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NZX CLOSE: NZ shares mixed; Telecom drops on compo, guidance, ALF gains

Tuesday 23rd February 2010

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New Zealand shares were mixed. Telecom fell after raising its compensation offer for XT outages and cutting its full-year guidance, while Allied Farmers rose on expectations it is only a matter of time before it enters the benchmark index.

The NZX 50 Index fell 3.387, or 0.1%, to 3126.367. Within the index, 16 stocks fell, 21 rose and 12 were unchanged. Turnover was $46 million.

Telecom (NZX: TEL ) declined 2.5% to $2.30, which is 9 cents above the record low it reached last November. Chief executive Paul Reynolds was forced to front up to apologise and outline an increased compensation package for customers amounting to $15 million after further disruptions on its XT network. Full-year earnings would be at the bottom of its $400 million to $440 million range, he said.

Contact Energy (NZX: CEN ), the biggest utility on the NZX 50, declined 1.4% to $5.72 after reporting underlying earnings of $80.1 million in the six months ended Dec. 31, missing some estimates, from $79.9 million a year earlier. Contact's retail margins were "unsustainably low" and electricity prices in the first half had not covered the costs of having gas-fired capacity available to run, CEO David Baldwin said.

The results were “a bit light compared to consensus,” said Craig Brown, who helps manage $3.3 billion at ING New Zealand.

Allied Farmers (NZX: ALF ) climbed 4.8% to 11 cents, snapping a two-day slide. Market operator NZX has copped criticism from the company for telling market participants last week that it would be included in the NZX 50 then later saying it wouldn’t yet.

“Our view is that NZX’s u-turn on entering ALF to the NZX 50 is only temporary and will again be reversed in the March review,” brokerage McDouall Stuart said in a note. It has a ‘buy’ recommendation on the stock and a target price of 20 cents.

New Zealand Refining (NZX: NZR ) , the nation’s only oil refinery, rose 2.4% to $3.48 after releasing a briefing to analysts in which it said the outlook for the year ahead indicates continuing tough times as refining margins remain squeezed, with more shakeouts expected in an unsustainable global refining industry.The company kept its output volumes on target at 17.5 million barrels.

Sky Network Television (NZX: SKT ), New Zealand’s dominant pay-TV provider, edged up 0.8% to $4.86.  The company posted a “very positive” 19% gain in first-half profit, with growth in MYSKY HDi subscribers the “big value driver,” said Stephen Walker, head of asset management at Goldman Sachs JBWere. Sky forecast full-year profit would be in a range of $88 million to $104 million, from $88 million in 2009.

New Zealand Oil & Gas (NZX: NZO ) rose 2% to $1.57 as the price of crude oil held near US$80 a barrel. New York crude traded at US$79.86 during Asia’s day.

Charlie’s Group (NZX: CHA ), the beverage company, jumped 5.2% to 10 cents after turning to a profit in the first half, helped by rising sales in Australia, where the company is expanding. Net profit was $1.9 million in the six months ended Dec. 31, from a loss of $700,000 a year earlier, the company said today. Gross sales in Australia surged by 37%.

Among other stocks, foodmaker Goodman Fielder (NZX: GFF )  fell 3% to $1.92, leading the index lower. Carpet maker Cavalier (NZX: CAV ) declined 2.3% to $2.61 and Freightways (NZX: FRE ) slid 1.7% to $2.97. AMP NZ Office Trust (NZX: APT ) gained 2.8% to 73 cents.

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