Kingfish Limited’s portfolio endured a tough first quarter of 2026, with a 7.2% adjusted NAV decline amid Iran conflict-driven volatility. While a2 Milk’s expansion in China buoyed gains, shares in consumer-exposed names and tech-linked Vista Group plunged sharply.
- Kingfish NAV down 7.2% in Q1 2026, underperforming S&P/NZX50G
- a2 Milk leads gains, expanding into China’s pediatric supplements market
- Geopolitical tensions from US-Iran conflict disrupt energy markets, pressuring consumer stocks
- Vista Group shares fall 35% amid AI sector fears despite solid results
- Infratil’s CDC Data Centres raises EBITDA guidance driven by AI demand
Kingfish NAV Slumps Amid Middle East Tensions and Market Volatility
Kingfish Limited (NZX:KFL) reported a challenging first quarter for 2026 with an adjusted net asset value (NAV) return of -7.2%, trailing the S&P/NZX50G benchmark’s -4.7% decline. The portfolio’s gross performance return was similarly down 7.3%, reflecting a market unsettled by escalating geopolitical risks after US military strikes on Iran.
The conflict triggered a blockade of the Strait of Hormuz, a critical oil transit route, sparking the largest energy supply disruption since the 1970s. This sent New Zealand petrol and diesel prices sharply higher, squeezing consumer spending power and inflating input costs for businesses. The knock-on effect rippled through Kingfish’s holdings, particularly those sensitive to consumer demand and supply chain costs.
a2 Milk’s China Expansion Shines Amid Broader Weakness
Amid the market turmoil, a2 Milk was the standout performer, rising 8% in the quarter. The company is leveraging its strong brand recognition in infant formula to enter China’s $8 billion paediatric supplements segment, diversifying beyond its core products like follow-on kids milk powder and adult milk powders. This strategic expansion aims to extend a2 Milk’s growth runway in the lucrative Chinese market, offering a rare bright spot in Kingfish’s portfolio.
Consumer-Exposed Stocks Bear the Brunt of Volatility
Consumer-facing companies felt the sharpest fallout. Mainfreight (-16%), Freightways (-15%), Vulcan Steel (-23%), Delegat (-17%), and Summerset (-27%) all suffered steep share price declines. Rising fuel costs and inflationary pressures are weighing on demand and profit margins, with some firms able to pass costs to customers but others facing squeezed returns.
Port of Tauranga, however, bucked the trend with a 2% gain, underpinned by its strategic role in New Zealand’s supply chain and disciplined capital recycling plans. The company targets a 7% return on invested capital and is on track to meet this in the 2027 financial year.
Vista Group Hit by AI Sector Sell-Off Despite Solid Fundamentals
Vista Group’s shares plunged 35% during the quarter amid a broader sell-off in software stocks triggered by the release of new AI tools from Anthropic/Claude. Despite fears that AI might disrupt incumbent software companies, Vista’s recent results showed steady progress, including growth in cloud deployments, improving profitability, and promising early traction in payments.
The company’s 2026 guidance anticipates continued revenue and profit growth, advancing towards its medium-term targets of over $300 million in revenue and $75 million in free cash flow by 2030. The steep share price decline appears more reflective of sector sentiment than the company’s underlying performance.
Infratil’s CDC Data Centres Boost Earnings Outlook
Infratil (+5%) highlighted its 49.7% stake in CDC Data Centres, valued around NZ$9 billion, as a key growth driver. At a Sydney investor event, CDC showcased its advanced technical infrastructure, including closed-loop water cooling and high-power density systems, positioning itself to meet soaring demand for AI-related data capacity in Australia.
CDC raised its core operating earnings (EBITDA) guidance for fiscal 2027 from approximately $660 million to a range of $680-720 million, signalling confidence in its growth trajectory amid scarce market capacity.
EBOS Group Faces Headwinds from Rising Costs and Management Concerns
EBOS Group’s shares declined 17% after delivering core operating earnings in line with expectations but flagging increased lease costs from its distribution centre renewal programme. This pressure on profitability, combined with investor caution over the new management team’s execution, has seen EBOS trade at a roughly 25% discount to its historical average price-to-earnings ratio.
Despite these challenges, Kingfish views EBOS as fundamentally sound, with both defensive and growth characteristics that could offer value at current levels.
Valuation Opportunity Amid Pessimism
Kingfish’s senior portfolio manager Matt Peek acknowledged the difficulty in predicting the war’s trajectory but noted that pessimism is heavily priced into share valuations. He highlighted that many portfolio companies are trading at rare discounts, presenting potential opportunities for long-term investors as volatility subsides and fundamentals reassert themselves.
While short-term uncertainty remains high due to geopolitical and economic pressures, the underlying business quality across most holdings remains intact, suggesting a foundation for recovery once external shocks ease.
Bottom Line?
Kingfish’s portfolio weakness amid geopolitical shocks masks underlying value, setting the stage for a potential rebound as conflict risks fade.
Questions in the middle?
- How will prolonged Middle East tensions reshape New Zealand’s inflation and interest rate outlook?
- Can Vista Group’s fundamentals withstand ongoing AI-driven sector volatility?
- Will consumer-exposed companies like Mainfreight and Freightways regain momentum as fuel prices stabilise?