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MARKET CLOSE: NZ stocks rise, led by Restaurant Brands

Tuesday 21st September 2010

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New Zealand stocks rose for a fourth session, lead by Restaurant Brands after the company managed to stymie the losses in the Pizza Hut brand and build on KFC’s success.

The NZX 50 Index rose 19.8 points, or 0.6%, to 3,236.7. Within the index, 29 stocks rose, nine fell and 12 were unchanged. Turnover was $90.6 million.

Restaurant Brands, the fast food franchise operator, rose 3.2% to $2.59 after second-quarter sales increased 3.7% to $100.4 million on continued strong trading from its KFC stores. On a same store basis, sales rose 3.9% to $97.2 million in the quarter. That takes its year-to-date sales to $176.3 million.

Shares touched on an all time high today of $2.60, and have risen 48% so far this year.

“Restaurant Brands is a darling of the stock market, but only because the company is doing the right thing, with management reinvesting in its brands and reinvigorating the business,” said Shane Solly, a portfolio manager at Mint Asset Investment. “When companies do the right thing they tend to get rerated, and the results were good positive evidence of that today.”

Kathmandu rose 3% to $1.73, ahead of its annual results on Friday.

Fletcher Building rose 1.9% to $8.66. Shares have risen as a result of the anticipated demand for construction in the wake of the Canterbury earthquake, and have been supported by the entrance of iShares, the world’s largest group of passive funds, into the market with renewed interest in large cap stocks, Solly said.

Air New Zealand was unchanged at $1.21 after the airline announced that it had carried 5.9% more passengers in August, to 978,000, compared to a year earlier.

F&P Appliance Holdings fell 3.2% to 60 cents, pacing decliners on the NZX 50.

ING Medical Properties Trust fell 2.3% to $1.25 cents after the investment group said it is conducting due diligence on Essential Healthcare Trust, an Australian health clinic investor managed by Orchard Capital Investments.

Essential owns A$152 million of hospital assets according to its 2009 annual report and provided Orchard with A$1.95 million in management fees last year.

Solly said that if the acquisition goes through it would be “quite a large asset for them to have a crack at,” but noted that the trust’s management had done a good job proving the standing of the portfolio to date.

OceanaGold, the operator of the Macraes goldfield, fell 3.6% to $5.15 after announced that it will be looking to raise US$140 million ($191 million) to get its Didipio Gold-Copper Project in the Philippines operational. The investment comes on top of the US$80 million already invested in the venture.

Affco was unchanged at 36 cents after Talley's Group declared its takeover offer for the meat processor and dairy investment group unconditional, and said it had acceptances amounting to almost 85% of company.

The offer of 37 cents a share was due to close yesterday.

Talley's, whose businesses range from frozen vegetable to seafood and ice cream, already controlled the company, with about 53% of the stock and had agreement to buy the 23.5% held by the Spencer family's Toocooya Nominees, which triggered the full takeover offer.

AMP NZ Office Trust fell 1.3% to 74 cents, the Warehouse fell 1% to $3.80, and Property For Industry fell 0.9% to $1.15.

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