MARKET CLOSE: NZ shares mixed; beat-up Fletcher rises, Sky TV and Bethunes drop

Tuesday 25th July 2017

New Zealand shares were mixed, with Fletcher Building and A2 Milk Co gaining while Sky Network Television and Bethunes Investments dropped.

The S&P/NZX 50 Index rose 30.77 points, or 0.4 percent, to 7,713.06. Within the index, 22 stocks fell, 18 rose and 10 were unchanged. Turnover was $131 million.

Fletcher gained 1.9 percent to $7.61 in what Craigs Investment Partners investment adviser Peter McIntyre described as "a bit of a relief rally" after the stock sustained losses last week when Fletcher downgraded its 2017 earnings for the second time this year, with chief executive Mark Adamson leaving immediately. Two projects, the Sky City Convention Centre and Christchurch's Justice Precinct, are running over budget and will be delivered late.

"Today suggests investors still have faith in Fletcher, there have been a few broker releases suggesting positivity especially looking at things like population growth," McIntyre said. "If management can get it right, find a CEO capable of driving the business forward, Fletcher should be very profitable. We've seen investors buy back on a value proposition, it looks cheap compared to peers in Australia."

Investors have speculated that Meridian Energy chief executive Mark Binns may be in line for the top job at Fletcher after announcing he would step down at the end of the year. He had been Fletcher's original Christchurch rebuild czar before being tapped for Meridian's top job almost six years ago.

A2 Milk led the index, up 3.3 percent to $4.04, while Mercury NZ rose 2.1 percent to $3.575 and Mainfreight gained 1.7 percent to $24.15.

Sky Network Television was the worst performer, down 4.9 percent to $3.32, and has dropped 23 percent this year.

"Sky has really fallen out of favour with everyone, there's a bit of a rotation out of it today," McIntyre said. "Until we can get some positive outlook from that company with regard to how they are going to drive earnings in the future, that weakness will continue."

Argosy Property fell 0.5 percent to $1.03. The Auckland-based company told attendees of its annual general meeting it is on track to deliver a 2018 full-year dividend of 6.2 cents per share, fully paid from distributable income. In the year to March 31 the dividend was 6.1 cents per share, a 1.2 percent increase on the prior year.

Trustpower dropped 0.4 percent to $5.73. The Tauranga-based company raised its earnings guidance for the second time in as many weeks, citing favourable trading conditions and anticipated customer growth. Earnings before interest, tax, depreciation, amortisation and fair value adjustments (ebitdaf) will be in a range of $225 million to $245 million in the year ending March 31, 2018. On July 14 Trustpower had said earnings would be at the top end of a $215 million-to-$235 million range it gave with the release of its 2017 results in May.

Summerset Group dipped 0.2 percent to $4.91. New Zealand's best-performing retirement village stock in the past 12 months has bought land to build a third retirement village in Christchurch, bringing its greenfield sites to seven across the country. Wellington-based Summerset said it had bought 9.5 hectares in Hawthornden Road in the Christchurch suburb of Avonhead, close to the Russley Golf Course and other recreation areas.

Outside the benchmark index, Bethunes Investments dropped 23 percent to 1 cent. Its planned reverse listing with Westgate Power Centre-subsidiary NZ Retail Property Group won't go ahead after a roadshow didn't generate enough interest, though it is still planning a new capital raising this year.

"While this is disappointing news, Bethunes shareholders have not incurred any direct costs from this transaction and therefore are no worse off than before the proposed transaction was announced," the company said. "Bethunes continues to research new investment opportunities as outlined at the companies annual shareholders meeting."

(BusinessDesk)

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