Chris Lee & Partners Ltd

Market News 27 July 2026

Johnny Lee writes:

Last week’s inflation data has strengthened the calls for a rate hike at the next RBNZ meeting on September 1, as inflation reached an annual rate of 4.1%. This is the highest annual rate of change since December 2023.

This is now well outside the 1% to 3% mandate of the Reserve Bank. Economists had broadly expected this result, affirming forward expectations rather than changing them.

While this data was expected, it is important to note that it reflects the annual rate up to June. This June quarter saw a significant increase in the price of oil. The end of June saw this decline markedly, before immediately returning to elevated levels following the re-escalation of hostilities.

Outside of the cost of petrol and petrol by-products, electricity and council rates remain a core driver of inflation. This was partially offset by a decline in the price of fruit, and a significant decline in the cost of domestic accommodation services.

For now, the question will be how many hikes are seen in the last three meetings of the year (September, October, December). Two hikes remain the base assumption, but the likelihood of a third is rising and a sustained, elevated oil price may lift it further.

Mercury Energy, one of the big four of New Zealand electricity generators, has announced it has purchased a 12.7% equity stake in data centre developer Datagrid Holding Group. The purchase price of $30 million USD implies a valuation of around $420 million NZD.

The Datagrid Data Centre project, described as an “AI factory”, is expected to be operational in 2028. It will become one of our largest electricity uses in the country, equivalent to around 6% of our national demand.

Alongside this, Datagrid Is developing a subsea cable system connecting Invercargill to Sydney and Melbourne.

This is not the first tie up between Mercury and Datagrid. Mercury signed a 140MW Power Purchase Agreement with Datagrid in March, as part of its plan to derisk its development pipeline.

These PPA’s are an increasingly important part of our electricity infrastructure, designed to provide users (Datagrid) with a guaranteed supply of electricity and confidence around costs, while giving suppliers (Mercury) known demand to “build into”. 

The 12.7% stake gives Mercury shareholders, which of course includes the Crown, a direct exposure to the project and the underlying AI industry. Detractors of the project, particularly those concerned about the lack of public ownership or the additional strain on the electricity supply, will be pleased with these developments.

Overall, it is an interesting development for Mercury shareholders. Mercury has historically been in the business of generating and retailing electricity, and this move towards data center and fibre optic cabling ownership is a step towards owning “the other side” of the demand and supply equation. 

Holders of the Precinct Convertible Notes, PCTHB, should take the time to refamiliarise themselves with the product, as we approach the conversion date of 21 September.

These notes were three-year securities issued in 2023. In September, the 65 million notes will likely convert into shares. While Precinct does retain the right to repay these in cash, this was not what occurred with the previous series, PCTHA. In the event that it repeats this course of action, investors will need a plan for these notes.

If converted into shares, this is done at a price equal to the volume weighted average price of the share in the 20 business days prior to the conversion announcement date. For the sake of simplicity, if the average price lands at $1.10, the 65 million shares will convert into approximately 59.1 million shares.

The Conversion Price Cap of $1.40, which was designed to offer potential upside for noteholders, was since reduced to $1.3449 following a capital raise late last year. Ultimately, the current price is nowhere near these levels and will almost certainly not be a relevant factor upon conversion.

Assuming the notes are converted into new shares, noteholders should now be considering their options. There are three scenarios that could be considered.

For those content to hold Precinct shares long-term, the simple solution is to wait until September and become a shareholder in the company.

For those seeking a return of their capital, the two remaining options become relevant.

The first and most obvious is to attempt to sell the notes prior to conversion. This provides a guarantee of value but requires a buyer to emerge. At present, there are no buyers. More on this later.

The reason noteholders may consider an early sale is to shield themselves from the possibility of the share price deteriorating rapidly upon conversion. This is exactly what occurred in 2021, when the previous iteration of convertible notes reached their conversion date.

It is important to note that these were converted at their cap, meaning that the early sellers were capturing a profit. This will not be the case in September, barring a miraculous recovery in the share price.

