MARKET CLOSE: NZ shares edge up; Air NZ rises while A2, Spark drop

Tuesday 28th March 2017

New Zealand shares rose, although the market was mixed, with Air New Zealand gaining after strong operating metrics and A2 Milk Co falling from a record high.

The S&P/NZX 50 Index gained 2.51 points, or 0.04 percent, to 7,065.22. Within the index, 23 stocks rose, 19 fell and eight were unchanged. Turnover was $168 million,

Air New Zealand led the index, up 3.1 percent to $2.365. In its monthly operating statistics for February, the national carrier reported a 2 percent rise in revenue passenger kilometres compared to February 2016, with capacity up 5.3 percent. Short-haul passenger numbers increased 2.2 percent, while long haul numbers rose 3.1 percent.

"They really do have a cash cow when it comes to the New Zealand domestic market," said James Smalley, director at Hamilton Hindin Greene. "At around $2.30 the market does seem to give it a bit of support. If the dollar falls it's good for inbound tourism, but in reality, they want a dollar around these levels because their margin is ultimately a reflection of where the dollar is."

Summerset Group gained 2 percent to $5.08, Chorus rose 1.9 percent to $4.23 and Westpac Banking Corp advanced 1.6 percent to $37.38.

A2 Milk was the worst performer, down 3.4 percent to $2.85, though that comes after a strong run in the month so far which culminated in it reaching a record $2.95 yesterday.

Spark New Zealand dipped 0.4 percent to $3.39, while TeamTalk gained 12 percent to $1.04.  The telecommunications minnow has been in a war of words with Spark after independent adviser Grant Samuel & Associates found the underlying value of TeamTalk is between $1.52 to $2.11 per share - well above Spark's 80 cent offer for the company.

On Friday, TeamTalk announced it had agreed to sell a 70 percent stake in its Farmside rural internet services provider to Vodafone New Zealand for $10 million, almost half what Spark is willing to pay for the entire group. Shareholders will vote on the plan next month at a special meeting

"It will be interesting to see whether Spark is going to sweeten the deal or, if they really do think it's ridiculous, to walk away," Smalley said. "Either the market's got it horrendously wrong or the independent advisors are making assumptions that don't necessarily apply in the specific circumstances. It's a very unusual set of circumstances, and for long-suffering TeamTalk investors it's definitely a bit of good news they haven't had over the years."

Mercury New Zealand dropped 1.9 percent to $3.10, while Metro Performance Glass fell 1.4 percent to $1.40.

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