MARKET CLOSE: NZ shares rise; Steel & Tube, Nuplex gain on positive reports

Thursday 18th February 2016

New Zealand shares rose as reporting season continued to provide plenty of news for the local market. Steel & Tube Holdings, Trade Me Group and Nuplex Industries climbed, while Skellerup Holdings dropped.

The S&P/NZX 50 Index advanced 25.5 points, or 0.4 percent, to 6,111.09. Within the index, 23 stocks rose, 18 fell and nine were unchanged. Turnover was $213 million.

Steel & Tube Holdings led the index, up 7.9 percent to $2.19. The steel products distributor lifted first-half profit 47 percent, although without income from property sales its underlying profit fell 8.3 percent to $9.9 million, as the price of steel continued to decline, fuelling intense competition. An interim dividend of 9 cents per share was declared, to be paid on March 31.

In November, the company said profit would undershoot last year's $10.8 million first-half result, although the Wellington-based company wasn't specific on the size of the decline. The shares had dropped 23 percent between that announcement and yesterday's close.

"The results weren't as bad as the market was thinking, so we've seen a bit of a bounce in it," said Robert Garden, investment adviser at Craigs Investment Partners. "The dividend was a bit better than some expected - same as last year, but it wasn't cut - and management were still reasonably confident for the second half of the year being a bit stronger. The second half mightn't be too bad, and probably equal to what we saw last year."

Trade Me Group gained 5.9 percent to $4.31. The stock rose 6 percent to $4.07 yesterday after the auction site's first-half profit was largely unchanged from the year earlier, although it signalled earnings should pick up in the future as it emerges from a period of higher investment, with the shares rising steadily throughout the day.

Coats Group rose 4.4 percent to 47 cents and Chorus climbed 2.5 percent to $3.77.

Nuplex advanced 2.4 percent to $5.10. The specialty chemicals maker lifted profit from continuing operations by 10 percent and upgraded its full year guidance of improved earnings in the Australia-New Zealand region, the Americas and Asia. Chief executive Emery Severin says it’s likely to take until June or July to finalise a takeover proposal from US-based Allnex Belgium SA, which offers investors the choice of a premium on the current share price or waiting for promised returns in two years from its Asian growth strategy and new coating technology Acure.

Spark New Zealand rose 2 percent to $3.27 after the country's biggest telecommunications company dangled the prospect of a cash sweetener to investors for a second year in a row.

The Auckland-based company's board delivered on an intention to pay special dividends this year, and wants to keep paying them in 2017. The board declared interim dividends totalling 12.5 cents per share today, including a 1.5 cents special dividend, and affirmed its forecast for annual ordinary dividends of 22 cents and special dividends of 3 cents.

"It's had a fairly solid result today," Garden said. "With interest rates where they are, any stock that's lifting their dividend and offering a special dividend is pretty attractive. If you've got stocks with consistent or improving dividend yields, which look like they're going to be sustainable for the foreseeable future, there's obviously a risk to weigh up but for those who are looking for income, that looks pretty sustainable."

Auckland International Airport advanced 1.6 percent to $5.89, Summerset Group rose 1.5 percent to $4.01, and Westpac Banking gained 1.4 percent to $31.95.

Skellerup Holdings was the worst performer today, dropping 7 percent to $1.33. The industrial rubber goods firm's first-half profit edged lower and it pulled back expectations for the full year as weakness in its agricultural business weighed on improved earnings from its industrial unit.

"The result today is below what their guidance was, and when companies miss guidance they are being sold off," Garden said. "It's exposed to the dairy sector, which is struggling at the moment and will probably be struggling in the future, and that's a large driver."

A2 Milk Co fell 3.3 percent to $2.03, turning around the 3.5 percent gain it made yesterday after the specialty milk marketer boosted first-half profit and raised its estimate for full-year earnings on a surge in demand for its infant formula in Australia, New Zealand, and China.

Tower dropped 1.8 percent to $1.60, while NZ Refining Co shed 1.7 percent to $3.51.

Fletcher Building dropped 1.2 percent to $6.60, continuing its downward streak from yesterday when it lost 2.5 percent on its first half profit report.

Port of Tauranga fell 0.3 percent to $18. New Zealand's biggest port company reported a 9 percent drop in first-half profit as export log volumes fell and after the year-earlier result was inflated by a one-time gain. The company guidance is for flat full-year earnings.

Outside the benchmark index, dual-listed financial services firm AMP rose 3.7 percent to $5.83. AMP's group profit jumped 10 percent to A$972 million, with underlying profit up 7 percent to A$1.12 billion, and total assets under management up 6 percent to A$226 billion, the parent company reported today.

BusinessDesk.co.nz

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