The second option is to await conversion into shares, then attempt to sell the shares. The shares are far more liquid than the notes, but this does expose the noteholder to the possibility of an uncertain capital loss (or gain).

Logically, the conversion will lead to an influx of selling. PCTHB is a hybrid instrument, and many holders simply want to collect interest and receive their principal back upon conversion. With 60-odd million new shares created, some of these will seek a quick exit to recoup this principal.

The aforementioned lack of buyers in PCTHB makes for an interesting proposition too. 

In theory, a buyer of PCTHB at a discounted price, where the market currently trades, buys a single interest payment and a discounted Precinct share. As we near the conversion date and gain greater clarity with regards to Precinct’s preference for a share or cash conversion, we will likely see buyers of Precinct shares pivot to the convertible note, and liquidity emerge, as the note becomes a more straightforward arbitrage between the two instruments.

Holders of the PCTHC, the third iteration of convertible notes maturing next year on the same day in September 2027, should also be watching this process carefully, as a similar decision will be required at the time. 

Noteholders of PCTHB are facing a decision over the coming two months. Those noteholders that are comfortable remaining a shareholder in Precinct long-term do not need to act. However, those expecting a return of their principal will need to consider their options, as a sale of either the Precinct shares (after the 21st) or the Precinct notes (prior to mid-September when trading ends) will be necessary.

Travel

Edward Lee - Auckland (Ellerslie) - 6 August

David Colman - Whanganui - 6 August

David Colman - New Plymouth - 7 August

Edward Lee and Gavin Parkes – Wellington – 10 August

Johnny Lee – Taupo – 1 September

Johnny Lee – Hamilton – 2 September

Johnny Lee – Tauranga – 3 September

Johnny Lee – Christchurch – 7 September

Market News 20 July 2026

David Colman writes:

Channel Infrastructure NZ (NZX: CHI, ASX: CHI) has announced further progress on the redevelopment of its Marsden Point Energy Precinct.

Channel is New Zealand’s largest fuel import terminal business, storing and distributing 40% of New Zealand’s refined fuel imports including 80% of the country’s jet fuel and is developing an energy precinct at Marsden Point, which was an oil refinery until operations concluded in April 2022.

Channel has entered into an agreement with Integrate Scope DMCC for the sale and removal of its decommissioned Continuous Catalyst Regeneration (CCR) Platformer unit (CCR).

The CCR Platformer unit is a building sized 3D maze of steel pipes, scaffolding, catwalks, and chimneys that occupied a relatively small part, in the middle, of the greater Marsden Point facility (itself the size of a small town).

Channel will receive net proceeds of US$5.95 million (NZ$10 million) from the sale of the CCR with a net deposit of US$1.2 million (NZ$2 million) on signing and the balance to be received in three instalments across full year 2027 in line with the deconstruction programme of work and shipping schedule.

Channel’s demolition provision relating to the CCR was approximately NZ$3 million and these costs are no longer expected to be incurred due to the sale.

The removal of the CCR will make way for the construction of the proposed Marsden Point Biorefinery.

The Biorefinery project is being developed by a consortium led by Seadra Energy, and includes Qantas, Renova, Kent, ANZ NZ and now also Air New Zealand.

The proposed biorefinery is expected to produce biodiesel, Sustainable Aviation Fuel (SAF), and urea and other fertilisers, all of which would be manufactured from biogenic feedstock sources (including agricultural and local government byproducts and residues).

The Biorefinery’s capabilities have been expanded to include the manufacture of fertilisers from byproducts of biorefining processes with Ballance Agri-Nutrients Limited forming an alliance with the Seadra consortium that would enable the production and offtake of fertilisers.

The local production of fertilisers is intended to help supplement manufacturing at the Kapuni Project (a South Taranaki renewable energy and green hydrogen project) and supply from overseas.

