MARKET CLOSE: NZ shares rise to record, Pumpkin Patch leads
MARKET CLOSE: NZ shares rise to a record, Pumpkin Patch leads gains after returning to annual profit
By Tina Morrison
Sept. 27 (BusinessDesk) - New Zealand shares advanced, pushing the NZX 50 Index to a new record, led by children’s clothing retailer Pumpkin Patch which posted a return to annual profit following a loss the previous year as it restructures its business.
The NZX 50 rose 17.206 points, or 0.361 percent, to 4,782.679. Within the index, 22 stocks rose, 20 fell and eight were unchanged. Turnover was $120.2 million.
“It was a good result this week from Kathmandu and a more positive result from Pumpkin Patch in a sector which has been tough,” said Nigel Scott, a director at Craigs Investment Partners.
Most stocks have managed to recover their dividends, which showed investors favoured equities over alternative investments such as fixed income, Scott said.
“That always gives you a pretty strong indication that the market is in a reasonable state when stocks cover their dividends quite quickly after them going ex-dividend,” Scott said. “It also is showing that most people are continuing to want to hold their equities because they are obtaining their income levels through the dividends and imputation credits versus fixed interest, a lot of people are relying on the income out of the equity market.”
The KiwiSaver superannuation scheme is also helping bolster the sharemarket, providing consistent cashflow, he said.
“The market has a pool of capital that it can work into the equity markets and underwrite and support valuations,” Scott said. “It is very much underpinning the market.”
Pumpkin Patch was the best performer on the benchmark, rising 5 percent to $1.05 after the company said net profit was $5.1 million in the year ended July 31, following a loss of $27.5 million the year earlier. Profit before reorganisation costs was $8.5 million, within the company’s $7.5 million to $9 million forecast range, and down from $10.1 million the year earlier.
Air New Zealand, the national carrier, rose 3.8 percent to $1.51. The company announced at its annual meeting in Auckland that it would extend its share buyback scheme for a further year as it believes the current share price doesn’t fairly reflect the underlying value of its shares. Air New Zealand plans to purchase up to 3 percent or as much as $45 million of its shares, whichever is the lower.
Infratil, the listed infrastructure investment firm which sold down its stake in Z Energy last month, gained 2.5 percent to $2.50 after the company said it is planning a $65 million share buy-back programme, and said shareholders can expect to see more dividend growth in coming years. The firm plans to buy back up to 24.8 million shares at $2.60 apiece. Based on Infratil’s internal valuations of its investment portfolio, it says the share prices are worth between $3.08 and $3.69.
Fletcher Building, the biggest listed company in New Zealand, gained 1.1 percent to $9.65. The company faces a probe into potentially anti-competitive behaviour in its plasterboard supply arrangements.
Postie Plus, the retailer whose shares are the worst performer on the NZX this year, plunged deeper into the red after its poorly executed outsourcing deal for a distribution centre in Mangere disrupted the business, and has left it relying on its banks to keep it cash-flow positive. The retailer’s loss widened to $11.6 million in the 12 months ended Aug. 4 from a loss of $183,000 a year earlier. The statement was made after the close of trading. The shares fell 5.8 percent to 11.3 cents today, adding to its 50 percent dive this year.
Vital Healthcare Property Trust, New Zealand’s largest listed medical and healthcare property investor, slipped 0.4 percent to $1.36. Vital Healthcare plans to spend A$28 million to redevelop a hospital in Sydney and A$1.9 million to extend a hospital near Newcastle, to meet rising demand for healthcare services.