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MARKET CLOSE: NZ shares rise as growth stocks A2, Xero, Synlait extend gains; CBL drops

Wednesday 11th October 2017

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New Zealand shares rose as the export-orientated growth stocks A2 Milk and Xero extended recent gains, while insurer CBL Corp declined.

The S&P/NZX50 Index increased 23.17 points, or 0.3 percent, to 8,060.98, another record close. Within the index, 21 stocks rose, 21 fell and eight were unchanged. Turnover was $194 million.

"It's more of the same today really, the glamour price-momentum stocks are carrying on their merry way," said Matt Goodson, managing director at Salt Funds Management. "I don't think the market is even remotely focused on when [a government is formed], I think it's more focused on what it is and what are the policies. The market hasn't paid a great deal of attention to date except via the currency which has been beneficial to a number of stocks who a weaker currency helps." 

Stocks which have enjoyed recent gains extended that run with Synlait Milk up 3.8 percent to $7.04, Xero gaining 3.1 percent to $33.95, and A2 Milk Co rising 2 percent to $7.75. This year, the stocks have respectively gained 118 percent, 88 percent and 257 percent, ahead of the benchmark index's gain of 17 percent. All three are export-focused businesses and have benefited from recent pressure on the kiwi dollar. 

Fisher & Paykel Healthcare, another exporter, gained 1.3 percent to $13.05 and Z Energy rose 1.3 percent to $7.11.

CBL Corp was the worst performer, down 2.3 percent to $2.98. It has made a technical adjustment to its minimum solvency capital, lifting it to $121 million from $107 million.

"It's come out that their minimum solvency capital is a little bit higher than previously stated, which would imply less headroom from their current capital position, though there still remains plenty of headroom," Goodson said. 

New Zealand Refining Co fell 1.6 percent to $2.48 and Metro Performance Glass declined 1 percent to $1.02.

Outside the benchmark index, Pushpay Holdings rose 8 percent to $2.96. The mobile payments app company said annualised committed monthly revenue (ACMR) has jumped 96.8 percent and reiterated its target to break even on a monthly cash-flow basis before the end of 2018. 

"It came out with some good numbers, they look like they're going to get to their revenue targets a bit quicker than initially planned," Goodson said. "We're in a market at the moment, across Asia and indeed globally, which is prepared to pay up aggressively for high-growth companies making their numbers."

Pacific Edge dropped 20 percent to 36.5 cents. It wants to raise $21.3 million at 32 cents apiece in a deeply discounted rights issue, which it says will fund the cancer diagnostics firm's goal of breaking even on a cash flow basis in the March 2019 year. The Dunedin-based company will sell 66.6 million shares in a one-for-six pro-rata rights offer, a 27 percent discount to the theoretical ex-rights price of 44 cents, it said in a statement. The deal is fully underwritten by lead manager First NZ Capital Securities. 

"The market is clearly hoping that they would be out with an announcement regarding Kaiser, a hugely influential client. That would still appear to be imminent, but not there yet. In the meantime, until they do build up their client base the business is still burning cash," Goodson said. 


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