The plant’s manufacturing capacity of drop-in fuel products from domestic sources will strengthen New Zealand’s resilience to global supply chain disruptions and strengthen its fuel and economic security. An estimate of up to 400 million litres per year of low carbon renewable fuels could be available for the domestic market during periods of fuel supply chain disruption.

The Marsden Point Biorefinery is anticipated to attract $1 billion of private sector investment to fund the construction of greenfield units as well as the repurposing of existing decommissioned refinery equipment and infrastructure.

The early contractor involvement (ECI) phase of project development has begun with strategic partners, to support final assessments of project costing, scheduling and design to enable the project to work towards a final investment decision.

The expansion of the project scope does not impact the consortium’s view of the overall timing of the project. The biorefinery project remains subject to the successful conclusion of the funding process, commercial discussions between the parties and any necessary regulatory approvals.

Channel has ambitious plans and identifying ways of reusing and realising value from its decommissioned assets is well supported and should be commended.

This project is expected to benefit Northland, with the potential for hundreds of jobs, and New Zealand, strengthening the country’s fuel supply security.

Channel will announce its half year results on 28 August 2026.

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Skellerup (SKL) increased its forecast full year 2026 net profit after tax (NPAT) to a range of $64 to $65 million.

This compares favourably to earlier guidance of $57 to $62 million and full year 2025 NPAT of $54.5 million.

CEO Graham Leaming described Skellerup’s sales in the US market as higher than anticipated.

The USA is Skellerup’s largest market, and demand was higher for its products related to potable water, wastewater, dairy, footwear and marine applications in the fourth quarter.

Sales of dairy consumables in the New Zealand market were also higher than expected.

Lower US tariff costs and a weaker NZD also contributed to the higher-than-expected fourth quarter earnings.

The company’s leadership, procurement and manufacturing teams were noted to have responded outstandingly well to deliver to customers, likely solidifying customer retention.

The company has experienced a period of significant uncertainty on the availability of key materials, but risks associated with security of supply appear to have receded.

Skellerup will announce its full year 2026 results on 20 August 2026.

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Two of New Zealand’s largest retirement village operatorshave recently released updates.

Summerset Group (SUM) reported 448 sales of occupation rights for the quarter ending 30 June 2026.

There were 221 new sales in line with the second quarter 2025 and 227 resales (an increase of 26% versus the same timeframe last year).

Chief Executive Scott Scoullar was pleased with both the quarter’s sales and performance over the first six months of the year.

Total first half (start of January to end of June) sales were up 17% on the same period last year, with new sales up 12% and resales up 23%.

The company opened four new village centre buildings during the first half of the year including in Cambridge, Whangārei and Waikanae in New Zealand and in Cranbourne North, Australia.

At Cambridge, 45% of the available serviced apartment, care and memory care stock is already occupied or under contract, with 43% at Whangārei, and 30% at Waikanae.

At Cranbourne North in Victoria, Australia, 21% of the village centre building assisted living apartments are occupied or under contract.

Sales momentum at Summerset St Johns in Auckland had also continued during the quarter and was described as remaining one of the company’s strongest-performing new sales villages, averaging 1.6 sales per week in the second quarter.

Summerset’s new villages have shifted its portfolio towards a greater weighting of care and apartment sales consistent with its development pipeline, and guidance provided in February 2026.

A disciplined approach has been taken since the start of the Iran conflict resulting in a reduction to its New Zealand build rate in line with economic conditions. The New Zealand delivery of new homes for the 2026 years is forecast to be between 600 and 650 (a reduction in build rate of 50 homes).

SUM remains on track to deliver the previously forecast 100 to 150 homes in Australia keeping the overall forecast to between 700 and 800 homes.

Summerset will release its half year 2026 financial results on Thursday 27 August.

Ryman Healthcare (RYM) provided its First quarter trading update reporting 325 sales of retirement living occupation right agreements (ORAs) for the quarter ended 30 June 2026.

RYM achieved 265 resales and 60 new sales in its first quarter of full year 2026.

