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MARKET CLOSE: NZ shares gain; Restaurant Brands climbs on upbeat outlook

Thursday 17th October 2019

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(Oct. 16, 5:50 PM) New Zealand shares rose for a fourth day, with Restaurant Brands New Zealand among the strongest performers after the fast-food operator gave upbeat guidance for its annual earnings. 

The S&P/NZX50 Index advanced 133.3 points, or 1.2 percent, to 11,178.64. Within the index 31 stocks rose, 11 fell and eight were unchanged. Turnover was $132.3 million. 

The local market led gains across Asia after economists decided the faster than expected pace of inflation won't deter the Reserve Bank from cutting the official cash rate even further. Low rates are a boon for equity markets by increasing the relative returns from companies that pay reliable dividends, but also by providing cheap finance for firms pursuing growth. 

Restaurant Brands was among the top gainers, up 4.2 percent at $11.64. Volume was typically small at 36,000 shares, in line with the 90-day average of 40,000. The company reported a small dip in first-half profit, due in part to new accounting standards, and said it expects to lift annual earnings by at least 10 percent. 

Peter McIntyre, an investment advisor at Craigs Investment Partners, said earnings were up about 5 percent on a like-for-like basis, and combined with the upbeat outlook, was a strong result. 

"KFC is the real jewel in the crown for them," he said. 

Synlait Milk led the market higher, up 5.4 percent at $9.50 on a volume of 89,000 shares, in line with its 84,000 average. A2 Milk Co, which is supplied by Synlait, rose 2.1 percent to $13.50. 

Fisher & Paykel Healthcare extended its run, up 2.7 percent to a record $19.30. The breathing mask maker has been in uncharted territory since upgrading its earnings outlook after securing early US regulatory approval for one of its masks. 

Sky Network Television was again the most traded stock on 5.3 million shares, well up on its 1 million average. The stock rose 0.9 percent to $1.07. 

McIntyre said investors would be watching for the issue price for New Zealand Rugby's 5 percent stake. The pay-TV operator holds its annual meeting tomorrow. 

Spark New Zealand, which has been an aggressive new rival in the sports broadcasting space, rose 2.3 percent to $4.545 on a volume of 2.5 million shares. 

Of other stocks trading on volumes of more than a million shares, Fletcher Building increased 2.2 percent to $4.70, Meridian Energy advanced 1.6 percent to $5.335, Contact Energy decreased 0.9 percent to $8.67 and Kiwi Property Group rose 0.6 percent to $1.67. 

Genesis Energy fell 2.6 percent, or 9 cents, to $3.39 with 181,000 shares changing hands, less than its 574,000 average. The stock shed rights to an 8.6 cent dividend payment today, and the company updated shareholders at its annual meeting, which McIntyre said held no surprises for investors. 

Outside the benchmark index, Blis Technologies soared 31.4 percent, or 1.1 cents, to 4.2 cents after saying first-half revenue rose 74 percent to $5.4 million, and it generated a profit of $800,000. It affirmed annual guidance for strong revenue growth and sustainable profitability, and will formally report its first-half result next month. 

McIntyre said the company was developing its cross-border e-commerce channels in China in a similar vein to the way A2 did and was eyeing up new markets, such as Canada. 

"They're a small company by any standard, but they're making progress and that's really been rewarded with the share price driven higher," he said. 

The Local Government Funding Agency's 2029 bond paying 1.5 percent annual interest was the most traded debt security with a volume of 2.2 million. The notes closed at a yield of 1.81 percent, up 1 basis point. 


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