CLOSE: NZ shares gain with Sky City; Goodman Property drops

Wednesday 19th August 2009

New Zealand shares snapped a two-day slide as casino and hotel operator Sky City Entertainment Group posted higher earnings and children’s clothing chain Pumpkin Patch gained to the highest level since April 2008.

The NZX 50 Index gained 9.46, or 0.3%, to 3081.04. Within the index, 26 stocks gained, 15 fell and nine were unchanged.

Turnover was $267.8 million, the busiest this year, as Goodman Group, the Australian property services company, reduced its stake in New Zealand’s Goodman Property Trust to 17% from 28%, with the sale of 93 million units to institutional investors.

Sky City Entertainment (NZX: SKC ) rose 3% to $3.40 after posting a 13% gain in full-year profit before one-time items to $115.3 million on lower finance costs and a 20% jump in earnings from Adelaide casino. The company said it may struggle to deliver double-digit earnings growth in 2010.

“Management deserve credit for the turnaround in Adelaide and for efforts to improve the operational performance of the casinos but they are battling tough economic conditions,” said Nick Dravitzki, portfolio manager at New Zealand Funds. The shares have gained about 32% from their lows last month and at current prices Sky City is an “expensive defensive” stock.

Pumpkin Patch (NZX: PPL ) rose 5.6% to $1.90, matching the 16-month high close it reached last week. The shares have rallied since the retailer announced at the end of June that it would close unprofitable U.S. stores, bolstering its earnings outlook.

Nuplex Industries (NZX: NPX ) climbed 4.7% to $2.25 and is up 41% in the past three months, having climbed from its lows of March after selling shares at a discount to strengthen its balance sheet.

Goodman Property Trust (NZX: GMT ) fell 5.8% to 97 cents. Goodman Group sold down its stake at 95 cents apiece and chief executive Greg Goodman said the remaining 17% holding in the trust is “a long term investment position.

ING Medical Properties (NZX: ING ) slipped 0.8% to $1.19 after reporting a 2.3% decline in full-year underlying earnings as the investor in health clinics weathered the impact of the worst recession in 30 years and rents rose.

National Property Trust (NZX: NAP ) rose 4.7% to 45 cents after announcing the sale of two mainstreet Newmarket shopping strip properties for $49 million to reduce debt.

AFFCO Holdings (NZX: AFF ), the North Island meat processor, fell 7% to 39 cents. Today the company said processing margins have been squeezed by a strong kiwi dollar and dwindling supplies of livestock.

Air New Zealand (NZX: AIR ) rose 0.8% to $1.29 after Australian rival Qantas Airways said there were “signs of improvement in passenger volumes while yields have stabilised” Qantas, which posted an 87% decline in full-year profit, climbed 3.5% to $2.69 on the ASX today.

Contact Energy (NZX: CEN ), the biggest utility on the NZX 50, slipped 0.5% to $6.25. New Zealand's electricity companies face possible credit rating downgrades as proposed electricity reforms would make their operating environments riskier and more competitive, according to Standard & Poor’s.

Businesswire.co.nz

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