MARKET CLOSE: NZ shares mixed, SkyCity falls on tepid earnings, Mainfreight and A2 rise

Wednesday 9th August 2017

New Zealand shares were mixed, with SkyCity Entertainment Group dropping to a five-month low on mediocre earnings while Mainfreight and A2 Milk Co gained.

The S&P/NZX 50 Index rose 16.92 points, or 0.2 percent, to 7,799.64. Within the index, 24 stocks fell, 13 rose and 13 were unchanged. Turnover was $186.8 million.

SkyCity shares fell 3.7 percent to $3.95 after posting its full-year results, with investors predicting analysts will downgrade the stock.

The Auckland-based casino and hotel group today reported a 1.3 percent increase in normalised net profit to $154.6 million in the year ended June 30, while normalised revenue dropped 4.9 percent to $1.03 billion. It didn't give specific numbers for the current financial year but said it expects group earnings before interest, tax, depreciation and amortisation to "grow modestly" compared to the prior year.

"It has disappointed on this year's earnings compared to forecasts, and the outlook is for modest growth which is a lot below what people were going for next year - that's the key disappointment," said Craig Stent, head of equities at Harbour Asset Management. "Clearly the period they've had in Auckland over the last while should have been positive for them with the Lions tour and the Masters Games, so it's the next year that's a pretty high hurdle for them to lap the preceding period. It's pretty well held by Australian investors as well, that may be where some of the marginal activity is coming from."

Mainfreight was the best performer, up 1.8 percent to $24.95, while Ryman Healthcare gained 1.6 percent to $9.34.

A2 Milk rose 1.5 percent to $4.84, a record high for a stock which has soared 124 percent this year. The recent rally has come after several brokers upgraded their expectations for the stock ahead of its results next week, Stent said.

"Clearly they've got earnings forecasts out there, and expectations are they might still beat those, and more importantly is what's the outlook for next year - if they give any guidance at all, that's what people will be looking for," Stent said.

TradeMe Group fell 2 percent to $4.80, continuing yesterday's selling after broker downgrades amid concern its business will be eroded by Amazon's expansion into Australia and plans for New Zealand.

Outside the benchmark index, Property For Industry gained 0.3 percent to $1.66. Excluding the impact of internalising a management contract, Property For Industry's first-half profit rose 12 percent to $25.2 million. Operating revenue lifted 1.4 percent to $35.7 million while operating expenses gained 4.2 percent to $13.5 million.

The industrial property investor posted a $5.6 million net loss in the first half of its financial year, from a profit of $22.5 million a year earlier, including $42.9 million in termination costs and a $6 million gain in the value of its properties.

Blis Technologies dropped 5.7 percent to 3.3 cents. Chief financial officer Tim Mepham has stepped down as the probiotics maker edges closer to turning a profit. The Dunedin-based company said Mepham will leave "in the coming months to pursue other business interests" and it is searching for a full-time replacement. Mepham has been performing the role four days a week, it said.

(BusinessDesk)

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