MARKET CLOSE: NZ shares gain as earnings boost lifts Mainfreight, Air NZ rebounds

Thursday 26th May 2016

New Zealand shares gained as Mainfreight posted stronger full-year earnings, giving investors more confidence about its outlook while Air New Zealand rebounded and Metro Performance Glass fell.

The S&P/NZX50 Index advanced 39.85 points, or 0.6 percent, to 6,947.89. Within the index, 30 shares rose, 13 fell and seven were unchanged. Turnover was $141.9mn.

Mainfreight gained 2.7 percent to $16.92. The transport and logistics group reported a 6.3 percent gain in full-year profit as improved trading in New Zealand, Asia and Europe was offset by weaker results in Australia and the Americas.

"It was slightly ahead of what we were expecting so that's positive, and it looks like the second half was a lot better than the first which is good because it means they're going into the next financial year with some good momentum - particularly in New Zealand, New Zealand was solid," said Mark Lister, head of private wealth research at Craigs Investment Partners. "Australia was a little bit weak but overall it was a pretty decent result."

Air New Zealand was the best performer on the index, gaining 3.5 percent to $2.09. It hit an eighteen-month low of $2.02 on Wednesday and has dropped 31.6 percent this year.

"It has probably got a bit oversold," Lister said. "It's been pretty beaten up over the past couple of months for a range of reasons, and it's a bit of a bounce. You've had a lot of competition come into the market because they've seen how well Air New Zealand's doing, which is very good for the consumer - more choice, lower prices - but it's just eaten into Air New Zealand's profits a little bit."

Kathmandu Holdings rose 2 percent to $1.55 while Fletcher Building advanced 1.9 percent to $8.74.

Metro Glass was the worst performer, down 4.4 percent to $1.75. The country's largest glass processor posted its first full-year profit as a listed company, meeting guidance, as it benefited from increased construction activity while coping with what it called supply and execution issues.

"They hit that guidance range but at a low end and a little weaker than what most of the analysts were expecting," Lister said. There is still a few concerns about - they've got quite high costs and they don't seem to be making progress on the commercial side of the business like people would like to see."

Genesis Energy dropped 1.5 percent to $2.02, while Trustpower shed 1.4 percent to $7.88.

Outside the main index, Trilogy International gained 4.4 percent to $4.23. The skincare and home fragrance company, which was last week asked by the NZX to explain a jump in its stock price, says it has acquired 25 percent of Chilean rosehip producer Forestal Casino for US$8 million in cash and shares, giving it certainty of supply for an oil used in skincare products. It's due to report its annual earnings tomorrow.

Gentrack Group increased 3.8 percent to $2.75. It lifted first-half profit 23 percent as sales from its UK division jumped with the signing of new customers and the software developer says annual revenue will climb at a faster pace than previously signalled.

Eroad advanced 1.6 percent to $2.50. The logistics and fleet management company posted an annual loss within its earlier guidance which it said was the result of more investment and US customer uncertainty.

Energy Mad gained 22.6 percent to 6.5 cents. The energy efficient light bulb marketer narrowed its annual loss as Australian sales surged higher.

Sanford rose 3.3 percent to $5.89. The country's largest listed fishing group almost doubled its first-half profit as it focused on lifting values over volumes and benefited from lower fuel costs and a weaker New Zealand dollar.

BusinessDesk.co.nz

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