MARKET CLOSE: NZ shares fall as Air NZ drops on cloudy outlook; Ebos rises to record

Thursday 25th February 2016

New Zealand shares fell, as Air New Zealand declined on a murkier outlook for the second half of the year, while Ebos Group hit a record high.

The S&P/NZX 50 Index decreased 5.1 points, or 0.1 percent, to 6,225.27. Within the index, 22 stocks fell, 18 rose and 10 were unchanged. Turnover was $140 million.

Air New Zealand fell 1.9 percent to $2.81. The airline posted a record pretax profit in the first half, up 132 percent on a year ago, due to lower fuel prices and a jump in passenger revenue as it added new routes and more aircraft. The stock traded as high as $2.90 after the earnings announcement but fell away by market close.

"It was a pretty strong result, a bit better than recent guidance, but the stock has come off a bit on the back of a more conservative outlook for the second half," said Robert Garden, investment adviser at Craigs Investment Partners. "The result that came out now is largely driven by cheap oil prices, and that's outside of the company's control. Management's just highlighting that uncertainty to the market, and they've kept a lid on the share price."

New Zealand Refining Co led the index lower, falling 4.4 percent to $3.52. The country's only oil refinery posted annual profit of $151 million as revenue almost doubled to $445 million, helped by historically high refining margins, a weaker kiwi dollar and improved plant reliability.

"They're reliant on outside factors, and the tailwind's been there for the last twelve months or so, which has been helping drive profits," Garden said. "There's a few people taking a bit of profit out of the good run New Zealand Refining has had."

A2 Milk Co shed 2.8 percent to $1.76, while Metro Performance Glass dropped 2.6 percent to $1.51.

Chorus slipped 1.8 percent to $3.91, Orion Health Group dropped 1.6 percent to $2.49, and Xero declined 1.4 percent to $14.80.

Ebos Group rose 6.9 percent to $15.34, an all-time high. Yesterday the animal and healthcare company reported a 19 percent gain in first-half profit, declaring a bigger-than-expected dividend and reiterating its expectation for double-digit full-year earnings growth.

"The guidance was a bit vague yesterday, but the market's looked through that to the momentum they're having with earnings growth," Garden said. "They've been quite active on acquisitions and trying to grow things organically and the market's liked them - and healthcare's a sector the market likes at the moment."

Metlifecare advanced 2 percent to $4.68. The retirement village operator yesterday announced first-half profit had more than tripled as property prices boomed.

Vector gained 1.6 percent to $3.25, Fletcher Building climbed 1.2 percent to $6.98, and Infratil increased 1.2 percent to $3.07.

Outside the main board, Wynyard Group's shares were unchanged at 94 cents, having traded as high as $1.04 in intraday trading after announcing it has binding commitments for the full $30 million it plans to raise in a deeply discounted rights offer. The company needs extra funds to meet its working capital requirements by the end of March, having raised $42.6 million in 2015, when its net cash outflow was $32.7 million.

Scales Corp dropped 1.7 percent to $2.39. New Zealand's biggest apple exporter more than doubled annual profit as its horticulture unit reaped the benefits from selling higher value apples to key markets. Prior to today, the stock has gained 63 percent over the past year, ahead of a 2.1 percent gain for the S&P/NZX All Capital Index over the same period.

Methven rose 0.9 percent to $1.17. The NZX-listed tap and shower manufacturer and exporter lifted first-half profit 27 percent as its core business in Australia and New Zealand more than made up for weakness in China.

Vital Healthcare Property Trust fell 0.5 percent to $1.90. The company, which owns and develops property for hospitals and healthcare, posted a jump in first-half profit after recognising a gain in the value of assets in Australia, and announced its entry into the aged-care market by buying four properties for A$41 million.

BusinessDesk.co.nz

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