Sharechat Logo

MARKET CLOSE: NZ shares down, A2 and Synlait fall from pedestal as Metro Glass, Fletcher drop

Wednesday 1st November 2017

Text too small?

New Zealand shares fell, pulled lower by A2 Milk Co and Synlait, with construction stocks Metro Performance Glass and Fletcher Building also taking a haircut.

The S&P/NZX50 Index dropped 92.53 points, or 1.1 percent, to 8,053.81. Within the index, 26 stocks fell, 14 rose and 10 were unchanged. Turnover was $218 million. 

A2 Milk Co dragged the index lower, down 8.4 percent to $7.94, though it dropped as low as $7.45 in the day. The stock has been on a tear this year, up 307 percent.

"Clearly it has pulled back very, very hard, but really it's just back to where it was in mid-October," said Matt Goodson, managing director at Salt Funds Management. "Such has been the speed and remorseless nature of the ascent that it's a very sharp move down today. The only real news out there is a broker in Australia may have downgraded from a positive to a neutral view, but that should be neither here nor there really. There's no fundamental reason we've seen as yet."

The sharp fall earnt the stock a price enquiry from market operator NZX today. A2 confirmed it continues to comply with its continuous disclosure obligations.

A2's supplier Synlait Milk fell 6.2 percent. It too has gained strongly this year, up 164 percent.

"The Synlait price rise has been a bit puzzling, as a contract manufacturer it's hard to get returns much above what your cost of capital is," Goodson said. "Maybe there's an option for them at some point to go their own route with their own products, but I think it has been a thematic trade for offshore investors, there's a lot of momentum-type investors."

Metro Performance Glass dropped 5.1 percent to 94 cents and Fletcher Building fell 3.7 percent to $7.09. Goodson said there are fears about the outlook for the general New Zealand construction sector. ASX-listed company CSR, which owns Viridian Glass in New Zealand, made some fairly cautious comments about their outlook for New Zealand in their half-year results today, and that could be spilling into Fletcher and Metro Glass, he said.

Mercury New Zealand was the best performer, up 2.1 percent to $3.36. Skycity Entertainment Group rose 1.8 percent to $3.96 and Infratil gained 1.4 percent to $3.26.

Outside the benchmark index, Methven gained 2 percent to $1.02. The shower and tapware designer affirmed its expectation for earnings growth on a constant currency basis in 2018 but said first-half profit won't rise due to planned investment.

Auckland-based Methven was projecting net profit on a constant currency basis to be 10 percent higher than the $5.8 million it posted in 2017, a period it described as "very disappointing". 

Evolve Education was unchanged at 75 cents. It has appointed interim chief executive Mark Finlay to the top role, effective immediately. Finlay, a former director and founder and managing director of the Lollipops Educare Group, has been interim CEO since August this year following the resignation of Alan Wham, who left after the early childhood education centre operator warned annual profit would fall as much as 12 percent in the current year. 


  General Finance Advertising    

Comments from our readers

No comments yet

Add your comment:
Your name:
Your email:
Not displayed to the public
Comments to Sharechat go through an approval process. Comments which are defamatory, abusive or in some way deemed inappropriate will not be approved. It is allowable to use some form of non-de-plume for your name, however we recommend real email addresses are used. Comments from free email addresses such as Gmail, Yahoo, Hotmail, etc may not be approved.

Related News:

Tourist numbers perk up in August as Aussies more than offset declining Asian demand
Peters to unions: strikes not helpful; no word on Fair Pay Agreements
Oil and gas critical to global emissions reduction effort - BP
Ebos pays A$34m for medical devices businesses
House price inflation ticks higher as sales volumes recover
Fletcher in $31 mln dispute with ministry over Greymouth hospital
NZ dollar eases as markets fret about US-China trade talks
15th October 2019 Morning Report
CTU pressures govt for Fair Pay Agreements
NZ Rugby not ready for a seat at Sky board table

IRG See IRG research reports