Jeremy Hutton: Milford Asset Management expert on the winners and losers from NZX results season

A busy reporting season has concluded for the NZX-listed companies, with some doing better than others.

A2 Milk stood out as a success story from this season, but other listed businesses haven't fared so well.

Milford Asset Management's Jeremy Hutton explained further.

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Episode Transcript

Speaker 1 (00:00):
A busy reporting season has just finished for the ins
and exlisted companies. We'll talk about the winners and the
losers from the last four weeks. Jeremy Hutton from Milfed
Asset Management is with us right now.

Speaker 2 (00:08):
Hey, Jeremy, good evening, Heather, Hey, doing very well.

Speaker 1 (00:11):
Thank you. One of the big winners has got to
be A two Milk.

Speaker 2 (00:15):
Yeah, A two Milk. They had another bumper reporting season.
Investors absolutely loved it. They sent the share price up
over twenty one percent in August alone, and the stock
is now up sixty percent so far year to date
in twenty twenty five. The A two Milk story, it
really can be boiled down to the fact that the
company is doing really well in a tough market. And

(00:35):
we know Chinese birth rates have been declining for a
number of years and that is a substantial headwind for
infant formula players and A two as well to overcome.
But now by market share, A two is the fourth
biggest player in the massive Chinese infant formula market. It's
bigger than huge competitors like Nesley and me Johnson and
other large Chinese and Western brands as well. So A

(00:58):
two continue to perform really well in a tough market.

Speaker 1 (01:02):
Market really loved that transaction. That the purchase of the
plant in Poconoa.

Speaker 2 (01:06):
Yeah, that's right, So the acquisition of the local Ushiley
dairy plant and Pocono The markets got really excited about this.
Now it wasn't so much about the financials of the deal,
but more that the site comes with these extra China
market registrations and these are effectively a license to operate
your brand or product in the Chinese market. And A two.

(01:28):
They currently only have one of these registered China label
products and it has been holding them back versus competitors,
they all have multiple products in the market. So they
get these two extra slots from the Pocono plant and
that means A two. You know, they can continue to grow,
bring out some new products and innovate and really de
risk the brand story a lot here.

Speaker 1 (01:47):
Okay, on the other side of the equation, what happened
with Ebos.

Speaker 2 (01:52):
Yeah, Ebos is a very tough start for the new CEO.
In his first update, the share price was down over
twenty percent, and this is very surprising for Eboss. It
is a great company. It's performed really well and always
consistently grows. Has done so over the past decade on
the nz X, but their forward guidance this time round

(02:13):
for the next financial year was for flat earnings and
the market got really caught off side by this. They
had to downgrade a lot of their outlooks for earnings.
But one could say it's a bit of a harsh
reaction as there is still confidence in the EBOS story.
Their core businesses of Australian pharmacies and animal care products
are still growing reasoningly reasonably well medium term. But sometimes,

(02:38):
particularly when it's a new CEO in the chair, the
market can shoot first and ask questions later, particularly if
they get the framing or the pitch wrong.

Speaker 1 (02:46):
Now now that the Reserve Bank is leaning on reducing
the OCR, or what's the outlook for the rest of
the year, do you think.

Speaker 2 (02:54):
Yeah, supportive Reserve Bank and OCR interest rate track should
be positive for the New Zealand market. The local market
has lagged key pairs substantially this year, but we are
considered a defensive, yield driven market. We don't have the
racy tech or AI stocks like they do overseas. We've
got more solid high dividend payers like telecoms companies, infrastructure,

(03:20):
real estate and these should perform well in a falling
interest rate environment. And then secondly I'll just call out
also the cyclical sectors, which is sort of the next leg,
like construction companies, retail exposed companies. They've really had a
tough time as we know in New Zealand, but again
should start to perform better when some of the economic

(03:41):
activity and data starts to improve.

Speaker 1 (03:43):
Good stuff. Hey, Jeremy, thanks as always for talking us
through that. Jeremy Hutton, Milford Asset Management. For more from
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