MARKET CLOSE: NZ shares drop as A2 extends slide, F&P Healthcare drops, Synlait, Mainfreight gain

Tuesday 29th May 2018

New Zealand shares fell as A2 Milk extended its decline and Fisher & Paykel Healthcare and Scales Corp dropped while Synlait Milk and Mainfreight rose.

The S&P/NZX 50 Index dipped 9.34 points, or 0.1 percent, to 8,635.86. Within the index, 24 stocks fell, 17 rose and nine were unchanged. Turnover was $144.7 million.

"It's not unexpected, there's a bit of a risk-off tone out there and we haven't had any major leads as is usual because the US and the UK were closed last night," said Mark Lister, head of private wealth research at Craigs Investment Partners. "They'll both be back open tonight and that will probably give markets a little bit more direction, but there's still a bit of nervousness out there with this US - North Korea summit and the Italian political dramas in the headlines too."

A2 Milk led the index lower, falling 2 percent to $10.55. The stock has been dropping for two weeks after it missed expectations in a trading update, prompting some analysts to reassess what have been optimistic assumptions for the company's outlook. A2 will join the MSCI Global Standard Index on Thursday when that index is rebalanced.

"It's down quite a bit from where it got to, around 25 percent down from the highs," Lister said. "There are mixed views on whether it's due for a rebound or goes lower, but for today it's the biggest decliner."

"We're all watching with interest the rebalancing later in the week as to whether that gives it a boost as a bit of buying demand comes back into the mix. It had a massive run, it's not surprising it's come off the boil, but it's still a good company with loads of growth options on the table. You've got to watch the next couple of results to see how they're going."

F&P Healthcare dropped 1.4 percent to $13. Yesterday, the company lifted 2018 annual profit to the top end of its forecast range and said it expects record earnings in the coming year as it benefits from growing global demand.

"It had a weak day yesterday as well following the result, which was good but not quite as good as people were hoping for, so it's on the back foot," Lister said.

Scales Corp fell 0.8 percent to $4.70 and Z Energy declined 0.7 percent to $7.40.

Synlait was the best performer, up 1.6 percent to $10.55, and Kiwi Property Group rose 1.5 percent to $1.40.

Gentrack Group rose 1.4 percent to $7.45 ahead of its earnings announcement tomorrow. Lister said the market was obviously expecting a good result, with the company having given positive recent updates.

Mainfreight gained 1.2 percent to $26.05. It posted a 6.3 percent gain in full-year profit on a record result in New Zealand and growth in Australia and said the strong performance meant it would pay record bonuses to its managers.

"It was a little higher than expectations and pretty solid across the board," Lister said. "Mainfreight always trades at a premium and like many high-quality stocks it always looks expensive, expectations are always high and I guess that's why it hasn't been up further. I think most investors will be pretty happy with where the company is travelling."

Arvida Group gained 0.8 percent to $1.30. The retirement village company, which listed in 2014, increased annual profit 7 percent after expanding its business and lifting margins. Its shares hit a 10-month high.

Outside the benchmark index, AWF Madison Group gained 7.1 percent to $1.95. The country's biggest contract labour firm reported a 14 percent fall in annual profit, even as revenue rose, with its white-collar recruiting business improving while there was weakness from construction recruitment.

Pacific Edge dropped 12.5 percent to 28 cents. It narrowed its full-year loss by 13 percent on improving revenue as more urologists and healthcare organizations adopt its Cxbladder cancer diagnostics tests.

Turners Automotive Group rose 2.1 percent to $2.99. New Zealand's largest second-hand vehicle retailer posted a 33 percent gain in full-year profit as it leveraged its position to provide more finance and an expanded insurance offering.

(BusinessDesk)

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