Chris Lee & Partners Ltd

Market News 13 October 2025

Johnny Lee writes:

SHARE investors will be doing a double-take at their portfolio valuations after last week’s announcement by the Reserve Bank, which saw new records reached amid strong demand for yield.

The share market index reached 13,600 following the 50-point cut, before easing back to 13,500 by the end of the week.

The Reserve Bank’s cut was not totally unexpected, with economists divided as to whether a 25- or 50-point cut would be made.

The RBNZ noted that the New Zealand economy has had a weak 2025 so far, due to both local and international factors. Households are behaving “cautiously”, with discretionary spending still being restrained. Economic growth has struggled. High power prices were cited as constraining growth, particularly for manufacturing.

Agriculture remains a bright spot, with the RBNZ noting very high commodity pricing over the period. 

Internationally, the RBNZ notes that investment in Artificial Intelligence and the infrastructure surrounding this sector is helping to boost overall economic activity. 

The commentary regarding cautiousness from households is an interesting one. The relationship between lower interest rates and mortgage costs is obvious and well understood – lower rates tend to flow through as lower interest costs eventually. However, whether households use these savings to boost consumption, or retire debt, is an individual choice. 

Lower rates should also spur willingness to borrow, and willingness to invest. 

The concern around Artificial Intelligence is also an interesting point. 

The increasing use of AI is absolutely real and evident throughout the globe. Use of AI - whether to proof-read, analyse, generate content or a multitude of new purposes - is now ubiquitous. 

The question may instead be whether the investment by the owners of these technologies will pay off. Billions are being spent on model training, data centres and new electricity generation to power these facilities. Nvidia famously reached a market capitalisation of $1 trillion in May 2023. 26 months later, Nvidia became the first company to reach $4 trillion. The gains have been staggering.

And in the case of Nvidia, revenue is climbing. Revenue in 2023 was $27 billion. In 2024, this figure was $61 billion. In 2025, this figure reached $130 billion. 

Still, fears of an “AI bubble” will likely persist, given the huge valuations being afforded to these companies. Investors want to see a return on their investment.

Last week's rate cut by the RBNZ may not be the last of the year. The next meeting is scheduled for November 26, with economists raising the possibility of another cut before the summer break.

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THE decision by the RBNZ had a notable impact on the sharemarket.

The yield stocks, in particular, saw a rapid rise in value. Virtually every yield stock on our exchange has now enjoyed a rally this month as the attractiveness of alternative investments - cash and term deposits - declines further.

Vector’s share price is now up 28% for the year, Argosy is up 29%, ANZ Bank is up over 30%, while even Spark has begun a modest recovery, up 18% from its low.

A few stocks, including Contact Energy, are down for the year, after soaring in late December last year and beginning 2025 at historical highs.

These gains even exclude dividends for the year. Most of these companies pay a significant proportion of their profits out in the form of dividends, retaining very little for growth.

As one would expect, bond yields fell. Meridian Energy issued a 6.5 year bond one month ago at 4.55%. This is already trading below 4% on the secondary market. These values represent the effective yield of a buyer today, meaning that low yields equate to a higher price for the bond.

Growth stocks have not followed the same trajectory. 

Fisher and Paykel Healthcare is actually down for the month, as are Infratil and Mainfreight. EBOS is modestly higher, but that is a reflection of a bounce from the post-result lows.

Overall, yield stocks have enjoyed a strong 2025 and this continued after the RBNZ announcement. With cash rates heading lower, expect 5% and 6% returns to look increasingly attractive, particularly in defensive industries.

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LAST week ended on a sour note for markets, however.

The US administration’s decision late on Friday to hike tariffs on China led to a modest sell-off of shares, and a very sharp decline in various cryptocurrencies.

Bitcoin fell 9%, equivalent to about 350 billion New Zealand dollars.

The Dow fell only 2%. Technology stocks fell around 3-5%.

Of course, this is not the first instance of sharemarkets falling on the back of tariff threats.

Previous declines saw rebounds in the days or weeks after the decisions were reversed or softened.

