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MARKET CLOSE: NZ shares rose; A2, F&P Healthcare gain, Metro Glass plunges 18.5%

Friday 3rd February 2017

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New Zealand shares gained, led by A2 Milk Co and Fisher & Paykel Healthcare, while Metro Performance Glass plunged after disappointing investors.

The S&P/NZX50 Index advanced 40.85 points, or 0.6 percent, to 7,094.39. Within the index, 25 stocks rose, 14 fell and 11 were unchanged. Turnover was $145 million.

Metro Glass was the worst performer, down 18.5 percent to $1.54. The Auckland-based company, which has more than half the country's glass processing market, said annual net profit was likely to be similar or even lower than the prior year's $20.5 million as local sales lagged behind expectations and costs were higher than expected.

In a conference call with analysts and investors chief executive Nigel Rigby underscored that the company is "going well" in a revenue sense but said a recent learning curve as it scales up production, distribution and technological capability has increased costs.

"They released a pretty disappointing update," said Greg Easton, an adviser at Craigs Investment Partners. "They achieved very well on the revenue growth front, however, they've had to spend a lot on some of their expansion plans and that spending hasn't yet been offset by increased revenue. They did note the slowdown in the Christchurch residential build, and the earthquakes in Wellington stalling activity for a while. They're still pretty upbeat generally about the future."

A2 Milk led the index, up 3.9 percent to $2.38, continuing yesterday's gains when it was reported that UK consumer giant Reckitt Benckiser is in talks to buy Mead Johnson Nutrition, the US-based baby-food maker, for US$90 per share, nearly a 30 percent premium. The negotiations value Mead Johnson's entire share capital at approximately US$16.7 billion, according to Reuters.

"It's an interesting sector, there's a whole bunch of companies that move depending on what the others do," Easton said. "We're also seeing other exporters up today, there's a bit of weakness in the dollar possibly giving them a wee lift as well. A2's an amazingly volatile stock at the best of times."

F&P Healthcare rose 2.3 percent to $9, Fletcher Building gained 1.8 percent to $10.32, and Argosy Property advanced 1.5 percent to $1.04.

Sky Network Television dropped 2.6 percent to $4.43, SkyCity Entertainment Group fell 1.9 percent to $3.72, and Comvita declined 1.4 percent to $7.

NZX dipped 0.9 percent to $1.10. Cash trading volumes on the NZX slowed 12 percent in January, continuing December's trend, while the value of trading rose 2.3 percent to $2.2 billion despite fewer small trades.

Outside the benchmark index, Intueri Education Group plummeted 50 percent to 1.5 cents. The Auckland-based private education provider will quit Australia by the end of the year after losing federal government subsidies and is considering bids for some of its assets, saying it was probably in breach of its banking covenants in 2016. In New Zealand, it's under Serious Fraud Office investigation over its Quantum unit.

Hallenstein Glasson Holdings gained 3 percent to $3.40. The clothing retailer said first-half profit rose about 34 percent to between $9 million and $9.2 million after it enjoyed a stronger Christmas trading season. Group sales rose 9.4 percent to $122.9 million in the six months to Feb. 1, with an 11 percent gain over the critical December period. 

Tenon was unchanged at $2.41. The Taupo-based company, which sold its US operations for US$110 million last year, has revised full-year guidance for its remaining Clearwood New Zealand business to reflect foreign exchange movements, Tenon corporate costs and changes in product mix.

Plexure Group was unchanged at 27 cents. The digital advertising firm, formerly known as VMob, raised $1.6 million through an issue of convertible notes and the funds will be used to support ongoing operations.

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