MARKET CLOSE: NZ stocks rise; Chorus gains to 4-week high; Telecom snaps 4 day decline
By Suze Metherell
July 31 (BusinessDesk) - New Zealand shares rose as Chorus gained to a four-week high on speculation it won't need to ask investors for more capital to fund its fibre network build, and Telecom Corp led the index higher, after tumbling after an analyst put a sell rating on the company.
The NZX 50 Index rose 9.437 points, or 0.2 percent, to 5167.989. Within the index, 24 stocks rose, 17 fell and nine were unchanged. Turnover was $197.5 million.
Chorus, the network provider, advanced 2 percent to $1.75. Earlier this month, Chorus cut a deal with Crown Fibre Holdings, the government body overseeing the ultra-fast broadband network rollout, to bring forward funding of $178 million and also gained more wiggle room under its banking covenants, allowing for weaker earnings relative to its borrowings. Today its case opened in the Court of Appeal, where it is continuing to challenge regulated cut to prices it can charge for network access.
"The other things Chorus has done, by recent deals with Crown Fibre Holdings and its banks, have really taken the risk of an equity raising off the table in the short to medium term," said Matthew Goodson, managing director at Salt Funds Management. "People are looking ahead for when the draft finding on the final pricing principle for the network are out," he said, referring to the appeal.
Telecom led the benchmark index higher, gaining 2.3 percent to $2.84. The stock had fallen after reaching the highest since splitting off Chorus in 2011 after analysts at UBS cut their rating on New Zealand's largest telecommunications provider to 'sell' from 'neutral'.Telecom shares have advanced about 25 percent this year, outperforming the NZX 50 Index's 8.9 percent gain.
OceanaGold was the NZX 50's worst performer on the day, declining 12 percent to $3.45. The Melbourne-based miner, which operates the Macraes goldfield in Otago, released figures showing New Zealand mining costs rose 21 percent to US$1,114 per ounce in the three months ended June 30. Rising New Zealand costs were offset in the first half by its Didipio copper and gold operation in the Philippines for a net profit of US$56.8 million in the six months ended June 30, from a year-earlier loss of US$63 million.
"It's a little bit disappointing, and costs are a bit higher than expected," Goodson said. "Oceana is really a combination of quite high costs in New Zealand gold mines and quite a low cost but potentially high political risk in copper gold mines in the Philippines."
Trade Me Group rose 1.5 percent to $3.48. The online auction site has added a monthly listing subscription fee option for realtors after some agents baulked at the online auction site's move to pay-per-listing fees. Property is seen as a key growth engine for the website's biggest earner, its classified advertising business, as it faces flat revenues in general auctions business.
"We think Trade Me's revised fee structure is a necessary back-down in the face of strong agent opposition and will result in a recovery in listing volumes," Stephen Ridgewell, an analyst at Craigs Investment Partners, said in a note. "Agents reverting to the monthly subscription fee - which we think will be most agents - will be incentivised to place all their listings on Trade Me. This should lead to a recovery in Trade Me's market share of listings."
Xero fell 0.8 percent to $25.41. The cloud-based accounting software firm said it had $192.7 million in the three months ended June 30, down from $210 million in the previous quarter ended March 31.
Fletcher Building, New Zealand's largest listed company, rose 1 percent to $9.12. Auckland International Airport climbed 0.4 percent to $3.82. Air New Zealand slipped 1 percent to $1.98
Outside the benchmark index, Millennium & Copthorne Hotels New Zealand rose 5.8 percent to $1.27 after the hotel chain said revenue and other income rose 16 percent to $58 million in the first half. Profit fell 31 percent to $6.22 million, reflecting costs related to First Sponsor Group.
CDL Investments increased 2 percent to 52 cents, after the residential property developer controlled by Millennium & Copthorne said profit rose 44 percent gain to $8.2 million in the six months ended June 30, on doubling sales of sections at developments in Auckland, Hamilton and Rolleston.