Indeed, one wonders how many more times we will see this pattern play out over the years ahead. Certainly, the initial reaction to this announcement pales in comparison to the reaction observed in April.

The next US election is not scheduled until November 7, 2028.

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ANOTHER announcement late in the week, regarding infrastructure company Chorus, has led to some confusion.

The Government announced it is looking to off-load some of its investment in Chorus. The Government owns both equity and debt assets in Chorus.

However, the structure of the securities devalue them significantly.

The debt securities are non-interest bearing and unsecured, while the equity securities are effectively non-voting, redeemable preference shares - and redeemable in the form of equity conversion.

The debt securities mature in tranches over the next 11 years. Their value to an investor may be in the price at the time of sale, and the remaining duration until maturity.

These investments were made by the Government at the beginning of the fibre rollout to provide initial funding for the project. However, these are not ordinary shares (yet) and carry no voting rights. The debt has a zero coupon, and some tranches do not mature until 2036. 

More details of the potential sale are expected over the coming months.

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Travel

21 October – Lower Hutt – David Colman

22 October – Wellington – Fraser Hunter

22 October – Blenheim – Edward Lee

24 October – Nelson – Edward Lee (Full)

29 October – Auckland (Ellerslie) – Edward Lee (Full)

30 October – Auckland (Albany) – Edward Lee

31 October – Auckland (CBD) – Edward Lee

Johnny Lee

Chris Lee & Partners

Market News 6 October 2025

Synlait Milk Limited (Synlait) made several announcements last week that were received positively by the market.

SML announced its results for the 12 months to 31 July 2025, along with a binding conditional agreement to sell its North Island assets.

It also advised that it has finalised bank refinancing totalling $350 million, with new banking syndicate support provided by ANZ, China Construction Bank, Bank of China, Rabobank, Industrial and Commercial Bank of China, HSBC, Bank of Communications, and Bank of East Asia.

SML Financial Results Highlights:

Net profit after tax of $0.8 million (unadjusted: $39.8 million)EBITDA $107.2 million (unadjusted $50.7 million)Net debt of $250.7 millionNew record milk price for the 2024/2025 season of $10.16 per kgMSEntry into a binding conditional agreement to sell the North Island assets to Abbott for approximately US$178 million (NZ$307 million)

FY2026 guidance represents a reset for Synlait, with completion of the North Island sale targeted for 1 April 2026.

Majority shareholder Bright Dairy Holding Limited (which owns 65.25% of SML) has irrevocably cast its postal vote in favour of the asset sale and all other resolutions before the Annual Meeting, which will be held on Friday 21 November 2025.

The sale proceeds will be used to significantly reduce debt and strengthen the company’s financial position.

SML plans to refocus on its core operations in Canterbury, with renewed emphasis on operational stability at its Dunsandel facility to drive longer-term profitability. The company sees continued growth in its Dairyworks business supporting this focus.

No further financial guidance for FY2026 was provided.

For now, the company will concentrate on executing the North Island sale, with the board aiming to have an updated strategic plan in place by March 2026.

The share price rose on the back of these announcements, increasing from below $0.70 before the announcement on Monday to close on Friday at $0.85 (an improvement of over 20% in a week).

Overall, the announcements suggest improved investor confidence in Synlait’s deleveraging strategy.

In contrast to frequent corporate actions this year, including takeovers for Bremworth and Restaurant Brands announced last week that have resulted in a shrinking number of publicly listed companies, the NZX welcomed a new company on Monday with the listing of Manuka Resources Limited (MKR), which is now dual listed (MKR listed on the ASX in July 2020).

MKR is a diversified critical and precious metals developer, producer, and explorer, adding exposure to a sector with limited representation on the NZX.

The company holds 100% interests in New Zealand and Australian assets, including Trans-Tasman Resources (TTR), a vanadiferous titanomagnetite (VTM) iron sands project located 22km offshore in the South Taranaki Bight.

TTR is advancing the Taranaki VTM Project through the Government’s Fast Track Approvals process. VTM ore contains iron, titanium, and vanadium.

