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MARKET CLOSE: NZ shares rise, A2 and Mainfreight hit records while F&P Health declines

Wednesday 23rd November 2016

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New Zealand shares rose, led by A2 Milk and Mainfreight which both set new records, while Fisher & Paykel Healthcare fell. 

The S&P/NZX 50 Index advanced 35.07 points, or 0.5 percent, to 6,851.46. Within the index, 24 stocks rose, 17 fell and 10 were unchanged. Turnover was $185.6 million. 

A2 Milk Co led the index, up 6.5 percent to a record price of $2.31, following yesterday's publication of a trading update for the four months to October at its annual meeting in Sydney. Net profit was $22 million in the four months, from $3.2 million in the same period a year earlier, while the EBITDA/sales ratio increased to 22.9 percent, A2 said.

"I think I've said in the past once it breaks through into a different trading range it's off - it's going to have to be something material to drive it back below that $2.25 mark in the short term," said Peter McIntyre, investment adviser at Craigs Investment Partners. "When your net profit multiplies sixfold in the first four months, that's the kind of percentage gain you're going to see. As long as they maintain good supply, and the market has this insatiable desire for their profit, you're going to see the share price very well bidded for."

SkyCity Entertainment Group gained 4.7 percent to $3.99 and Sky Network Television Group advanced 3.8 percent to $4.60.

Fisher and Paykel Healthcare was the worst performer, down 5.9 percent to $8.15. The medical device maker increased first-half profit 26 percent to $78.2 million, widening its margins in its first-half results yesterday, and reiterated its forecast for a record annual profit this year.

"That was a solid result yesterday, but the market's clouded by the prospect of litigation from Resmed coming to fruition far quicker, some are saying it could happen within 18 months time so you're seeing a de-risking of portfolio positions," McIntyre said. "It's carrying a dividend but those that hold it are probably just wanting to get into a neutral position rather than being overweight as a number have, because it's been a bit of a darling for the market in recent times."

Tower dropped 4.6 percent to 73.5 cents, while Heartland Bank declined 2.6 percent to $1.48.

Mainfreight gained 1.8 percent to a record $20.05, having gained 28 percent this year.

"Their market cap moves beyond $2 billion, a lot of brokers have moved their thoughts from yield stocks to growth stocks and Mainfreight fits that bill - it's a global player as well," McIntyre said.

Argosy Property was unchanged at $1.05. The country's fifth-biggest listed property investor increased first-half earnings 22 percent as it benefited from the rising value of its portfolio and extra cash from the surrender of a lease agreement.


Outside the main index, Pushpay dropped 3.2 percent to $1.79. The mobile payments app developer says it will acquire a church app business from Bluebridge Digital for US$3.1 million, continuing an expansion that saw revenue soar 308 percent in the first half while its net loss widened to US$11.3 million.

"It's another small one that has a promising business if you look at their key metrics like revenue retention rate it's all pretty positive," McIntyre said. "Their cash and available funding lines - which tend to be the first thing analysts are looking at these days with smaller companies, post Wynyard - have increased as well. They're down, purely on the basis the loss has widened quite significantly.

Arvida Group gained 0.9 percent to $1.15. The retirement village and aged care facilities operator says it's "on track to deliver a strong FY17 result" after it more than doubled first-half profit. McIntyre said it was an up-and-comer within the sector.

Abano Healthcare was unchanged at $8.41. The Australasian dental centre and radiology operator, which is under a partial takeover offer from dissident shareholders, expects to pay a first-half dividend of between 11 and 16 cents per share.

Serko was unchanged at 35 cents. The online travel booking company confirmed a 10 percent gain in first-half sales and narrowed its net loss to $2 million as costs fell.

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