Resales of occupation rights were consistent with the trading update provided in its full year 2026 results, and resale volumes remained in line with the same period last year with serviced apartments accounting for a higher proportion of the mix reflecting the company’s sales strategy and growing demand for assisted living.

Net resales contract volumes increased by 7% on the same period last year.

CEO Naomi James remarked that resales had held up despite the external impacts of global events on housing market conditions with new sales stock reduced by 65 units to 414 units in quarter 1 full year 2027.

New sales of serviced apartments were noted at the Bert Newton Village in Melbourne and Kevin Hickman Village in Christchurch as a sign of strong performance in the quarter.

Further stock reduction and progress in full year 2027 is expected to contribute towards Ryman’s $500 million cash release target scheduled for full year 2029.

Ryman remains on track to deliver its full year 2027 build guidance of 157 to 168 retirement living units and aged care beds at Patrick Hogan Village in Cambridge and Richard Hadlee Village in Christchurch including 60 aged care beds, 71 serviced apartments and 26 to 37 independent living units, with deliveries expected in the second half.

Within the quarter, 15 townhouses at Patrick Hogan were released for pre-sale, with around two thirds contracted in the first week.

Demand for Ryman’s aged care offering was described as remaining strong across its 4,700 aged care beds with occupancy in mature care centres at 96.1% in the quarter (unchanged from Q4 full year 2026).

Subdued housing market conditions were noted to have impacted independent living sales. Initiatives such as offering greater product choice and various pricing options across independent living, assisted living and aged care are projected by Ryman to produce positive results.

The company’s objective remains to lift retirement living resale volumes to match turnover by the end of the financial year.

Retirement sector operator’s performances have varied greatly, and the sector has shown flexibility and resilience in a market influenced negatively by underlying house price devaluation experienced in recent years.

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Travel

David Colman - Lower Hutt - 21 JulyDavid Colman - Palmerston North - 24 July

Edward Lee - Auckland (Ellerslie) – 6 August

David Colman - Whanganui - 6 AugustDavid Colman - New Plymouth - 7 August

David Colman

Chris Lee & Partners

Market News 13 July 2026

David Colman writes:

Last week, the a2 Milk Company provided a supply chain update in relation to its China infant milk formula (IMF) business and an update on its preliminary unaudited full-year 2026 results.

The supply chain update elaborated on the update from 13 April, which noted that shortfalls of China label IMF product at distributors and retailers were expected to materially affect in-market product availability during the fourth quarter of 2026.

The shortfalls were due to strong demand in the preceding quarter, freight challenges, Synlait Milk’s production backlog, extended product release times and additional customs requirements.

Basically, a2 Milk lacked the inventory needed to supply the market and keep shelves stocked.

China label IMF product availability was confirmed to have been materially affected by these factors, with a large proportion of existing users having to switch to alternative brands during the quarter.

Some users switched to a2 Milk’s English label products, which were not affected to the same degree, although a2 Genesis was affected by planned production downtime at the Pokeno plant and changes to Chinese importation requirements.

A2 product availability issues have now been substantially resolved, and product flows of China label and English label products have resumed, with stock levels returning to target levels.

The company must now focus on marketing, likely involving promotions and sales initiatives, to win back previous China label IMF users and gain new customers through its retail and distribution partners.

Full-year 2026 results will reflect the fourth-quarter supply chain issues affecting China label IMF sales, with full-year sales down approximately 14% on full-year 2025.

All other product categories, including English label IMF, Other Nutritionals and Liquid Milk, are significantly up for the full year.

The well-performing categories should help ATM deliver full-year results in line with, or slightly ahead of, the guidance range previously announced on 13 April 2026, which included:

- Revenue of approximately $1.97 billion, up more than 12% on FY25. April guidance was low to mid double-digit growth.

- EBITDA margin to be at the high end of the April guidance range of 14.0% to 14.5%.

- NPAT to be slightly up on reported FY25. April guidance was for a similar or lower result, with underlying NPAT expected to be up.

