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MARKET CLOSE: NZ shares extend gain; Kathmandu produces 'ripper' result

Friday 9th August 2019

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(Aug. 8, 5:52 PM) New Zealand shares rose for a second day, led by Kathmandu Holdings after the outdoor equipment chain beat earnings expectations and as record-low interest rates continue to support yield stocks. 

The S&P/NZX 50 Index increased 88.04 points, or 0.8 percent, to 10,874.30. Within the index, 34 stocks rose, 12 fell, and four were unchanged. Turnover was $165.3 million. 

Kathmandu hit a four-month high $2.45, and ended the day up 16 percent at $2.44 on a volume of 850,000 shares, well up on its 90-day average of 143,000. The retailer said annual profit rose by as much as 13 percent as Australian sales accelerated in the second half and its North American Oboz Footwear acquisition continued to bolster revenue. It will report its audited result in September. 

"Kathmandu was the star on the day," said Shane Solly, a portfolio manager at Harbour Asset Management which owns about 11 percent of the retailer. "They came out with an absolute ripper of a result." 

Yesterday's surprisingly large cut to the official cash rate by the Reserve Bank continued to support demand for stocks offering reliable dividends. Argosy Property, which held its annual meeting today, rose 4.6 percent to $1.475, Auckland International Airport was up 3.3 percent to $9.81 on a volume of 1.3 million shares, Contact Energy advanced 2.7 percent to $8.13 with 1.2 million shares changing hands, Stride Property increased 2.6 percent to $2.34, and Genesis Energy was up 2.6 percent at $3.51. 

Solly said interest rates are at generational lows with the 10-year government bond yield at 1.13 percent and people are resetting their thinking. 

"Undoubtedly we will continue to see capital flowing into our higher, sustainable yielding securities," he said. 

Napier Port was priced at the top of its indicative range in a bookbuild at $2.60 a share. It is set to list on the NZX on Aug. 20. NZX was unchanged at $1.19. 

Solly said the port operator is the right business at the right time given the demand for infrastructure companies, although he noted the recent volatility in log prices mean Napier Port will still need to deliver on its plan. 

The sharp interest rate cut also helped push the kiwi dollar lower - ending the local session at 64.56 US cents - which Solly said also supported exporters. Pushpay Holdings rose 1.3 percent to $3.25, Air New Zealand advanced 0.9 percent to $2.76, Scales Corp was up 0.9 percent at $4.58 and Fisher & Paykel Healthcare increased 0.3 percent to $16.05. 

A2 Milk Co fell 2.7 percent to $16.13 on a volume of 1.3 million shares, more than its 710,000 average, and the worst performer on the benchmark index. Tourism Holdings was down 2.2 percent at $3.95. 

Spark New Zealand was the most traded stock on a volume of 8.9 million shares, more than twice its 90-day average of 3 million and the biggest volume since early April. It rose 0.5 percent to $4.14. Meridian Energy was up 0.8 percent at $4.88 on a volume of 1.7 million. 

Of other stocks trading on volumes of more than a million shares, Kiwi Property Group rose 1.5 percent to $1.655, Fletcher Building decreased 0.2 percent to $4.73, and Chorus increased 1.6 percent to $5.71. 

Vital Healthcare Property Trust increased 0.6 percent to $2.62 after reporting a 6.6 percent decline in annual profit, due to higher management fees and finance costs. That was despite a 7.7 percent increase in net rental income. 

Infratil rose 2.1 percent to $4.85 after selling its 80 percent stake in Perth Energy to Australia's AGL Energy for A$55 million upfront and a potential earn-out of A$14.9 million. The infrastructure investor said it might post a $33 million loss on the sale. 

Mercury NZ's 2049 capital bond paying annual interest of 3.6 percent was the most traded debt security for a second day on a volume of 464,000. It closed at a yield of 2.65 percent, down 10 basis points. Mercury's shares rose 2.2 percent to a record $5.05. 

(BusinessDesk)



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