MKR also fully owns the Wonawinta Silver Project and Mt Boppy Gold Project, both fully permitted and located in the central Cobar Basin, NSW.

Manuka’s current Australian focus is to bring the above precious metal projects into production during early 2026. The company also plans to use significant resources to ensure the New Zealand TTR project is favourably received by the Fast Track Approvals panel.

TTR is considered to have substantial potential due to the scale of the resource and lower comparative cost. The project hosts a JORC (Joint Ore Reserves Committee) compliant mineral resource of 3.2 billion tonnes @ 10.17% iron oxide; 1.03% titanium dioxide; and 0.05% vanadium pentoxide, with production plans targeting the extraction of up to 50 million tonnes per annum (Mtpa) from the seabed.

A yield of approximately 5 Mtpa of exportable heavy mineral sands concentrates at expected grades of 56 to 57% iron, 8.5% titanium oxide, and 0.5% vanadium pentoxide is anticipated.

A Pre Feasibility Study released 26 March 2025 indicated:- 20 year mine life- US$312 million average annual EBITDA- US$1.26 billion NPV (net present value)- 39% IRR (internal rate of return)

An independent NZIER Economic Impact Assessment (2 April 2025) estimated the project could deliver:- NZ$854 million in annual export revenues- 1,125 regional jobs- NZ$234 million in annual local expenditure- Over NZ$190 million in annual tax and royalty contributions

TTR holds Mining Permit MMP55581, and its environmental consent application was accepted into the Fast Track Approvals process on 15 May 2025.

If the Expert Advisory Panel confirms TTR’s Fast Track consents in early 2026, Manuka would then need to complete the following steps (estimated to take a year):Bankable Feasibility Study (anticipated cost NZ$15 to NZ$20 million)Construction and commissioning phase requiring approximately NZ$1 billion of debt and equity investmentFinal environmental consents and operating conditions for the initial 20 year mine plan

Both vanadium and titanium are deemed critical minerals in the USA, EU, Canada, and Australia, and in January New Zealand issued its own list of critical minerals, including both vanadium and titanium.

In Australia, MKR owns 100% of the Wonawinta Silver Project and the Mt Boppy Gold Mine, both located in the Cobar Basin, New South Wales.

The Wonawinta Silver Project includes a significant JORC Mineral Resource of 38.3Mt @ 41.3g/t Ag (51Moz Ag) and an Ore Reserve of 6.2Mt @ 56g/t Ag (11.16Moz Ag). It includes an 84 person mine camp and a 1 Mtpa processing facility. Wonawinta was formerly the largest primary silver producer in Australia and is central to the company’s 10 year production plan targeting 19.2Moz of silver.

The project has an estimated NPV of A$153 million and IRR of 173%.

The Mt Boppy Gold Mine consists of an existing open pit, a 48 person camp, and adjoining exploration tenements with a JORC Probable Ore Reserve of 290kt @ 4.2g/t Au (39,100oz of gold).

Gold recovery operations had briefly started through screening and haulage to the Wonawinta plant and will recommence in early 2026. Options are being assessed to increase mine life and production scale.

As at 31 December 2024, Manuka Resources Limited reported total assets of A$61.2 million and net assets of A$8.6 million.

Total liabilities stood at A$52.6 million, with borrowings representing the largest component of current liabilities.

For the half year ended 31 December 2024, the Group recorded a net loss of A$8.7 million, reflecting ongoing investment in its development assets and project pipeline.

Cash flows during the period were primarily allocated toward exploration, care and maintenance, and project advancement activities.

MKR released its Annual Report for the 2024 to 2025 financial year through both the ASX and NZX on 30 September 2025, providing extensive detail on the company and its development plans.

Overall, Manuka’s dual listing brings renewed attention to the NZX’s limited exposure to critical minerals.

Scales Corporation Limited (SCL) on Tuesday announced that it has agreed to increase its shareholding in its Australian Global Proteins joint ventures through the acquisition of 50% of Meateor Australia, 50% of Fayman International, and 42.5% of ANZ Exports.

As a result, SCL will own 100% of both Meateor Australia and Fayman International, and 85% of ANZ Exports.