- Cash conversion of approximately 70%. April guidance was 50%.

ATM will release its audited FY26 results and FY27 outlook commentary on 17 August 2026.

Tāiko Critical Minerals

One of New Zealand’s newest listings, Tāiko Critical Minerals (TCM), which listed in March this year, announced last week a significant boost to its project with the receipt of a Government funding offer.

Hon Shane Jones, Minister for Resources and Regional Development, announced on behalf of the New Zealand Government that it has offered to provide financial assistance of up to NZ$20 million towards funding a $40 million wet separation plant planned as part of TCM’s Barrytown Critical Minerals Project on the West Coast.

Westland Mineral Sands, which is not listed, will receive $30 million towards progressing a proposed $70 million wet separation plant, also contributing to the development of the fledgling domestic critical minerals industry.

The minister, a flag-bearer for the New Zealand mining sector, has made it clear that if the world is looking to secure critical minerals for manufacturing and scientific development, the Government will support the industry in New Zealand.

TCM has since completed the first part of a capital raising with an oversubscribed placement of shares. The placement comfortably raised $7 million, including $2 million of oversubscriptions above the $5 million sought.

A total of 28 million shares were issued through the placement at $0.25 per share.

The second part of the capital raise involves a share purchase plan (SPP) for New Zealand-resident TCM shareholders, capped at $3 million. The SPP offers new shares at the same price as the placement of $0.25.

Based on the demand for the placement, and with the on-market share price closing at $0.30 on Friday, TCM appears likely to successfully raise the targeted funds.

The money raised will be used to fund working capital, including completion of the Fast-track resource consent process, the Definitive Feasibility Study and OIA approval for the Barrytown Critical Minerals Project.

Infratil

Infratil’s investment in the rapidly growing data centre sector has been a major success.

The company updated the valuation of its investment in CDC, which owns and operates large-scale data centres across Australasia.

CDC’s independent valuation increased by 23.6% during the April to June quarter to a midpoint of A$18.5 billion, up A$3.5 billion.

The increase was driven by:

- Strong growth in CDC’s contracted capacity to more than 1GW.

- The acceleration of CDC’s build programme to support this demand.

- The expansion of CDC’s total pipeline through to 2040 from 2.6GW to 3.9GW of leasable capacity to support future growth.

The numbers are impressive. One gigawatt is equivalent to the electricity used by many hundreds of thousands of homes.

Infratil’s 49.72% interest in CDC is now independently valued at A$9,213 million, up A$1,759 million from A$7,454 million.

A$9.2 billion is more than NZ$11 billion, which indicates that CDC represents more than half of Infratil’s business, noting that its total asset value was NZ$20.6 billion for the year ended 31 March 2026.

Bremworth

Minority shareholders of Bremworth (BRW) have no choice but to accept that the scheme of arrangement initially announced in October last year will not go ahead.

The board of Bremworth was forced to abandon discussions regarding a scheme that would have seen Floorscape acquire 100% of BRW for effectively $1.05 to $1.15 per share, comprising a cash payment of $0.75 per share and a capital distribution of between $0.30 and $0.40.

A group of shareholders, representing in aggregate approximately 38% of shares and led by David Ferrier, were committed to voting against the scheme.

The board was clearly frustrated with the opposing group, which decided to vote against the scheme after the final regulatory hurdle had been achieved but before an Independent Adviser’s Report was produced.

The report would have given shareholders the ability to assess the scheme and would have included an independent valuation, including an indicative value of the company compared with the offer price.

Bremworth’s remaining 2,300-plus shareholders might have welcomed the scheme, considering the on-market share price has ranged between $0.30 and $0.90, with no dividends paid, over the past five years.

The opposing shareholders have not offered an alternative plan for BRW or provided details of any other bidder with an offer at or near the level of the Floorscape scheme.

The board engaged with Floorscape in good faith and continues to believe that the scheme was in the best interests of Bremworth shareholders. It remarked that it was disappointed shareholders were not given the opportunity to vote on the scheme with the benefit of all relevant information.

