MARKET CLOSE: NZ shares rise to record, Xero, Metlifecare gain, Air NZ drops

Wednesday 20th July 2016

New Zealand shares rose to a new record with Xero, Metlifecare and Steel & Tube Holdings gaining while Air New Zealand dropped on its June operating statistics.

The S&P/NZX 50 Index gained 17.84 points, or 0.3 percent, to 7,172.67. Within the index, 30 stocks rose, 14 fell and seven were unchanged. Turnover was $130.4 million.

Xero led the index, up 3.5 percent to $18.80. The software-as-a-service firm held its annual meeting in Sydney today, where chief executive Rod Drury told investors it will start offering new services as it seeks to transform the platform founded on accounting software into the online portal of choice for small businesses.

Xero affirmed its previous guidance that it has enough cash in the bank to start breaking even without raising more capital, and Drury today said the company will pass 1 million customers this year on its path to becoming a $1 billion revenue company.

"It's more of a steady as she goes for Xero at the moment rather than huge acceleration - the big risk for them is competitive threat that may come to fruition," Peter McIntyre, investment adviser at Craigs Investment Partners, said. "It's an exciting company, but it's really a matter of confirming their presence in the United States because that's where they'll really make money, and that's going to be with subscriber rates far higher than the 62,000 which they currently have."

Air New Zealand was the worst performer, down 2.2 percent to $2.18. In its operating statistics for June, the airline said it carried 4.8 percent more passengers at 1.215 million, but its load factors dipped 0.9 percentage points overall to 80.8 percent.

"It was possibly a little disappointing, and we've seen the share price weaken - obviously Jetstar is having an impact on domestic performance and that's having an impact on load factor, but in saying that the Tasman routes performed pretty solidly and on long haul the capacity they've added is able to be met," McIntyre said. "The load factors have been trending to the downside for the last couple of months, but we'll get more clarity in late August when their full year comes out."

New Zealand Refining rose 0.4 percent to $2.57. In its throughput and margin report for May/June, the refinery said it had a gross margin of US $6.26 per barrel, while throughput for the period was 6.8 million barrels.

"They're pretty confident numbers out of Refining - their throughput was ahead of the first half of 2015, and their refining margin is at the top end of the historical range - remembering they have a floor and a cap on the margin they can do, and that's based out of the Singapore price," McIntyre said.

Metlifecare gained 2.9 percent to $5.64, Steel & Tube Holdings rose 2 percent to $2.02, and Heartland Bank advanced 1.6 percent to $1.31.

Westpac Banking Corp gained 0.5 percent to $32.14. The bank has announced it will not take any new loan applications from property investors who do not have a 40 percent deposit from 4.30pm this afternoon.

Vital Healthcare Property Trust was unchanged at $2.20. It has raised $160 million after its existing investors took up 87 percent of the units in the two-for-nine renounceable rights offer.

Tower dropped 2.2 percent to $1.35 and Comvita fell 1.3 percent to $11.06.

BusinessDesk.co.nz

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