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MARKET CLOSE: Metlifecare, Ebos, Meridian lead NZ shares higher, Wynyard suffers

Wednesday 24th February 2016

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New Zealand shares rose, with Metlifecare, Ebos Group and Meridian Energy leading the index on strong earnings, while Wynyard Group dropped.

The S&P/NZX 50 Index gained 54.7 points, or 0.9 percent, to 6,230.38. Within the index, 31 stocks rose, 13 fell and six were unchanged. Turnover was $191 million.

Metlifecare led the index, up 7 percent to $4.59, a two-month high. The retirement village operator announced first-half profit more than tripled as property prices boomed.

"The result was comfortably ahead of where people were expecting it to come out, on resale gains in particular, so broadly it's been well received," said Nick Dravitzki, equity analyst at Devon Funds Management. "This is a stock that has definitely lagged the broader sector for a while, so the market has responded positively to a strong result."

Ebos Group rose 4.7 percent to $14.35, the highest level this year, after reporting a 19 percent gain in first-half profit, declaring a bigger-than-expected dividend and reiterating its expectation for double-digit full-year earnings growth.

"Operationally it's been a pretty solid result. Everything was slightly ahead of expectations and consequently the stock has re-rated," Dravitzki said.

Meridian Energy gained 3 percent to $2.41. It announced an 11 percent fall in net profit after tax of $104 million for the six months ended Dec. 31, reflecting non-cash items, but cited sufficient strength in underlying earnings to lift the interim dividend and declare a special dividend of 2.4 cents per share. The company plans to raise up to $150 million in a bond offer next month.

"The expectations were that it would be a pretty solid result, and it was," Dravitzki said. "It confirmed they're getting some pricing in retail which others have struggled to achieve."

Fletcher Building rose 3 percent to $6.90. It posted a 51 percent gain in first-half profit last Wednesday, reflecting changes in one-time items from the year-earlier period and a modest increase in revenue.

"Maybe as people have worked through their result from last week, people have become a bit more optimistic," Dravitzki said.

Air New Zealand gained 2.7 percent to $2.865 while Spark New Zealand advanced 2.7 percent to $3.46. 

NZ Refining Co climbed 2.2 percent to $3.64 after New Zealand's only oil refinery posted annual profit of $151 million as revenue almost doubled to $445 million, helped by historically high refining margins, a weaker kiwi dollar and improved plant reliability.

Summerset Group rose 1 percent to $3.99. It lifted annual underlying earnings 55 percent in 2015 as the country's third-biggest retirement village operator by market value generated more sales after opening new sites and said it wants to double its national footprint over the next six years.

Genesis Energy rose 0.5 percent to $1.88. The country's biggest electricity retailer increased first-half earnings 1.5 percent as it grabbed more customers in a tightly contested retail market and lifted generation volumes but faces earnings declines in future years from its Kupe oil and gas field because of slumping global prices for oil and methanol, which a major customer, Methanex, manufactures from natural gas.

Orion Health Group was the worst performer, dropping 4.2 percent to $2.53.

Dual-listed banks dropped, with Westpac Banking Corp down 3.3 percent to $31.01, and Australia & New Zealand Banking Group shedding 2.7 percent to $24.40.

NZX dropped 2 percent to 99 cents after reporting an 82 percent gain in full-year profit as a one-time gain from the sale of its Link Market Services division lifted flat operating earnings.

Outside the benchmark index, Wynyard tumbled 39 percent to 94 cents in its first day trading since Feb. 17, when a halt was called while it considered capital raising options. The crime-fighting and security software developer plans to raise about $30 million in a one-for-four renounceable rights offer at 85 cents a share, a 55 percent discount to its last trading price before the recent halt and well below the minimum $2 that shareholders approved in December. 

Yesterday, the company also reported its loss had doubled to $44.1 million in 2015 on static revenue while reshaping its business plan to try and achieve cash break-even more quickly.

"The whole thing's pretty messy, and certainly not a great look," Dravitzki said. "Wynyard's making significant losses, its loss grew a lot and they clearly need to raise capital but the way they've gone about it has not proved to be great for shareholders."

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