MARKET CLOSE: NZ shares down, Mercury and Xero fall while Metro Glass, Air NZ rise

Wednesday 1st March 2017

By Sophie Boot

March 1 (BusinessDesk) - New Zealand shares dipped, with Mercury New Zealand and Xero falling, while Metro Performance Glass and Air New Zealand gained.

The S&P/NZX 50 Index dropped 18.68 points, or 0.3 percent, to 7,148.78. Within the index, 27 stocks dropped, 19 rose and four were unchanged. Turnover was $123.3 million.

"We saw some very sharp share price movements at the end of the month, as we're wont to do in New Zealand, unbridled flows from ETFs and the like into this market," said Matt Goodson, managing director at Salt Funds Management. "There appears to be a bit of a continuation of that today as people square up from going on the other side of those flows. They're quite a remarkable factor in this market, it was an extremely strong day yesterday, particularly later in the day."

Mercury New Zealand was the worst performer on the index, down 2.9 percent. Xero, which along with other clients of cloud platform Amazon Web Services' S3 hosting service, has experience intermittent disruption today, dropped 2.5 percent to $18.35.

Metro Performance Glass was the best performer, up 4.9 percent to $1.50, while Air New Zealand rose 3 percent to $2.435 and Comvita gained 2.4 percent to $7.27.

Sky Network Television was unchanged at $3.80. Sky and Vodafone New Zealand haven't given up hope for a merger despite being rebuffed by the Commerce Commission last week over competition concerns, with neither currently intending to trigger a right to terminate the transaction if it wasn't completed by Feb. 28.

Outside the benchmark index, Methven dropped 4.6 percent to $1.26. The shower and tapware designer posted a 32 percent drop in first-half profit after a major supplier in its biggest market Australia shut down, but says it's on track for a stronger second half. It has maintained full-year guidance for revenue growth of at least 5 percent but expects net profit growth to be at the lower end of its 10 percent to 20 percent range, with both numbers on a constant currency basis.

"It was slightly disappointing, they appeared to have had a very soft first quarter for a number of factors which will likely prove one-off but have seen them move profit expectations to the lower end of their guidance range," Goodson said.

New Zealand King Salmon, which listed last October after raising $70 million selling shares, rose 0.7 percent to $1.37. It posted a 52 percent gain in first-half profit to $8.7 million and said it was on track to meet its prospectus target for the full year. The company is projecting revenue of $130.1 million in the year ending June 30, 2017, for a profit of $10 million, compared to a $2.6 million profit on sales of $114.1 million in 2016.

"It was a tad on the light side, critically however they've reiterated guidance so the market has given them the benefit of the doubt," Goodson said.

New Zealand Oil & Gas dropped 1.5 percent to 64 cents. It narrowed its loss in the final six months of 2016, just before the $168 million sale of its stake in the Kupe oil and gas fields, cutting almost a third of its operating costs, and halving exploration expenditure.

Network provider TeamTalk gained 2.6 percent to 78 cents. The company, which is under a $22.7 million hostile takeover offer from Spark NZ, lifted first-half profit 18 percent to $1.3 million, forecast annual profit and will consider resuming dividends next year.

SeaDragon was unchanged at 0.6 of a cent. The fish oil manufacturer expects to report a wider annual loss of $4.3 million to $4.5 million, versus a 2016 loss of $400,000, due to the length of time to transition from its legacy Omega-2 business to Omega-3 fish oil produced by its new refinery.

BusinessDesk.co.nz

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