MARKET CLOSE: NZ shares gain as ANZ Bank rises after results; Tegel climbs on debut

Tuesday 3rd May 2016

New Zealand shares rose after Australia & New Zealand Banking Group's decision to cut its dividend was taken as a sign of prudent management. Air New Zealand rose after saying it was well-placed to foot it in a competitive air travel market and Tegel Group Holdings rose in its NZX debut.

The S&P/NZX 50 Index gained 51.2 points, or 0.8 percent, to 6,843.01. Within the index, 31 stocks rose, nine fell and nine were unchanged. Turnover was $138 million.

ANZ Bank gained 5.7 percent to $26.98 on the NZX. Australia's fourth-largest lender today posted a 24 percent decline in first-half cash profit to A$2.78 billion, after taking A$717 million of charges such as restructuring costs, an accounting change for software capitalisation and an impairment against its Malaysian bank. It also cut the first-half dividend by 7 percent to 80 Australian cents.

"They've provided some certainty about whether the dividend will be sustained," said Greg Easton, an adviser at Craigs Investment Partners. "They are doing some housekeeping, getting the house in order. Making it nice and clean."

Westpac Banking Corp, which led the index lower yesterday after posting first-half results that missed some estimates, rose 2 percent to $33.03 today.

Air New Zealand rose almost 4 percent to $2.61. The airline released a presentation for an investor briefing today in which it indicated that 2017 earnings won’t match the $800 million it has forecast for 2016 as it faces increased competition and gets less benefit from foreign exchange hedging. Air New Zealand said it was "well-positioned to compete and win in a dynamic marketplace" and had "significant opportunity" to generate sustainable shareholder returns. The company is halfway through a programme to refurbish its fleet, reducing both the average age and range of models it puts in the air.

The airline "is obviously out there pushing its barrow," Easton said. "They've highlighted the value that's there in the business should they be able to maintain profitability."

Vector led gains among utility-type companies, rising 2.7 percent to $3.40. Mighty RiverPower rose 2.2 percent to $2.995 and Trustpower gained about 2 percent to $7.80. Utility stocks were part of yesterday's broad selloff.

Port of Tauranga rose 2.2 percent to $18.91 and retailer Kathmandu Holdings rose 1.9 percent to $1.59. A2 Milk gained 1.7 percent to $1.78. Summerset Group climbed 1.4 percent to $4.42, Trade Me Group gained 1.3 percent to $4.64 and Auckland International Airport rose 1.3 percent to $6.19.

Tegel ended its debut day on the NZX at $1.63, a 5.2 percent gain on its initial public offering price of $1.55. The poultry group was taken public by private equity firm Affinity Equity Partners, which has retained a 45 percent stake in the company, a holding that is in escrow for 12 months unless the stock price rises above certain thresholds. Some 29 million Tegel shares changed hands.

"There's obviously been some pent-up demand since the IPO," Easton said. "That suggests the sale was priced about right."

CBL Corp was unchanged at $2.40 after the Auckland-based insurer said ts European unit will be “an outperformer” this year as new programmes the insurer started last year in France and Scandinavia ramp up.

BusinessDesk.co.nz

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