MARKET CLOSE: NZ shares snap decline as growth stocks Tourism Holdings, A2 recover

Thursday 22nd November 2018

New Zealand shares snapped a six-day decline as a revival in global investor optimism boosted beat-up growth stocks such as Tourism Holdings, A2 Milk and Pushpay Holdings. Fletcher Building extended its decline.

The NZX/S&P 50 rose 30.76 points, or 0.4 percent, to 8,703.16. Within the index, 20 stocks gained, 23 fell and seven were unchanged. Turnover was $183 million, of which Fletcher accounted for $68.3 million.

New Zealand shares joined a global rally ahead of the Thanksgiving Holiday in the US, with growth stocks the main benefactors after being punished in an increasingly volatile environment. Companies that trade at high price-to-earnings multiples such as Pushpay and Tourism Holdings bore the brunt of that downturn and were among today's leaders. Tourism Holdings rose 5.3 percent to $4.77 and Pushpay was up 3.1 percent to $2.99, both on heavier volumes than normal.

A2 rose 5 percent to $10.50 after saying China's current e-commerce retail import policies will remain in place, something its executive team is confident it can manage.

Grant Davies, an investment adviser at Hamilton Hindin Greene, said A2 rallied on the improvement in sentiment, noting that it had done a good job in building its Chinese market.

Synlait Milk rose 3.5 percent to $8.55 on small volumes. The milk processor faced a setback in its attempts to diversify away from supplying A2 with its Munchkin Grass Fed infant formula, saying it will re-submit its application to the US Food and Drug Administration with extra evidence.

Davies said the delay was unfortunate but that Synlait needs to pursue the strategy.

"Those sorts of things are how they're going to grow their earnings in the long-term," he said.

Fletcher Building was the most traded stock, with 14.9 million shares changing hands compared to its 1.3 million 90-day average. It fell 2.1 percent to $4.60, a new 14-year low.

Davies said there are still some good quality businesses within Fletcher and that its weaker earnings forecast will still deliver a reasonable result.

"It's about separating the wheat from the chaff, so to speak," he said. "It's just a question of how long it takes."

Meridian Energy fell 0.9 percent to $3.19 on 2.2 million shares, almost twice its normal volume.

Trade Me rose 0.7 percent to $5.97 on twice its average volume, extending yesterday's gain on news it might face an attractive takeover bid by UK private equity firm Apax Partners. Morningstar Research gives the $6.40 indicative offer a 50/50 chance of success.

Among other companies with turnover of more than 1 million shares, Spark New Zealand slipped 0.4 percent to $4.14, Fonterra Shareholders' Fund decreased 0.2 percent to $4.80, and Precinct Properties New Zealand increased 1.1 percent to $1.43.

Ryman Healthcare rose 2.3 percent to $11.50 ahead of tomorrow's first-half result, while Kathmandu Holdings fell 1.2 percent to $2.49 ahead of its annual meeting.

Stride Property slipped 0.5 percent to $1.87 after reporting a decline in first-half distributable profit on smaller rental income and management fees.

Sky Network Television fell 3 percent to $2.29, the biggest decline on the day.

Trustpower fell 2.6 percent, or 16 cents, to $6.04 after shedding rights to a 17 cent interim dividend and 25 cent special dividend. Z Energy decreased 1.8 percent, or 11 cents, to $5.86 after giving up rights to a 12.5 cents per share dividend.

Outside the benchmark index, Warehouse Group was down 3.2 percent, or 7 cents, to $2.09 after giving up rights to a 6 cents per share dividend.

AFT Pharmaceuticals rose 1.8 percent to $2.29 after narrowing its first half loss on fatter gross margins.

(BusinessDesk)

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