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MARKET CLOSE: NZ shares drop as stocks shed dividend rights; Synlait, Heartland, A2 fall

Thursday 6th September 2018

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New Zealand shares dropped as many large stocks shed their dividend rights, with Synlait Milk, Heartland Bank and A2 Milk Co leading the index lower.

The S&P/NZX50 Index fell 126.4 points, or 1.4 percent, to 9,101.6. Within the index, 38 stocks fell, nine rose and three were unchanged. Turnover was $131.4 million. 

A lot of today's weakness came from large stocks going ex-dividend, with Air New Zealand, Heartland Bank, Trade Me Group, Sky Network Television and Vector all giving up dividend rights.

"We also had mixed offshore leads and there are concerns about emerging markets with a more recent addendum to the Trump trade wars," said Peter McIntyre, investment adviser at Craigs Investment Partners. "Sometimes when markets get a bit skittish those stocks that have done well tend to get sold off to a greater extent than those that haven't."

Leading the index lower was Synlait Milk, down 4.9 percent to $12.75. It's the best-performing stock on the index so far this year, up 86 percent. The second-best performing stock, A2 Milk which is up 54 percent, dropped 4.2 percent to $11.88.

Heartland fell 4.6 percent or 8 cents to $1.67 as it shed a 5.5 cent final dividend; Air New Zealand dropped 3.8 percent or 12.5 cents to $3.21 as it gave up rights to an 11 cent final dividend. Trade Me dropped 2.9 percent, or 15 cents, to $4.96, as it shed both a 10.5 cent final dividend and a 22 cent special dividend.

Tourism Holdings was the best performer, up 3 percent to $5.85. It gives up its dividend rights on Oct. 1. Summerset Group Holdings rose 0.9 percent to $7.71 and Skycity Entertainment Group gained 0.7 percent to $4.13.

Infratil dropped 1.3 percent to $3.405 while Tilt Renewables was unchanged at $2.30. Infratil today said the $208.5 million Tilt takeover offer it's leading is "fair and reasonable" after Tilt's independent directors recommended shareholders reject the deal as being too low.

Infrastructure investment company Infratil owns 51 percent of the Melbourne-based wind and solar developer. Last month it announced it was partnering with power company Mercury NZ, which in May acquired almost 20 percent of Tilt's shares from Tauranga Energy Consumer Trust, to buy out the rest at $2.30 a share. That was 8 percent more than they were trading at prior to the offer and matches what Mercury paid for its stake. 

Unless the offer is extended, it will close on Oct. 15. Tilt has said it will provide its shareholders with a target company statement including "compelling reasons why you should not accept the JV’s offer" by Sept. 17. The was declared unconditional today. 

"The offer price is quite a decent percentage lift from where the shares have previously traded," McIntyre said. "There doesn't seem to be an appetite at all from Infratil to increase the offer price, time will tell with regards to this. You may find some shareholders will get direction from the independent directors, and others will think it's a reasonable offer price and take it. There's definitely a bit further to run with this."

Market turnover was bolstered by Oceania Healthcare's cornerstone shareholder Macquarie Group selling a 15.6 percent stake in the aged care and retirement village operator for $104.5 million, reducing its holding to 41.7 percent. Oceania dropped 0.9 percent to $1.13.

Macquarie sold 95 million shares at $1.10 apiece in a bookbuild process to a range of New Zealand and Australian institutional investors, and New Zealand retail investors, according to a statement to the NZX

Outside the benchmark index, Steel & Tube Holdings fell 1.6 percent to $1.21. It sold the leftover shares from a rights issue at $1.23, a premium to what was a discounted offer, raising another $17.8 million to repay debt. 


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