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MARKET CLOSE: NZ shares rise, A2 Milk at fresh high with Ebos, Comvita also gaining

Monday 19th June 2017

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New Zealand shares gained, led by A2 Milk's continued rise after an earnings upgrade, with Ebos Group and Comvita also up.

The S&P/NZX50 Index rose 39.28 points, or 0.5 percent, to 7,592.03. Within the index, 28 stocks rose, 17 fell and five were unchanged. Turnover was $156.8 million.

Turnover was $279 million on Friday as the NZX benchmark index was reshuffled, with Tegel Group Holdings replaced by CBL Corp, while changes to the FTSE Russell index pushed volumes higher. A lot of today's activity has been left over from Friday, with volume pretty scant, said David Price, broker at Forsyth Barr.

A2 Milk Co continued its gains, rising 5.7 percent to $4.07, a new record. The Auckland-based, Sydney-headquartered milk marketer last week lifted annual sales guidance for the second time in as many months as it beefed up production to meet sweltering Chinese demand for infant formula. It expects revenue to be $545 million in the 12 months ending June 30, a $20 million increase from its April update which was itself an upgrade. A2 reported annual revenue of $352.8 million in 2016.

"It was quite a sizeable upgrade, I suppose the thing people are focussed on is the run rate increase in the quarter," Price said. "The quarter-on-quarter numbers are quite strong, it's continued on a happy roll for the holders."

Ebos Group gained 2.4 percent to $17.64, Comvita rose 2.3 percent to $5.38 and Vista Group International advanced 1.9 percent to $5.86.

CBL Corp was the worst performer, down 2.6 percent to $3.33, while Investore Property fell 2.2 percent to $1.35 and Precinct Properties dropped 1.6 percent to $1.225.

Kiwi Property Group was unchanged at $1.43 and has risen 3 percent this year. The largest property company listed on the NZX plans to raise $161 million to fund expansion in Auckland where it sees strong growth continuing. The Auckland-based company will sell about 118 million shares at $1.36 each in the 11-for-one entitlement offer, a 4.5 percent discount to the theoretical ex-entitlement price. It intends to use funding from the offer, debt facilities and selling selective assets to bankroll its investment strategy which it has been re-weighting towards Auckland.

Spark New Zealand was unchanged at $3.815 and has gained 12 percent this year. The telecommunications provider is planning to buy back all its stores from external management as it works to connect better with customers bored with online shopping. Spark directly owns 36 stores, while 26 are under management by its dealer partners Leading Edge and Orb, and now plans to own all 62 retail stores by late 2017.

Outside the benchmark, SeaDragon jumped 20 percent to 0.6 of a cent. The company, which manufactures fish oils for health supplements, said a customer has confirmed an order for its refined Omega-3 fish oil and it is in discussions to meet their future demand. The order – for two full shipping container loads of refined Omega-3 fish oil representing 32,000 kilograms – is the first “significant order of refined tuna oil Omega-3 product from our new refinery and represents the culmination of months of discussions and product testing by the customer,” the company said. Discussions are ongoing regarding any future demand.


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