MARKET CLOSE NZ shares rise as Pumpkin Patch, Diligent bounce back

Wednesday 17th July 2013

New Zealand shares rose, led Pumpkin Patch as the retailer clawed back a small portion of this year's 34 percent slide, while Diligent Board Member Services rose after telling the NZX yesterday that it knew of no reason for its recent slide.

The NZX 50 Index rose 2.425 points, or 0.1 percent, to 4578.97. Within the index, 26 stocks rose, 12 fell and were unchanged. Turnover was $94.9 million.

Pumpkin Patch, the children's clothing chain, jumped 8.5 percent to 89 cents. The stock hit an 18-month low late last month when the company said full-year profit may drop as much as 35 percent in the face of intense competition in Australia.

"The retail sector is challenging at best," said Rickey Ward, head of equities at Tyndall Investment Management. Pumpkin Patch "looks cheap longer term but it has got to earn its stripes in the next six months."

Retailers were mixed today. Jewellery chain Michael Hill International climbed 3.2 percent to $1.28, Warehouse Group gained 2.4 percent to $3.87, and fast food operator Restaurant Brands was unchanged at $2.87. Hallenstein Glasson Holdings, another retailer to have issued a profit warning, fell 0.4 percent to $4.86.

Diligent gained 7.6 percent to $6.10 after telling the NZX yesterday it wasn't sitting on any information that could account for a 17.3 percent drop in the company's share price over four days. Diligent's software helps company directors manage their information flows but its own administration has suffered from some missteps including wrongly awarded executive options and mis-counted sales.

"Most people believe it is making positive earnings," Tyndall's Ward said. "It comes down to what price you want to pay for those earnings. The missteps "are a distraction but it is not a broken model."

Xero, the cloud-based accounting company, fell 0.9 percent to $15.60 after NZX regulators asked it to explain a 23 percent slump in its shares in the past six days. The company said it didn't have any information that needed disclosing though the stock "has a history of high volatility as a result of a tightly held share register, thus buying or selling pressure from one or more institutions can significantly affect the price."

Property for Industry rose 0.4 percent to $1.415 on demand from institutions adjusting their portfolios in anticipation of the property investor's elevation in benchmark stock indexes, after a merger with Direct Property Fund doubled its size.

Fletcher Building fell 0.6 percent to $8.52.

The Australian market is showing no signs of material improvement and the building products and construction group "might disappoint on the downside" when it posts earnings, Ward said.

MightyRiverPower fell 0.4 percent to $2.41 after figures showed Australian funds were the biggest sellers of the state-controlled power company after its float. The shares are rated a 'hold' based on the consensus of six recommendations compiled by Reuters, with a median price target of $2.50.

Tower was unchanged at $2.00 after the insurer said it is in talks with the Reserve Bank as part of the licensing process, and may face the imposition of stricter solvency requirements as a condition set by the regulator.

SkyCity Entertainment Group rose 0.2 percent to $4.36 after the Commerce Commission cleared it to buy a rival casino in Queenstown for $5 million. The Auckland-based casino and hotel operator will buy Lasseters International-owned Otago Casinos, and add 74 electronic gaming machines and six gaming tables to SkyCity's existing operations in the resort town.

Units in the Fonterra Shareholders' Fund increased 0.3 percent to $7.42 after Fonterra Cooperative Group said it will cut prices of its Anmum-branded products in China as the local watchdog looks at whether foreign firms have been fixing formula prices in the world's most populous nation.

Summerset gained 0.7 percent to $3.03 as the retirement village operator and developer prepares for trading to begin in its secondary listing on the ASX tomorrow.

(BusinessDesk)

BusinessDesk.co.nz

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