Wednesday 13th September 2017
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New Zealand shares continued to decline as election uncertainty dampens investor enthusiasm with Sky Network Television and Kathmandu Holdings dropping while CBL Corp bounced from its recent decline.
The S&P/NZX50 Index dropped 12.98 points, or 0.2 percent, to 7,827.43. Within the index, 27 stocks fell, 17 rose and six were unchanged. Turnover was $191 million.
Matt Goodson, managing director at Salt Funds Management, said there was a lack of corporate news following reporting season with a number of companies busy with investor roadshows. The local market bucked the trend by not following international markets higher over the last couple of days, although the bourse initially responded well to the latest general election poll released last night showing the incumbent National Party back in front, Goodson said.
The local index is down 0.3 percent this week, although it's still up 13.9 percent for the year. Overnight, the S&P 500, Dow Jones and Nasdaq Composite all closed at records, rallying as recent fears about nuclear tension with North Korea and natural disaster damage diminished.
Sky Network Television led the NZX50 lower, down 3.3 percent to $2.61 and Kathmandu Holdings declined 2.7 percent to $2.15. Mercury NZ dropped 3.1 percent, or 10.5 cents, to $3.34, after shedding rights ton 8.8 cents per share final dividend and 5 cents per share special dividend.
CBL Corp gained 2.5 percent to $2.92. The stock had dropped 6.6 percent this week before today's rise. Last month, the company flagged a $16.5 million increase in CBL Insurance's reserves to cover future claims, leading operating profit to fall to $22.4 million from $35.1 million in the same period a year earlier, some $17.5 million below expectations.
"Obviously it has been sold down fairly aggressively, whenever a stock has been sold down that hard you often see a sharp bounce. I don't think there's anything more to it than that," Goodson said.
Vector rose 2.8 percent to $3.30 while Contact Energy gained 2.1 percent to $5.44.
Outside the benchmark index, Turners Automotive Group was halted at $3.36 on the NZX. It intends to raise as much as $30 million by selling new shares to help fund future growth and provide more liquidity for its stock.
The Auckland-based company will raise $25 million through the placement of new ordinary shares at $3.02 apiece, which will be fully underwritten by the sole lead manager UBS New Zealand. It also plans to raise as much as $5 million through a non-underwritten share purchase plan which will be offered to eligible shareholders and convertible bond holders, it said in a statement.
"They've had a lot of success in their relationship with MTF, and from their latest update overall the business is trading pretty solidly," Goodson said. "It's possibly a surprising discount, and one suspects it will be fairly keenly sought."
Opus International Consultants gained 6.3 percent to $1.87. WSP Global Inc, a Canadian listed consultancy firm, has lifted its offer for Opus after the company declared a 14 cent dividend. Shareholders who choose to sell will now receive $1.92 per share, from the previous $1.85 per share which allowed Opus to declare a fully imputed dividend of 7 cents a share.
Evolve Education was flat at 78 cents, though it traded most of the day at 79 cents. Chief executive of Evolve Alan Wham resigned last month after the early childhood education centre operator warned annual profit will fall as much as 12 percent in the current year. Mark Finlay, a former director who stepped down from the board earlier this month, is acting as interim CEO.
"It's continuing to recover, after the latest operating update they were extremely hard hit," Goodson said. "Mark Finlay is very well regarded and it is hoped he can steady the ship there, it's really an issue of the enrolment numbers which he should be able to get back."
In late trading on the Australian stock exchange, CropLogic was down 6.5 percent to 14.5 Australian cents. Yesterday, the agricultural technology company dropped 23 percent to 15.5 Australian cents on its debut. It raised A$8 million in a fully subscribed share offer last month at an issue price of 20 Australian cents per share, with A$5 million of the capital raised underwritten by Hunter Capital Advisors.
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