MARKET CLOSE: NZ shares up, A2 and Air NZ continue gains while Kathmandu hits 2.5 year high

Tuesday 11th July 2017

New Zealand shares rose, led by A2 Milk's continued strength along with Kathmandu Holdings on a 2.5 year high and Air New Zealand rising.

The S&P/NZX50 Index gained 44.62 points, or 0.6 percent, to 7,628.57. Within the index, 30 stocks rose, 12 fell and eight were unchanged. Turnover was $124.5 million.

A2 Milk led the index, up 5 percent to $4.02. The stock has gained 80 percent this year as it has found success selling infant formula into China, while its competitors have struggled with that country's regulatory regime.

"It's having a nice run, there have been some broker upgrades with regards to that stock, and there's pretty reasonable volume compared to the rest of the market," said Peter McIntyre, investment adviser at Craigs Investment Partners.

Kathmandu Holdings gained 4.7 percent to $2.25, a price last seen in December 2014. The stock has gained 10.3 percent this month, soaring since July 3.

"Not huge volumes, there's no news flowing from that company at all," McIntyre said. "There's been a wide range of prices traded through today, sometimes it's a stock that doesn't carry a great deal of liquidity so if investors are wanting to buy that share price can move. On the other hand retail numbers out of New Zealand and Australia have been strong, we've had a bit of a cold snap as well which may be good for their clothing range."

Vista Group International advanced 3.5 percent to $5.95. The shares climbed after 20th Century Fox Film became the newest studio customer for its Movio unit in what the Kiwi firm sees as proving the value of the analytics business.

"The market has really liked that, it's another good bit of news which has come from that company," McIntyre said. "It's a relatively new 50 entrant, it was listed in August 2014 but over the last six months it's performed quite well. It's another progression to improve its earnings."

Air New Zealand rose 2.4 percent to $3.57 and has gained 59 percent this year.

"It's continued to have a good run, oil prices have moved to the downside because of oversupply in the market and I think that has given investors confidence they'll stay lower for longer, that's a big part of Air New Zealand's cost structure so we're seeing it very well supported," McIntyre said. "The company also continues to impress with regards to its domestic performance and the efficiencies it has been able to gather over the past 12 months. It's really trading like it is going to have another earnings upgrade," he said.

TradeMe edged up 0.2 percent to $5.35. The country's dominant online auction site will buy Limelight Software, which operates the cloud-based auto dealer management platform motorcentral.co.nz, for an undisclosed sum provided it gets Commerce Commission approval.

"That provides them with another avenue to enter into that lucrative used-car sales market, the share price hasn't traded to the upside at all today, it's been average volume running through so the market's just taken that in its stride," McIntyre said.

CBL Corp was the worst performer, down 1.2 percent to $3.30, while Comvita dropped 0.8 percent to $6.17.

Outside the benchmark, SLI Systems shares sank 8 percent to 23 cents, a record low, as a dearth of news ahead of next month's earnings season has seen some investors exit the e-commerce software vendor. The shares have fallen 49 percent so far this year making them the fifth-worst performer on the S&P/NZX All Index.

(BusinessDesk)

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