MARKET CLOSE: NZ stocks fall; Westpac, Xero decline while Sky TV gains

Thursday 12th May 2016

New Zealand shares joined a slide in equity markets that started on Wall Street and continued into Asia. Westpac Banking Corp, Air New Zealand and Xero dropping while Sky Network Television gained.

The S&P/NZX50 Index dropped 21.17 points, or 0.3 percent, to 6,923.17. Within the index, 22 stocks rose, 19 fell and nine were unchanged. Turnover was $185.6 million.

"The local market took a bit of a breather today, there was offshore negativity and the New Zealand dollar movements aren't good for some stocks on the index," said Grant Williamson, director at Hamilton Hindin Greene.

Markets across Asia mostly traded lower this afternoon, following Wall Street's negative lead dragged down by disappointing results from retailers Disney and Macy's.

Westpac Banking Corp fell 4.8 percent or $1.64 to $32.36. It gave up rights to a 94 cent dividend today.

Air New Zealand dropped 4.2 percent to $1.82. The national carrier has fallen 19.8 percent this year, having reached highs in January when oil was at record lows but has dropped back since then on concern it faces increased competition on key routes.

"The market is continuing to punish Air New Zealand, it's pretty cautious about what increased competition will do to that company," Williamson said.

A2 Milk Co shed 4.2 percent to $2.28, while Meridian Energy declined 2.9 percent to $2.66.

Xero fell 1.7 percent to $15.42. The cloud-based accounting software firm said it has sufficient cash reserves to reach breakeven without having to raise more capital, after posting a 67 percent jump in full-year operating revenue and a wider net loss. Its net loss was $82.5 million in the 12 months ended March 31, from a loss of $69.5 million a year earlier.

"It pretty much hit the spot, though subscriber numbers certainly weren't better than expected - it's just drifted off with the rest of the market today," Williamson said.

Nuplex Industries rose 0.8 percent to $5.33. The company, whose independent directors are backing a $1.05 billion takeover offer from Allnex Belguim SA which values Nuplex at $5.55 a share, raised its 2016 earnings guidance, reflecting a stronger performance in the EMEA (Europe, the Middle East and Africa) and the Americas in March and April. It said operating earnings before interest, tax, depreciation and amortisation for the year ending June 30 would be in a range of $157 million and $161 million, up from its previous guidance of $145-to-$157 million.

"Although it has that scheme of arrangement, today's earnings announcement has seen the share price close the gap, but it might be all a little bit too late," Williamson said.

Restaurant Brands New Zealand was the biggest gainer, up 2.3 percent to $5.45. NZX rose 2 percent to $1.01 while Summerset Group Holdings rose 1.6 percent to $4.46.

Sky Network Television halted its slide, rising 1.5 percent to $4.12. The stock dropped 26 percent over four sessions of losses since last Friday after saying subscriber numbers were expected to fall further this financial year, causing earnings next year to miss analyst estimates. The pay-TV operator said subscriber numbers dropped 1.5 percent last year to 851,561. It expects to lose 45,000 core residential pay-TV subscribers this year and gain about 25,000 subscribers for its online services such as Neon and FanPass.

"It has been savaged this week, but hasn't fallen any further today," Williamson said. "Investors will be pretty cautious, a number of analysts are saying they need to change their models for that stock."

Outside the main index, Delegat Group was unchanged at $5.99. The winemaker that retails under brands including Oyster Bay says it has completed the 2016 harvest, with yields in New Zealand up 33 percent on a difficult 2015. It says it will have appropriate inventory to achieve planned future sales growth of 3.17 million cases by 2020.

Energy Mad was unchanged at 6.5 cents. The energy efficient lightbulb marketer will outsource its New Zealand direct-to-consumer sales in a bid to focus on its growing Australian market. The company says this is expected to increase the operating profit from direct-to-consumer sales in New Zealand. That area of business recorded an unaudited operating loss of $127,000 on $542,000 of sales between February and April, prior to depreciation and amortisation of $5,000. The shares have gained 62 percent since the start of the year but remain well below the $1 float price when the company joined the NZX in September 2011.

BusinessDesk.co.nz

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