CLOSE: Shares pare gain from 10-month high; Contact, Fletcher fall

Tuesday 11th August 2009

Shares fell from near their highest levels in 10 months amid perceptions valuations have become stretched after a rally that pushed the NZX 50 Index up 18% in the past four months.

Contact Energy and Fletcher Building fell. The NZX 50 fell 25.50, or 0.8%, to 3055.47. Within the index, 24 stocks fell, 15 rose and 11 were unchanged. Turnover was $81 million.

Contact Energy (NZX: CEN ), the biggest utility on the NZX 50, fell 2.3% to $6.34, having gained 15% in the past month. The shares are trading at 26 times earnings of the past 12 months. Contact reports its results on Friday, having warned in June that underlying earnings will be up to 33% below last year’s $232.8 million.

Fletcher Building (NZX: FBU ) fell 2.2% to $7.02. New Zealand’s biggest construction company reports earnings tomorrow and is expected to post its first net loss since 2001 on costs to close plants and a writedown of the value of its Formica business.

Fisher & Paykel Healthcare (NZX: FPH ), which gets almost 80% of its revenue in U.S. dollars, fell 2.1% to $3.28 as the kiwi dollar strengthened. The currency has gained about 2% this month and was recently at 67.45 U.S. cents.

Companies in the NZX 50 may on average post a decline in earnings before one-time items of 21% for the year ended June 30, according to a Forsyth Barr estimate. Sales on average may rise 2.1%, indicating companies’ margins have shrunk during the worst economic downturn in 30 years.

Michael Hill International (NZX: MHI ) led rising stocks, gaining 2.9% to 70 cents, while clothing retailer Hallenstein Glasson Holdings (NZX: HLG ) rose 2.5% to $2.85. Warehouse Group (NZX: WHS ), the biggest retailer on the benchmark index, rose 1% to $4.05.

Electronic card transactions rose 1.2% in July, or 0.8% for retail industries, according to figures from Statistics New Zealand today.

Recent data suggests “that a modest recovery in retail spending is now underway,” said Darren Gibbs, chief economist at Deutsche Bank. That’s supported by “very stimulatory macroeconomic policy settings, rising population growth, a recovery in housing market activity and the associated lift in consumer and business confidence,” he said. Gibbs expects the economy will climb out of recession this quarter.

Nuplex Industries (NZX: NPX ), one of the hardest hit companies as the economic slump was deepening, forcing it to raise capital at a discount earlier this year, gained 2.4% to $2.12.

Courier and logistics firm Freightways (NZX: FRE ) rose 2% to NZ$3.35. Infratil (NZX: IFT ) the investment group that controls TrustPower, rose 1.1% to $1.85. Skellerup Holdings (NZX: SKL ) fell 3.5% to 55 cents, the biggest decline on the NZX 50 today.

Businesswire.co.nz

Comments from our readers

No comments yet