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MARKET CLOSE: NZ shares rise as Trustpower hits record on special dividend

Tuesday 14th May 2019

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New Zealand shares rose in quiet trading, with Trustpower hitting a record after declaring a special dividend at today's earnings result. Fonterra fund units rose on the sale of its Tip Top business.

The S&P/NZX 50 Index increased 27.46 points, 0.3 percent, to 10,126.83. Within the index, 17 stocks rose, 20 fell, and 13 were unchanged. Turnover was $82.7 million, with just two companies trading on volumes of more than a million shares. 

Trustpower hit a record $7.21, ending the day up 2.9 percent at $7.20, after declaring a special dividend of 15 cents per share. That takes the special returns to 40 cents since the sale of Green State Power in New South Wales to Meridian Energy last year. The company reported a 9 percent decline in annual operating earnings to $222 million, meeting expectations. The 30,000 shares traded were less than half its 90-day average of 74,000. 

"That will be the end of the special dividends. The result was in line with market expectations," said Peter McIntyre, an investment adviser at Craigs Investment Partners. 

Fonterra Shareholders' Fund units rose 0.5 percent to $4.30 on a volume of just 65,000 units, well short of its 248,000 average. Fonterra announced the sale of its Tip Top ice cream business for $380 million, some $100 million above book value, while securing a supply agreement with the new owner. Fonterra shares, which are restricted to its farmer-suppliers, rose 0.5 percent to $4.30. 

McIntyre said the price was pretty good given how much it was above book value, and was a very positive outcome. 

Spark New Zealand was the most traded stock on a volume of 2.1 million shares. The stock rose 1.8 percent to $3.685. Auckland International Airport increased 1.5 percent to $8.55 on a volume of 1.4 million shares. 

McIntyre said the market is lacking liquidity at the moment, with investors happy to hold on to their shares. 

"Investors are being pushed at the moment to hold on to good quality assets that provide income," he said. 

Infratil remained in a trading halt, with the shares last at $4.60. The infrastructure investor is in talks to buy Vodafone New Zealand, and director Alison Gerry today resigned from Spark's board to avoid a potential or perceived conflict of interest. Infratil is scheduled to report this Friday, and also owns a controlling stake in Trustpower. 

Australia & New Zealand Banking Group fell 3.6 percent to $28.03, posting the biggest decline on the benchmark index, on a volume of just 6,635 shares. Heartland Group fell 1.9 percent to $1.55 and Westpac Banking Group decreased 0.1 percent to $28.68. The Reserve Bank today issued a reminder that its consultation on bank capital requirements closes on Friday.

Separately, ASB Bank parent Commonwealth Bank of Australia said its New Zealand subsidiary will probably need about $3 billion of additional capital to meet the proposals as they stand. One of ASB's five debt securities traded on the NZX today. The 2021 bonds paying annual interest of 4.245 percent traded at a yield of 2.16 percent, down 3 basis points. 

The most-traded debt security was the New Zealand Local Government Funding Agency's 2023 bond, paying annual interest of 5.5 percent. Some 850,000 notes traded today, closing at a yield of 1.98 percent, down 3 basis points. 

Outside the benchmark, Evolve Education resumed trading after a deeply discounted entitlement offer raised $63.5 million. The shares closed at 12.3 cents, above the 8 cent issue price, though down 47 percent from where they last traded. 


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