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MARKET CLOSE: NZ shares rise, led by Fletcher on Higgins buy; Summerset gains, MRP, Nuplex drop

Tuesday 2nd February 2016

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New Zealand shares rose, led by Fletcher Building after the country's biggest construction company bought a roading firm. Summerset Group gained while Mighty River Power and Nuplex Industries dropped.

The S&P/NZX 50 Index rose 5.6 points, or 0.1 percent, to 6180.09. Within the index, 25 stocks fell, 20 rose and five were unchanged. Turnover was $151 million.

Fletcher led the index, up 3.6 percent to $7.25 on $34 million in turnover. The company has paid $315 million for Higgins Group Holdings, New Zealand’s third-largest road construction and maintenance company, while separately announcing it will restructure into five divisions. Chief executive Mark Adamson has previously signalled a desire to expand into road construction and maintenance which the company sees as a significant opportunity. 

"The company's been a bit of a frustrating stock over the last couple of years, and it's perceived that it's trading below fair value," said Robert Garden, investment adviser at Craigs Investment Partners. "Its New Zealand business has been performing well, but the international side of things, particularly in Australia, has been holding things back."

The announcements came after brokerage First NZ Capital produced a report arguing for a break-up of the company. 

"There's been talk of whether the company would be worth more broken up, this move to the new divisional structure is trying to put more emphasis on the parts of the business that perhaps have been under performing and thus hope to see a bit of a turn around in those areas," Garden said.

Summerset climbed 2.5 percent to $4.10, a six-month high, and A2 Milk Co rose 2.3 percent to $1.78, recouping some of yesterday's 7 percent drop.

Warehouse Group advanced 1.9 percent to $2.72, and Restaurant Brands gained 1.7 percent to $4.30. 

Ryman Healthcare gained 1.3 percent to $7.99, partly offsetting yesterday's fall of 1.9 percent, with the stock down 7.2 percent for the year. The retirement village operator will spend $200 million building its site in Melbourne as part of its planned expansion in Australia's second-biggest city, it said yesterday.

Craigs' Garden said investors are waiting for earnings season, with little corporate news before then.

Mighty River Power was the worst performer on the index, down 2.3 percent to $2.60, and Nuplex fell 1.7 percent to $4.08.

Australian dual-listed banks dropped, with Westpac Banking Corp down 2.1 percent to $32.84, and Australia and New Zealand Banking Group down 1.2 percent to $26.60.

Heartland Bank fell 1.6 percent to $1.21, while Fisher & Paykel Healthcare shed 1.5 percent to $8.56.

Trade Me dropped 0.8 percent to $3.99. The stock was downgraded to 'sell' from 'buy' by brokerage Craigs last week, which said shares in New Zealand's largest online auction site were "fully priced".

Outside the benchmark index, Augusta Capital fell 3 percent to 96 cents. The listed property investor and fund manager will buy a A$23 million industrial property in Brisbane, which it plans to put up for syndication, it said today in a statement. The Auckland-based company will offer the property to syndicate investors in mid to late March, with a view to raising A$14 million, with the acquisition conditional on Augusta raising at least A$9 million by the end of May.

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