Chris Lee & Partners Ltd

Market News – 19 October 2026

Edward Lee writes:

Summerset and Ryman Healthcare

Two of New Zealand’s largest retirement village operators, Summerset and Ryman Healthcare, released their quarterly sales updates last week, with both reporting stronger resale activity despite the continued weakness in the residential property market.

The results suggest that demand for retirement village accommodation remains healthy, although prospective residents are still having difficulty selling their existing homes.

This has been a recurring problem for the sector, particularly as many retirees need to sell their homes before purchasing an occupation right in a retirement village.

The latest residential property auction figures highlight just how difficult conditions remain. 

According to last weeks data, only 34% of properties offered at auction were sold, compared with 43% during the equivalent week last year. 

Over half of those sold fetched less than their rating valuations.

Although auction activity is increasing, buyers remain cautious and sellers are often having to adjust their price expectations. 

For retirement village operators, this creates a difficult situation. There may be plenty of people wanting to move into a village, but until they can sell their family home, many cannot proceed with their purchase.

Summerset reported 415 occupation right sales for the September quarter, comprising 175 new sales and 240 resales. Resales increased 36% compared with the September 2025 quarter, helping total sales for the first nine months of the year increase by 10%.

New sales were weaker than the same quarter last year, reflecting the difficulties prospective residents continue to face in the housing market. However, contracts signed for new units increased 20% compared with both the March and June quarters, suggesting sales activity may be improving.

Back in August, Summerset increased its deferred management fee to 30%. This is the fee deducted from the amount repaid to residents when they leave a village.

Management reported no material deterioration in contracting rates following the change, suggesting prospective residents have been relatively accepting of the higher fee.

This is encouraging for shareholders. Higher deferred management fees should improve profitability over time, although the full benefit will take years to emerge as existing contracts run their course.

Ryman Healthcare also reported improving resale activity, recording 379 sales for the September quarter, comprising 312 resales and 67 new sales.

Resales increased 14% compared to last year, reaching their highest quarterly level in two years. The company also reduced its inventory of completed but unsold new retirement living units by 67 during the quarter, leaving just 347 units of approximately 10,000 unsold.

Ryman has spent the past several years dealing with the financial consequences of its development programme, excessive debt and weaker than expected sales, so it is encouraging to see the number of unsold units continuing to fall.

Unlike Summerset, which has generally maintained a stronger financial position, Ryman has been forced to substantially restructure its balance sheet and reconsider its development strategy.

In saying this, I believe Summerset missed an opportunity approximately 12 months ago when its shares were trading near net tangible asset value (NTA). It could have raised capital at a relatively attractive price, reduced debt and strengthened its balance sheet, but chose not to.

It reminds me of Ryman, which also failed to take advantage of an opportunity to raise capital when its shares were trading around $13.

One of the principal reasons companies list on a sharemarket is to gain access to capital. Taking pride in never needing to approach shareholders for additional funding can create a false sense of security.

I have seen similar mistakes made by listed property trusts, several of which had opportunities to raise capital when their shares were trading at or above NTA.

Those were rare opportunities to raise capital at attractive valuations, reduce debt and position themselves for future growth. Instead, some are now having to recycle capital by selling properties, reducing their portfolios and limiting their growth ambitions.

There is nothing wrong with raising capital when the price is right. In fact, management should be willing to do so when it is in shareholders’ long-term interests.

Returning to Ryman, its overall aged care occupancy reached 94%, while its five aged care centres in Victoria achieving occupancy of 98%, suggesting demand for its Australian operations remains strong.

Our view is that both announcements are encouraging, although Summerset and Ryman remain quite different investment propositions.

Summerset continues to demonstrate that its established villages can generate recurring resale activity, and the increase in deferred management fees should support future profitability.

Meanwhile, Ryman offers potentially greater upside if management can successfully restore profitability, reduce inventory and improve cash generation.

The retirement village sector should benefit from New Zealand’s ageing population over the next decade. The immediate challenge, though, is the ability of prospective residents to sell their homes and complete settlements.

We would expect both companies to benefit when confidence eventually returns to the residential property market, although there is little evidence of that happening yet. 

With the Reserve Bank still expected to increase interest rates, a meaningful recovery in housing activity may remain some way off.

Tāiko Critical Minerals

Tāiko Critical Minerals released two important announcements last week, providing shareholders with greater clarity over both the size of its Barrytown mineral resource and the timetable for its fast-track consent application.

The company confirmed that its fast-track application remains on schedule, with a draft decision due next month and the Panel’s final decision expected in December.

