MARKET CLOSE: NZ shares mixed; smaller dividends drag down NZ Refining, Comvita

Tuesday 23rd August 2016

New Zealand shares were mixed as dividend payments weighed on investors' minds, with smaller payments from NZ Refining and Comvita dragging down those stocks and a bigger payment for Fliway Group stoking demand for the logistics company.

The S&P/NZX index increased 5.17 points, or 0.1 percent, to 7,467.33. Within the index, 27 stocks gained, 19 fell and five were unchanged. Turnover was $155.4 million.

New Zealand's stock market has been trading near record highs as investors in search of yield are drawn to the country's relatively high dividend paying shares in a world where interest rates keep a lid on investment income. That dynamic has seen companies rewarded for increasing their dividend payments, or punished for trimming their returns.

New Zealand Refining shares dropped 7.8 percent top $2.36 and Comvita fell 6.6 percent to $9.89 after the two companies trimmed their dividend payments from a year earlier when reporting their earnings. In the case of NZ Refining, falling refining margins were expected with the global overhang of oil, and the interim dividend of 3 cents per share was more than what Forsyth Barr was expecting, while Comvita cut its dividend payout ratio to reinvest earnings into growth opportunities.

"If the dividends aren't there, investors can punish a stock somewhat," said Grant Williamson, a director at Hamilton Hindin Greene in Christchurch. "It's the old interest rate story - it's not going to go away anytime soon."

Meantime, Fliway, which is outside the NZX 50, jumped 14 percent to $1.08 after the transport and logistics firm declared a final dividend at the top end of its payout range to reward shareholders through a challenging earnings period.

Williamson said some stocks look fully priced based on earnings fundamentals, "but we're in an environment of low interest rates and we haven't been here before."

Spark New Zealand fell 2.5 percent to $3.90.

A2 Milk led the benchmark index higher, up 2.7 percent to $2.30 after announcing an extension to its supply arrangements with Synlait Milk. Synlait shares increased 0.8 percent. Fletcher Building, which met guidance when posting earnings last week, gained 1.7 percent to $10.71.

Mercury NZ, the rebranded Mighty River Power, rose 1.6 percent to $3.09 after the power company after reporting a 2.3 percent increase in operating earnings. Meridian Energy rose 0.5 percent to $2.945 and Genesis Energy increased 0.9 percent to $2.27 before they report their respective earnings tomorrow.

Tourism Holdings fell 0.7 percent to $3.02 after reporting a 21 percent increase in annual profit to $24.4 million and a higher annual dividend payment of 15 cents per share.

Serko climbed 13 percent to 68 cents after the online travel booking software developer entered into a deal with Nasdaq-listed Sabre Corp which will deliver at least an extra $1 million in annual revenue to the New Zealand firm.

Fisher & Paykel Healthcare fell 0.6 percent to $10.21 after warning annual earnings would be near the bottom end of guidance due to the appreciation of the kiwi dollar.

Kiwi Property Group fell 1 percent to $1.555 after the real estate investor opened a bond offer to raise up to $125 million to repay bank debt while interest rates remain low.

BusinessDesk.co.nz

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