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MARKET CLOSE: NZ shares dip as investors eye Fletcher update

Thursday 27th June 2019

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New Zealand shares snapped a three-day gain, edging lower as investors pored through the details of Fletcher Building's investor briefing in which it confirmed a small capital return and noted Australian trading conditions remain tough. 

The S&P/NZX 50 Index decreased 10.24 points, or 0.1 percent, to 10,408.05. Within the index 21 stocks fell, 22 rose, and seven were unchanged. Turnover was $121 million. 

Fletcher slipped 0.8 percent to $5.29 on a volume of 1.5 million shares, more than its 90-day average of 1.2 million. The company today unveiled plans to buy back as much as $300 million of stock, affirmed its annual earnings and dividend, and said it doesn't expect to lift its provisioning for the troubled Building + Interiors division that experienced a cost blow-out in recent years. 

Rickey Ward, New Zealand equity manager at JBWere, said the B+I news should have supported the stock, given there were concerns that the cost of its projects may rise further. However, investors latched on to the composition of earnings, with weak Australian trading conditions and the local residential unit benefitting from land sales, which Ward said was a regular part of its business. 

"I don't know what is negative about that when it comes to messaging - it's only when you delve down that you can find something and everyone's homed in on its property sales," he said. 

Ward said a number of investors were in Sydney for the Fletcher briefing, which meant the local trading session was relatively quiet. 

Tourism Holdings led the market lower, down 3.8 percent at $3.80 on a volume of 198,000 shares, more than its 158,000 average. The rental RV operator is raising $50 million, having already placed $30 million with China's Citic. 

Arvida Group was the most traded stock on a volume of 6.8 million shares, well up on its 281,000 average. The retirement village operator resumed trading after the stock was halted yesterday for a $50 million placement to help fund a $180 million acquisition of three villages. It fell 2.2 percent to $1.35. 

Ward said there's a lot of support for firms to raise equity, with flush investors keen to support companies wanting to do something. 

The stock market will get another boost in August, with Hawke's Bay Regional Council confirming a sell-down of its stake in Napier Port in an initial public offering in July and listing the following month. That follows the $10 million IPO at 50 cents a share for medicinal cannabis firm Cannasouth, which listed earlier this month. The shares were down 2.7 percent at 36 cents today. 

NZX was unchanged at $1.10. 

Among other companies trading on volumes of more than a million shares, Spark New Zealand fell 0.5 percent to $3.88, Kiwi Property Group decreased 0.3 percent to $1.625, and Meridian Energy increased 1.1 percent to $4.78. 

Trustpower posted the day's biggest gain, up 3.4 percent at $7.25 on a smaller volume than usual of 52,000 shares. Utilities software developer Gentrack increased 2.4 percent to $6 and Synlait Milk advanced 1.9 percent to $9.37. 

Outside the benchmark index, Tilt Renewables rose 3.4 percent to $2.45 after saying it might sell its Snowtown 2 wind farm to help fund other developments. 

Bank of New Zealand's 2020 bond paying annual interest of 4.43 percent was the most traded debt security with a volume of almost 1.6 million changing hands. The notes closed at a yield of 1.69 percent, up 1 basis point. ANZ Bank New Zealand's 2024 bond paying 3.03 percent traded on a volume of about 1.2 million notes, closing at an unchanged yield of 2.25 percent. 

The Reserve Bank today kept the official cash rate at 1.5 percent and signalled it will probably need to cut rates further. 


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