MARKET CLOSE: NZ shares flat, Tegel and Z Energy gain   19 Oct 2016

MARKET CLOSE: NZ shares flat, Tegel and Z Energy gain while SkyCity falls

By Sophie Boot

Oct. 19 (BusinessDesk) - New Zealand shares were flat as Tegel Group Holdings and Z Energy advanced on positive updates, while SkyCity Entertainment Group dropped.

The S&P/NZX50 index rose 3.4 points, or 0.05 percent, to 6,976.53. Within the index, 24 stocks rose, 20 fell and six were unchanged. Turnover was $155 million.

"The market is disappointingly flat - we had good leads from offshore, pretty much a sea of green from everywhere, but we're only just there," said David Price, broker at Forsyth Barr. "Volumes are relatively quiet in a lot of stocks, the market itself is not cheap, on a multiple basis it's still very high and some of the stocks don't have the valuation support so they have fallen on very low volumes."

Tegel led the index, up 3.4 percent to $1.52. At its annual meeting today, the company said it was on track to achieve its product disclosure statement forecast for the full year of $625 million in revenue, up 7.6 percent on 2016. The forecast will be updated at the release of the first-half results in mid-December when it also expects to announce its first dividend.

The shares performed well after the May float, hitting a peak of $1.80 in mid-August, but have been mainly falling since which some commentators have blamed on the upcoming November float on the ASX of Australia’s largest chicken company, Ingham’s Group, which is Tegel’s largest competitor domestically.

"Inghams is struggling, from what we've heard, to gain a lot of momentum, so that could get re-priced," Price said. "There has also been a lot of talk about chicken prices because they have been quite soft, and there might have been an expectation that they weren't going to make it and they have, so that's why they've bounced today."

Z Energy rose 3.2 percent to $8.03. The Wellington-based service station operator said it has identified $10 million to $15 million of additional savings from the integration of the Caltex and Z businesses, while the sale of an Auckland retail site for $23 million will be used to repay debt. The additional synergy benefits bring the total to be achieved in the 2018 year to between $40 million and $45 million, it said.

"The feeling towards those synergies is it's probably still conservative, and the divestment was higher than we were picking, so all very positive," Price said.

Ebos Group advanced 1.1 percent to $17.80. The Christchurch-based company said it had a positive start to 2017, based on its first-quarter performance, which improved even in the face of a kiwi dollar that reached an 18-month high against its Australian counterpart last month.

SkyCity Entertainment Group was the worst performer, down 2.7 percent to $4.27. Its shares started falling on Monday in response to the arrest of 18 staff employed by its Australian rival, Crown Resorts, by the Chinese government. Last week, SkyCity said its President of International Business, Ejaaz Dean, was to leave to take up a new role as the managing director of a gaming property in Europe.

"It's had a bit of a tough day - the VIP and IB markets probably represent 5 percent of earnings before interest, taxation, depreciation and amortisation and they're out there looking for someone to fill a role as a senior guy has just left, so they will potentially be in the market at the same time as Crown are. We're getting a trading update on Friday," Price said.

Contact Energy fell 2 percent to $4.79 while New Zealand Refining Co dropped 1.8 percent to $2.21.

Genesis Energy was unchanged at $1.98, and has gained 6.2 percent this year. New Zealand's largest electricity retailer said lower oil prices, increased carbon costs and its "below market" contract with the struggling Tiwai Point aluminium smelter will weigh on earnings this year.

Outside the benchmark index, New Zealand King Salmon shares fell 1.8 percent to $1.10 in their NZX debut after the fish farming company raised more than $70 million to fund its growth and allow existing shareholders to reduce their holdings. The stock first traded at $1.16 on the NZX, valuing the company at about $160 million.

Intueri Education Group gained 7.7 percent to 7 cents. It has been granted an extension to respond to audits of its Australian subsidiaries Online Courses Australia and Conwal & Associates by the Australian Skills Quality Authority. It will now have to respond by Nov 6. The previous deadline was Oct. 21.

Wynyard Group remains in a trading halt at 21.5 cents, having been placed in a trading halt on Monday afternoon ahead of a company announcement which has not yet materialised.

(BusinessDesk)

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