MARKET CLOSE: NZ shares rise as A2 extends rally; Sky TV, Xero advance

Tuesday 29th December 2015

New Zealand shares rose as A2 Milk Co extended its rally to new record, Xero and Sky Network Television advanced in a quiet market, and Ebos Group fell.

The S&P/NZX 50 rose 66.9 points, or 1.1 percent, to 6292.43, a record high. Within the index, 29 stocks rose, 14 were unchanged and 7 fell. Turnover was $87 million.

A2 Milk continued its pre-Christmas rally, rising 15 percent to $2.27. The stock closed above $2 for the first time today, and has more than doubled in value from $1.10 since Dec. 17, when the company announced a second earnings upgrade for the year. The share price has risen 240 percent this year, spurred by strong Chinese demand for infant formula.

"When people invest in small, rapid-growth companies - which A2 is - you get a real surge of interest and stocks tend to be well supported," said Shane Solly, director, portfolio manager and research analyst at Harbour Asset Management, which owns A2 Milk shares.

The stock's rally comes as other listed dairy producers gain across Australia and New Zealand. Synlait Milk rose 0.7 percent to $3.07 on the NZX, while ASX-listed Bega Cheese advanced 13 percent to $7.24 and Blackmores rose 2.7 percent to $5.60. ASX-listed formula producer Bellamy's Australia rose 6.8 percent to $15.50.

"There's a group of similar stocks that are all getting enthusiastic support for dairy-based products, be they at the more technical end like A2 or the more basic end like Bega in Australia," Solly said. "If you start looking through what A2's doing, it is easy for people to get excited about growth in Chinese infant formula space, pushing into the UK and US markets with whole milk products or milk-based products."

Xero rose 3.3 percent to $19.58, and Chorus was up 2.1 percent to $3.88.

Sky TV rose 2.4 percent to $4.64. The stock has recovered after dropping as low as $4.19 on Dec.15, but has fallen 25 percent this year amid concern it faces increased rivalry from companies such as Netflix and Apple's Apple TV.

"You've seen some selling by some large international shareholders in the middle of December for those large structural reasons, there's a lot of different competitive forces against Sky TV now," Solly said. "Those forces are accelerating in some circumstances. They've got a good management team and they've dealt with changes in the past, but this is certainly a more fractious competitive issue for them."

Ebos was the worst performer on the market today, down 2 percent to $14.40.

Goodman Property Trust fell 1.6 percent to $1.23, Stride Property fell 1.2 percent to $2.15, and Kiwi Property Group fell 0.4 percent to $1.34.

On the ASX, Richfield International rose 2.5 percent to 20.5 Australian cents after the shipping firm urged shareholders to take no action while it reviews a takeover offer from veteran corporate raider Ron Brierley's Mercantile Investment. Richfield received an unsolicited on-market takeover offer of 20 Australian cents per share from Mercantile on Dec. 23, the Perth-based company said in a statement. The shares have been unchanged at 20 Australian cents since Dec. 22, and have risen 135 percent this year.

BusinessDesk.co.nz

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