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MARKET CLOSE: NZ shares climb back above 10,000; Synlait rallies on covenant appeal

Friday 7th June 2019

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New Zealand's benchmark index climbed back above 10,000, led by Synlait Milk, on news the dairy company is appealing a ruling that may prevent the opening of its second processing facility. 

The S&P/NZX 50 Index rose 0.6 percent to 10,047.82. Within the index, 26 stocks rose, 15 fell, and nine were unchanged. Turnover was $103.2 million with just six stocks trading on volumes of more than a million shares. 

Synlait rose 4 percent to $9.10 on a volume of 102 shares, below its 90-day average of 123,000. The milk processor said it's appealing to the Supreme Court in an effort to get covenants removed from land where it's all but completed a processing factory in Pokeno. The company is still pursuing a commercial solution to the dispute. 

Grant Williamson, a director at Hamilton Hindin Greene, said Synlait has also been weighed down by A2 Milk's performance in recent days as investors pondered the impact of China's goal of lifting its internal production of infant formula. A2 increased 0.8 percent to $14.40 on 433,000 shares, a smaller volume than usual. 

"Synlait is back up above where it started the week, but is still well off its highs," he said. 

Equity markets were generally stronger across Asia Pacific, although the uncertainty around US trade policy kept activity relatively quiet. The most heavily traded local stocks were widely held blue-chip companies, such as Spark New Zealand and Fletcher Building, and stocks held for their yield, such as property companies and utilities. 

Fletcher increased 2.1 percent to $5.27 on a volume 1.5 million, more than its 1.2 million average. Williamson said it was bouncing back from the earnings downgrade earlier this week which was due to the early settlement of its Formica divestment. 

Genesis Energy was the most traded stock on a volume of 3.4 million shares, well north of its 519,000 average. It was unchanged at $3.10. Spark rose 3 percent to $3.785 on a volume of 2.7 million shares, about half its usual volume, and Contact Energy rose 0.5 percent to $7.50 on 2 million shares. Meridian Energy increased 0.7 percent to $4.38 on a volume of 1.4 million and Goodman Property Trust was unchanged at $1.81 with 1 million units changing hands. 

Auckland International Airport posted the day's biggest decline, down 1.5 percent at $8.69 on a volume of 445,000 shares, less than half its 90-day average. Air New Zealand fell 0.8 percent to $2.55, New Zealand Refining decreased 0.5 percent to $2.06, and Z Energy was down 0.2 percent at $5.99. The four companies have been participating at the three-day public inquiry into the 2017 refinery-to-Auckland pipeline failure. 

Fonterra Shareholders' Fund units decreased 0.3 percent to $3.99 on a volume of 333,000, more than its 222,000 average. Fonterra Cooperative Group's farmer-owned shares were also down 0.3 percent at $3.99. The government yesterday announced its planned changes to the dairy sector's governing legislation, which Fonterra gave a mixed response to. 

Mercury NZ decreased 0.1 percent to $3.88 after announcing plans to raise up to $300 million in a subordinated capital bond offer. If the offer goes ahead and is successful, Mercury plans to use the funds to redeem $300 million of existing listed debt that's currently paying annual interest of 6.9 percent. The rate on the existing 2044 bonds was reset in July, and closed at a yield of 2.55 percent, down 125 basis points. 

Chorus's 2028 bonds paying annual interest of 4.35 percent were the most traded debt security on a volume of 796,000 notes. It closed at a yield of 3.14 percent, up 1 basis point. Chorus shares rose 1.6 percent to $5.80. 


Bond Offer: Infratil Ltd, 7.2 year & 10.2 year unsecured unsubordinated bond

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