MARKET CLOSE: NZ shares rise as Contact stock changes hands; F&P Healthcare, SkyTV gain

Wednesday 5th August 2015

New Zealand shares rose, continuing the week's volatile course as Origin Energy sold its Contact Energy stake at a discount, creating one of the busiest days on record for the NZX in terms of turnover.

The S&P/NZX 50 Index rose 4.76 points, or 0.1 percent, to 5938.51. Within the index, 20 stocks rose, 20 fell and ten were unchanged. Turnover was $2.1 billion, compared to a daily average in July of $142 million, after Origin Energy raised $1.8 billion in a bookbuild for its stake at $4.65 a share, a 7.9 percent discount to the $5.02 closing price for Contact shares on Monday. Today the shares rose 1.2 percent to $5.08.

"Today's a special case," said Stuart Williams, head of equities at Nikko Asset Management. "There's been some very strange reactions. Some people were caught short and people were disappointed with their allocations and recognised that it was an absolute bargain at $4.65."

Williams said Origin "left a staggering amount of money on the table" and that the decision to sell was more about "corporate priorities from Australia."

Among other power companies, which were among the biggest to move this week as institutions sold down to buy into the Contact offer, TrustPower rose 0.3 percent to $7.77. MightyRiverPower fell 1.4 percent to $2.75, while Meridian Energy, which extended its contract with Tiwai Point on more favourable terms this week, was unchanged at $2.29.

Williams said it will be "really fascinating now how some fund managers position themselves". Contact's index weighting rises to about 5 percent from about 2.7 percent currently and there'd be a case to re-weight them in some portfolios at the expense of other power companies or sectors.

F&P Healthcare rose 2.3 percent to $7.63 as the kiwi dollar fell near 65 US cents, helping the fortunes of manufacturers selling in US dollars.

Sky Network Television, the nation's biggest pay-TV company, rose 1.8 percent to $6.19. Diligent Corp fell 3.5 percent to $5.45. Z Energy rose 1.8 percent to $5.81 and a2 Milk Co rose 1.2 percent to 82 cents.

In the wider market, Intueri Education Group fell 4 percent to $1.70 after New Zealand's largest private training college cut its full-year earnings guidance for a second time, citing weaker sales at its Quantum Education Group division and higher-than-expected costs. Underlying earnings before interest, tax and amortisation is expected to be $27 million to $29 million in calendar 2015, down from a previous range of $30 million to $33 million.

Fonterra Shareholders' Fund fell 1.5 percent to $4.62. A further collapse in dairy prices overnight in the GlobalDairyTrade auction makes it more likely Fonterra will cut its milk payout forecast and potentially its dividends.

Auckland International Airport fell 1.9 percent to $5.435 after the nation's busiest gateway said chief financial officer Simon Robertson and corporate affairs manager Charles Spillane were leaving after a company review.

Xero, the cloud-based accounting software developer, was unchanged at $17.40 after it said chief operating officer and interim chief financial officer Ross Jenkins will retire by the end of this calendar year following a transition to incoming CFO Sankar Narayan.

BusinessDesk.co.nz

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