MARKET CLOSE: NZ shares drop, A2 Milk gives up gains; F&P Healthcare gains on court result

Friday 2nd December 2016

New Zealand shares fell, dragged lower by A2 Milk Co on negative news from an Australian rival, while Fisher & Paykel Healthcare gained after a positive result in court.

The S&P/NZX 50 Index dropped 27.88 points, or 0.4 percent, to 6,904.86. Within the index, 27 stocks fell, 17 rose and seven were unchanged. Turnover was $155 million.

A2 Milk Co led the index lower, down 11.6 percent to $2.28. The shares had gained 19 percent since last Tuesday when the company updated shareholders at its annual meeting in Sydney, but dropped today after rival formula producer Bellamy's said Chinese demand had dropped due to regulatory changeover.

"An Australian baby formula manufacturer has come out with guidance not as good as expected, due to waning demand in the Chinese baby formula market," Grant Williamson, director at Hamilton Hindin Greene, said. "Their share price has taken a real hit, and that's certainly had an effect on A2. It was a little firmer first thing this morning, but the announcement certainly turned it down. The market builds in such high expectations and if they don't achieve that they can get hit."

Meridian Energy fell 1.9 percent to $2.55, Sky Network Television dropped 1.9 percent to $4.66, and Fletcher Building declined 1.8 percent to $10.26.

"We've seen a bit of profit taking on stocks that haven't done too badly in recent times - Fletcher Building have come off, they've had a pretty good time of it just recently but are down overall for the week," Williamson said.

Fisher & Paykel Healthcare was the best performer, up 4.3 percent to $8.56. The company, which is battling rival ResMed over intellectual property for face and nasal masks, has succeeded in overturning the second of two preliminary injunctions against it in Germany, allowing the company to resume sales of the affected products in that country.

"They have been successful in the German court proceedings, so that really turned the price around - it's been relatively weak for a wee while now, it's a nice turnaround," Williamson said. "There are still concerns with the company doing a lot of manufacturing in Mexico, and what Mr Trump might do, but it was nice to see the company have a win in the courts anyway."

Tegel Group Holdings rose 2.7 percent to $1.53 and Port of Tauranga advanced 1.9 percent to $3.82.

Property for Industry gained 2 percent to $1.57. The commercial property investor expects its portfolio to lift 9 percent in value this year amid high demand. The value of PFI's portfolio of 84 properties is estimated to have increased to $1.09 billion this month, from $1.01 billion as at June 30 and from $987 million at the start of the year.

Outside the main index, IkeGPS gained 14.3 percent to 40 cents. The company said it has extended its supply, branding and distribution deal for its Stanley Smart Measure Pro with Stanley Black & Decker, the world's largest tool supplier, to the end of calendar 2018.

Intueri Education Group rose 5.7 percent to 5.6 cents. It will get an A$3.5 million payment from the Australian Department of Education and Training (DET) for 2015, but is still waiting to hear whether it will get a further A$6 million for 2016 and whether it can join that country's new student loan payment scheme.

Cavalier dropped 1.2 percent to 81 cents. Godfrey Hirst has said it will abandon its fight to overturn the regulatory approval for a wool scouring monopoly in New Zealand involving rival Cavalier, despite judging it a "major blow to the wool industry and competition generally in New Zealand".

Augusta Capital was unchanged at $1.04, while NPT was also unchanged at 67 cents. Augusta has been granted a date in February next year for its High Court proceedings seeking orders requiring NPT to call a meeting of shareholders to discuss its hostile bid.

BusinessDesk.co.nz

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