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MARKET CLOSE: NZ shares drop, Trustpower and NZ Refining fell, Sky TV, A2 gain

Tuesday 10th July 2018

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New Zealand shares dropped, led lower by Trustpower and New Zealand Refining Co, while Sky Network Television rebounded from yesterday's selloff.

The S&P/NZX 50 Index fell 28.72 points, or 0.4 percent, to 9,022.93. Within the index, 27 stocks fell, 16 rose and seven were unchanged. Turnover was $114 million.

"We've been a bit sluggish today, there's always the school holidays excuse," said Peter McIntyre, investment adviser at Craigs Investment Partners. "With the US reporting season opening on Thursday evening, we're expecting another really robust reporting season with earning-per-share growth of 8.5 to 9 percent and revenue growth around 20 percent. We've just got a void of information running through the market prior to that and our own reporting season as well."

Trustpower was the worst performer, down 2.3 percent to $5.62, with New Zealand Refining Co dropping 2 percent to $2.47, Skycity Entertainment Group falling 2 percent to $4.03, and Kathmandu Holdings down 1.7 percent to $2.88.

Sky TV was the best performer, up 3.1 percent to $2.70, having been the worst performer yesterday when it dropped 5.1 percent. 

A2 Milk Co rose 1.9 percent to $11.66, Investore Property gained 1.3 percent to $1.52, and Stride Property was up 1.1 percent to $1.88.

Summerset Holdings gained 0.4 percent to $7.56. Its first-half profit rose as much as 26 percent as stronger development margins made up for a lower volume of new sales.

Underlying profit, which excludes unrealised valuation gains in the fair value of investment property, was between $43 million and $45 million in the six months ended June 30 from about $36 million a year earlier, the Wellington-based company said in a statement. Earnings grew 45 percent in the first half of last year. Summerset will release its detailed results for the first half on Aug. 14. 

"It's pretty much in line with what the market had expected, though potentially some may see it on the weaker side," McIntyre said. "The concern was that new sales volumes looked weak in the second quarter, about 20 units lower than we'd expected, though development profit still looked reasonably strong, the softer volume slightly offset by higher margins."

Gentrack Group gained 0.7 percent to $6.95. It came out of a trading halt yesterday after raising about $52.4 million in a discounted stock offer to institutional investors as part of a two-stage share sale aimed at raising funds to repay debt used for a recent flurry of acquisitions.

That bookbuild, of 3.4 million entitlements, achieved a clearing price of $6.69 per share, a premium of 50 cents per share over the offer price of $6.19, and a discount of 19 cents per share to the theoretical ex-rights price of $6.88.

"It continues to trade well post entitlements - they've broadened their product offering but more importantly for investors they're still on the lookout for acquisitions," McIntyre said.

Precinct Properties was unchanged at $1.36. It has refinanced its $760 million bank debt facility, which was due to expire in November 2020, extending $460 million of the existing facilities in two new tranches expiring in July 2022 and July 2023, with the balance of the facility expiring in November 2020.

"For a property-based company that refinancing is really important," McIntyre said. "You've seen a lot of property companies rotate capital, sell assets to buy assets but also come to the market with debt issues as well. This is further insulating their debt from potential interest rate increases." 

Outside the benchmark index, ERoad fell 6.9 percent to $3.25. It registered slower first-quarter growth than anticipated as prospective buyers put off their purchasing decisions across Australasia and in North America, after a period of rapid expansion in the US. 

PGG Wrightson rose 4.8 percent to 66 cents. It says it has no comment on Australian media reporting that ASX-listed agribusiness company Elders is looking to buy it for $600 million.

Blis Technologies jumped 14.3 percent to 1.6 cents. The biotechnology firm expects to post a “small profit” for the fiscal 2019 year as it reported revenue more than tripled in the first quarter while its losses narrowed.

(BusinessDesk)

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