MARKET CLOSE: NZ shares fall; Telecom dips in budget week

Monday 25th May 2009

New Zealand shares fell, led by Telecom, as investors await results from its new network. Fletcher Building fell and Fisher & Paykel Appliances was halted pending an announcement about debt restructuring that may involve equity.

The NZX 50 fell 20.34, or 0.7%, to 2740.20, its third daily decline. Within the index, 17 stocks fell, 20 rose and 13 were unchanged or untraded, with the US. public holiday tonight dimming demand in the market. Turnover was $61.8 million.

Telecom fell 5.4% to $2.46. The phone company’s faster XT mobile network goes live on May 29 and chief executive Paul Reynolds wants to take mobile market share from Vodafone.

The XT network “is a very good new starting point for them,” said Alan Moore, who helps manage about $250 million at Milford Asset Management. “But they have to get runs on the board and get that translated through to the bottom line.”

Fletcher Building slipped 2.5% to $6.27, having gained 18% in the past month. Fletcher trades on an historical p/e of 8 while Australian rival Boral is on about 13 times earnings.

Contact Energy slipped 0.2% to $5.84 while TrustPower climbed 1.3% to $1.60. Goldman Sachs JBWere maintained a ‘neutral’ rating on the two utilities, saying earnings would be flat next year, on tariff constraints and weak wholesale prices.

Briscoe Group, which operates the Rebel Sports and homeware stores, gained 1% to $1.03, bringing its 1-month gain to 24%. The diversified retailer this month said profit in the six month through July will exceed year-earlier earnings.

Briscoe has proved resilient in a consumer downturn, said Milford’s Moore. “Not bad having a company with no debt and NZ$65 million in the bank.

Added to that, acquisitions by Kathmandu founder Jan Cameron show there’s interest in the sector, he said.

Jeweller Michael Hill International climbed 3.1% to 67 cents and has advanced 27% this year.

“It’s a quality company with good management,” Moore said. “Once retailing turns around it’s probably not a bad stock.”

Auckland International Airport fell 1.2% to $1.60. Overseas passenger numbers climbed last month, reflecting the positive impact of Easter, while domestic passengers fell on the impact on increased rivalry from Qantas Airways, the company said today.

OceanaGold, the owner of New Zealand’s largest gold mining operation at Macraes, fell 7.5% to $1.35 after the company said chief executive Steve Orr will leave the company at the end of June.

Spokesman Darren Klinck said Orr had been with the company since it floated in 2004 and since then it has sought scale by opening and developing mines to create a scalable business. The decision was a mutual decision between Orr and the board, he said.

Businesswire.co.nz

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