Market News 17 August 2026

Johnny Lee writes:

Vital Healthcare has published its full year results, posting an increase in distributable profit as it completed its first year since the buyout of its management contract. Vital Healthcare owns a portfolio of hospitals and healthcare facilities across New Zealand and Australia.

Vital raised $220 million from its shareholders last November, as part of its plan to buy out Northwest as the manager of the Trust for $214 million. Management fees totalled over $17 million in FY25, and over $24 million in FY24, before being bought out by Vital. This $214 million was later determined to be fully deductible for income tax purposes, resulting in a net payment nearer $180 million.

One of the main attractions to Vital as an investment prospect is the very long-dated nature of its income. Its tenants (healthcare facilities) sign extremely long leases, with over 80% of its leases not due to expire for another 10 years. This leads to predictable, known income, with flows through to predictable, known dividends.

Gearing improved modestly and now sits under the 40% mark. This was driven by both the balance of the equity raise, and modest revaluation gains. Net Tangible Assets fell, although this was largely due to the capital raise: the 16% increase to net assets was outweighed by the 19% increase in number of shares on issue. 

Building new and developing existing facilities remains a key pillar of its current strategy. Three developments concluded this year, including the refurbishment at Boulcott Hospital in Lower Hutt. 

Guidance remains unchanged. The company expects another annual distribution of 9.75 cents per unit, as it continues to navigate its development pipeline. Longer-term, it hopes that distributable income will climb, as these developments complete and leasing activity commences.

Overall, it was a year of significant change for Vital. The buyout of its management contract has resulted in significant long-term cost savings. Vital continues to use its balance sheet to target long-term income growth, as it looks to improve occupancy at its most recent developments, and continue pre-leasing its upcoming projects.

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A2 Milk’s result left the market disappointed, as the company reported a modest decline in net profit.

It is worth noting the wild ride the share price has endured this year. It began the year around $10.50, soared to almost $12, halved to $6, then rallied back to $8.20 prior to the full year announcement. The price has since fallen 10% to $7.40 after the results were announced. 

Sales remain strong. The Asian segment climbed 11%, Australia and New Zealand rose 10% and the US business finally began to gain traction, up 28%. The weaker New Zealand dollar also helped. 

The company continues to see positive signs out of Chinese birth rates. A modest increase in Chinese marriage rates, considered a key leading indicator, is expected to lead to a rebound in newborns. 

A2 notes that although market share weakened, this was being largely driven by a lack of supply. Consumers were choosing to use alternative brands due to the lack of product on the shelves, an issue the company was actively working to resolve. 

This lack of supply was being caused by an unusually high level of demand depleting existing stocks, “freight challenges”, Synlait production issues and additional customs requirements. 

The balance sheet remains in a strong state, despite the capital return earlier this year. The company has over $700 million in cash, allowing it to increase its dividend to 9.5 cents per share for the 6 months. This brings the full year dividend to 21 cents (ignoring the special dividend), up from 20 cents.

Outlook was cautious, with the company highlighting the supply chain difficulties it is currently experiencing. It expects the half year result, due in February, to reflect this, before seeing more meaningful improvements in the second half of the financial year.

A2 Milk is planning a further update in mid-November, where it hopes to have an update to the current supply chain difficulties it is currently navigating.

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Freightways, the owner of various commercial brands including New Zealand Couriers and Post Haste, has also published its results, with rising profits leading to rising dividends.

Revenue climbed 13%, profit was up 17% and the dividend rose 12%. Despite this, the share price eased after the announcement, down 5%.

The full year result from Freightways acted as a reminder of the year that was – a clear upward trend for the first half, before a sudden deterioration following the conflict in the Middle East.

For Freightways, the sharp increase in fuel prices in March led to a notable consumer response, noting “current demand has not returned to pre-Middle East war levels”. 

Gearing climbed throughout the period, reflecting the acquisition of VT Freight Express in December. Gearing now sits at 35% excluding lease liabilities, within the company’s targets.

The 6-month dividend climbed to 24 cents per share, up from last year’s payment of 21 cents. 

Looking forward, development at the Christchurch Airport facility and Palmerston North Airport facility is progressing. Both are expected to complete by the first half of next year. 

The company is also looking at further acquisition targets in Australia. Freightways has explored over 70 such opportunities and is actively considering making such acquisitions in the medium-term.

Overall, despite the positive performance, the company’s outlook was middling. Freightways is realistic about the impact of higher fuel prices on consumer demand, having observed a strong demand response mid-year. This year, Brent crude has swung from $60, to $110, to $70 and now sits around $88 a barrel. Freightways will be hoping for some degree of normalisation by the end of the year.

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David Colman writes:

Auckland’s long awaited City Rail Link (CRL) will open officially on 13 September.

The massive inner city infrastructure project opening has the potential to revitalise a city that has been hampered by the project itself.

Underground rail is commonplace in cities around the world and provides a safe, fast and frequent public transportation option and the CRL is expected to significantly increase Auckland’s transport capacity.

The completion of the project will also mean the multi-year disruptions above ground which included the blocking of roads and footpaths as the tunnels were bored, tracks were laid, and stations were built will dissipate.

Visitors to Auckland in recent years have had to navigate these obstacles and, much like Christchurch following the 2011 earthquakes, visitor impressions can affect tourism numbers as word-of-mouth describing mesh fences, endless orange cones, blocked streets and noisy construction sites deters travellers away from the city.

The New Zealand International Convention Centre (NZICC) opened in February, new train stations in Drury and Paerātā opened in August, and Auckland Airport’s terminal integration is scheduled for completion by 2029 which should result in Auckland being viewed more positively by visitors and residents alike.

Auckland is a massive driver of growth for New Zealand (a third of New Zealanders live there) and the opening of the CRL in conjunction with these other projects is ideally helping provide some much-needed economic momentum for the city and by extension the country.

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Travel

Johnny Lee - Taupo - 1 September

Johnny Lee - Hamilton - 2 September

Johnny Lee - Tauranga - 3 September

Johnny Lee - Christchurch - 7 September (FULL)