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MARKET CLOSE: NZ shares rise, Z Energy gains after annual earnings

Thursday 3rd May 2018

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New Zealand shares gained, led by Z Energy following its annual results, with Chorus and Genesis also rising.

 

The S&P/NZX 50 Index rose 52.64 points, or 0.6 percent, to 8,546.88. Within the index, 26 stocks rose, 14 fell and 10 were unchanged. Turnover was $125.4 million.

 

Z Energy led the index higher, up 2.9 percent to $7.51. It delivered annual earnings within its lowered guidance, with profits rising as the government looks more closely at pricing strategy in the fuel sector. In the year to March 31, revenue surged 18 percent to $4.57 billion, and net profit rose 8 percent to $263 million.

 

Replacement cost operating earnings before interest, tax, depreciation and financial adjustments - a measure Z uses to strip out the changing value of inventory - rose 13 percent to $449 million. That's within the guidance update it gave in January, which was cut by about $20 million due to the shutdown of the New Zealand Refining fuel pipeline to Auckland and the rising price of crude oil.

 

The board declared a full-year dividend of 21.9 cents, up from 19.9 cents in 2017, bringing total dividends for 2018 to 32.3 cents. Z expects to pay a 2019 dividend of between 50 cents and 55 cents, equivalent to between 90 percent and 100 percent of free cash flow, if it hits the midpoint of replacement cost ebitdaf guidance.between $450 million and $485 million.

 

"It was a good result from Z, it's been interesting this week but they've continued onwards and upwards as they should," said David Price, director, institutional equities at Forsyth Barr. "They confirmed circa 10 percent gross dividend yield for next year, which in the current low environment is pretty good."

 

Chorus rose 2.8 percent to $4.18, Genesis Energy gained 2.6 percent to $2.36, and Port of Tauranga advanced 1.8 percent to $5. 

 

Dairy stocks gained, with Synlait Milk up 1.6 percent to $10.21 and A2 Milk Co rising 1.4 percent to $12.72. Fonterra Shareholders' Fund rose 0.2 percent to $5.76

 

The worst performer was Gentrack Group, coming off yesterday's record high and down 2.7 percent to $7.20.

 

"If you look at volumes yesterday, it was very much just machines going off. I wouldn't read anything into that," Price said. "We've had a few people away at the Macquarie conference. The stocks have been running on very little in the way of volume."

 

SkyCity Entertainment Group dropped 1 percent to $3.99, Infratil fell 0.9 percent to $3.155, and Arvida Group declined 0.8 percent to $1.19.

 

Vector was unchanged at $3.21. The Auckland electricity and gas distributor has asked the Auckland High Court for an injunction against media organisation Stuff over Vector customer data given to Stuff by a hacker, to stop Vector "failing its customers again".

 

Stuff says it has destroyed the data and won't give it back to Vector to avoid revealing its source, but Vector says in its last communication with Stuff, it was told Stuff would not destroy the data, and the comments to the media were "disappointing".

 

Separately, Fairfax Media, the Australian parent of Stuff, outlined its revenue gathering strategy as it shuts down regional newspapers. Group chief executive Greg Hywood said its audience was being monetised through digital ad sales, third-party syndication and standalone print products, along with its website Neighbourly, its joint venture Stuff Fibre, and "lead-generation partnerships with utilities, health insurance and financial service providers." 

 

Fairfax's ASX-listed shares gained 1.3 percent to 76 Australian cents.

 

(BusinessDesk)

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