MARKET CLOSE: NZ shares gain as market bounce continues; Kathmandu, Fletcher rise

Thursday 30th June 2016

New Zealand shares gained for a fourth straight session on expectations there will be no immediate change following the Brexit vote. Kathmandu Holdings, Fletcher Building and Mainfreight gained.

The S&P/NZX 50 Index rose 93.3 points, or 1.4 percent, to 6,897.52. Within the index, 41 stocks rose, six dropped and three were unchanged. Turnover was $227.6 million.

The market weakened on Friday following the news that the UK had voted to leave the European Union, but has recovered since then to be higher than where it closed last Thursday.

"We're down on the month to date, but we've well and truly recovered from Friday's events," said Shane Solly, director at Harbour Asset Management. "Amongst other things, it's a positive reaction to monetary policy changes globally. For now, a lot of the concern about Brexit has washed through, and you've certainly seen investors focus on quality earning stocks in this part of the world."

Kathmandu was the biggest gainer, up 15 percent to $1.53. The outdoor equipment chain raised its forecast for annual earnings after boosting margins from new products, better management of promotional activity and cost savings.

Still, the company said "a substantial proportion" of sales and earnings this financial year are still dependent on trading in July, the final month of the financial year. It will provide a further trading update in August and publish its earnings Sept. 21.

"It's almost back to where it was at the end of May - it's recovered from a low point," Solly said. "The numbers were ok, not as weak as some had expected, and certainly the first positive statistic we've seen from Kathmandu for some time - it does go against the grain of people's expectations. While we've had a couple of rainy days, it hasn't really been cold and they need some cold to get things going."

Fletcher Building gained 3.5 percent to $8.58. The construction company has dropped the Horokiwi Quarries from its application to buy rival Higgins Group Holdings, a step that may help win approval from the Commerce Commission which today delayed its ruling for the second time.

Solly said building consent statistics released today, which showed new housing consents were up 13 percent on an annual basis to an 11-year high, were also really good for Fletcher.

Mainfreight rose 2.9 percent to $16.63, Mighty River Power gained 2.7 percent to $3.01, and Ebos Group advanced 2.3 percent to $16.36.

Stride Property Group rose 0.9 percent to $2.35. Its shareholders have approved a motion to split its property-owning unit from its real estate investment management in a 'stapled' structure, allowing it to expand the management arm while preserving its favourable tax status.

The transaction will see shares in Stride Investment Management distributed to Stride Property investors on a one-for-one basis. The board met after the special meeting, and the change, which involves Stride adopting a replacement constitution, will take place on July 11, it said in a statement.

Steel & Tube Holdings was the worst performer, down 1.6 percent to $1.86.

Warehouse Group dropped 1.1 percent to $2.77. Solly said their latest trading update had been "pretty moribund" and investors could be comparing the retailer unfavourably to Kathmandu.

Pushpay Holdings dropped 2.9 percent to $2. The mobile payment app developer wants to raise at least US$30 million from investors in the US where it is targeting growth.

Z Energy advanced 0.4 percent to $8.09. The service station chain still expects to cut annual costs by between $25 million and $30 million from its acquisition of Chevron New Zealand, and has started the process to sell 19 service stations which was a condition of the tie-up.

Sky Network Television rose 1.9 percent to $4.77. The company, and Vodafone New Zealand, are playing down the threat to competition posed by a merged telecommunications and pay-TV operator in the markets they currently operate in, which they say has plenty of rivals.

Marlborough Wine Estates Group rose 35 percent to 28 cents on in its NZX debut after a compliance listing on the NXT market. The Chinese-owned winemaker is looking to expand its bottled wine sales into the US, Japan, and South Korea, and will increase its production by reducing bulk grape sales and converting more of its land holdings to vineyards, it said.

BusinessDesk.co.nz

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