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MARKET CLOSE: NZ shares rise, led by Xero, Pacific Edge

MARKET CLOSE: NZ shares rise, led by Xero, Pacific Edge; Metlifecare gains on earnings

By Suze Metherell

Aug. 25 (BusinessDesk) - New Zealand share rose, led by Xero and Pacific Edge, as risk appetite returned to the market. Metlifecare gained after its full-year profit exceeded expectations, while Kathmandu Holdings fell on news its chief executive has resigned.

The NZX 50 Index rose 15.748 points, or 0.3 percent, to 5182.743. Within the index, 25 stocks rose, 21 fell and four were unchanged. Turnover was $92.6 million.

Wall Street rallied last week, with the Standard & Poor's 500 Index trading at a record high as data out of the world's biggest economy showed signs of a pick up. Sentiment flowed through to the local market where the benchmark index gained 1.9 percent last week, giving investors confidence to return to more risky, tech-based stocks which had been sold down globally as investors questioned their high valuations relative to earnings.

Xero, the cloud-based accounting software firm which has fallen some 44 percent from its March high of $45.99, advanced 5.3 percent to $25. Pacific Edge, the Dunedin-based biotech company which has more than halved from its $1.76 high, increased 4.1 percent to 76 cents.

"Last week was a very strong week for equity markets. We saw some big gains and the US market hit fresh all-time highs," said Mark Lister, head of private wealth research at Craigs Investment Partners. "Some of the risk appetite has returned, after things looked a bit shaky there through early August so it's probably partly due to that. I'ts probably partly due to those stocks having fallen quite heavily.

Metlifecare climbed 3.5 percent to $4.50 after the retirement village operator reported a 37 percent gain in annual underlying profit to $46 million, the top end of its May guidance. It's sitting on a land-bank of over 1,000 units and care beds and is further expanding, particularly in Auckland where it is spending $200 million on two new villages in Auckland's North Shore, on the expectation the 65 year old plus population will double to more than a million people by 2036.

"At the top end of its guidance range, which is a good and encouraging result," Lister said. "It didn't give guidance for the year ahead but they were reasonably upbeat about how things were going and the new rate of growth being sustainable and they will deliver further gains."

Kathmandu was the worst performer on the day, down 5 percent to $3.20 after the outdoor goods retailer's chief executive Peter Halkett said he was resigning effective November. The market always eyes resignations with caution, Lister said, and Halkett had been particularly popular with investors after leading the retailer to profit growth.

Chorus was unchanged at $1.73, after the telecommunications network provider, which is charged with building the nation's ultrafast broadband network, said annual profit fell 14 percent to $148 million in the year ended June 30, in line with market expectations. It is in dispute with the Commerce Commission over the proposed regulated cutting of the network operator’s pricing on its copper line services, while other telecommunications providers have laid claims Chorus is trying to dodge regulation with new service offerings.

"Chorus was still in line with expectations, there were no surprises, but people are still thinking about all the capital expenditure that they're likely to have to do in terms of spending money on the network and people still worry about potential regulatory concerns," Lister said.

Meridian Energy, the government-controlled energy company, fell 0.4 percent to $1.265 after it said it will sell its metering assets and services business, Arc Innovations, to Vector, the Auckland lines company, as it focuses on its retail business. Vector rose 1.5 percent to $2.64.

Heartland New Zealand fell 1.1 percent to 94 cents. The bank formed from the merger of Canterbury and Southern Cross building societies and Marac Finance posted a rebound in profit to $36 million in the 12 months ended June 30, from a previous $6.9 million, meeting its guidance this month and reiterated its projection for earnings growth in 2015.

Spark New Zealand, formerly known as Telecom Corp, rose 1.4 percent to $2.90. Fletcher Building, New Zealand's largest listed company, slipped 0.2 percent to $9.15.

Outside the benchmark index, Intueri Education Group rose 2.1 percent to $2.96 after New Zealand's largest private training company, more than tripled first-half profit to $1.6 million in the six months ended June 30, as it benefited from its acquisition of a half-share in an Australian online education service and from its purchase of New Zealand education provider Quantum Education Group.

Moa Group rose 2.6 percent to 39 cents after the unprofitable boutique brewer raised $5.25 million in an oversubscribed discounted rights issue to shareholders to fund further growth plans.

Blis Technologies shares soared 25 percent to 2.5 cents after the biotech company said its Chinese partner planned to roll out a much wider market test of its probiotic products for mouth and throat health than it had initially indicated.


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