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MARKET CLOSE: NZ shares gain; A2, Fletcher, TeamTalk rise, Metro Glass, Infratil fall

Wednesday 29th March 2017

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New Zealand shares gained, led by A2 Milk Co and Fletcher Building, while TeamTalk extended its rally. Metro Performance Glass and Infratil fell.
 
 
The S&P/NZX 50 Index rose 68.33 points, or 1 percent, to 7,133.56. Within the index, 32 stocks rose, 12 fell and six were unchanged. Turnover was $137 million.
 
 
"We had a pretty big night overseas, everything was looking pretty positive this morning after strong leads from the US and elsewhere, so unsurprisingly we've followed suit and it's been a pretty good day," said Mark Lister, head of private wealth research at Craigs Investment Partners.
 
 
A2 Milk led the index, gaining 3.9 percent to $2.96, a record high, and Air New Zealand continued yesterday's gains, up 3.8 percent to $2.455. 
 
 
Fletcher Building rose 3.8 percent to $8.25, having dropped 25 percent so far this year after its first-half earnings disappointed the market in February, with a cut to its full-year guidance last week accelerating that decline.
 
 
"It's staging a bit of a rebound after obviously coming under huge pressure following that big earnings downgrade, but it's attracted a few bargain hunters today," Lister said. "It's getting a bit of support having traded down pretty heavily, that doesn't mean everything's back on track for Fletcher but it's unsurprising given how sharply it had declined."
 
 
Genesis Energy was the worst performer, down 9.5 cents or 4.4 percent to $2.05 after shedding rights to an 8.2 cent dividend.
 
 
Metro Glass dropped 4.3 percent to $1.34 and has fallen 30 percent so far this year, making it the worst performer on the NZX 50.
 
 
"That's close to the lowest since it listed, it's a pretty decent fall from north of $2 where it was six months ago," Lister said. "It's another company in a similar sector to Fletcher Building which is struggling to benefit from that macro strength you're seeing in the construction market."
 
 
Infratil dropped 2.1 percent to $2.85. The Wellington-based investment firm is anticipating flat earnings in the 2018 financial year but is confident it can keep boosting returns to shareholders and is still on the prowl for new acquisitions. 
 
 
Outside the benchmark index, TeamTalk rose 2.9 percent to $1.07. The telecommunications minnow has been in a war of words with Spark after independent adviser Grant Samuel & Associates found the underlying value of TeamTalk is between $1.52 to $2.11 per share - well above Spark's 80 cent offer for the company.
 
 
"It's sitting well above that Spark offer price so the market obviously sees some possibility of that deal being sweetened," Lister said. "It's been a terrible performer over the years, and they've made some quite poor decisions so in some ways it's deserved to be valued at such low levels as it was before the Spark deal came along. At the same time, you could argue there was some underlying value there, though it's hard for the market to have confidence in a company that's disappointed them for so long."
 
 
Synlait Milk fell 5.7 percent to $3.30. The dairy company posted a 3.8 percent lift in first-half profit to $10.6 million as higher sales offset increased investment in people and business development. It reiterated that it expects "modest" growth in full-year profit, followed by a higher rate of profit growth in its 2018 year and beyond. 
 
 
"It was a little below expectations, not bad but not as strong as some of the analysts would have liked so it's come off a bit. It's probably a case of expectations being a touch too high," Lister said.
 
 
Gentrack Group gained 6.8 percent to $3.95. It has agreed to acquire the UK's Junifer Systems for about $79 million, extending its reach in customer information and billing systems for utilities such as energy retailers.
 
 
"That's been taken quite positively, the stock was up 10 percent at one point - the market's obviously taken it as an acquisition that's likely to add value to the company," Lister said.

Bond Offer: Infratil Ltd, 7.2 year & 10.2 year unsecured unsubordinated bond


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