MARKET CLOSE: NZ stocks rise; Telecom paces gainers, Pyne Gould falls

By Jason Krupp

June 14 (BusinessDesk) - New Zealand stocks rose led by Telecom Corp. after legislation related to the ultrafast broadband project cleared its second to last hurdle in Parliament, lifting investors' hopes the company may split in two before the end of the year. Pyne Gould Corp. fell.

The NZX 50 Index rose 12.17 points, or 0.4%, to 3,488.85. Within the index, 18 stocks rose, 22 fell, and 10 were unchanged. Turnover was $104.8 million.

Telecom, the country's biggest telephone company, rose 4.6% to $2.37 after the Telecommunications (TSO, Broadband, and Other Matters) Amendment Bill passed its second reading in parliament today by 67 to 53, backed by the National Party, Maori Party, Act and United Future Party.

The bill is a key legislative step which sets the framework for the $1.35 billion fibre-to-the-home, and only has to pass one more reading before it becomes law.

Air New Zealand Ltd., the national carrier, rose 2.9% to $1.08 after the airline said it will continue to operate flights while Chile's Puyehue-Cordon Caulle volcano erupts. The airline says it is safe to fly under the predictable ash clouds, even as several rivals, including Jetstar, Qantas and Emirates, chose to cancel some flights due to the eruption.

The airline's current price to book ratio is currently cheap, according to David Price, a broker with Forsyth Barr, which he said was helping to improve the attractiveness of the stock in the eyes of investors.

"Airlines have always been a difficult industry to invest in," he said. "You invest in them during a good time, not for a long time because there are only short windows where you can make a very good return."

SkyCity Entertainment Group, the casino and hotel operator, rose 2.3% to $3.62, with the stock continuing to attract buying interest after government selected the company as its preferred bidder to build a $350 million convention centre in Auckland. The casino operator has offered to foot the construction bill in return for regulatory concessions.

Heartland New Zealand Ltd., the would-be bank formed by the merger of Marac Finance and the Southern Cross and Canterbury building societies, rose 2.8% to 74 cents after it announced it was expanding its rural lending with a $100 million bid for PGG Wrightson’s finance unit.

Chief executive Jeff Greenslade said the acquisition of PGG Wrightson Finance Ltd. will lift Heartland’s rural lending exposure to 21% from 6% -to-7% currently. He said the would-be bank ultimately wants about a third of its loan book in rural loans.

"To see the finance division go to Heartland was very little surprise to anyone," Price said. "They were always the red hot favourite."

Pyne Gould, the financial services company which is helping fund the Heartland deal through a $10 million private placement, fell 7.5% to 37 cents, leading decliners on the exchange.

Wrightson, the parent of Wrightson Finance which is also helping fund the sale through a similar placement, fell 1.9% to 51 cents.

Tower Ltd., the general insurer, fell 4.5% to $1.70, after yesterday's earthquakes in Christchurch raised fresh question in investors' minds about the ability of local insurance companies to secure reinsurance cover.

Guinness Peat Group, the investment holding company which owns a 35% stake in Tower, fell 0.6% to $81 cents.

Lyttelton Port Co., the South Island's busiest port, fell 0.9% to $2.26 after it said it had sustained further damage to its facilities after yesterday's earthquakes, adding to the $22.6 million repair costs from the September and March earthquakes.

Jason's Travel media Ltd., the NZAX-listed publishing company, was unchanged at 30 cents after its reported a 12.3% decline in full year net profit, with a decline in advertising spend weighing on the company's accommodation directories business.

Net profit was $485,000 for the 12 months ending March 31, with revenue for the period coming in 4.5% softer at 13.9 million compared to the previous year.

(BusinessDesk)

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