NZX CLOSE: NZ shares edge higher as recession ends; SKL, FBU gain

Wednesday 23rd September 2009

New Zealand shares rose after government figures unexpectedly showed the economy climbed out of recession in the second quarter, stoking optimism for a revival in corporate earnings.

The NZX 50 Index gained 5.04, or 0.2%, to 3147.90. Within the index, 25 stocks gained, 17 fell and eight were unchanged. Turnover was $96.3 million.

Skellerup Holdings, the manufacturer of rubber goods and milking equipment, rose 3.8% to 55 cents, leading the index higher. The company’s underwritten rights issue for $21.5 million rights issue will resolve its debt issues, says Forsyth Barr analyst John Cairns, according to the ShareChat website. Cairns reduced his valuation on the stock to 74 cents from 82 cents to reflect the two-for-five issue.

Fletcher Building, the nation’s biggest construction company, climbed about 1% to $8.49, a 16-month high. The economy grew 0.1% in the second quarter, ending five quarters of contraction.

The data came after figures showed the current account deficit is shrinking as a percentage of GDP and after Fonterra Cooperative Group raised its forecast milk fat payment for 2010, stoking optimism the economy is on the mend.

“The noises coming out of the companies seem to be more positive now,” said Paul Harrison, who manages about $150 million at BT Funds Management. Investors will now be keen to see whether companies are more bullish at the annual meetings through the remainder of the year, he said.

NZ Farming Systems Uruguay climbed 2.3% to 45 cents on optimism for global prices of dairy products. Fonterra today posted earnings that showed a recovery in its second half, having yesterday lifted its forecast milk payment for 2010 by 55 cents to $5.10.Fonterra’s announcements “are definitely helping sentiment,” Harrison said.

Rakon Ltd., the manufacturer of components for navigation devices, tumbled 14% to $1.28 when its stock resumed trading after being halted for a $45 million placement to expand its Chinese manufacturing operations. The Auckland-based manufacturer sold the shares at $1.10 apiece.

Pyne Gould Corp., the finance company with ambitions to become a bank, ended the day down 1% at 99 cents, having earlier climbed as high as $1.18. Today it said it plans to raise as much as $270 million in a rights offer at a 60% discount, seeking to restore a balance sheet eroded by write-downs on property loans. Its shares soared 18%. The fund raising includes a fully-underwritten renounceable rights offer of six new shares for every one held at 40 cents apiece, to raise $237 million.

“The recapitalisation provides the foundation for future growth,” chief executive Jeff Greenslade said.

Restaurant Brands New Zealand, the fast-food operator, slipped 0.8% to $1.22 after reporting a 4.8% gain in second-quarter sales as it sold more pizza and fried chicken, making up for a weaker performance at its Starbucks coffee outlets. Sales rose to $96.9 million from the same period a year earlier, the company said today. Starbucks revenue dipped 5% to $8.8 million.

Tourism Holdings Ltd., the campervan rental company, fell 4.2% to 69 cents as the kiwi dollar gained to a 13 month high. A higher kiwi makes New Zealand a more expensive destination for tourists and the currency surged above 73 U.S. cents today, after the GDP figures.

Auckland International Airport, the nation’s busiest gateway, fell 2.1% to $1.87. Clothing chain Hallenstein Glasson Holdings fell 2% to $2.94 and Freightways Ltd. declined 1.5% to $3.20.

Businesswire.co.nz

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