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MARKET CLOSE: NZ shares dip, Air NZ, NZ Refining fall, Kathmandu surges

Monday 25th June 2018

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New Zealand shares fell, led by Air New Zealand and NZ Refining while Kathmandu Holdings surged to a three-and-a-half-year high.

The S&P/NZX 50 Index fell 3.13 points, or 0.04 percent, to 8,996.24. Within the index, 20 stocks rose, 20 fell and ten were unchanged. Turnover was $92 million.

Kathmandu Holdings was the best performer, up 12 percent to $2.80, the highest it has closed since December 2014. The shares traded as high as $2.88 during the day after the outdoor equipment retailer said it expects to increase profit this year on higher sales and better margins. The company expects net profit of $48 million to $52 million in the year ending July 31, from $38 million last year, and earnings before interest and tax (ebit) are expected to be between $72 million and $77 million, from $57 million last year.

"It's a really positive trading update, they were actually slightly negative in New Zealand same-store sales but really good in Australia, which is good to see because Australia has been the drag in the past few updates," said Greg Easton, investment adviser at Craigs Investment Partners.

Easton said it was too early to tell whether the so-called 'Amazon tax' - imposing GST on all goods bought overseas, which will be introduced from Oct. 2019 - would have a positive impact on local retailers like Kathmandu. 

Sky Network Television rose 2.8 percent to $2.54, Fletcher Building gained 2.5 percent to $6.99, and Freightways advanced 1.8 percent to $7.94. 

Precinct Properties New Zealand rose 1.5 percent to $1.355. A draft revaluation has increased the value of its property portfolio by 8.8 percent to $2.5 billion, it said, and forecast net profit rose as the company's Commercial Bay development will be worth over $1 billion when finished. 

"It looks to be really positive, and looks like Commercial Bay will be even more profitable than they thought originally," Easton said. "It's all good stuff for them, though there are concerns around when the development will be finished - they did say they expect to give an update in August when they formally announce the results to the end of June." 

Air New Zealand was the worst performer, down 2.6 percent to $3.195. A2 Milk Co fell 2.5 percent to $11.65 and Mercury New Zealand declined 2.5 percent to $3.33.

New Zealand Refining Co dropped 1.2 percent to $2.53. The Marsden Point refinery operator said a longer planned outage than anticipated will cost more and hit the bottom line harder than previously forecast.

The Whangarei-based company said the shutdown would cost $25 million to $30 million more than the $85 million it previously forecast, implying a cost of $110 million-to-$125 million, and will cut $40 million from profit in calendar 2018 as opposed to $30 million previously flagged.

Outside the benchmark index, Veritas Investments was unchanged at 15 cents. Its shareholders overwhelmingly backed a $27.5 million refinancing deal with Japan's Nomura Holdings which gives the operator of the Better Bar Co a new lease of life. It gives the food and beverage investor enough cash to repay ANZ Bank New Zealand, and give it a $5 million credit line to use with the investment bank's approval for capital spending on growth propositions.


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