Tāiko has responded to the submissions received, with management confirming that all deadlines have been met. This is encouraging, particularly given the delays experienced by several other mining projects seeking approval through New Zealand’s fast-track process.

Tāiko already has consent to mine part of the Barrytown project and operate a mineral separation plant at Rapahoe. Its fast-track application seeks approval to expand mining onto neighbouring land that it intends to purchase, allowing the project to operate on a much larger scale.

The second announcement confirmed that Tāiko’s Barrytown project contains approximately 35 million tonnes of mineral-rich material, with a world-leading heavy mineral grade of 21%.

The resource includes an estimated 2.2 million tonnes of ilmenite, used mainly in paints and titanium production, 3.1 million tonnes of garnet, used in industrial cutting and abrasives, and 48,000 tonnes of zircon, used in ceramics and advanced manufacturing.

The completion of the resource estimate is another step towards the company’s Definitive Feasibility Study, which should provide investors with a more detailed understanding of the project’s expected capital costs, operating expenses and potential profitability.

With a substantial mineral resource now established, existing consents in place for part of its operations and a fast-track decision expected in December, Tāiko is approaching an important stage of its development.

If the December decision is favourable and the feasibility study confirms the project’s economics, attention will turn towards financing, construction and eventually production.

We continue to regard Tāiko as a higher risk investment, but one with several important milestones over the coming months that could materially influence its share price.

Disclosure: Most of our staff hold shares in Tāiko, and a number also hold shares in both Summerset and Ryman.

Bonds

The outlook for interest rates has changed considerably over the past few months, with economists increasingly expecting the Reserve Bank to increase the Official Cash Rate further.

The OCR currently sits at 2.75%, having increased from 2.25% earlier this year, with the ANZ bank expecting one further increase of 0.25% this year.

The Reserve Bank faces a difficult decision. Annual inflation reached 4.1% in June, above its target range of 1% to 3%, yet parts of the domestic economy remain weak. 

The residential property market is a good example, with sales volumes falling and auction clearance rates remaining low.

There is a risk that further increases in interest rates will place additional pressure on households and businesses at a time when the economic recovery is still fragile.

For bond investors, however, rising interest rate expectations are not necessarily bad news and it is worth remembering that the overnight cash rate and longer-term bond yields do not move together. 

Bond markets look ahead, and if investors believe the Reserve Bank is approaching the end of its tightening cycle, longer-term yields could begin falling before the OCR reaches its peak.

Our preference remains to focus on financially sound issuers, attractive yields and a range of maturity dates, rather than trying to predict precisely where interest rates will peak.

We expect several new bond issues over the coming weeks, including Kiwi Property Group, Contact Energy and perhaps Infratil towards the end of the year. 

New Issues

Contact Energy is expected to issue a new subordinated capital bond on 2 November. We expect the bond to have a term of around 6 years, with a possible interest rate of around 6.00% per annum.

Kiwi Property Group has announced it is considering an offer of 7-year, fixed rate, senior, secured green bonds. We expect it will offer an interest rate of around 6.00% per annum. The offer is expected to open on Monday 19 October. 

Investors who are interested in either of these potential bonds are welcome to contact us with their CSN and an indication of the amount they may wish to invest. We will then contact them once further details are available.

Travel

Our advisors will be in the following cities next month:

17 November – Christchurch - Chris Lee

18 November (am) – Christchurch – Chris Lee

18 November (pm) – Ashburton – Chris Lee

19 November – Timaru – Chris Lee

Investors who would like an appointment to see us are welcome to contact us.

Edward Lee

Chris Lee & Partners Limited

Market News 12 October 2026

Johnny Lee writes:

The final quarter of 2026 is shaping up as a busy one for investors, with the imminent listing of Lodestone Energy and several new bonds said to be in the pipeline.

Lodestone will begin trading next Thursday, 22 October. It will use the ticker code LOD.

In the bond market, Kiwi Property Group has confirmed it is considering a bond offer, while Contact Energy has previously announced its intention to redeem its CEN060 bonds, and “issue a replacement in line with market expectations”. There are several other bonds maturing this year, some of which may lead to new offers late in the year.

On the maturing side, well over a billion dollars’ worth of bonds are expected to be repaid by the end of the year. There will be no shortage of funds looking for a home.

Both bond and equity pricing have been volatile in recent months, with the oil price having an undue impact on underlying interest rates. With interest rates elevated and no solution on the short-term horizon – attention instead turning to renaming the Pacific Ocean – companies may need to accept these higher rates when looking to extend their balance sheets for now.