The acquisitions bring forward the existing Put and Call options between SCL and the Fayman family to take full ownership of Meateor Australia and Fayman International, and to increase its ANZ Exports stake.

SCL Managing Director Andy Borland described the businesses as demonstrating strong performance and good strategic alignment with Scales’ long term growth objectives.

Meateor Australia’s manufacturing facility in Melbourne is strategically important to SCL’s Global Proteins division and its Australian growth plans.

Fayman International and ANZ Exports have exceeded expectations since the initial investments were made and will play an important role in the edible proteins sector, particularly in relation to Australian exports.

SCL Chairman Mike Petersen commented that the acquisitions align with the Global Proteins division’s strategy to increase joint venture shareholdings over time and accelerate a single brand approach. He noted SCL will continue its relationship with the Fayman family.

The total acquisition price was A$91.05 million, comprising cash (A$49.4 million, funded from cash reserves) paid immediately, shares (A$5.25 million worth) to be issued in a month’s time, and cash instalments (five equal payments over the next five years totalling A$36.4 million).

As a result of the acquisitions, SCL is now forecasting a net debt position of $57 million by year end.

The acquisitions are subject to a locked box arrangement, entitling SCL to earnings from 1 April 2025 on the acquired interests.

SCL’s half year results in August showed a strong performance, lifting its full year 2025 profit guidance to between $45.0 million and $50.0 million. As a result of the acquisitions, full year 2025 guidance has increased further to between $51.0 million and $56.0 million.

The Global Proteins EBITDA target for FY2027 lifts from $70 million to $85 million.

This is an ambitious step for SCL, accelerating its previously outlined plans to grow its proteins business in Australia. Scales Corporation has proved resilient in recent years and performed well in 2025.

Its shares are up 40.3% year to date, compared with the NZ50G’s 2.9% rise over the same period.

The Warehouse Group (WHS) announced its FY2025 Annual Results.

The results mark a year of reset, with the operating model reshaped and progress made in pricing, products, and cost control.

FY2025 Highlights:

- Group Sales up 1.6% to $3.1 billion- The Warehouse Sales up 1.4% to $1.8 billion- Warehouse Stationery Sales down 2.5% to $226.0 million- Noel Leeming Sales up 3.3% to $1.0 billion- Gross Profit Margin down 140 basis points to 32.2%- Cost of Doing Business (CODB) reduced as a percentage of sales by 40 basis points to 32.2%- Operating Profit (EBIT pre NZ IFRS 16) of $1.3 million, down from $28.9 million in FY2024- Reported Net Loss After Tax of $2.8 million (a substantial improvement on the $54.2 million loss a year ago)- Capital Expenditure of $12.4 million (down from $39.0 million in FY2024)- Net debt was $96.1 million, though on a like-for-like basis it would have been closer to $13 million- No dividend declared for the financial year

It is clear the economic environment for The Warehouse Group remains challenging, with unemployment rising and consumer confidence low.

The 84 Warehouse (red shed) stores made an operating loss, but both Warehouse Stationery (66 stores) and Noel Leeming (66 stores) were profitable.

WHS highlighted the following strengths:- 27 private label brands (H&H and Living & Co being its two largest)- Consumer preference for shopping at its stores- Geographic reach (85% of New Zealanders live within a 20 minute drive of one of its stores)

The group reiterated its purpose to build exceptional retail brands, its ambition to be a highly desired retail stock, and its values of thinking as a customer.

The business remains reliant on an economic recovery, although innovation to improve its competitive position would be welcome.

WHS shares last traded at $0.785, down 24% year to date.

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Travel

7 October – Palmerston North – David Colman

8 October – Christchurch – Johnny Lee (Full)

21 October – Lower Hutt – David Colman

22 October – Wellington – Fraser Hunter

22 October – Blenheim – Edward Lee

24 October – Nelson – Edward Lee (Full)

29 October – Auckland (Ellerslie) – Edward Lee (Full)

30 October – Auckland (Albany) – Edward Lee

31 October – Auckland (CBD) – Edward Lee

David Colman

Chris Lee & Partners