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MARKET CLOSE: NZ shares rise, led by Auckland Airport, Chorus on strong earnings

Friday 19th February 2016

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New Zealand shares rose, led by Auckland International Airport and Chorus on their strong earnings reports. A2 Milk Co dropped.

The S&P/NZX 50 Index rose 30.6 points, or 0.5 percent, to 6,141.72. Within the index, 22 stocks rose, 22 fell and six were unchanged. Turnover was $193 million.

Auckland International Airport led the index, up 7.6 percent to $6.34, the highest level since the company split its shares in 2005. The country’s largest airport reported a 25 percent lift in first-half profit due to increasing passenger numbers from a rise in tourism, as it plans to spend up to $260 million this financial year to expand its facilities. Net profit rose to $115.8 million in the six months ended Dec. 31.

"To have such a dramatic improvement in profit did surprise the market," said Peter McIntyre, investment adviser at Craigs Investment Partners. "It's a well-owned stock because of its quality infrastructure assets and landbank, but it was able to report quite a dramatic improvement in profitability. From here on in, it's going to be hard for them to deliver further significant growth at that rate, but the market obviously likes it a lot."

Chorus also gained, rising 5 percent to $3.96. Chorus will start paying dividends again after the Commerce Commission's decision to let the telecommunications network operator charge its customers more for access to its copper lines, easing some of the regulatory burden that dragged first-half profit down 48 percent.

"It's been one of the turnaround stories on the stockmarket in the last few years," McIntyre said. "Now there's a lot more visibility with its earnings, they've been able to manage their capital expenditure volumes really well. Investors are looking for yield, that's one that's given some guaranteed guidance around dividend and the market really like it."

Freightways gained 3.3 percent to $6.25, Skellerup Holdings rose 2.3 percent to $1.36, and Fonterra Shareholders Fund advanced 2.2 percent to $5.64. 

Port of Tauranga was unchanged at $18. New Zealand's biggest port operator yesterday confirmed a review of its capital structure is planned for 2017, by which time it will be over the hump of its spending programme and able to contemplate options such as a return to shareholders. 

A2 Milk was the biggest loser on the index, dropping 9.4 percent to $1.84, having gained on Wednesday following its first half profit announcement. Around 20 million shares in the stock were traded today, making it the top stock by volume. 

"When everyone's trying to get out of it at the same time, it does push the price down," McIntyre said. "A lot of investors have held the stock for a long period of time at very low prices, so a lot of them are making a good capital gain on their purchase. Most brokers are working towards a $2 valuation on the stock."

Xero fell 2.9 percent to $14.60, while Australia & New Zealand Banking Group dropped 2 percent to $25. 

Outside the benchmark, OceanaGold rose 4.6 percent to $4.34. The gold and copper miner said its annual profit halved due to low commodity prices and extra costs from its purchase of Waihi Gold Mine and the construction of the Haile Gold Mine in South Carolina. The company said today it has a significant pipeline of organic growth and exploration opportunities in the Australasia and Americas regions.

Hellaby Holdings fell 0.4 percent to $2.63. The diversified investment company posted a 65 percent drop in first-half profit with revenue from three of its four segments falling, but says it expects a better second half from its oil division as it tries to sell its loss-making footwear division.

Wynyard Group will stay in a trading halt until Feb. 23, pending an announcement by the software developer over its capital raising plans. Wynyard's shares last traded at $1.54 and have shed 16 percent so far this year.

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