Andrew Curtayne: Milford Asset Management on Fletcher Building's potential sale of their construction division

Fletcher Building is looking into possibly selling its construction arm.

It's exploring divesting its main construction division - and the Higgins, Brian Perry Civil and Fletcher Construction Major Projects business units.

Milford Asset Management's Andrew Curtayne explains further.

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Episode Transcript

Speaker 1 (00:00):
With me now is Andrew Kurtain Milford Acid Management.

Speaker 2 (00:02):
Hey Andrew even in Heather.

Speaker 1 (00:04):
So what do you make of that update yesterday from
Fletcher Building on the potential sale of the Construction division.

Speaker 2 (00:10):
Yeah, it didn't come as a complete surprise because they
had an invest a day about a month ago where
they allocated this division which is Construction Division, including Brian Perry,
Sibil and Higgins, and they allocated that it's been a
non core division, so basically saying it's not strategically important
to the future of the business, which is essentially a
signal to the market saying look, we may be willing

(00:31):
to sell this business. I guess what maybe is a
little bit surprising is only a month later that come
out and said we're now launching a formal process. So
it sounds like they've had some expressions of interest coming
from some external buyers. Postsets at update a month ago,
which maybe is a little bit earlier than people were expecting.
This division is sort of recovering from a lack of

(00:52):
roading infrastructure spend over the last few years, so some
investors thought it might take a little bit longer for
interest to build, But it seems like the forward looking
expectation on sort of higher or more roading expensure, but
that seemed sort of push forward by the national government
has got interest in this division.

Speaker 1 (01:08):
Share price reaction to it has been fairly mute, it
hasn't it.

Speaker 2 (01:12):
Yeah, it's a pretty it's a material but smallish division.
It's around about ten percent of the value of lecture buildings,
so it's not huge, and it's sort of hard to
put a number on things. At the moment, we don't
have a formal bid and it's going to take many
months for this process to run, and I think investors
already going to look for a little bit more color
on what price the bids might come out before they

(01:33):
sort of make too many assumptions about share rights reaction.

Speaker 1 (01:36):
Now on the international markets, you had the second quarter
results season which is kicked off in the US and Europe. Obviously,
is there anything that you will see in worth calling
out so far?

Speaker 2 (01:46):
Yes. Results season is always important for the stock market direction,
and particularly at the moment with the share market at
all time high is having rallied for about twenty five
percent from the April low. Is everyone's very focused to
see what's going to become out on results, what's going
to be the news on sort of tariff impacts? Early
indications and this is sort of before we have all
the super large mega cap companies reporting, But over the

(02:08):
last week, the indications have shown that the market is
given just enough kind of confidence and earnings and outlook
to support the market. The large banks such as Jacobrgan,
City Bank, Wells Fargo had decent results last week, pointed
to an economy that's relatively resilient, not too much weakness.
One result that was a little bit more negative was Netflix,
which is sort of a top twenty company in the

(02:30):
US stock market now had fantastic numbers, but the share
price sold off five percent, So that sort of indication
that the market's got pretty over at skis and needed
sort of super strong results to support the share price.

Speaker 1 (02:42):
Yeah, and what are the key results to focus on
over the next week or so.

Speaker 2 (02:46):
We've got the megacaps coming out, So tomorrow's Google and Tesla,
they were always very important results, and then in the
next week got Microsoft, Amazon and Meta which I was Facebook,
and really the market's could be focused on what these
companies are saying about ARTI for short time in elligence,
so they're going to keep spending on it, and the
market kind of wants to see that they are going
to spend to sort of justify this big rally. We've
seen a lot in these AI stocks, so if they

(03:09):
sort of show a bit of caution, then that could
be negative for the market.

Speaker 1 (03:11):
It's stuff Andrew really appreciate it. Enjoy evening, Andrew Curtain
Wilford Ascent Management.

Speaker 2 (03:15):
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