MARKET CLOSE: NZ shares snap 4-day slide; FPA soars, Methven climbs

Wednesday 27th May 2009

New Zealand shares snapped a four-day slide, with Fisher & Paykel Appliances soaring as the manufacturer clinched its refinancing plan and Methven gaining after the tap-maker posted a gain in profit.

The NZX 50 Index rose 35.70, or 1.3%, to 2769.78, the biggest gain since May 5. Within the index, 27 stocks rose, 11 fell and 12 were unchanged. Turnover was $94.7 million.

Fisher Paykel Appliances (NZX: FPA ) jumped 56% to $1.03 after the Auckland-based manufacturer said it would raise at least $189 million via a rights issue and the sale of a 20% stake to Haier, China’s biggest manufacturer of home appliances. The deal gives its foothold in the Chinese market and helps repay debt.

Haier’s involvement “is a much better outcome in terms of value dilution,” said Paul Robertshawe, head of equities at Tower Asset Management, which will take up its entitlement and has underwritten a portion of the sale. “There’s an industry player that sees some value,” he said. At around $1 the shares “could easily be good value.”

Methven (NZX: MVN ) climbed 5.4% to $1.36 after after the manufacturer of taps and bathroom fittings posted a 3.1% increase in annual profit, meeting its forecast, on a one-time tax gain and earnings contributions from its U.K. business, Deva Tap Co. Deva “produced an outstanding result given that this was the market worst affected by recession,” chairman Phil Lough said.

APN News & Media (NZX: APN ), the Australian publisher of the New Zealand Herald newspaper, jumped 13% to NZ$1.63. Goodman Fielder (NZX: GFF ) rose 8.1% to $1.61.

Helping stoke optimism today, business confidence turned positive for the first time in eight months, according to the National Bank Business Outlook.

A net 3.8% of firms expect the economy to improve, from minus 3.8% last month. The bank’s monthly gauge of business sentiment saw the number of optimists exceed pessimists for the first time since September last year.With the likelihood of a technical recovery in the second half of the year, the bank’s chief economist, Cameron Bagrie, said “confidence was up across all segments.”

Fletcher Building (NZX: FBU ) advanced 1.1% to $6.40. Contact Energy, the biggest utility on the NZX 50, climbed 2.6% to $5.85. Skellerup Holdings rose 3.6% to 57 cents and Steel & Tube Holdings gained 2.8% to $2.95.

Rakon (NZX: RAK ) dropped 2.7% to $1.46 after the maker of components for navigation systems posted a 59% slump in earnings. Profit for the year ended March 31 fell to $4.5 million, or 3.6 cents per share, from $10.9 million a year earlier, the company said in a statement today. Sales shrank 20% to $139.5 million while operating expenses rose 4.6% to $55.7 million.

“Sales of consumer GPS were soft in the second half of the financial year, but we are now seeing some demand returning,” said managing director Brent Robinson.

NZ Farming Systems Uruguay (NZX: NZS ) dropped 8.5% to 54 cents after Fonterra Cooperative Group, the world’s largest dairy exporter, forecast a 13% drop in milk payments for the 2010 season, reflecting a stronger New Zealand dollar and the reintroduction of U.S. dairy subsidies.

The dairy giant will pay an estimated $4.55 per kilogram of milk solids for the 2010 season, down from the $5.50 a kilogram payment in the current season. Its statement comes after Fonterra’s board met yesterday.

The New Zealand dollar has jumped 27% from its sub-50 U.S. cents low in early March. Last week, U.S. Agriculture Secretary Tom Vilsack announced the reintroduction of subsidies for more than 90,000 metric tons of dairy products produced in America, as a means to compete with the European Union’s protections on farming.

PGG Wrightson (NZX: PGW ), the nation's biggest rural services company, slipped 0.7% to $1.34.

Businesswire.co.nz

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