MARKET CLOSE: NZX 50 charts new record as Restaurant Brands, SkyCity gain, Metro Glass falls

Friday 4th March 2016

New Zealand shares rose to another index record, buoyed by Restaurant Brands New Zealand and SkyCity Entertainment Group, while Metro Performance Glass fell.

The S&P/NZX 50 Index rose 37.3 points, or 0.6 percent, to 6,418.12. Within the index, 28 stocks rose, 17 fell and five were unchanged. Turnover was $170 million.

Restaurant Brands led the index, gaining 6.7 percent to $4.47, having earlier touched a record $4.61 in intraday trading, after the fast food operator unveiled plans to expand in Australia, buying the biggest KFC fried chicken franchise in New South Wales for A$82.4 million in cash and scrip and gaining a business with annual sales of A$100 million and pretax earnings of A$15 million.

"The market so far has really liked it. It's going to add in excess of 20 percent revenue for Restaurant Brands," said Peter McIntyre, investment adviser at Craigs Investment Partners. "They've paid good money for that - even though it's earnings-per-share accretive, they have paid 5.5 times ebitda. I'm possibly surprised how hard it's run, given there's a bit of execution risk."

SkyCity rose 3.4 percent to $4.54, with 3.8 million shares worth $16.8 million traded. the casino and hotel operator last month posted first-half earnings growth of 30 percent.

"With that amount of volume trading through, it looks to me like an institutional buyer's been in there, potentially topping up post result," McIntyre said. "Part of earnings season is CEOs and CFOs getting out and about to talk to brokers about what is the real story behind this business, and maybe the story is being fed back through investors. It's one which has possibly underperformed in recent times, so it may be a little bit of catch up as well."

Infratil rose 2.9 percent to $3.20 and Sky Network Television gained 2.5 percent to $4.45.

Kathmandu Holdings climbed 1.9 percent to $1.58, while Coats Group was up 1.7 percent to 60 cents and Vital Healthcare Property Trust rose 1.6 percent to $1.96.

New Zealand shares have recovered from their pre-earnings season lows, with the index rising to a record for the second consecutive trading session. The local bourse saw a strong reporting season, McIntyre said, with a lot of companies carrying dividends and not too many surprises.

"There's enough confidence for investors to buy-in based on forward outlooks post reporting season," McIntyre said. "There was a lack of visibility coming into earnings season based on what was happening globally, but that's been allayed. I also suspect the market's being driven by investors adding to their existing holdings which have done well over the past while - there's confidence about management in various companies and how they've been able to drive growth."

MetroGlass was the worst performer, falling 1.9 percent to $1.57. The shares have declined 8.7 percent so far this year, underperforming the NZX 50 which has risen 1.5 percent. The company hasn't reported earnings yet as it has a March balance date.

Air New Zealand dropped 1.7 percent to $2.88. The airline is one of two carriers still defending a multi-billion dollar civil law suit in New York, where 26 airlines have cut settlement deals totalling US$1.19 billion. The freight forwarders say the airlines "conspired to develop and implement an industry-wide index for calculating fuel and security surcharges that were applied to thousands of routes flown worldwide by the defendants, including flights to and from the United States."

Heartland Bank fell 1.7 percent to $1.17, and Warehouse Group dropped 1.1 percent to $2.71.

Outside the benchmark index, Vista Group rose 5.2 percent to $5.05. Beijing Weying Technology Co (WePiao) is taking a 2 percent shareholding in Vista Group International as part of a deal that will see the pair set up a new venture to tap into China’s expanding film market and is expected to generate more than $30 million for the New Zealand cinema software provider in the first year.

BusinessDesk.co.nz

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