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MARKET CLOSE: NZX 50 rises 1.2% to new record, Ebos, A2, Synlait gain

Tuesday 3rd July 2018

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New Zealand shares jumped to a record with Ebos Group hitting a fresh high while A2 Milk Co and Synlait Milk gained on news they plan to extend their supply contract.

The S&P/NZX 50 Index rose 111.12 points, or 1.2 percent, to 9,053.59. Within the index, 32 stocks rose, 10 fell and eight were unchanged. Turnover was $131.8 million.

David Price, broker at Forsyth Barr, said that despite big moves in stocks like A2 Milk which makes up a significant chunk of the index, volume was light today as corporate news was scarce and the market is quiet ahead of next week's school holidays.

"You would've thought there might have been, with this sort of move, a decent flow, but a lot of things have tracked up on relatively light volume," he said.

Ebos Group led the index higher for a second consecutive day, up 6.5 percent to $20.50, a record. Yesterday, the pharmaceutical and animal health products maker announced it won a bid for a distribution deal with Australia's Chemist Warehouse which could bring in A$1 billion of revenue in the first year. 

A2 Milk rose 3.2 percent to $11.80 and Synlait Milk gained 1.4 percent to $11.55. The two have agreed to extend their infant formula supply deal and increase the volume of formula Synlait will supply as the two continue to focus on sales in the lucrative Chinese market.

They have also agreed on pricing terms "that reflect the commitment on the part of both companies to an ongoing market-competitive pricing regime", each company's statement to the NZX said. However, the companies either need shareholder approval for the changes or a waiver from NZX from needing to get shareholder approval. 

Price noted that the companies haven't released the details "about who takes the haircut in terms of the pricing". 

Spark New Zealand gained 3.6 percent to $3.845, Scales Corp rose 2.2 percent to $4.73, and Fisher & Paykel Healthcare Corp advanced 1.9 percent to $15.25.

Fonterra Shareholders Fund was the worst performer, down 1.1 percent to $5.24, with Stride Property falling 1.1 percent to $1.84 and Restaurant Brands New Zealand dropping 0.8 percent to $7.74.

Outside the benchmark index, Orion Health Group surged 34.1 percent to $1.14. UK-based private equity firm Hg will acquire its Rhapsody business for $205 million and take a quarter stake in its Population Health unit for $20 million, leaving the New Zealand company in 100 percent control of just its hospitals division.

TruScreen gained 28.6 percent to 18 cents. The NZAX-listed maker of a cervical cancer test said sales in the three months ending June 30 have already exceeded the $800,000 it took in for the previous full year.


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