The global transport and logistics company Mainfreight is on the verge of becoming the first company to crack $100 per share on the local stock exchange.
File image. Photo: RNZ / Samuel Rillstone
Shares in the company jumped more than 5 percent yesterday to $99.78 per share in late trading before finishing slightly lower at $98.52.
In early trading this morning Mainfreight shares were down a touch at $98.45.
The surge in activity followed a trading update from the company for the first 22 weeks of the current financial year which showed revenue had increased by more than 40 percent on a year ago to $2.2 billion.
Its pre-tax profit was up 83 percent at $142.3 million, with the company's managing director Don Braid saying it was on track to beat last year's result.
Harbour Asset Management head of research Andrew Bascand said the current share price reflects the greater long term confidence in the company's outlook.
"Only a year ago people thought Mainfreight would only earn a $1.50 a share.
"Today, they think Mainfreight will be earning $2.70 a share and most analysts have Mainfreight earning over $3 next year - so that's another 10 percent plus rise," he said.
The high share price, which had jumped 95 percent in the past year, risked pricing out most ordinary investors out of the market.
Bascand said that was not really an issue because most New Zealanders invested through their KiwiSaver or managed funds.
"Mainfreight will give very significant exposure throughout those KiwiSaver schemes and managed funds because it is a large part of the New Zealand market," he said.
He was neutral on the idea of a share split because it would not add value to the company.
"I would prefer to see management focus on what they are doing incredibly well, across four or five geographies and that's look after clients and look after their own people, and invest in technology."
Investment analyst and founder of the share tipping service Stock Fox, David McEwen, said the price of the Mainfreight's stock was "irrelevant".
"It's all about the value that you receive as an investor in that share, whether its capital gain or dividend."
He said a share split was possible if the company felt like small investors were not buying shares because they were too expensive.
However, he said the company was a lot more internationally focused these days and it may decide to seek international capital at a higher share price.
Mainfreight will release its half year results in November.
