MARKET CLOSE: NZ shares rise, led by Spark   28 May 2015

MARKET CLOSE: NZ shares rise, led by Spark; Ryman, Summerset gain

By Suze Metherell

May 28 (BusinessDesk) - The New Zealand shares rose as Spark New Zealand rebounded from a year-low. Ryman Healthcare extended its post-earnings advance.

The NZX 50 Index rose 19.699 points, or 0.3 percent, to 5777.637. Within the index 21 stocks rose, 22 fell and eight were unchanged. Turnover was $123.4 million.

Spark rose 3.8 percent to $2.735. The telecommunications provider is looking to supplement its bread and butter land line income by focusing on data, cloud and content services. The arrival of ASX-listed M2 Group, the voice and data services company, in the local market, after it agreed to buy New Zealand's CallPlus, the country's third-biggest broadband and telecommunications services company, had seen investors sell Spark on concern it will be hurt by increased competition.

"It's still providing a reasonably attractive yield, notwithstanding the challenges across some of its businesses," said Mark Lister, head of private wealth research at Craigs Investment Partners. "It has got heaps of competition that's happening on the internet front, and with all of those other offerings that everyone seems to be chasing in the market at the moment. Notwithstanding all those challenges it is still a reasonably predictable business."

Ryman Healthcare gained 1.2 percent to $7.80. The retirement village operator earlier this month said annual underlying profit, which excludes non-cash items such as deferred taxation and unrealised gains on investment properties, rose 18 percent to $118.2 million, marking its 12th consecutive year of profit growth. The good sentiment for its earnings flowed through to rival Summerset Group Holdings, which advanced 1.8 percent to $3.43. Metlifecare fell 0.4 percent to $4.86.

Fonterra Cooperative Group, the world's largest dairy exporter, cut its this season’s farmgate milk price to the lowest level in eight years, while announcing a cautious opening farm-gate milk price forecast for the new 2015/2016 season of $5.25 per kilogram of milk solids, at the upper end of commentators' expectations. The lower milk price spooked investors about the outlook for New Zealand's economy.

"The Fonterra payout put a damper on local spirits, even though it was in line with expectations it was still not as high as the farming sector would like," Lister said. "On the economic front that's a negative."

Fonterra Shareholders' Fund, which gives holders access to the cooperative's dividend stream, fell 0.6 percent to $4.87.

Pacific Edge was the worst performer on the benchmark index, sliding 8.3 percent to 66 cents. The company, which commercialised a non-invasive test for bladder cancer, widened its full-year loss to $10.6 million, from $9.4 million a year earlier, and said it will raise $35.3 million in a discounted rights issue to continue funding its expansion in the US, which is burning through cash.

"That's a reaction to the rights issue, which is going to be 61 cents," Lister said. " A $35 million rights issue is reasonably large given that its $230 million company. Effectively investors will get the opportunity to buy some shares at a lower price so the share price tends down."

Argosy Property was unchanged at $1.105. The property investor reported a 25 percent drop in annual profit to $64.4 million, while its rental income rose, as it returned to a tax paying position for the first time in four years and paid more interest.

Outside the benchmark index, Gentrack dropped 7.7 percent to $2.27. The company, which develops utilities and airports software, said first-half profit rose by a third to $3.2 million, but warned full-year earnings may miss its prospectus forecasts because of delays in inking contracts. Gentrack, which raised $36 million of new capital in an IPO last year, got itself into hot water after releasing a significant profit downgrade just five weeks after its share market listing.

ERoad fell 1.3 percent to $3.95. The electronic road user charges and transport services company, which also joined the bourse last year, posted a full-year loss in its maiden annual report as a public company, while sales missed its prospectus forecast.

The Auckland-based company reported a loss of $1.3 million in the year ended March 31, wider than the loss of $1 million forecast in its July prospectus. Sales increased 76 percent to $17.6 million, below the $19 million it predicted in its prospectus.

AWF Group rose 4.4 percent to $2.40. The country’s largest recruiter and labour provider posted a 37 percent rise in full-year profit to $197.5 million, with the 2013 purchase of recruitment firm Madison Group fully reflected in its results for the first time.

On the New Zealand Alternative Index, Pushpay Holdings was unchanged at $4.02 after the mobile payment app, which helps churches raise money from parishioners, widened its annual loss to $7.5 million even as sales surged and it invested in future growth.

(BusinessDesk)

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