Market News 18 May 2026

Johnny Lee writes:

Pacific Edge is back with another capital raising, this time raising up to $31.4 million at a price of 17 cents per share. $25.4 million has already been raised from wholesale investors, with $6 million to be raised from retail shareholders. The offer comes less than a year since the most recent capital raising. PEB raised $20.7 million in August of last year at a price of 10 cents per share. 

The money is being used to ensure “Pacific Edge has the resources and capacity to regain Medicare coverage, achieve reimbursement for its tests, and to position the business for growth.” 

Last year, the company lost $35.7 million. The company’s cash position on 31 March 2026 was only $7.8 million, giving it about three months of runway at its current cash burn rate. 

Pacific Edge also provided an update on the conditions at the frontline, providing its unaudited, preliminary 2026 results.

The loss of Medicare coverage saw revenue decline sharply, leading the company to instead focus on reducing its costs. Revenue fell from $21.8 million to $11.5 million – a 47% decline – while expenses also declined, down 10% to $49.3 million.

At the time of the announcement, the offer looked unattractive and may have struggled to garner support from its beleaguered retail base. The discount to prevailing prices was minimal, and the long struggles of Pacific Edge would weigh on many potential investors decision-making.

However, an announcement on Friday – the very next day - gave investors a glimmer of hope.

A draft Local Coverage Determination has been published to the Medicare Coverage Database, covering hematuria evaluation for the first time. Pacific Edge’s products, Cxbladder Triage and Triage Plus, were both proposed to be reimbursable. 

The share price rallied sharply after the announcement, moving from 17.5 cents to 34 cents. It retraced shortly after, returning to nearer 24 cents. The offer at 17 cents now represents a meaningful enough discount for those interested to consider.

All the directors have committed to participate in the offer. The Chair, Simon Flood, has stated his intentions to apply for up to $500,000 of shares.

The online offer is open now and closes on the 28th.

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Both Meridian and Mercury had announcements last week, signalling further commitments to increase the nation’s electricity supply.

Mercury Limited is ramping up its geothermal pipeline, with the company committing to spend $75 million to appraise the capacity of two of its sites near Taupo. 

Mercury signalled that, assuming the drilling results are favourable, the investment into the projects could total up to $1 billion and introduce 1 TWh of new geothermal generation by 2030.

At this stage, growth is being funded from existing provisions, with no signal given regarding a capital raising. 

Meridian announced that it had received consent to include a 120 MW solar farm alongside its planned battery storage investment in Bunnythorpe, north of Palmerston North.

While these announcements will be of interest to Meridian and Mercury shareholders specifically, they carry ramifications for the rest of the electricity sector.

All four generators are in the midst of a scale-up of new generation, with geothermal, wind and solar generation advancing significantly over the next five years. This new generation is designed to meet the expected increase in demand of electricity.

The demand growth is being driven by a number of factors, including an increase in our population, trends towards electrification and new industry coming to market.

The first point is self-explanatory. More people in the country will mean more lights being turned on and more cups of tea being made. New businesses and industry will follow, requiring more capacity in the grid.

Electrification is more difficult to forecast. Fonterra’s decision to electrify its boiler network, as part of its commitment to eliminate coal use by 2037, requires planning by the electricity generators. 

The trajectory of electric vehicle take-up is also difficult to predict, as is the trajectory of at home solar generation. These often hinge on incentives and disincentives, and in the case of electric vehicles, other factors like vehicle cost and the oil price can impact demand.

New industry is another difficult facet of demand to predict. The proliferation of data centres is a well-known modern phenomenon, as is the very large electricity requirement for these facilities. The Datagrid “AI Factory”, planned for Makarewa near Invercargill, is set to require 280 MW of constant generation.

The electricity generation sector then has the unenviable job of trying to plan its generation around a demand profile that is fast-moving and difficult to predict, and vulnerable to oversupply should that demand profile markedly change. PPA, or Power Purchase Agreements, are increasingly used to de-risk both sides of this market, particularly in the case of very large-scale projects.

Competition makes this harder still. While Mercury and Meridian have their new generation pipelines advancing, Contact and Genesis are also planning new projects to increase the supply of our nations power. These are all staggered over the next few years, and all four will be basing the viability of their projects on wholesale prices that will remain in flux. 

Technological advancement will continue at the same time, hopefully leading to cheaper and more efficient ways to both produce and consume electricity. 

All four of our listed generators are investing aggressively into the electricity market, with dozens of projects now planned across the country. Some of these projects may not proceed, as the economics change with supply and demand. However, it is clear that as we welcome more people, convert more technology to electricity and introduce more industry like data centres across the country, we will need to produce more power.

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The May reporting season is now formally underway, with fishery company Sanford Limited publishing its result to market.

The result saw a record net profit of $42.4 million, up 24.6% on last year. However, an asterisk should be beside these numbers, due to the extraordinary conditions from the prior corresponding period.

Revenue actually fell for the half, down 5.5%. This must in turn be viewed through the context of last years half year result, which saw the company accelerate its sale of salmon and mussels to reduce the risk of adverse US tariffs devaluing its inventory. 

Capital expenditure has also been markedly reduced. The company has reiterated its commitment to “no cost and low-cost opportunities”, including two new vessels which were purchased during the reporting period. Sanford has also committed to expanding its mussel farm in the Coromandel, with a return on this investment expected within 10 months.

The financial trajectory of the company of late has been reassuring. After five years of consecutive losses from 2018 to 2022, the last four years has seen the company turnaround and produce growing profits. 

This has not been met with a commensurate rise in shareholder distributions. Instead, the company has focused on reducing its debt, which has halved over the last two years. 

The next year is expected to be difficult. Costs are rising, debt may become more expensive, and pricing – particularly on mussels – will be volatile. 

The last few years has seen Sanford in the news for all the wrong reasons, including ammonia leaks, trawling in a protected area and the death of an employee. These issues, justifiably, often deter investors from considering the company as an investment.

Nevertheless, the $750 million market capitalisation places it as a midcap on our exchange similar to Turners Automotive, Tower or Napier Port. It is no minnow, and is in fact one of our oldest publicly listed companies, having listed back in 1924. 

The share price touched 5-year highs following the result, having more than doubled over the last 18 months. The strategy of debt reduction and small, consistent dividends looks set to continue for now, as the company looks to build a long-term foundation going forward, while entering what is shaping up to be a difficult trading environment.

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