NZX CLOSE: NZ shares gain on Fonterra payment, M&A; NZS, PGW rise

Monday 9th November 2009

New Zealand shares rose after Fonterra Cooperative Group raised its forecast payment to farmers, buoying shares of PGG Wrightson and NZ Farming Systems Uruguay. An unsolicited takeover proposal for Australia’s Axa Asia Pacific Holdings stoked speculation for more M&A activity in the region.

The NZX 50 Index rose 4.9, or 0.2%, to 3165.06, the second daily gain. Within the index, 23 stocks rose, 16 fell and 11 were unchanged. Turnover was $82 million.

PGG Wrightson, New Zealand’s biggest rural services company, gained 1.6% to 63 cents after Fonterra lifted its forecast pay-out to farmers by 19%, citing a recovery as a recovery in global prices. Prices at its monthly online milk powder auction have soared 88% in the past four months. Investors are awaiting details of Wrightson’s capital raising, with Morningstar analyst Nachi Moghe predicting a rights issue of about $120 million.

NZ Farming Systems Uruguay, which is developing dairy farms in the South American nation using intensive New Zealand intensive dairying techniques, climbed 2.3% to 45 cents.

Fonterra improved forecast “certainly helped,” said James Lindsay, who helps manage about $400 million at Tyndall Investment Management. “It’s exceptionally good news for New Zealand.”

Lindsay said the bounce in equities after the recession has been “quicker than we thought” though the quantum of the recovery is in the ballpark of previous pick-ups after downturns.“What we’re looking for now is justification of earnings – we’re looking at corporate with pretty robust balance sheets,” he said.

Westpac Banking Corp. gained 1.1% to $33.88 on the NZX, while Australia & New Zealand Banking Group rose 0.9% to $29. Australian lenders rose after Commonwealth Bank of Australia reported a cash profit of A$1.4 billion for the first quarter and said economic conditions have improved since that nation’s biggest lender posted its full-year results and it was over the hump of bad debts.

Wealth manager Tower Ltd gained 1.2% to $1.70 and ING Property Trust gained 2.6% to 80 cents after AXA Asia Pacific rejected an offer from AMP and AXA SA to acquire and break up the company for cash and stock amounting to A$5.34 a share. AXA Asia Pacific’s shares soared 34% to A$5.75 on the ASX as investors bet the offer will be sweetened.

The proposal “significantly undervalues AXA Asia Pacific,” said Rick Allert, the target company’s chairman, in a statement. It comes against a backdrop of weakness in global financial markets “and before the growth of our Asian operations is fully reflected in our profitability.”

Pan Pacific Petroleum gained about 2% to 52 cents after the price of crude oil revived on the threat to production from a hurricane in the Gulf of Mexico and as the greenback weakened.Crude oil for December delivery rose 1.2% to US$78.38 a barrel in after-hours electronic trading on the New York Mercantile Exchange.

Sky Network Television, New Zealand’s biggest pay-TV company, rose 0.4% to $4.90. The company’s “unassailable" position means it should trade at a premium to global peers, say analysts for Morningstar Equity Research in a post-annual meeting update report.

Warehouse Group tumbled 4.4% to $4.30, leading declines among retailers. Restaurant Brands, the fast-food operator, fell 3.3% to $1.47 and jeweler Michael Hill International dropped 1.5% to 64 cents.

Fisher & Paykel Healthcare slipped 1.3% to $3.16 as the New Zealand dollar gained in response to Fonterra’s improved payment forecast. The manufacturer of respirators and breathing masks gets almost 80% of its revenue in U.S. dollars. The kiwi dollar recently traded at 73.68 U.S. cents.

Businesswire.co.nz

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