45 days to ensure construction-start rules are not circumvented through artificial acceleration or manipulation.

The guidance may involve a narrower interpretation of safe harbour provisions though any changes are expected to be prospective in line with past practice.

The executive order reaffirms the US Treasury’s mandate to implement FEOC restrictions which apply to projects that begin construction after 31 December 2025.

FEOC rules will need to be navigated carefully for battery storage projects given reliance on Chinese imports (for projects that have not already started construction by the end of 2025).

Longroad’s strong relationship with First Solar and its American-made solar technology were noted as allowing it to more-easily navigate FEOC rules for solar projects and the company was described as well positioned to navigate the changes, viewing the legislation as a strategic opportunity rather than a setback.

Longroad has over 30GW (for context: New Zealand’s total electricity generation is about 40GW) of utility-scale wind, solar, and storage projects in its development pipeline, and has confirmed a focus on leveraging the Bill’s safe harbour provisions by meeting key construction and in-service deadlines to preserve eligibility for federal tax incentives across a significant portion of its portfolio, supporting ongoing development.

Approximately 2.6GW of projects are safe harboured (up from 1.8GW at the time of IFT’s annual results), with additional safe harbouring by the end of the year targeted to enable it to meet its target of 1.5 GW on average per year of new project starts across 2025 to 2027 with potential that the safe harbour mechanism will be available to qualify a further 1.5GW per year up to 2029/2030.

Tax credits have been highly beneficial for Longroad, and the final legislation provides more time than expected for the industry to transition.

Longroad’s long-term aspirations are underpinned by commercial demand, combined with expected growth in U.S. electricity consumption driven by electrification, data centre expansion, and domestic manufacturing. 

Longroad’s team are expected to provide further updates as part of Infratil’s annual Investor Day in September.

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Retirement sector companies Summerset and Ryman released announcements last week which indicated a modicum of improvement for a sector that has mostly struggled since values last peaked in 2021.

On Tuesday 8 July Summerset Group (SUM) which houses over 8,500 residents in its 37 villages reported 402 sales for the quarter ending 30 June 2025, comprising 222 new sales and 180 resales.

CEO Scott Scoullar noted continued high demand for its retirement living offering but described the sales environment as not easy.

It was the company’s highest ever first half total sales with 692, up 18% on 1H24.

SUM’s diverse landbank was described as an advantage with over 46% of sales coming from outside Auckland, Wellington and Christchurch.

130 (new and resales) more villas and apartments were contracted in the past six months than in 1H24.

Sales at the company’s flagship St Johns village include 50% of the apartments, and almost 60% of the memory care apartments and care suites at St Johns either under contract or occupied ahead of internal budgeting noting the size of the village.

SUM remains on track to deliver its FY25 forecast of 650 to 730 homes, including the delivery of village centre buildings at Cambridge, Waikato, and Cranbourne North, Australia as well as the first villas at its Chirnside Park village.

SUM will release its Half Year 2025 results on 28 August 2025.

On Friday 11 July Ryman Healthcare (RYM), which houses over 15,000 residents in its 49 villages, provided a first quarter update.

RYM reported 337 sales of occupation right agreements (ORAs) for the quarter ending 30 June 2025 which included 73 new sales and 264 resales.

The sales figures reflect retirement village units only and exclude refundable accommodation deposits (RADs) and ORAs on aged care accommodation.

Total sales were 11% below the same period last year - resales were down 5% and performed better than new sales which were down 28%.

Total sales were up 12% on Q4 FY25 seemingly buoyed by targeted promotions and sales incentives, price optimisation, and continued investment in front-line development.

CEO Naomi James commented that RYM has continued to improve contracting and sales levels through the quarter across most regions, including in Auckland which has experienced more challenging property market conditions recently.

Occupancy in RYMs mature aged care centres was at 96.2% in Q1 FY26, up slightly compared to 96.0% in Q4 FY25.

The main building at Kevin Hickman opened and welcomed its first care residents in early July.

Full Year 2026 sales of ORAs were described as currently tracking towards the upper end of the previously guided 1,100 to 1,300 (Full Year 2025: 1,523).

