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MARKET CLOSE: NZ shares fall as Vista sinks on slowing sales growth

Thursday 29th August 2019

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(Aug. 29, 5:48 PM) New Zealand shares fell, led lower by Vista Group International, which was punished for dialling back its expectations for revenue growth. 

The S&P/NZX 50 Index declined 46.10 points, or 0.4 percent, to 10,580.07. Within the index, 24 stocks fell, 23 rose, and three were unchanged. Turnover was $139.2 million, of which Vista accounted for $20.8 million. 

Vista slump to a seven-month low after scaling back its projections for revenue growth to 10-12 percent and reporting a 23 percent slide in first-half profit. The cinema software analytics firm has lifted revenue by more than 20 percent in each of the past five years.

The stock led the market lower, down 29 percent at $3.85 on a volume of 5.2 million shares, more than 15 times its 90-day average of 336,000. It was the most traded stock. 

"People start extrapolating the growth and they're prepared to pay in advance, but today's reaction is kind of an Australian-type reaction. They're fairly savage on companies that don't hit their targets and that's what we've seen today with Vista," said David Price, a broker at Forsyth Barr. 

Meridian Energy fell 3 percent to $4.88 on a volume of 1.4 million shares. Sky Network Television dropped 2.7 to $1.10 and A2 Milk dipped 0.6 percent to $14.02. 

SkyCity Entertainment Group was down 2.3 percent, or 9 cents, at $3.82 on a volume of 1.7 million shares. It gave up rights to a 10 cent dividend today. 

NZX was down 1.6 percent, or 2 cents, at $1.26, having hit a five-year high earlier this week. It shed rights to a 3 cent dividend today. 

Of companies holding their annual meetings today, Oceania Healthcare decreased 1 percent to $1.01 and Stride Property Group was down 0.9 percent at $2.32. 

Fonterra Shareholders' Fund units rose 2.5 percent to $3.23 on a volume of 200,000, in line with its 193,000 average. Fonterra yesterday said milk collection was tracking 4.7 percent higher in the season-to-July 31 than the year-earlier period. It was also yet to hit full swing. 

The New Zealand dollar hit a four-year low today as a weak business confidence survey and tepid inflation expectations raised the spectre of more action by the Reserve Bank. Exporters benefit from a weaker currency and Scales Corp was up 2.4 percent at $4.61. Kathmandu Holdings rose 1.6 percent to $2.60, Fisher & Paykel Healthcare advanced 1.4 percent to $16.29, and Skellerup increased 1.4 percent to $2.23. 

Of companies trading on volumes of more than a million shares, Fletcher Building was unchanged at $4.32, Precinct Properties New Zealand rose 1.1 percent to $1.85, Spark New Zealand was down 0.2 percent at $4.37, Goodman Property Trust increased 0.5 percent to $2.155, Auckland International Airport was down 1.4 percent at $9.46 and Kiwi Property Group dipped 0.3 percent to $1.61. 

Outside the benchmark index, Tilt Renewables was unchanged at $2.65 after its board approved a $276 million project to build a 31-turbine wind farm in south Taranaki. Cornerstone shareholders Infratil fell 1.1 percent to $4.55 and Mercury NZ increased 0.9 percent to $5.12. 

The domestic company earnings season has largely wrapped up with all of the major firms having reported.

Price said the season started off in line with expectations, but got gloomier as it progressed when firms downgraded their outlooks. He pointed to today's "pretty ugly" business sentiment survey as an indicator of uncertainty in the local economy. 

A clutch of smaller companies outside the benchmark index reported earnings today. 

NZ King Salmon rose 3.5 percent to $2.06 after reporting an 8 percent increase in annual revenue despite a dip in its harvest. Profit fell as the fish farmer deals with higher mortality rates, which has prompted an increased investment programme. 

Marsden Maritime Holdings increased 0.9 percent to $5.36 after lifting annual profit 3.1 percent as gains on its investment property portfolio offset weaker earnings from its stake in NorthPort. 

South Port New Zealand was unchanged at $7.25 after the Bluff port operator lifted annual profit 1 percent to a record $9.8 million. It expects to report lower earnings in the 2020 financial year due to increased maintenance spending. 

Mercer Group was unchanged at 17 cents after reporting positive annual operating earnings on a 32 percent increase in revenue. The stainless steel products fabricator narrowed its net loss to $707,000, which included a one-off $1 million cost to settle a claim by Fonterra over the collapse of a silo at the dairy processor's Edendale plant in 2016. 

Wellington Drive Technologies rose 5.1 percent to 20.5 cents after reporting a 19 percent increase in first-half revenue and a near doubling of operating earnings to $2.5 million. 


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