MARKET CLOSE: NZ shares rise, led by Auckland Airport, Ryman Health while Kathmandu drops

Friday 18th November 2016

New Zealand shares rose as buyers came back into the market, led upwards by Auckland International Airport and Ryman Healthcare while Kathmandu Holdings dropped.

The S&P/NZX 50 Index gained 43.19 points, or 0.6 percent, to 6,857.85. Within the index, 25 stocks rose, 16 fell and 10 were unchanged. Turnover was $212.8 million.

"We are starting to see some retail bargain hunters coming into the market, I've noticed that with my own client base, investors are thinking that the Trump effect has slowed and things have settled down to some degree despite the earthquake and are keen to come from the buy side again," said Grant Williamson, director at Hamilton Hindin Greene.

Auckland International Airport led the index, up 3.3 percent to $6.25. Williamson said it was a volatile stock which had been sold down early in the week amidst concerns about tourism in New Zealand following Monday's early morning 7.8 magnitude earthquake near Kaikoura, but has since more than regained what it lost.

"The market had lost almost 10 percent at one stage and is regaining some of that lost ground quite nicely this week," Williamson said. "We're up 1.75 percent for the week, the first positive week in the last seven, so a nice turnaround this week - given the events of the weekend, you really wouldn't have thought that, but investors have taken that earthquake in their stride."

Argosy Property rose 2.9 percent to $1.05, Mercury gained 2.4 percent to $3.035, and Vector advanced 1.9 percent to $3.18.

Ryman Healthcare improved 1.9 percent to $8.59. New Zealand’s largest retirement village operator lifted first-half earnings and said it expects to report another record profit for the full year, as it inked higher sales and continues to expand. Underlying profit, which excludes fair value changes from its property portfolio, rose 9 percent to $76.5 million in the six months ended Sept. 30 compared with the year-earlier period

"It was better than market expectations - although the company has a historical 15 percent earnings growth target, the market wasn't expecting very much in its first half because of when the new villages are available for sale," Williamson said. "The second half should be a lot better but the first half was a lot better than the expected 5 or 6 percent."

Kathmandu Holdings was the worst performer on the index, down 4.8 percent to $1.79. The retailer expects first-half profit to be in line with last year's, which was $9.4 million, as it struggles to grow sales and maintain margins. Its first-quarter sales fell 0.6 percent, the company said.

"The market reaction tells the story, it looked like the stock was starting to recover after a pretty difficult time throughout 2015 and the first half of 16, we were experiencing a nice improvement, but it's certainly turned back down again," Williamson said.

Comvita dropped 3.7 percent to $9 and Tilt Renewables fell 2.4 percent to $2.

Outside the benchmark index, Seadragon dropped 11 percent to 0.8 cents. The fish oil refiner more than quadrupled its first-half loss to $3.4 million with revenue falling as the company continued its transition to higher value Omega-3 fish oil products from Omega-2.

Tenon was unchanged at $2.60. Shareholders have approved the sale of the wood processor's US business to New York-based buyout firm Blue Wolf Capital, allowing the company to make a $100 million capital return via a share cancellation.

The shares have declined about 7 percent this year. Rubicon, which owns 59.8 percent of Tenon, last traded at 22 cents and has fallen 23 percent so far in 2016.

BusinessDesk.co.nz

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