The RYM update was received positively with an increase in its share price following the update with the share price as high as $2.59 on Friday but is still down 41% year to date.

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PGG Wrightson (PGW) provided a lift to Market Guidance on Friday.

PGW updated operating EBITDA2 guidance for the financial year ending 30 June 2025 to around $54 million (up from $51 million).

This forecast reflects stronger-than-anticipated performance across several businesses and continued resilience in New Zealand’s agricultural sector.

Chair, Garry Moore commented that the agricultural sector has rebounded and has built momentum as the financial year has progressed in contrast to other parts of the economy with improved farmer confidence, favourable growing conditions, and solid commodity prices contributing to a more positive operating environment.

PGW provided the following key driver:

- Livestock and Real Estate:

Agency businesses delivered a strong turnaround from FY24.

Livestock earnings are up, driven by elevated commodity prices particularly sheep values, which rose approximately 26% pre-Christmas and have remained steady.

Real Estate activity increased, supported by improved confidence in dairy and the red meat sectors, alongside recent interest rate reductions.

- Commodity Strength:

Dairy and beef prices remained robust throughout the year, supporting farmgate returns.

Lamb prices held at elevated levels, providing welcome cashflows. Horticulture returns, particularly for kiwifruit and apples, have also been positive, with kiwifruit exports on track for a record year.

- Sentiment:

Full Year 2024 appears to have marked the bottom of the cycle.

Improved economic signals, including lower inflation and interest rates, are supporting renewed optimism.

Rural real estate enquiries have strengthened, particularly for dairy, beef, sheep and select horticultural properties.

While the overall outlook is positive, we remain mindful of ongoing challenges in the wool, viticulture, and arable sectors.

Retail & Water business performance is broadly in line with FY24.

More information on PGW Group's performance will be expected beyond the revised guidance which remains subject to audit with PGW scheduled to issue its full year results on 12 August.

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Transpower Bond Offer

Government-owned Transpower has announced its intention to launch a new senior bond offer to retail investors.

The bond is expected to offer a fixed interest rate of approximately 4.20 - 4.30% per annum, with a 5-year term.

Please note that Transpower will not be covering transaction costs for this offer, so brokerage will apply.

If you would like to be pencilled in for an allocation, pending further details, please let us know.

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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:

23 July – Christchurch – Fraser Hunter

24 July – Auckland – Edward Lee

25 July – Auckland – Edward Lee

David Colman

Chris Lee & Partners Limited

Market News 7 July 2025

Johnny Lee writes:

Metro Performance Glass’s sorry story continued last week, with the glass supplier finally publishing details of its long-awaited recapitalisation plan.

The company intends to raise up to $24 million from a combination of existing and new shareholders, at a price of only 3 cents per share.

Shareholders may recall that this is not the only corporate activity taking place within the company.

MPG received a non-binding proposal in December last year, seeking to buy the entirety of the company at 8 cents per share. Importantly, the proposed offer was from a major competitor, Viridian.

Rightly or wrongly, MPG did not pursue the proposal. At the time, the company considered three major factors when coming to this decision:

Firstly, MPG was concerned about the risks related to allowing a competitor to conduct due diligence on the company. This is customary for takeovers, but in the case of a direct competitor, would naturally yield commercially sensitive information and would require strict controls.

Secondly, MPG considered a lengthy regulatory approval process would be detrimental to the company, effectively forcing it to pause its strategy as the takeover process played out. 

Lastly, MPG also believed such a takeover would inevitably fail to gain Commerce Commission approval, based on two major competitors merging within the same industry.

Ultimately, the offer was rejected by the MPG board.

This has not deterred Viridian, which has recently applied to the Commerce Commission for approval to acquire MPG. Time will tell whether this proceeds further.

This information is to provide context to the situation Metro Performance Glass now finds itself in.

MPG is now raising at least $15 million (up to $24 million) of new capital at 3 cents per share, a steep discount to the last traded price of 4.9 cents. At least $6 million of this will be raised directly from a new shareholder, Amari Metals, which intends to become a major shareholder of the company.

