MARKET CLOSE: NZ shares rise as Tegel, A2 Milk bounce; Vista and Infratil drop

Friday 16th December 2016

New Zealand shares rose, snapping five days of decline, with Tegel Group Holdings and A2 Milk Co recovering from being sold off earlier in the week, while Vista Group International and Infratil fell.

The S&P/NZX50 Index gained 11.63 points, or 0.2 percent, to 6,760.25. Within the index, 27 stocks rose, 19 fell and five were unchanged. Turnover was solid at $239.8 million.

"After a pretty miserable week we've had a nice rebound to finish off. There were firmer markets offshore but I also think we're starting to see a little bit of bargain hunting in our own market," said Grant Williamson, director at Hamilton Hindin Greene. "Following a pretty miserable day for Tegel yesterday, they've come in for a little bit of bargain hunting."

Tegel rose 2.3 percent to $1.32. It sank 17 percent to a record low $1.29 yesterday after posting a 4 percent decline in first-half earnings as margins were squeezed by a glut of chicken keeping domestic prices low. Tegel expects annual underlying earnings before interest, tax, depreciation and amortisation of between $75 million and $85 million, having previously projected pro forma earnings of $84 million for the 2017 year.

A2 Milk led the index higher, gaining 3.4 percent to $2.15. It began declining on Monday on the news that Australian formula producer Bellamy's had gone into a trading halt on the ASX, and had dropped 14 percent before today's bounce.

"There's still a bit of caution as we wait for the news from Bellamy's over in Australia. Investors will be cautious about what that means for that stock and obviously how it affects the sector," Williamson said.

Williamson said there was buying in blue chip stocks, which have been knocked down recently, and some yield stocks have come back into play with the electricity generators attracting reasonable demand today.

"Quite often we see a Christmas and New Year rally on the market. It'll be interesting to see whether that happens this year - once the institutions close up it's normally the 'mum and dad' investors who push the market a little higher in the quiet period," Williamson said. "We might see a bit of upside in the coming weeks, but most investors will be keeping a pretty close eye on what Wall Street is doing with that interest rate rise."

Vista was down 3.5 percent to $5.50. Infratil dropped 2.8 percent to $2.60 and Property for Industry declined 2.6 percent to $1.51.

Sky Network Television dropped 0.5 percent to $4.08. It's shed 17 percent since Wednesday, when it cut its 2017 earnings guidance, citing rising content costs and falling revenue and subscribers.

Vector fell 0.3 percent to $3.13. Auckland's electricity network owner made strong criticisms of the Electricity Authority's latest proposals to shift the cost of the national grid to those areas benefitting most from investment in upgrades, saying the revamped proposals released this week change nothing of substance while introducing "huge risk" to the process.

Outside the benchmark index, AFT Pharmaceuticals fell 1.1 percent to $2.75. The Auckland-based drug-maker will have to re-apply to Pharmac for a heart medicine supply contract it won in July 2015, which has suffered supply disruptions over the past year.

Hellaby Holdings was unchanged at $3.46. The company is engaged in a battle to fend off unwanted suitor Bapcor and advised shareholders not to accept a revised takeover offer when it provided first-half guidance for profit to be up to $39.5 million, promising a special dividend if the bid fails.

BusinessDesk.co.nz

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