NZX CLOSE: Shares gain; Pumpkin Patch lifts on profit, GPG up

Tuesday 2nd March 2010

New Zealand shares gained after children’s clothing chain Pumpkin Patch posted a profit surge that beat estimates and Guinness Peat Group extended its advance on signs of recovery at its Coats unit.

The NZX 50 Index rose 19.08, or 0.6%, to 3183.23, the fifth straight gain. Within the index, 26 stocks rose, 11 fell and 14 were unchanged. Turnover was $67.8 million.

Pumpkin Patch (NZXPPL) rose 4.5% to $2.09, the highest close in two years, after reporting a 50% gain in first-half profit, on reduced losses in the US and UK, and lower interest costs. Operating revenue fell 8%.

The retailer’s results come at the tail end of an earnings season that has shown little sale growth, underlining the need to rein in costs and pay down debt.

“A lot of companies have put more focus on debt reduction and cost cutting, knowing there’s not going to be the same growth in revenue,” said Grant Williamson, a director at brokerage Hamilton Hindin Greene in Christchurch.

Since March last year, investors “had built in reasonably high expectations for earnings improving quite markedly.” Since that’s been confirmed, the market has had less reason to rally further, he said.

Guinness Peat (NZX: GPG ) gained 3.5% to 90 cents, matching the highest closing level since January 11. The investment group yesterday said a “value return” to shareholders is top priority. While Coats, its biggest investment, had a loss of 3 million pounds, this reflected timing of tax and the threadmaker’s “strong” cash flow enabled it to repay debt.

Allied Farmers (NZX: ALF ) sank 15% to 8.5 cents, with about 2 million of its almost 2 billion shares changing hands. The finance company yesterday released a valuation that showed Hanover and United assets it paid for with $400 million of its own shares are worth less than half that amount now. The assets have slumped to $175.5 million under NZ IFRS reporting, from a gross realisation value of $396 million at the time the deal was announced last year.

Wellington Drive Technologies (NZX: WDT ) climbed 6.3% to 8 cents, adding to its 14% gain yesterday, when the maker of energy-efficient motors reported a 54% gain in annual revenue to $22.4 million and said sales of motors to the commercial refrigeration sector, principally for soft drink bottle coolers and supermarket refrigerated display cabinets, rose 105%.

New Zealand Refining (NZX: NZR ) fell 2.1% to $3.30. The Northland-based oil refiner can’t expect any profit increase soon, with margins continuing to be squeezed, brokerages McDouall Stuart said in a report, according to the ShareChat website. New refinery capacity in Asia and constrained demand indicate margins won’t rise any time soon.

NZX (NZX: NZX ) fell 2.5% to $1.99. the company yesterday posted a weaker full-year profit than it achieved in the first six months of the year, after recognising a drop in the value of the Markit shares it got for the sale of its TZ1 carbon registry.

Pan Pacific Petroleum (NZX: PPL ) gained 5.7% to 37 cents, making it the biggest gainer on the NZX 50 today.

Steel & Tube Holdings (NZX: STU ) fell 4.9% to $2.52, the biggest decline on the benchmark index.

Businesswire.co.nz

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