MARKET CLOSE: NZ shares rise as reporting season runs, TradeMe, A2, ANZ gain

Wednesday 17th February 2016

New Zealand shares rose as a busy reporting day generated wild movements in some stocks. Trade Me Group, a2 Milk Co and Australia and New Zealand Banking Group gained.

The S&P/NZX 50 Index advanced 10.2 points, or 0.2 percent, to 6085.56. Within the index, 24 stocks rose, 19 fell and seven were unchanged. Turnover was $217 million.

"Results season is in full swing, and it's created quite wild swings in those companies that have reported," said James Lindsay, senior portfolio manager at Nikko Asset Management who helps manage about $400 million in NZ equities. "There's been a lot of nervousness around results. A time period where it isn't clear where the direction of the markets go means you see these swings from euphoria to pessimism."

A2 Milk shares gained 3.5 percent to $2.10. The stock touched an all-time high of $2.61 in intraday trading after the specialty milk marketer boosted first-half profit and raised its estimate for full-year earnings on a surge in demand for its infant formula in Australia, New Zealand, and China.

"It's another very significant uplift in expectations, and that's led to significant swings in that stock," Lindsay said. "That swing shows how much this has got the eyes and ears of more speculative investment. There's some really strong drivers there, but obviously the market hasn't been able to easily value that, from those wild fluctuations in price."

Fletcher Building fell 2.5 percent to $6.68, having touched $7.07 during the session after the country's biggest construction company posted a 51 percent gain in first-half profit, with growth in its newly aligned building products and distribution units making up for weaker earnings from Formica and New Zealand housing developments.

"It disappointed on the offshore stuff," Lindsay said. "On the results, it was pretty much in line with expectations, there were a few small wins and small losses."

Trade Me Group led the index, up 6 percent to $4.07, with the shares rising steadily throughout the day.

The auction site's first-half profit was largely unchanged from the year earlier, although it signalled earnings should pick up in the future as it emerges from a period of higher investment. The company said it expects a "moderately greater profit growth rate" in the second half of this financial year.

"The result was slightly ahead of expectations," Lindsay said. "It could've been worse, it's probably a bit of a relief rally."

Xero rose 4.2 percent to $14.95, Metlifecare gained 1.9 percent to $4.30, and Heartland Bank advanced 1.8 percent to $1.13.

Australia and New Zealand Banking Group nudged up 0.4 percent to $25.09. The New Zealand division reported a 6 percent fall in first-quarter profit as tight lending competition ate into margins, even as it grabbed a bigger slice of the market.

"The market was pretty concerned about it, but it hasn't been as bad as feared," Lindsay said.

Coats Group was the biggest loser on the day, down 5.3 percent to 45 cents, while Tower dropped 2.7 percent to $1.63.

Precinct Properties New Zealand fell 1.2 percent to $1.215. The commercial property investor lifted profit 10 percent, having cut interest costs after paying off debt by selling assets, though that pushed revenue lower. Last year, the company engaged in a string of asset sales in Wellington to expand its Auckland presence, raising $177 million from the sale of three central-city properties.

Outside the index, TeamTalk shares jumped 22 percent to 73 cents after the listed telecommunications firm's first-half profit rebounded from a year earlier when it wrote down the value of its Farmside broadband services unit.

Wynyard Group had its shares halted at $1.54, cancelling a planned special meeting for tomorrow that would allow it to raise new capital. The software developer is considering other capital raising options, including a rights issue.

BusinessDesk.co.nz

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