MARKET CLOSE: NZ stocks mixed; Air NZ, Nuplex gain, THL falls

Friday 24th April 2009

New Zealand shares were mixed, with Air New Zealand gaining as it cut capacity to maintain load factors in the face of falling passenger numbers fell and Tourism Holdings falling with inbound tourists.

The NZX 50 fell 2.46, or 0.1%, to 2656.39, the fifth daily decline. Within the index, 21 stocks fell, 17 rose and 12 were unchanged. Turnover was NZ$97.9 million.

Air New Zealand rose 3.7% to $1.11. While long-haul passengers slumped 21% in March, the airline trimmed capacity by 12.2%, resulting in a load-factor drop of 4.1 percentage points. For short-haul, passenger numbers fell 8.8% while capacity was reduced 7%, resulting in a drop in passenger load factor of just 0.5 percentage point.

"The airline is doing so much better than the likes of Qantas," said Stephen Wright, private client adviser at ASB Securities. "They keep capacity down and are able to rejig the planes. It's a tough, tough business but they seem to be doing very well.

Nuplex climbed 3% to 34 cents after it lifted the sale price of shares in the top-up component of its capital raising. The specialty chemicals maker raised an additional $26.7 million, bringing the total to $159.5 million, after arranger First NZ Capital used a call option to place the equivalent of 15% of Nuplex's stock with sub-underwriters. The price was bumped up to 27 cents a share from 23 cents.

"There was very good demand," said Martin Stearne, director of investment banking at First NZ Capital. "We did have the rights to do it at 23 cents but felt in the circumstances that it was the right thing to do to increase the price."

Investors are awaiting Reserve Bank Governor Alan Bollard's review of monetary policy next week, with a cut to the official cash rate expected of either 25 basis points or 50 basis points, to as little as a record low 2.5%.

Tourism Holdings fell 4.3% to 45 cents amid signs tourists from North America and Europe are staying away in droves, leaving the campervan fleet operator with high fixed costs with less revenue. "Everything is out of their control - tourist numbers, climate, exchange rate,"ASB's Wright said. "They've never been able to predict their profit."

Contact Energy fell 0.4% to $5.58 amid concern it will miss its full-year profit forecast after shedding 8% of its customers since a peak in September, losing the best part of seven years of customer growth.

"They would have to do very well to achieve their January outlook," said Andrew Harvey-Green, an analyst at Forsyth Barr. "Dual-fuel customers are moving away to Contact's competitors."

Contact's electricity customers fell to 487,000 as at March 31 from 517,000 at the same time last year. Its gas customer base suffered an even worse drop proportionally, down 10.7% to 67,000.

National Property Trust fell 2.9% to 34 cents after saying the value of its portfolio fell 4.9% in the six months through March, reflecting softer capital yields in the property market. The value of the trust's portfolio of commercial, retail and industrial properties fell $28 million to about $266.8 million in its second half ended March 31, bringing the full-year decline to 9.1%, National property said in a statement.

"Over the last twelve months cap rates have eased by an average of over 0.75%," said John Crone, the trust's general manager. "Even though passing rent has improved by almost 2% these gains have only partially offset weaker market conditions," he said.

Skellerup Holdings fell 3.9% to 50 cents. Selwyn Cushing, chairman of the maker of milking equipment and rubber goods, denied the company was preparing to raise equity, the Independent reported. His comment comes after Macquarie Equities raised the prospect of Skellerup seeking to tap investors for funds, while cutting its recommendation for the company to "underperform" from "neutral".

Sanford, the fishing company, declined 2.7% to $5.50 and Infratil declined 2.6% to $1.53.

Fisher & Paykel Appliances slipped 2.2% to 45 cents. The manufacturer is in talks with its banks to refinance $80 million in a short-term facility that comes due on April 30.

Carpet-maker Cavalier gained 3% to $1.70, New Zealand Oil & Gas climbed about 3% to $1.39 and Fletcher Building rose 2.9% to $6.32.

"There's money out there for special deals, with support for capital raisings by Sky City Entertainment, Fletcher Building and Freightways," ASB's Wright said. "There's talk of Contact Energy and others - there's certainly more dollars going in."

"Wright said he is telling his clients - our market will be better in the second half of the year. Markets always go up before economies."

Businesswire.co.nz

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