CLOSE: Sky City leads NZ stocks higher, joining global rally

Tuesday 21st July 2009

New Zealand shares rose for a sixth day, led by Sky City Entertainment Group, after the casino and hotel operator said annual profit was better than forecast and optimism the local bourse joined a global rally sparked by optimism the global economy has bottomed.

The NZX 50 jumped 52.28, or 1.9%, to 2873.19, the highest close since Nov. 5. Within the index, 32 stocks rose, eight fell and 11 were unchanged. Turnover was NZ$92.4 million.

Sky City (NZX: SKC ) jumped 6.6% to $3.05, the highest level since Nov. 10 after the company said net profit for the year ended June 30 was $113 million to $116 million, about 9% higher than its forecast in April. The results reflect better-than-expected fourth quarter revenues across its core casino operations.

“People are getting confidence in the management of the operation,” said Ian Waddell, a broker at McDouall Stuart. “Whether they can grow the business is another question.”

Nigel Morrison became chief executive in March last year after the sudden departure of his predecessor Evan Davies left Elmar Toime in a caretaker role as executive director.

Nuplex Industries (NZX: NPX ) climbed 4.7% to $1.80 and Fisher & Paykel Healthcare (NZX: FPH ) rose 4.1% to $3.06.

Fletcher Building (NZX: FBU ), New Zealand’s largest construction company, rose 3.2% to $7.04 and steel building supplies firm Steel & Tube Holdings (NZX: STU ) rose 2.8% to $2.96 after government figures showed the influx of migrants continued in June, stoking demand for housing and the goods to furnish them.

Seasonally adjusted, permanent and long-term arrivals exceeded departures by a net 1,700 migrants in June, down from the 2,690 in May, according to Statistics New Zealand.

“Rising net migration will help provide a floor on demand for housing and retail spending, at a time when these sectors are cyclically very weak,” said Jane Turner, economist at ASB Bank.

Jeweller Michael Hill international (NZX: MHI ) rose 3% to 66 cents and Ryman Healthcare (NZX: RYM ) gained 3.3% to $1.57.

Pyne Gould Corp (NZX: PGC ) fell 4.5% to $1.70 after the finance group that’s aiming to become a bank agreed to acquire Equity Partners Asset Management, an asset manager controlled by Pyne director George Kerr for $18 million. As part of the arrangements, Pyne Gould will initially acquire about $160 million of impaired or likely to be impaired loans from its MARAC unit, paying cash over time that will allow MARAC to buy government and bank securities to strengthen liquidity.

Delegat’s Group (NZX: DGL ), the maker Oyster Bay brand wines, rose 1.4% to NZ$2.18, adding to yesterday’s 4.9% jump after the company said full-year profit climbed at least 58%, reflecting a pick-up in sales in the fourth quarter and adjustments to the fair value of currency hedge contracts.

Telstra Corp (NZX: TLS ). was the biggest decliner on the NZX 50, falling 2.4% to $4.15, while clothing chain Hallenstein Glasson Holdings (NZX: HLG ) fell 1.9% to $2.55.

On Wall Street, the Dow Jones Industrial Average climbed 1.2% yesterday, led by Caterpillar, the heavy earth moving equipment maker which is set to post earnings this week.

So far this earnings season, companies on the S&P 500 have exceeded earnings estimates by an average 15%, according to Bloomberg. Some 35 companies out of 43 beat expectations.

Waddell said there is room for earnings in New Zealand “to surprise to the upside a little bit.”

Across Asia today, Japan’s Nikkei 225 rose 2.7% in early afternoon trading. Australia’s S&P/ASX 200 barely budged at 4050.70, as a surge in mining stocks was offset by a 6% decline for Harvey Norman, after Australia’s biggest electronics retailer posted sales that missed estimates.

Businesswire.co.nz

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