These higher rates have proved a boon for bond investors, who are now achieving rates well in excess of those observed only three months ago. Unfortunately, this has also meant borrowing costs for households have spiked, leading to some preferring short-term debt for now.

On the equity side, higher rates have seen a shift out of shares towards bonds, particularly in the yield space. Yield stocks have struggled over the last month or two, as investors rebalance to take advantage of these higher rates.

New equity listings are expected in 2027. While the usual suspects are said to be eyeing an entry (or re-entry) to the NZX, it may become a question of valuation. Globally, IPOs are being postponed or cancelled due to the widening gap between sellers’ expectations and buyers’ valuations. Firmus, the Australian AI infrastructure provider, cancelled its planned “mega IPO” early this month.

Despite all the volatility of late, 2026 should see a strong close for new issuance. Next year, with luck, will see some new options emerge on the share market too, helping provide new choices for New Zealand investors.

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SkyCity Entertainment has provided an update to its ongoing restructure programme, as the company continues its “asset monetisation programme”. This programme may conclude with a number of assets sold, including the now unconditional sale of its investment properties and the sale of the Grand Hotel.

Next on the chopping block may be the Adelaide business, with SkyCity stating it will begin a formal sale process “shortly”. Its Adelaide business has been in the news for all the wrong reasons of late, following settlements with the various regulators. 

Despite this, the 2026 result in August saw a modest profit. SkyCity confirmed a challenging trading environment, with the increased cost of fuel impacting visitation and consumer spending. In the face of this, the company responded by prioritising cost control and debt management. 

Hanging over its head, of course, is the existing SKC050 bonds. Due to mature in May 2027, the $175 million of bonds issued represent a significant part of its balance sheet. These were issued in 2021 at 3.02%, when the Official Cash Rate was only 0.25%. With significant headroom in place with its banks, SkyCity has some flexibility with the timing of its asset sales.

Alongside these bonds is the USPP issuance added over the last decade or so. The company’s net debt was reduced over the 2026 financial year from $756 million to $590 million, and SkyCity remains committed to seeing this fall lower still. Once the company is “right sized”, the company can then address shareholder returns.

The broader question may be the role of casinos in society and the changing way that people interact with the gambling industry going forward.

SkyCity’s foray into online gambling is perhaps a reflection of this. The company is currently bidding for an online gambling licence, hoping to be one of the 15 selected on Wednesday to hold such a licence in New Zealand. 

While gambling is often seen on “exclusion” lists from retail clients, demand is still readily apparent. SkyCity views the online gambling sector as a billion-dollar market, and while the exact shape of this industry within New Zealand is not yet clear, SkyCity will play a key role in building it. 

The International Convention Centre (ICC) also looks to be an exciting opportunity for the business going forward. After eight months of operation, reviews have been positive and the pipeline for 2027 looks strong. The ICC is targeting breakeven within two years, while benefits across the other assets within SkyCity’s portfolio have already been observed.

These two assets - the Auckland precinct and the online business - may be the assets of the future, in amongst all the ongoing asset sales and strategic reviews.

However, the reality is that SkyCity shareholders have seen a significant decline in value, with the share price falling year on year for five consecutive years. No dividend has been paid for two and a half years, and multiple compliance failures have led to ongoing issues with the regulators.

Now, it seems international buyers have taken an interest and may view the company as undervalued. SkyCity has received multiple bids for the company, and while these have not yet eventuated in a formal offer to take the company private, there is clearly an interest in the company at its current valuation.

With asset sales a core part of SkyCity’s strategic plan, the business will become smaller, simpler, and less indebted, which may make the business easier to value and package for such a new owner.

SkyCity is a profitable business, with assets (for now) in Auckland, Adelaide, Hamilton and Queenstown. The board’s focus now is “maximising value for all SkyCity shareholders”, which may include further asset sales in the short-term. 

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Insurer Tower Group has lifted its guidance for the year, following the conclusion of its financial year. Tower confirmed it had not required the full $45 million set aside as part of its “large event allowance”, allowing it to adjust its formal guidance.

Tower has been one of the best performers over the last two years, almost quadrupling in value while returning to strong dividends. Relatively benign weather and the absence of any major catastrophic event have helped the company recover some of the value lost over the preceding decade.

Net profit guidance now sits at a midpoint of $74 million, up from $60 million. This $14 million difference is the after-tax benefit of the $20 million unused allowance. The underlying business is still seeing modest growth. Customer numbers increased by 8%, and efforts continue to derisk itself from weather-related impacts.

The full year result is expected to be announced on 26 November.

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New Investment Opportunities

Lodestone Energy 

Lodestone Energy has confirmed that the IPO price is $2.25 per share.

