MARKET CLOSE: NZX 50 rises to record; Z Energy, Sky TV rise, SkyCity drops

Tuesday 19th April 2016

New Zealand shares rose to a record amid speculation Z Energy's application to buy the Caltex chain will be approved. Sky Network Television and Fletcher Building also rose while SkyCity Entertainment Group dropped.

The S&P/NZX 50 Index gained 21.8 points, or 0.3 percent, to 6,873.04. Within the index, 24 stocks rose, 16 fell and nine were unchanged. Turnover was $171.8 million.

Z Energy led the index, gaining 3.7 percent to $7.08. The Commerce Commission's decision on whether to approve Z Energy's application to buy Chevron New Zealand's service station chain is due on April 29, having been delayed multiple times. Z wants to buy the Caltex and Challenge! branded chains from Chevron New Zealand for $785 million, giving it 49 percent of the retail market. The length of time has stoked some speculation they might have to divest certain assets to get it over the line.

"Most people I speak to believe they will get approval, but the conditions are unknown," said Rickey Ward, New Zealand equity manager at JBWere. "Given it's taken such a long time from when the acquisition was first commenced to the current date, it's very hard to believe that they only have to divest four or six petrol stations. It feels like they're going to have to give up a lot more than that. What the share price is telling us is that there's a greater degree of confidence that they will be given approval."

Mighty River Power gained 2.1 percent to $2.96.

Sky TV advanced 2 percent to $5.03. Investors have been wary of the company as it struggles to retain subscribers with growing competition from services such as Netflix, and faces higher costs to secure content in the increasingly competitive market.

"It's well off its lows, but it is quite surprising - local institutions don't like it, they think the industry is evolving and changing away from it," Ward said. "That share price has firmed quite nicely on good volume. I do wonder whether it's Australian investors - they are the dominant purchaser, and the story has been better received by Australian institutions than local institutions."

Australia & New Zealand Banking Group gained 1.7 percent to $26.75.

Fletcher Building rose 1.6 percent to $8.18.

"It seems like the company has moved from a downgrade cycle to an upgrade cycle," Ward said. "Not many companies appear to be undervalued but that one seems to screen pretty well. A lot of offshore investors and some domestics are searching for stocks which haven't been rewarded, that have the potential to surprise, that you're not paying a lot for - that ticks the box."

Air New Zealand advanced 0.9 percent to $2.885. The airline is benefitting from increased demand from tourism and low fuel prices. It fell 4.7 percent yesterday after ASX-listed rival Qantas Airlines trimmed plans to expand capacity, a signal it saw leaner times ahead.

Steel & Tube Holdings was the worst performer, down 1.7 percent to $2.28, while Xero dropped 1.7 percent to $17.45.

SkyCity shed 1.5 percent to $5.15. It has regained ground since the surprise resignation of its chief executive Nigel Morrison triggered a selloff.

"Australian analysts more than domestic ones are optimistic - they've been taking a very positive view on Adelaide in particular, and therefore they're more positive on its value," Ward said. "It's certainly brushed off Nigel's announcement."

Outside the main index, Pushpay Holdings fell 10 percent to $2.20. It has not made any announcements, but rallied to an all-time high of $2.75 a week ago and has fallen back since.

"They would have to disclose if it was something of materiality regarding the company's earnings, positive or negative," Ward said. "They've been asked to disclose a number of times, and they've been consistent in their message that they've fulfilled all their obligations."

BusinessDesk.co.nz

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