MARKET CLOSE: NZ shares rise, led by Kathmandu as sales rise

MARKET CLOSE: NZ shares rise, led by Kathmandu on sales growth; A2, Genesis fall

By Sophie Boot

Feb. 1 (BusinessDesk) - New Zealand shares rose, led by Kathmandu Holdings after the retailer reported stronger first-half sales on improved margins. Australia & New Zealand Banking Group advanced, while A2 Milk Co and Genesis Energy dropped.

The S&P/NZX 50 Index increased 4.28 points, or 0.1 percent, to 6174.5. Within the index, 27 stocks rose, 13 fell and 10 were unchanged. Turnover was $99 million, as the Auckland Anniversary holiday meant trading was lighter than usual.

Kathmandu led the index, jumping up 7.2 percent to $1.63, a three-month high. The outdoor equipment chain, which fended off a hostile takeover by Briscoe Group last year, lifted first-half profit 9.1 percent on wider margins, and said it's on track to deliver annual profit of $30.2 million.

"It's a pretty positive announcement, but it's still early days," Grant Williamson, director at Hamilton Hindin Greene. "They've lifted both revenue and margins, which is good news, but there's still a lot of water to go under that bridge."

Kathmandu operates sales year-round and much of its clothing stock designed for winter weather, unlike other retailers whose biggest trading periods are over Christmas, Williamson said.

Markets across Asia were mixed on the afternoon's trading, after a strong close on Wall Street over the weekend. Japan's Nikkei 225 rose 1.7 percent and Australia's S&P/ASX 200 gained 0.6 percent, while Hong Kong's Hang Seng dropped 0.9 percent and China's large-cap CSI 300 Index fell 1.8 percent.

"It's pretty dull with Auckland anniversary day, the market's looking firmer on the back of offshore markets but we're again lacking any news flow," Williamson said

Australia & New Zealand Banking Group advanced 2.2 percent to $26.92, New Zealand Refining rose 1.6 percent to $3.77, and Fletcher Building gained 1.6 percent to $7.

Units in Fonterra Shareholders' Fund, which give holders access to Fonterra Cooperative Group's dividend stream, rose 1.2 percent to $5.99. Fonterra has kicked off a review of governance by posing the question of whether a board stacked with farmers has the right skills to drive a global business and whether milk suppliers in other countries should be able to hold shares.

A2 Milk fell 7 percent to $1.74. The dual-listed stock saw a huge rally before Christmas as Chinese demand for infant formula spurred investors in that sector, but has fallen back significantly since then. On the Australian ASX 200 today, infant formula producers dropped, with Blackmores down 6.8 percent and Bellamy's falling 6.7 percent.

"A2 saw spectacular rises, and share prices don't go up forever," Williamson said. "When you get such huge rallies that quickly, stocks can fall back on profit taking."

Ryman Healthcare fell 1.9 percent . The retirement village operator will spend $200 million building its site in Melbourne as part of its planned expansion in Australia's second-biggest city.

Genesis Energy dropped 2.1 percent to $1.86, and Vector fell 1.2 percent to $3.19. Xero shed 1.1 percent to $16.60.

Outside the benchmark index, Synlait Milk was unchanged at $2.88, and has fallen 8.9 percent this year. The NZX-listed dairy company cut its forecast milk payout for this season as global commodity prices stay lower for longer, dropping its forecast milk price for farmers for the 2015/16 season to $4.20 per kilogram of milk solids, from a previous forecast of $5/kgMS.

(BusinessDesk)

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