The board will now focus on improving performance, with priorities including a cost reset, revenue recovery and capital discipline.

Wool carpet sales in New Zealand and Australia are ahead of last year, but trading in both markets is challenging, and the company was neither cash flow positive nor profitable in the second half of full-year 2026.

BRW will announce its preliminary full-year 2026 financial results in late August.

Fletcher Building

Fletcher Building’s increase in guidance for full-year 2026 was welcomed by long-suffering shareholders.

The company indicated there would be a 6.4% increase in full-year 2026 EBIT guidance to between $400 million and $403 million, including approximately $52 million of earnings from surplus property sales.

An update on volumes showed improvement across the company’s core manufacturing and distribution divisions.

Light Building Materials benefited from favourable raw material procurement, manufacturing productivity improvements and greater use of low-cost scrap.

Iplex in New Zealand and Australia saw increases in demand as customers accelerated purchases ahead of progressive price increases.

Heavy Building Materials delivered a mixed performance, reflecting an ongoing recovery from weaker roading and project activity in the first half of 2026, alongside stable performances from Golden Bay, Firth and Humes. Demand in the civil and infrastructure sector was elevated due to unseasonably settled weather through June.

Within Distribution, PlaceMakers Frame & Truss volumes were higher. A new Cavendish Drive site is now operational and supporting the Auckland market.

Residential took 220 residential and apartment units to profit in the fourth quarter. A total of 536 units were taken to profit in full-year 2026, compared with 666 in 2025.

FBU expects existing construction projects to progress, supporting ongoing demand for materials. However, economic and cost uncertainty were noted as causes of delays or cancellations of new projects, particularly in the commercial sector.

If sustained, this trend is likely to weigh on FBU’s performance in the first half of full-year 2027.

FBU’s full-year results will be released on 19 August.

Travel

David Colman – Lower Hutt – 21 JulyDavid Colman – Palmerston North – 24 JulyDavid Colman – Whanganui – 6 AugustDavid Colman – New Plymouth – 7 August

Chris Lee & Partners

Market News 6 July 2026

Johnny Lee writes:

Mainfreight (MFT) has provided its annual report to shareholders, outlining its targets and strategy for the next five years.

As always, the document begins with a brief thought piece from founder Bruce Plested. These have become a staple for the socially-inclined investment community, with the latest discussion focusing on the necessity of migration, specifically as a tool to ease pressure on our national superannuation affordability.

Mainfreight has long been one of our most “environmentally conscious” companies, using its financial success to invest in solar panels, battery storage, EV charging facilities, electric-based machinery and water collection. The management team are distinctly aware of their social license and have made real investments to ensure this is not placed into jeopardy, even going so far as to say their branches “are becoming both freight hubs and energy stations”.

Financially, the board is seeing rapid improvement throughout the year, after a disappointing 2025. The start of the 2027 financial year has seen some positive improvements, after a period of underperformance post-COVID.

The company also highlighted its increasing use of robotics in its warehousing division, and artificial intelligence in its analysis arm. 

Perhaps the most interesting part of the announcement was its five-year roadmap, which gives shareholders a glimpse into the current strategic direction of the company. While its current focus is largely on Australia, it has far more global ambitions long-term.

Included in this is a plan to structurally separate its airfreight network from the existing “Air and Ocean” division. It also includes an interest in expanding further into the Middle East, Africa and South America, eventually reaching 50 countries.

It also discussed a possible shift in its land acquisition strategy, moving from an “as-required” approach towards a land-banking one.

The last five years have been a long journey for Mainfreight. 2022 and 2023 saw a tremendous increase in revenue and profit, as freight costs soared following the COVID lockdowns around the globe. The company took a cautious approach to dividends at the time, with modest, sustainable increases that persist today. 

However, the last few years have seen a modest fall from these heights, with some regions underperforming, particularly in the Americas. The company is distinctly aware of this, and is taking steps, both strategically and with its capital expenditure, to address this. 

