MARKET CLOSE: NZX 50 rise to record; Xero surges on more cash; Air NZ climbs

Wednesday 25th February 2015

New Zealand shares rose to a record, led by Xero after it raised $147 million from two American fund managers. Air New Zealand gained as it posted savings on falling oil prices.

The NZX 50 Index advanced 119.327 points, or 2.1 percent, to 5842.292. Within the index, 27 stocks rose, 12 fell, and 11 were unchanged. Turnover was $161 million.

Xero jumped 26 percent to $23, paring an intraday gain to as high as $23.20, after the cloud-based accounting software firm announced Silicon Valley venture capital firm Accel Partners and Matrix Capital Management, its biggest shareholder, invested $147 million in the firm, doubling its cash balance to $285 million.

"At the moment, with their negative cash flow, it probably funds them for 12 or 18 months further on than the cash they had before," said James Lindsay, helps manage about $400 million in equities for Nikko Asset Management, New Zealand. "It's good news to see US shareholders backing it, because there was some concern about their growth rate in the US and if that would affect the propensity of US investors to take another swig of it."

Last Thursday, the stock market operator and regulator issued a 'please explain' notice asking Xero to confirm it was disclosing all material information after the share price rose some 16 percent in two days. Under continuous disclosure rules there are exemptions if a company is yet to finalise details, such as a capital raise, provided they're kept confidential.

Xero "themselves legally are fine, however it would be fascinating to know all those people who bought the stock when it had the jump from $16 to $20, what they knew and when," said Matthew Goodson, managing director at Salt Funds Management. "Clearly there's a whiff associated with this, given the legalistic interpretation of the listing rules that doesn't attach to Xero, but it does attach to whoever was buying that stock."

Air New Zealand advanced 7.2 percent to $2.76 after the national carrier’s normalised earnings before tax rose 20 percent to $216 million, driven by lower fuel prices and increased numbers of travellers. It posted a 6 per cent fall in net profit for the half year to $197 million, which reflected a $14 million loss on its stake in Australian budget airline Virgin Australia.

Ebos climbed 5.2 percent to $10.10. The healthcare and animal care products company reported a 12 percent gain in first-half profit to $53.9 million after lifting earnings in both divisions and refinancing debt on more favourable terms.

Metlifecare fell 0.2 percent to $4.77. New Zealand's second-largest listed retirement village operator boosted first-half underlying profit, which removes non-cash items including unrealised valuation gains, some 70 percent to $26 million and signalled full-year underlying profit may rise about 13 percent as it expands in higher value markets.

Precinct Properties New Zealand was unchanged at $1.225. The property investor reported a 10 percent gain in first-half earnings to $35.3 million and said better occupancy rates at its buildings lifted earnings and will raise $174.1 million to fund a major development programme in the country's biggest city.

A2 Milk Co climbed 7.8 percent to 55 cents after it said first-half profit fell 81 percent to $125,000. The company, which markets milk with a protein variant said to have health benefits, blamed costs for its planned ASX listing, lodged today, and for hiring consultants.

Outside the benchmark index, Tourism Holdings fell 1.1 percent to $1.85. The largest campervan rental business in Australia and New Zealand more than doubled first-half profit to $5.6 million, beating expectations, after cutting costs and fattening margins.

Airwork Holdings rose 2.5 percent to $3.26 after it lifted first-half profit 19 percent to $7.9 million, beating its prospectus guidance. The aviation service firm has raised its annual earnings forecast after revising the residual value of its Boeing 737 aircraft.

Wynyard Group fell 3.4 percent to $1.98 after the security software firm reported a near-doubling in its annual loss to $22.3 million as its push for large global contracts helped boost revenue 62 percent to $26 million in its first full year as a listed company. The net loss widened more than twice the level forecast in its share float prospectus, although the result was in line with market expectations, owing to subsequent guidance from the company.

BusinessDesk.co.nz

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