CLOSE: NZX 50 climbs above 3,000; Sky City gains

Tuesday 28th July 2009

New Zealand’s benchmark NZX 50 index climbed above 3,000 for the first time since Oct. 7 amid optimism the economy is over the worst of its recession, making equities look relatively good value on a long-term view.

Sky City Entertainment Group (NZX: SKC ) climbed to a nine-month high and Freightways Ltd (NZX: FRE ) rose to the highest since early January. The NZX 50 rose 20.46, or 0.7%, to 3018.47. Within the index, 26 stocks rose, 12 fell and 12 were unchanged. Turnover was NZ$77.5 million.

Sky City rose 3.5% to $3.24. Shares of the casino and hotel operator have surged 23% since its July 21 announcement that annual profit was a higher-than-expected $113 million to $116 million, on better-than-expected fourth-quarter revenue from its casinos. Air New Zealand (NZX: AIR ) rose 6.2% to $1.04, leading the index higher.

Freightways Ltd., the logistics and courier company, gained 3.6% to $3.16. The shares are rated ‘outperform,’ based on the consensus of seven recommendations compiled by Reuters. Three analysts rate it a ‘buy.’

“My view (of the earnings season) has been tempered a wee bit – we’ve had modest upgrades and earnings reaffirmations from companies such as Sky City and winemaker Delegat’s” Group Ltd., said Paul Robertshawe, who helps manage about $250 million at Tower Asset Management. “Armageddon has been priced out but recovery not yet priced in.”

Methven Ltd (MVN), the tapware and bathroom fixtures company, tumbled 7.8% to $1.31 after forecasting a drop in 2010m profit of as much as 20% because of worsening trading conditions in the UK.

“No one expects 2009-10 to be easy with extremely challenging trading conditions in all markets, but we are fit to compete,” said chief executive Rick Fala.

The company predicts “a significant decline in UK margins and profitability in (a) worsening recession,” while New Zealand sales and profit are set to decline and a “strong improvement” is expected in the Australian market.

New Zealand Refining (NZX: NZR ) fell 3.3% to $7.40. The nation’s only oil refinery said yesterday it was unaware of any interest from parties wanting to acquire a stake or the whole of the business. Bloomberg reported on Friday that Valero Energy Corp. was considering making a full or partial takeover.

Pumpkin Patch (NZX: PPL ), the children’s clothing chain, slipped 3% to $1.60. The shares have soared 75% this year, helped by the retailer’s decision to exit unprofitable U.S. stores, which is expected to restore earnings.

Steel & Tube Holdings (NZX: STU ), which sells steel building supplies such as reinforcing rods, rose 1.4% to $3 after naming OneSteel executive Dave Taylor as chief executive, filling a gap after the retirement of Nick Calavrias in April. The stock is rated ‘outperform,’ based on the consensus of six analysts polled by Reuters.

NZX Ltd (NZX: NZX ), the stock exchange operator, rose 2.7% to $7.70. Its full-year profit before one-time items may gain 12% to $5.6 million, according to Forsyth Barr. Including gains from asset sales, earnings probably soared 1132%.

Auckland International Airport (NZX: AIA ) fell 0.6% to $1.73. International passengers arriving through the NZX-listed national gateway airport fell 5.2% to 215,879.

Abano Healthcare Ltd (NZX: ABA ) rose 0.8% to $5.35 and has gained 18% in the past three months. Net profit jumped 24% to $9.7 million in the 12 months through May, the health clinic investor said today.

Businesswire.co.nz

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