Lodestone owns a portfolio of five solar farms across New Zealand, with plans to build another 10 solar farms using the funds raised from this IPO, essentially tripling the size of the business over the next 5-years.

The company is seeking to raise between $75 million and $100 million, with no existing shareholders selling shares as part of the IPO. The new capital will be used to support Lodestone’s continued expansion across New Zealand.

For advised clients, we have prepared a research piece on Lodestone Energy, which is available in the private area of our website. If you would prefer a copy to be emailed to you, please contact us and we would be happy to send it through.

Investors can find the investment statement on our website and if you would like an allocation for these shares, please contact our office with an amount and your CSN and we will send through a contract note.

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Contact Energy is expected to issue a new subordinated capital bond in October. We expect the bond to have a term of around 6 years, with a possible interest rate of around 6.00% per annum. 

Kiwi Property Group has announced it is considering an offer of 7-year, fixed rate, senior, secured green bonds. We expect it will offer an interest rate of around 6.00% per annum. The offer opens 19 October. 

Investors who are interested in either of these potential bonds are welcome to contact us with their CSN and an indication of the amount they may wish to invest. We will then contact them once further details are available.

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Travel

Our advisors have an extensive travel schedule coming up over the next quarter, including the following dates:

21 October – Auckland (Albany) – Edward Lee

22 October – Auckland (Ellerslie) – Edward Lee

29 October – Christchurch – Johnny Lee (FULL)

Market News – 5 October 2026

Edward Lee Writes:

Lodestone Energy’s public share offer opened last week, giving investors an opportunity to invest in a growing New Zealand electricity business with five operating solar farms, another under construction and plans for substantial expansion.

The company is seeking between $75 million and $100 million at $2.25 per share. The offer will close on 14 October, with trading on the NZX expected to begin on 22 October under the code LOD. Depending on the amount raised, Lodestone will have a market value of approximately $440 million to $465 million. Existing shareholders are not selling through the offer, so the capital raised will remain in the business to fund its development.

We believe Lodestone is worth considering for clients seeking long term capital growth within a diversified portfolio. The attraction is the combination of existing generation, further solar farm development and the opportunity to earn more from its electricity by selling directly to a larger customer base.

Management is targeting nine operating solar farms by FY29 and 16–18 by FY32, compared with five today. Energy revenue is forecast to increase from $25.1 million in FY26 to between $169 million and $195 million by FY32. These are ambitious targets, but they explain why we see Lodestone as an interesting potential growth investment.

Building those farms will require considerably more funding than the IPO alone provides. The wider programme is expected to be financed through debt, strategic partners, existing cash and cash generated by the business.

If the full $100 million is raised, management expects its funding plan to support development through FY32, when it expects to generate sustainable free cash flow after capital spending and debt repayments. This depends on the business performing as planned and continued access to those funding sources.

The retail business is an important part of the investment case. Lodestone already supplies commercial and industrial customers under long term agreements and has begun selling electricity to households and small businesses in Hawke’s Bay. By FY32, it expects around 65% of the electricity it sells to be through its mass market retail business, where it anticipates earning better margins.

This also helps address one of solar generation’s commercial risks. When sunshine is plentiful, solar farms tend to produce electricity at the same time, potentially depressing wholesale prices during those hours. 

Selling directly to customers can reduce some of that exposure, although Lodestone will still need to manage the difference between when its farms generate electricity and when customers use it.

We continue to like the longer term outlook for renewable electricity. Lodestone has already demonstrated that it can build and operate solar farms. Its next task is to repeat that across a larger portfolio while attracting enough customers to deliver the earnings it is targeting.

The outcome will depend on construction costs, retail growth, the debt required to finance expansion and any changes to the number of shares on issue.

Investors also need to accept the expected wait for income. Lodestone does not anticipate paying dividends before FY32, as available cash will support its development programme. 

For clients who can invest over that period without relying on dividends, we believe the potential growth warrants consideration, with an allocation that recognises the construction, funding and retail risks.

We have written a research piece examining Lodestone’s growth plans, funding, valuation and risks. Our advised clients can request a copy from us or view it in the private area of our website. Clients interested in the offer are welcome to contact us to discuss whether it suits their portfolios.

Hallenstein Glasson

Hallenstein Glasson delivered another strong result last week, with annual net profit rising almost 50% to $59.2 million. Glassons Australia continued to lead the expansion, although its New Zealand business and Hallensteins also increased sales.

