MARKET CLOSE: NZ shares mixed, gains for Auckland Airport, Spark while Chorus, Sky TV fall

Monday 20th February 2017

New Zealand shares were mixed with Auckland International Airport and Spark New Zealand gaining while Chorus and Sky Network Television dropped.

The S&P/NZX 50 Index gained 5.96 points, or 0.08 percent, to 7,099.49. Within the index, 27 stocks fell, 16 rose and seven were unchanged. Turnover was $98.4 million.

Auckland Airport led the index, up 2.3 percent to $6.945. On Friday, it posted a 19 percent gain in first-half profit to $123.5 million, a period when New Zealand's busiest gateway added airlines with increased capacity and new services and routes, and the country enjoyed record tourist numbers.

"It's a surprise of the day, the result was behind expectations last week particularly out of the retail business, which wasn't getting the same growth as in passenger throughput. It's light volumes, flow driven rather than telling the story about the business," said Matt Goodson, managing director at Salt Funds Management.

Mercury New Zealand rose 1.9 percent to $3.02 and Ryman Healthcare gained 1.3 percent to $8.83.

Chorus was the worst performer, down 1.9 percent to $4.07. The telecommunications network operator beat first-half profit expectations, rising to to $66 million, and raised its forecast for annual earnings as it benefited from the increase in regulated prices on its copper lines, even as connection numbers fell in an increasingly competitive environment. The company raised guidance for annual ebitda by $20 million to a range of $645 million to $665 million.

"While at the headline it was a lift in guidance, that was achieved by capitalisation of various operating costs to a greater degree than previously, so on a like-for-like basis it was in line to perhaps fractionally behind. The share price has been very strong of late, so it's back a couple of percent at the moment," Goodson said.

Spark New Zealand rose 0.3 percent to $3.49. It has been granted an emergency High Court hearing on Wednesday where it will seek to delay a merger between rival Vodafone New Zealand and pay-TV operator Sky Network Television if the regulator signs off on the deal this week.

Auckland-based Spark said it's asking the High Court to order, if the Commerce Commission clears the merger on Feb. 23, that it doesn't come into effect for 36 hours to give the opposing parties time to read the reasoning behind the decision and decide whether they will pursue legal action.

"It's an interesting pre-emptive strike - they're just covering their options," Goodson said. "The date's well known, it could always be delayed a little further but they'll be acting to preserve all of their options."

Sky TV dropped 0.9 percent to $4.37.

"The market doesn't know what to expect out of the Commerce Commission to be honest," Goodson said. "The basic thought process is it would make more sense to allow the merger, there's still plenty of competition around and the ability of the combined entity to use the package of media contact and telephone to lock people in would be quite limited by a number of other factors - but the ComCom's initial cut went the other way, so it's something that's very hard to know until we see what they come out with."

Freightways dropped 1.1 percent to $6.92. It posted a 22 percent gain in first-half profit to $34 million, driven by growth in its express package & business mail division, which made up for a drop in earnings from information management.

Heartland Bank gained 0.6 percent to $1.57. It has bought 25 percent of online lender Fuelled for an undisclosed sum, giving it more exposure to online small-to-medium (SME) business lending.

Outside the benchmark index, Blis Technologies fell 10.2 percent to 4.4 cents. It has cut its profit and revenue guidance after a change in customer buying patterns, though it still expects to post its first annual profit since listing 16 years ago. The company doesn't expect to meet previous guidance of pre-tax profit exceeding $700,000 for the year ending March 31, with forecast total trading revenue down significantly for February and March, it said in a statement.

BusinessDesk.co.nz

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