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MARKET CLOSE: NZ shares down on Fletcher's weakness, exporters A2 and Comvita book gains

Friday 27th October 2017

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New Zealand shares fell, dragged lower by Fletcher Building for a third day running, while exporters Comvita and A2 Milk continued to make gains.

The S&P/NZX50 Index dipped 1.75 points, or 0.02 percent, to 8,084.99. Within the index, 24 stocks fell, 18 rose and eight were unchanged. Turnover was $220 million. 

Mark Lister, head of private wealth research at Craigs Investment Partners, said the index had fallen this week with Fletcher Building's falling share price leading the index lower.

Fletcher was the worst performer for the third day in a row, dropping 2.4 percent to $7.28. On Wednesday, it announced it has taken a further $125 million provision against problematic construction contracts including the convention centre and the justice precinct in Christchurch, and said its B&I unit would report a full-year loss of $160 million, including $35 million of overhead costs.

"It's obviously slipped a bit further, it did look for a while that it had found a bit of a bottom and support around $7.50 but it seems to have weakened later in the week," Lister said. "There are still two schools of thought on that one - there are definitely people who think that they might have kitchen-sinked it and all the bad news is out there, but obviously there is an equally large amount of cynicism about whether they've done enough to get things back on track."

Metro Performance Glass fell 2 percent to 98 cents, Chorus dropped 1.4 percent to $3.98 and Mercury New Zealand declined 1.3 percent to $3.35.

Weakness in the kiwi dollar has also driven stocks this week, Lister said, with export stocks such as Comvita and Fisher & Paykel Healthcare making gains. Fisher & Paykel Healthcare  touched a record $13.49 during the day, and ended up 0.4 percent to $13.30, while Comvita led the index, up 2.4 percent to $8.55.

"Comvita has found a bit of support following the AGM recently, some three-quarters of their revenue comes from outside New Zealand so that's another company with the international flavour people are looking for," Lister said. "People are worried about policy changes in the local market, whether that will give us a few more headwinds, so companies with large operations in other parts of the world are insulated from that, as well as the benefit from the lower kiwi dollar."

A2 Milk rose 2.4 percent to $8.60, with its supplier Synlait Milk also rising 2.3 percent to $7.96.

Property For Industry rose 0.9 percent to $1.625. It wants to raise $100 million through a new bond offer to institutional and New Zealand investors in order to repay existing bank debt. 

The Auckland-based company is offering up to $75 million of senior secured fixed rate bonds with oversubscriptions of up to $25 million, it said. The bonds are expected to have a term to maturity of seven years and it expects to provide full details of the offer next week. The company didn't offer an indicative rate, with the seven-year swap rate recently at 2.95 percent. 

Outside the benchmark index, Bethunes Investments jumped 90 percent to 1.9 cents. It has signed up New Plymouth-based freight and logistics group Transport Investments to a reverse listing in a deal valuing the group at $200 million. The reverse listing will see Bethunes issue 73.3 million shares at $1.50 apiece.

Blis Technologies dropped 39 percent to 1.7 cents. The probiotics maker won't deliver its maiden profit in 2018 as previously forecast after a weaker first half. In July, the Dunedin-based company forecast it would post its first profit in the current year. Today, it downgraded those expectations, saying it expects revenue for the year to be similar to that of 2017, with small positive earnings before interest, tax, depreciation and amortisation, and a net deficit.

IkeGPS gained 21 percent to 34 cents. It said it had made a major new deal in the US, from which it expects $1.3 million in revenue in the 2018 financial year, with ongoing recurring revenue of approximately $400,000 per year.


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