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MARKET CLOSE: NZ shares up on A2, Port of Tauranga gains

MARKET CLOSE: NZ shares up on A2, Port of Tauranga gains while F&P Healthcare falls further

By Sophie Boot

Nov. 22 (BusinessDesk) - New Zealand shares rose, led higher by A2 Milk Co and Port of Tauranga, while Fisher & Paykel Healthcare weakened further after its first half results yesterday.

The S&P/NZX50 Index rose 16.51 points, or 0.2 percent, to 8,104.99. Within the index, 27 stocks rose, 12 fell and 11 were unchanged. Turnover was $173 million.

A2 was the best performer for the second day in a row, up 5.2 percent to $8.69. The milk marketer said yesterday that both revenue and net profit jumped in the first four months of the current financial year as it continues to benefit from strong demand for its infant formula.

"There have been a series of analyst upgrades after yesterday's bullish AGM commentary, that's notwithstanding one of the larger brokers cutting their call back from buy to hold," said Matt Goodson, managing director at Salt Funds Management. "These are markets where if you hit your numbers, there is no multiple high enough."

Port of Tauranga rose 4.1 percent to $4.86 and Air New Zealand gained 2.1 percent to $3.18.

Stride Property rose 1.2 percent to $1.68. The property company plans to spend $43 million transforming an Auckland bottling plant into a logistics site for the country's biggest rubbish collection and recycling firm, Waste Management NZ.

It wants to finish the redevelopment in the September 2019 quarter, after which Waste Management would sign up to a 25-year lease, generating initial net rental income of $3.89 million with structured growth built into the agreement, meaning it should break the $100 million mark for Stride over the lifetime of the contract. The agreement also caters for an additional work to expand the scope of works by up to $23 million, which would lift the rent.

"It dealt with one of its largest long term lease issues and the stock is responding to that," Goodson said.

Restaurant Brands gained 1.2 percent to $6.90. The stock has risen 34 percent this year and has gained 6.2 percent over the past four trading sessions.

"It continues to catch a bid on no new news," Goodson said. "In a presentation they released about a week ago, for the first time they explicitly mentioned the potential purchase of KFC Hawaii, and that seems to have created a little bit of interest."

Fisher & Paykel Healthcare was the worst performer, down 4.9 percent to $12.60, continuing yesterday's weakness. New Zealand's biggest listed company increased first-half profit 4 percent to $81.3 million, widened its margins, and lifted its forecast for full-year earnings to the top end of its range.

"It was a slightly disappointing result at an underlying operating level," Goodson said. "They certainly made their numbers but that was from having slightly lesser litigation costs than expected, but mask sales were a little under expectations."

Xero dipped 0.5 percent to $33.21. It's now trading 2.5 percent lower than when it announced it would leave the NZX and be solely listed on the ASX, having recovered somewhat from the $30.74 low it reached after that announcement.

"There's ongoing angst from New Zealand investors about what appears to be a now-certain shift to Australia," Goodson said. "Australians have had every opportunity to buy the stock yet they're still only about five percent of the register, so that continues to utterly baffle the market here."

Investore Property was unchanged at $1.39. The property investor, which was spun out of Stride Property last year, said first-half profit more than tripled to $11.6 million as acquisitions boosted rental income and it benefited from lower finance costs.

Outside the benchmark index, Seeka dipped 0.5 percent to $5.72. The fruit grower lifted its annual operating earnings guidance after improved performance across most of its businesses. Still, the company warned it will take an impairment on the goodwill of its banana ripening and supply business of between $1.75 million and $2.5 million.


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