MARKET CLOSE: NZ shares hit record, Fletcher, SkyTV and A2 lead index

Wednesday 13th April 2016

New Zealand shares rose to a record today, with strength across Asia as commodity and oil prices rebounded. Fletcher Building, Sky Network Television and A2 Milk Co grew while Orion Health Group dropped.

The NZX50 Index advanced 51.9 points, or 0.8 percent, to 6,777.92. Within the index, 31 stocks gained, 12 fell and seven were unchanged. Turnover was $178.1 million.

Stocks across Asia rose on the afternoon's trading, with Japan's Nikkei 225 up 2.7 percent, Australia's ASX 200 rising 1.4 percent, and Hong Kong's Hang Seng gaining 2.4 percent.

"It seems pretty positive out there today," said Peter McIntyre, investment adviser at Craigs Investment Partners. "Our market was really driven by what happened offshore, we've seen a rebound in commodity prices and oil prices, and all of Asia's trading on the upside. We've seen a lot of companies be well bid for in that yield space."

Fletcher Building led the index, gaining 3.2 percent to $7.98.

"It's one of those stocks where institutional investors may see some unlocked value happening at some stage," McIntyre said "The scenario we're moving into now is likely lower interest rates for a longer period of time, that's really good for building activity and for those making longer term investment decisions, so maybe some of that's starting to build momentum within Fletcher. Their order book is the largest it's ever been, so they're having a very strong day on reasonable volume."

Sky Network Television grew 3 percent to $4.80, and Xero advanced 2.9 percent to $17.19.

Dual-listed banks grew on Australia's strength, with Westpac Banking Corp up 2.6 percent to $32.90 and Australia & New Zealand Banking Group rising 1.6 percent to $25.63.

A2 Milk Co advanced 1.7 percent to $1.81, having been the worst performer on the index yesterday. The infant formula producer was hit, along with ASX listed Bellamy's and Blackmores, by investor worries over changes to China's import regulations, but all three rebounded today.

"The market's trying to work out just where does fair value lie with this company," McIntyre said. "Most analysts would say there's a lot of growth, but there's likely to be speed bumps along the way. There's a lot priced into the growth aspect of A2 - if you were to value it fundamentally you'd get a valuation far lower than it currently is. The story's still intact, there's no doubt about that."

Diligent Corp was unchanged at $7.03. Shareholders voted in favour of a takeover by venture capital firm Insight Venture Partners at a special shareholders’ meeting this morning.

The company will delist from the NZX tomorrow after a decade, to be replaced by Comvita, and the deal will then close on Friday. Shareholders will receive $7.39 (US$4.90) in cash per share, valuing the company at $941 million and at a 31 percent premium to the pre-announcement share price.

"There's still a lot of analysts out there saying the inherent value of DIligent was a lot higher than the offer price, so it's disappointing to see it go," McIntyre said.

Orion Health was the worst performer, falling 2.4 percent to $4.10. The stock had gained 20 percent in the last week, having announced three significant deals in the last fortnight.

"There's probably a number of investors who have topped themselves up at lower levels and are starting to make a bit of profit off that stock - it's not a term I've ever heard before with reference to Orion, but it's run pretty hard," McIntyre said. "It's a company with good momentum and has been able to get some contracts signed and do some quite significant deals. These things which travel very quickly in a short space of time do tend to have profit taking days."

Outside the main index, Michael Hill rose 1 percent to $1.01. The listed jewellery retailer confirmed it will move its primary listing to the ASX, given most of its operations are now based in its dominant market of Australia and its financial reports are in Australian dollars.

Cavalier Corp dropped 2.9 percent to 67 cents. The carpet maker, which is restructuring its business to boost profitability, will consolidate its manufacturing operations to Napier and Whanganui and close its Christchurch plant. The NZX yesterday asked Cavalier for an explanation for a 27 percent jump in its share price in under a week,

VMob Group fell 1.1 percent to 43.5 cents. The mobile advertising firm plans to raise as much as $4 million in a private placement, triggering a requirement that it get shareholder ratification of previous placements to keep annual stock issuance within the threshold of listing rules.

Pushpay Holdings declined 3.6 percent to $2.65. The mobile payments app developer expects to reach its target of $100 million of annualised committed monthly revenue six months early as it expands its product offering and narrows its focus to larger customers. The shares rose to a record.

BusinessDesk.co.nz

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