MARKET CLOSE: NZ shares mixed, Metro Glass falls while Kiwi Property gains on 1H earnings

Monday 21st November 2016

New Zealand shares were mixed with Metro Performance Glass falling while Kiwi Property Group and Evolve Education Group gained following their first-half earnings.

The S&P/NZX 50 Index fell 8.89 points, or 0.1 percent, to 6,848.95. Within the index, 23 stocks rose, 22 fell and six were unchanged. Turnover was $154 million.

"We really are waiting for direction from offshore markets," said Rickey Ward, NZ equity manager at JBWere. "We've got a market that's very bond-like, bond-sensitive, and that hasn't been a thematic of choice since the end of August. Until we see a bit of clarity about what's happening in the US and Europe, we're going to be a market out of favour so we're just going to drift a little bit."

Metro Performance Glass dropped 3.3 percent to $2.08. The glass supplier lifted first-half profit 5 percent to $11.5 million as it benefited from a strong local construction market and booked a gain on an Australian acquisition. The company said it had invested in extra capacity in Auckland where its market is growing and was making good progress at cutting processing costs. The 3.6 cent interim dividend was at the low end of guidance, which chair John Goulter said reflected both the company's opportunities and its increased gearing level after its foray across the Tasman.

"It opened up a little firmer and is weakening into the close - there's no real reason for that, the result was pretty much in line with what people expected, but they didn't really provide a reason on the conference call for people to go out and continue buying it, despite the background being really strong," Ward said. "They made a couple of throwaway comments that the outlook is strong, but the issue is we're not seeing any leverage from recent spend on their facilities in Auckland. You'd expect to get out of revenue growth significant margin expansion, and you're just not getting that. People also might've been disappointed by the dividend, but I view it as fiscally prudent as they want to reduce gearing levels."

Restaurant Brands NZ dropped 0.6 percent to $5.06. The company successfully raised $94 million through a sale of shares to investors, helping fund its planned purchase of Pacific Island Restaurants, the largest fast-food operator in Hawaii with 82 Taco Bell and Pizza Hut stores.The shares resumed trading today after being placed in a trading halt on Nov. 18.

Kathmandu Holdings was the best performer on the index, up 3.9 percent to $1.86, while Ryman Healthcare rose 2.7 percent to $8.82.

Kiwi Property Group gained 1.4 percent to $1.455. The country's biggest listed property investor posted a 27 percent gain in first-half profit to $45.6 million and affirmed its guidance for an uplift in its full-year dividend.

Vital Healthcare Property Trust was unchanged at $2.05. The hospital and healthcare property developer paid A$24.4 million for a majority interest in a medical centre in Melbourne, Australia, and spent A$10 million acquiring sites to enable future expansion.

Outside the benchmark index, Evolve Education Group gained 5 percent to $1.05. The childcare centre operator lifted first-half profit 11 percent to $12.5 million as it looks to increase its centre numbers over the next two years.

The company is on track to add between 15 and 20 centres in 2017. It has 119 centres as of today, up from 84 at the time of its 2014 initial public offering. The board declared a 2.5 cent dividend, up from 2.38 cents in the first half of 2016.

"They paid a higher dividend than what people expected, and had a new CFO on the conference call - I suspect left people a little more confident than they had been in the past," Ward said. "They've got a strategy built around acquisitions which seems to be delivering a few question marks on margins and occupancy, but the new management team seem to be delivering and the result reflected that."

Hellaby Holdings dipped 0.3 percent to $3.34. Bapcor today sent out a press release about comments made by its chief executive Darryl Abotomey on Radio New Zealand in relation to its takeover offer for Hellaby. It said it has not made a decision at this stage about whether to increase its offer price for Hellaby, after RNZ reported it wouldn't raise the offer price.

Blis Technologies was unchanged at 4.6 cents. The probiotics manufacturer turned to a first-half profit of $428,000 allowing it to affirm guidance for its first annual profit since listing 15 years ago, as solid sales growth offset the impact of a strong kiwi dollar against the greenback and the euro.

BusinessDesk.co.nz

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