The company sold more clothing at full price, helping improve its margins. Better purchasing and freight arrangements also contributed, allowing more of the sales growth to flow through to profit. A stronger Australian dollar provided a further benefit when Australian sales were translated into New Zealand dollars, although the business still achieved substantial growth after removing that currency effect.

Hallenstein Glasson has traditionally attracted investors for its dividend income and currently offers an indicative gross dividend yield of just 5.80%. In our view, the investment case at this level relies increasingly on further earnings and dividend growth.

Trading has remained strong, with sales in the opening eight weeks of the new financial year up 18.4% after allowing for exchange rate movements. However, directors explicitly said they do not expect that pace to continue through the remainder of the first half. They also highlighted uncertainty around consumer spending, exchange rates, freight and other costs, with the important Black Friday and Christmas trading periods still ahead.

We regard this as a well-run retailer producing an excellent result, but investors should be careful about projecting the latest growth too far into the future. Maintaining a higher level of profitability requires customers to keep buying its ranges with relatively little discounting. If spending weakens or more stock needs to be marked down, margins could come under pressure. The stronger Australian dollar has helped this year, but that benefit can also reverse.

For existing shareholders, the growth in earnings and dividends is welcome. For anyone considering buying today, the question is whether the price leaves enough room for a worthwhile return if growth moderates, as management expects. 

Investors who would like to discuss Hallenstein Glasson and its place in their portfolio are welcome to call us.

The Warehouse Group

The Warehouse Group’s result illustrates how much difference margins and costs make to a retailer’s earnings. It generated approximately $3 billion in annual revenue, compared with Hallenstein Glasson’s $563 million, yet reported a net profit after tax of just $11.2 million against Hallenstein Glasson’s $59.2 million. 

With less than one fifth of The Warehouse Group’s revenue, Hallenstein Glasson produced more than five times its profit.

The businesses sell different products and operate with different margins, so we would not expect identical returns. Nevertheless, the comparison shows how little of The Warehouse Group’s substantial sales currently reaches shareholders as profit. Hallenstein Glasson retained roughly $10.50 in net profit from every $100 of revenue, compared with around 37 cents at The Warehouse Group.

There was still plenty to welcome in The Warehouse’s result. Gross margins improved and operating costs fell by almost $30 million, helping adjusted operating profit recover to $22.6 million from just $1.3 million. Better buying, stock management and more sales at full price contributed to that improvement.

The reduction in net debt was particularly pleasing. It fell from $96.1 million to $17 million, leaving the group with very little net borrowing relative to its size. That gives management more room to invest in stores and improve the business, and strengthens the case for resuming dividends.

We expect dividends to be reinstated at the next result, provided trading and cash generation continue to support a payment. This is our expectation, rather than a commitment from the company, and a resumption could help support the share price by restoring some appeal to income investors.

The Warehouse still has a long way to go. Noel Leeming and Warehouse Stationery delivered improved earnings, but the red sheds remained loss-making after allocated support office costs. Returning that business to sustained profitability is essential if the group is to deliver the returns shareholders should expect from its sales base.

Our ambition for The Warehouse Group would be a return to annual net profits of $50 million to $100 million and would require a substantial further improvement. The latest result shows the business heading in the right direction, with better margins, lower costs and sharply reduced debt. Management now needs to build on those gains and turn more of its revenue into lasting profit.

New Investment Opportunities

Lodestone Energy 

Lodestone Energy has confirmed that the IPO price is $2.25 per share.

Lodestone owns a portfolio of five solar farms across New Zealand, with plans to build another 10 solar farms using the funds raised from this IPO, essentially tripling the size of the business over the next 5-years.

The company is seeking to raise between $75 million and $100 million, with no existing shareholders selling shares as part of the IPO. The new capital will be used to support Lodestone’s continued expansion across New Zealand.

For advised clients, we have prepared a research piece on Lodestone Energy, which is available in the private area of our website. If you would prefer a copy to be emailed to you, please contact us and we would be happy to send it through.

Investors can find the investment statement on our website and if you would like an allocation for these shares, please contact our office with an amount and your CSN and we will send through a contract note .

Contact Energy is expected to issue a new subordinated capital bond in October. We expect the bond to have a term of around 6 years, with a possible interest rate of around 6.00% per annum. 

Investors who are interested in this potential bond are welcome to contact us with their CSN and an indication of the amount they may wish to invest. We will then contact them once the final terms and further details are available.

Travel

Our advisors have an extensive travel schedule coming up over the next quarter, including the following dates:

21 October – Auckland (Albany) – Edward Lee

22 October – Auckland (Ellerslie) – Edward Lee

Chris Lee and Partners Limited