MARKET CLOSE: NZ shares fall: A2 downgraded on eve of earnings, Heartland misses expectations

Tuesday 19th February 2019

New Zealand shares fell, with A2 Milk weaker after an analyst dubbed it overvalued and as weak Chinese sales by Australian supplements maker Blackmores weighed on the dairy company. Heartland Group declined on weaker-than-expected earnings.

The S&P/NZX 50 index decreased 21.18 points, or 0.2 percent, to 9,224.26. Within the index, 21 stocks fell, 23 gained, and six were unchanged. Turnover was $106.1 million, of which Spark New Zealand accounted for $45.1 million.

A2 fell 2.2 percent to $12.87 on slightly lighter than usual volumes of 989,000. It was caught by negative sentiment over Blackmore's warning over its Chinese business, and was also downgraded by an Australian broker. The milk marketing firm will report its first-half earnings tomorrow and is expected to deliver a 37 percent increase in underlying earnings.

"An Australian broker said the stock was overvalued and we saw some people take some profit," said Grant Williamson, a director at Hamilton Hindin Greene. "Given A2's weighting on our index it does weigh down the index."

A2 supplier Synlait Milk decreased 0.6 percent to $9.59, while Fonterra Shareholders' Fund units were up 0.2 percent at $4.62.

Heartland Group fell 1.5 percent to $1.32 on a volume of 750,000 shares, more than twice the 90-day average. The lender reported a 6.5 percent increase in first-half profit but trimmed its guidance for annual earnings due to listing, restructuring and foreign exchange costs. Williamson said it was a little bit below expectations.

Precinct Properties New Zealand's shares were halted at $1.54 pending a $130 million placement to institutional investors and a $20 million offer for retail investors. The proceeds will repay debt and fund some medium-term developments. The property investor announced increased first-half profit largely on revaluation gains.

Trustpower led the market lower, down 2.9 percent at $6.34 on a volume of 22,000 shares, less than half its average trading volume.

Spark was the most traded stock with 11.1 million shares changing hands, compared to its 3.8 million 90-day average. It fell 0.7 percent ahead of tomorrow's first-half earnings result. Sky Network Television and Fletcher Building were the only other stocks to trade on volumes of more than a million, shares and both are reporting tomorrow. Sky fell 1.1 percent to $1.75 while Fletcher gained 1.3 percent to $5.28.

Of other companies reporting tomorrow, Ebos Group rose 0.3 percent to $21.96 and Meridian Energy decreased 0.2 percent to $3.72.

Outside the benchmark index, NZME sank 8.5 percent to 48.5 cents after reporting a 44 percent slide in annual profit. That was due in part to extra investment in digital classifieds and online subscriptions, which it's hoping will generate new income streams to replace the structural decline in its cornerstone print operations.

PGG Wrightson fell 5.4 percent to 53 cents after warning earnings from its real estate, water, and retail rural supplies unit will be lower than a year earlier. Wrightson reports next week, but will eventually book a $120 million on the sale of its seeds unit once the transaction is settled.

Hallenstein Glasson decreased 2.1 percent to $4.28 after chief executive Mark Goddard unexpectedly left to spend more time with his family. The retailer's board has started looking for a replacement.

(BusinessDesk)

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