RESEND MARKET CLOSE: NZ shares rise; DNZ gains; Spark drops; Chorus at 2.5 year high
(Fixes garble in lede)
By Suze Metherell
May 21 (BusinessDesk) - New Zealand shares rose, paced by DNZ Property Fund after it reported an increase in annual earnings. Spark New Zealand dropped while Chorus rose as investors looked ahead to the Commerce Commission decision.
The NZX 50 Index rose 13.478 points, or 0.2 percent, to 5769.265. Within the index, 25 stocks rose, 15 fell and 10 were unchanged. Turnover was $143 million.
DNZ Property Fund rose 1.3 percent to $2.025. The sixth-biggest property stock on the NZX 50 Index by market capitalisation posted a 66 percent gain to $68.8 million in annual profit as it benefited from its property divestment plan, selling five properties and boosting the value of its remaining assets, and costs fell. Property stocks have been popular with investors in a low-interest rate environment as traders look for income paying investments.
"With the view that there could be potential rate cuts down the track that is generally beneficial to yield plays," said James Smalley, director at Hamilton Hindin Greene. "Their earnings were in line" with expectations.
Spark New Zealand, formerly Telecom Corp, dropped 1.3 percent to $2.775, its lowest level since July. Chorus, the telecommunications infrastructure operator, advanced 0.2 percent to $3.17, its highest level since November 2011. Both are awaiting a mid-year announcement from the Commerce Commission on a draft determination for the regulated price of copper-based broadband services. Chorus owns the copper network and Spark is the largest user of the copper lines. Spark is pushing a customer campaign to force the commission to justify a draft decision that favoured Chorus.
"There's a real divergence between Spark and Chorus at the moment," Smalley said. "They're almost perfectly negatively correlated in the last wee while. We do get a draft announcement from the Commerce Commission on the first of July. Maybe there is a bit of sectorial switching out of Spark as the network user and into Chorus as the network owner."
Heartland New Zealand fell 0.8 percent to $1.28. The bank formed through the merger of Canterbury and Southern Cross building societies with Marac Finance said it expects full-year profit to be at the upper end of its guidance range of $46 million to $48 million.
Fletcher Building, the building supplies and construction firm, slipped 0.7 percent to $8.66. Auckland International Airport, the nation's busiest gateway, advanced 2.4 percent to $4.77.
Outside the benchmark index, Rakon, the high-tech components manufacturer, jumped 10 percent to 38 cents, still well below the 2007 peak of $5.67. The company posted an annual profit of $3.2 million from a loss of $83.8 million a year earlier, while doubling its debt and turning to a negative cash flow. The company has been exiting the smart wireless device market, which didn't deliver big enough margins, to focus on the burgeoning telecommunications sector, and has shifted manufacturing from the UK and France to New Zealand and India as part of restructuring to reduce its global workforce by 45 percent and slash its operating costs.
"It's obviously a stock that's been a very sorry story for investors for a long time," Smalley said.
Intueri Education Group declined 1.4 percent to $2.05. New Zealand's largest private training college expects annual earnings will be at the bottom end of guidance of between $30 million to $33 million based on current trading performance, having missed prospectus targets in calendar 2014.
Augusta Capital was unchanged at 99 cents. The listed property investor and fund manager increased annual earnings by 5 percent to $4.9 million as gains from its funds management business offset a decline in rental income.