MARKET CLOSE: NZ shares up, Sky TV bounces with Comvita, Mainfreight up while Orion Health gains 20%

Friday 6th April 2018

New Zealand shares gained, led by Sky Network Television bouncing back and Orion Health surging 20 percent after it confirmed it's considering sale options.

The S&P/NZX50 Index rose 29.28 points, or 0.4 percent, to 8,393.27. Within the index, 24 stocks rose, 13 fell and 13 were unchanged. Turnover was $126 million.

Peter McIntyre, investment adviser at Craigs Investment Partners, said the market had gotten stronger today as the impact of comments made by US President Donald Trump - that he asked the US Trade Representative to consider whether US$100 billion of additional tariffs on China would be appropriate - faded. "We did start the day off weaker and like the rest of Asia we've gathered strength throughout the day," McIntyre said.

Sky Network Television was the best performer, up 6.3 percent to $2.35, meaning it's gained 2.6 percent this week despite dropping for most of it. The stock has been falling since the end of February when it announced it wasn't the preferred bidder for the 2019 Rugby World Cup rights: It's lost 16 percent since then.

"Its topsy-turvy nature has been prevalent again. Every time it gets sold down it gets bid back up, on a value basis more than anything else," McIntyre said. "It still produces a good cash flow, and even though it's lost the Rugby World Cup rights that's not in itself a death knell for the stock."

Comvita gained 2.1 percent to $7.25, Mainfreight rose 1.7 percent to $24.40, and Trade Me Group advanced 1.6 percent to $4.37.

Summerset Group Holdings gained 0.9 percent to $6.94. Its first-quarter sales of occupation rights dropped 16 percent but the company said it remains on track to deliver 450 new homes over 2018 as sales increase.

"Even though those unit sales originally disappointed the market, it has regathered strength like the whole market through the day," McIntyre said. "A lot of investors have looked through that result and have seen serviced apartments, which typically have a longer sale time, made up the first part of the 2018 sales number where retirement units generally wait until the second half. It's probably a timing issue and the CEO has said they're getting good resales and still on track for 450. It's shown it can still provide good solid growth."

Tourism Holdings was the worst performer, dropping 2.1 percent to $6. Freightways fell 1.6 percent to $7.60.

Synlait Milk fell 1.3 percent to $8.96, meaning it's up 6.8 percent for the week, while A2 Milk Co gained 0.4 percent to $12.97, putting its weekly gain at 4.6 percent. Both stocks recovered this week from selling last week, which came on news of increased competition for A2 from Nestle in China.

Outside the benchmark index, Orion Health jumped 20 percent to 72 cents. Media speculation of a trade sale spurred the health software developer to confirm today it was pursuing "potentially significant transactions". The company has been reviewing its capital structure over the past year and has settled on a major overhaul of its operations. Its shares sank as low as 57 cents this week after it missed annual revenue guidance, citing delayed contracts for pushing sales into the next financial year.

"Investors are looking at the way that business has been restructured, it looks like any one of those businesses could be sold off in a trade sale, and it looks like investors are looking to buy into Orion on that," McIntyre said. "There are concerns in some parts of the market that Orion will have to do another capital raising, even though the CFO has indicated that's not necessarily the case. I think that's very much on the cards. There's a number out there looking at the value component of Orion as well."

ERoad dropped 0.5 percent to $3.76. Its annual sales of contracted units rose 62 percent, meeting guidance, as the firm's North American expansion continues to accelerate. It didn't comment on whether it met revenue guidance of between $46.9 million and $47.6 million or forecast earnings before interest tax, depreciation and amortisation of between $12.8 million and $13.3 million.

(BusinessDesk)

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