MARKET CLOSE: NZ shares mixed as Orion Health, Coats rise, Sky TV falls after earnings

Friday 26th February 2016

New Zealand shares were mixed, as Orion Health Group gained from a record low on news of a major US deal and Coats signalled efforts to resolve its pension standoff, while Sky Network Television fell after citing rising costs in a competitive market.

The S&P/NZX 50 fell 0.3 points, or 0.01 percent, to 6,224.980. Within the index, 21 stocks rose, 21 fell and eight were unchanged. Turnover was $151 million. The index has gained almost 5 percent in the past two weeks, the heaviest period of earnings season.

Orion jumped 15 percent to $2.87 after announcing a deal to provide its Amadeus platform to Nasdaq-listed Cognizant Group, which has the potential to triple the number of patients it reaches, boosting a metric it says is increasingly used to value businesses in the healthcare sector. Shares of the unprofitable company have declined 55 percent in the past two years as Orion chases sales growth in lieu of profits.

Orion shares "aren't going to get a full reward until we see some profit," said Rickey Ward, New Zealand equities manager at JBWere. "Orion has been under pressure from lack of earnings. You have to deliver what you promise."

Coats rose 7.4 percent to 51 cents. The UK-based threadmaker that grew out of diversified investor Guinness Peat Group has committed to retaining the 342 million pounds generated from asset sales in an attempt to resolve its impasse with the UK Pensions Regulator over its three pension schemes.The company plans to delist from the NZX and ASX on June 24, leaving its shares tradable only on the London Stock Exchange.

Sky TV fell about 2 percent to $4.51 after the pay-TV operator posted a 5.8 percent decline in first-half profit as the cost of securing content rose in an increasingly competitive market.

Ward said investors were focussing on increased competition and costs in a market where the future isn't clear. Against that, the company told analysts today that it had appointed an adviser to address its capital management while saying it was currently in its peak period of capital spending. That could suggest it will be more inclined to increase dividends in future, becoming more of a yield than a growth stock.

Meridian Energy rose 2.9 percent to $2.50. While the power company announced an 11 percent fall in first-half net profit this week, it also cited sufficient strength in underlying earnings to lift the interim dividend and declare a special dividend of 2.4 cents per share.

Fisher & Paykel Healthcare fell 2.9 percent to $8.79. The healthcare products company gets the bulk of its earnings in US dollars and the kiwi dollar is heading for a 2 percent gain against the greenback this week.

Metlifecare, the retirement village operator, rose 1.1 percent to $4.73 and has rallied since announcing this week that first-half profit more than tripled as property prices boomed. Air New Zealand dropped 2.5 percent to $2.74.

Vector rose 0.6 percent to $3.27 after the Auckland electricity and telecommunications infrastructure provider reported a 16 percent lift in first-half profit to $100.1 million. Delegat Group was unchanged at $5.93 after New Zealand’s largest listed wine company said first-half operating profit rose 5 percent as wine sales rose to a record.

Vista Group International fell 2 percent to $4.90 even after the cinema software company beat its prospectus forecast for annual underlying profit as it doubled sales in the Americas, and signalled plans to start paying dividends in 2016. T&G Global was unchanged at $2.10 after the fruit marketer controlled by Germany’s BayWa said annual profit rose 83 percent on acquisitions and improved performance in its existing businesses.

SLI Systems rose almost 4 percent to 79 cents after the online retail search engine developer narrowed its first-half loss as sales rose and costs were little changed, saying it had enough cash to get to cash-flow breakeven without seeking more funds.

BusinessDesk.co.nz

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