MARKET CLOSE: NZ shares fall as F&P Healthcare loses latest patent dispute

Tuesday 23rd October 2018

New Zealand shares fell to a four-month low, with Fisher & Paykel Healthcare among the hardest hit after the breathing mask maker lost the latest round in a wide-ranging patent dispute.

The S&P/NZX 50 index dropped 129.08 points, or 1.5 percent, to 8,673.18. Within the index, 34 stocks fell, 11 gained and five were unchanged. Turnover was $146.3 million.

F&P Healthcare fell 4.4 percent to $13.41 on average volumes. The Munich Regional Court upheld a patent claim by rival ResMed in the two-year dispute. The breathing apparatus makers have lodged suits and countersuits across multiple jurisdictions.

Shane Solly, a portfolio at Harbour Asset Management, said F&P Healthcare is a strong business with good assets but is finding ResMed a challenging competitor. That's at a time when the stock price is also high.

"It's already trading on a relatively full valuation," Solly said.

Stocks across Asia were weaker as investors gauge the impact of rising US interest rates on equities. The NZX 50's average price-to-earnings ratio is 17.35 times, the fifth-highest across regional stock indices tracked by Reuters, and the third highest average dividend yield at 5.5 percent.

Solly said some of the blue-chip stocks typically held by overseas investors were among those sold off today.

Spark New Zealand was the most traded, falling 1 percent to $3.86 on 6.1 million shares, more than twice the normal volume. Fletcher Building fell 3.6 percent to $5.88 on a volume of 2.8 million. Air New Zealand declined 1.5 percent to $2.80 on 2.5 million shares, and Z Energy dropped 3.8 percent to $5.87 on 2.1 million shares.

Kathmandu sank 6.7 percent to $2.64 on smaller volumes than usual. Trade Me Group dropped 5.3 percent to $4.69, also on light trading.

Kiwi Property Group fell 0.7 percent after saying it was considering a new bond offer.

A2 Milk declined 0.6 percent to $10.25 with 1.3 million shares traded.

NZX was the biggest gainer on the day, up 1.9 percent to $1.07 on thin volumes. Metlifecare increased 1.7 percent to $5.95 and Genesis Energy was up 1.7 percent at $2.41.

Infratil gained 0.7 percent to $3.46 after saying it was considering selling its Perth Energy business.

Tourism Holdings declined 0.4 percent to $5.11 after saying it was in talks about potentially selling several New Zealand businesses, including the Kiwi Experience.

Outside the benchmark index, SLI Systems soared 87 percent to 56 cents after receiving a takeover offer from Texas-based ESW Holdings at more than twice the earlier market price.

Solly said there are a number of New Zealand businesses that are appealing to global companies: "SLI is today's target".

Restaurant Brands New Zealand, which received a partial takeover offer last week, fell 2.8 percent to $8.26. Steel & Tube, which fended off an opportunistic bid from Fletcher Building, was unchanged at $1.36.

Teamtalk fell 2.4 percent to 80 cents after raising $2 million in a placement at 75 cents a share. It plans to raise another $6.7 million through a rights issue at 65 cents apiece.

PGG Wrightson slipped 3.3 percent to 58 cents on slightly quieter trading. The New Zealand Shareholders' Association said it will vote its proxies against the planned sale of the firm's seeds unit at next week's combined special and annual meeting.

Pyne Gould Corp dropped 11 percent to 31 cents. The asset manager controlled by managing director George Kerr issued a notice for a special meeting after trading closed on Friday. It plans to leave the NZX for a listing on The International Stock Exchange in Guernsey. Pyne Gould's majority shareholder isn't eligible to vote.

(BusinessDesk)

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