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Shareholders of carpet manufacturer Bremworth Limited (BRW), formerly Cavalier Corporation, have finally received notification of Commerce Commission clearance for Floorscape’s bid for the company.

Much like the Contact Energy takeover of Manawa, the Bremworth decision appeared to surprise the market, as it rallied sharply following the announcement, up 20% on the day.

Cavalier Corporation first listed in 1984, a somewhat famous year for NZX listings which included Rainbow Corporation and Charter Corporation.

Very few have survived to 2026. Bremworth’s departure, assuming the takeover proceeds, will leave only a handful from that era, including the likes of Hallenstein, EBOS and Sanford. This survival rate reflects perhaps not just how hard it is to build an enduring business model, but how rare it is for successful New Zealand companies to remain New Zealand owned.

However, another wrinkle in the plan has since emerged. 

Bremworth has made a subsequent announcement to market this morning. Some shareholders, represented by David Ferrier, intend to vote against the proposal. Mr Ferrier’s group represents an interest of around 19% of Bremworth, enough to prevent a mandatory acquisition. 

Minority shareholders of Bremworth should watch the market very closely over the weeks ahead.

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Tourism Holdings (THL) takeover is also progressing, although new twists are being introduced along the way.

Tourism Holdings received its first takeover offer in June 2025, with an indicative cash offer of $2.30 per share. The offer was from a group including Australian private equity firm BGH Capital, and the family interests of Luke and Karl Trouchet. Luke Trouchet was, at the time, a director of THL. He has since resigned from the role.

This offer was rejected by the board, expressing its view that the value of the company was “well north of $3 per share”, and that the offer was being made during a “bottom-of-the-cycle trading environment”.

In May of this year, Tourism Holdings received a revised offer from the same Consortium, at a price of $3.10 per share. So far, this was proceeding as shareholders would expect, with the board effectively negotiating on their behalf before providing a recommendation as to whether the offer represents a fair value.

Two weeks ago, an additional NBIO (Non-binding indicative offer) was received, this time at a range of $3.30 to $3.40. The buyer’s identity was not revealed, although Australian financial media believe the bid originated from a Portuguese RV rental company.

The bidders are now in the process of conducting due diligence, at which point the NBIO can proceed to a formal offer to buy the company.

These competing bids are always interesting to watch, especially when one side has acquired a meaningful holding. Rival bids tend to better shake out the “true” value of company, as bidders try to find a balance between securing acceptance and leaving themselves room to extract their own value following completion.

The winners, ultimately, will be the shareholders. The share price has climbed from $1.40 a year ago to $2.95 today, with the potential to go higher should either of the two offers proceed.

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The Reserve Bank of New Zealand (RBNZ) will meet on Wednesday to discuss our economy and decide the Official Cash Rate.

Market expectations are fairly mixed, with some expecting a 25-point hike to 2.50%, while others expect the Committee to hold, pending further data. Both arguments are compelling in their own right.

The rapidly evolving oil price story is driving much of these differences of opinion. Oil prices, and commodity prices that correlate with the oil price, have fallen sharply following the most recent announcement of a ceasefire.

Indeed, the previous decision saw significant commentary surrounding the conflict in the Middle East, and discussed the negative impacts this would have on our economic recovery and our inflation rates. Now, there are some (very) tentative market views that the conflict has ended and that the oil price is now in decline.

When expectations diverge like this, it increases the chance of a market move following the decision. Currency and swap markets will inevitably react, as one side – the wrong side – adjusts positioning.

The one consensus is that the current rate, of 2.25%, is too low. Longer term, interest rates will need to rise to a higher neutral rate – perhaps above 3% - and this week’s difficult decision may be the first step towards this point.

Travel

David Colman - Lower Hutt - 21 July

David Colman – Palmerston North - 24 July

David Colman - Whanganui - 6 August

David Colman - New Plymouth - 7 August

Johnny Lee

Chris Lee & Partners