Such a significant placement will require shareholder approval, with a meeting planned for late August. Shareholders will need to determine whether the dilution and surrendering of some control to Amari Group is worth the potential upside this external capital and relationship may bring.

MPG will solicit an independent view on the offer from Grant Samuel, to assist shareholders with the vote.

Metro Performance Glass has struggled since listing.

After debuting in 2014 at $1.70 per share and a valuation of over $300 million, the company’s market capitalisation has now sunk below $10 million and is one of the smallest companies on our exchange. It dwells with the likes of the medicinal cannabis companies and the empty “Reverse Takeover” shell companies.

The company saw a net loss after tax this year of $13.5 million. Ten years ago, the company made a profit of $9.6 million and paid a dividend of 3.6 cents per share.

The vote next month will be a critical one, and shareholders may find neither option palatable. One way or another, Metro Performance Glass will face a major fork in the road. So far, that road has been anything but smooth.

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The Warehouse has provided a brief trading update, as the company continues to struggle in a difficult retail environment.

The company has been making more regular updates of late, with a noticeable effort to keep shareholders informed.

The third quarter saw sales growth of 2.2%, however the fourth quarter of the financial year – which ends in four weeks - has been challenging. Consumer wallets remain closed, competition is fierce, and margins are tight. 

This broadly aligns with the other retail stocks, which have reported similar conditions. While Briscoes and Hallenstein have both held their ground, the likes of Michael Hill, Kathmandu and The Warehouse have seen steep falls in value, in a year when the broader market has been flat.

The Warehouse also updated guidance, indicating it is now expecting the full-year earnings result to be in the range of a $5 million loss and a $5 million profit. Last year’s result was a substantial loss, after the write-down of the Torpedo7 asset.

As the company stated in its half year result, “we aren’t relying on an economic recovery to fix our business”. The company is actively trying to reduce costs, improve inventory management and cut debt.

Ultimately, a company cannot trend downwards indefinitely. 2022 saw a 49% decline in net profit. 2023 saw a 56% decline. 2024 saw a 67% fall. 

The update from The Warehouse is another data point showing the retail sector continues to face significant headwinds. Competition is tight, and consumers are still not returning to brick-and-mortar stores. 

Hopefully, the second half of 2025 will show more signs of recovery for the beleaguered retailers.

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Santana Minerals has updated its November Pre-Feasibility Study, accounting for the latest findings and valuations.

The gold price has climbed since the November report. November’s report was based on a spot price of A$4,000 per ounce, with the latest update priced at $4,950. Of course, this will fluctuate during the mining process, but last week’s snapshot is based on this figure.

Reserves were also updated.

This has obviously meant a steep increase in all metrics: revenue, free cash and taxes paid. 

First gold is still planned for early 2027, with the timeline updated following the recent delays. It now sits at the end of the first quarter of the calendar year – late March.

All of this, of course, assumes a successful completion of the consenting process. The company notes that the submission is imminent.

Santana had one other update last week, announcing a conditional purchase of the neighbouring Ardgour Station land.

The total cost of the acquisition was NZ$25 million, with $2 million of this acting as a non-refundable deposit. Settlement is subject to project consent. $5 million of the $25 million will be settled by a placement of shares in Santana Minerals. 

While this was a brief announcement, it secures freehold ownership of the land which covers most of the infrastructure for the development and removes another risk from the project.

The purchase of the land will also remove the gross production royalty (1%) for a significant proportion of the orebody within the various deposits.

Hopefully, the next announcement will not be far behind!

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The Contact Energy takeover of Manawa Energy has received final approvals and takes place this Friday, 11 July.

All shareholders will receive $1.12 cash, and 0.583 Contact shares, per Manawa share held. Note that this ratio is slightly higher than the Initial Exchange Ratio quoted in the November announcement (which was 0.5719 shares).

Bondholders will be repaid “as soon as practicable” from this date.

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Travel

Lower Hutt – 9 July – Fraser HunterChristchurch – 23 July – Fraser Hunter

Please contact us if you would like to make an appointment to see any of our advisers.

Chris Lee

Chris Lee & Partners