MARKET CLOSE: NZ shares gain, Freightways and Sky TV rise

MARKET CLOSE: NZ shares gain, Freightways and Sky TV rise while Gentrack, Ebos drop

By Sophie Boot

July 31 (BusinessDesk) - New Zealand shares gained, led higher by Freightways and Sky Network Television as the market remains quiet ahead of earnings season.

The S&P/NZX50 Index rose 0.71 points, or 0.008 percent, to 8,922.09. Within the index, 24 stocks rose, 19 fell and seven were unchanged. Turnover was $123.2 million.

Mark Lister, head of private wealth research at Craigs Investment Partners, said the local market was waiting for the reporting season to begin. That kicks off at the end of next week with Skycity Entertainment Group's full-year earnings on Aug. 8, with most companies reporting in the second and third weeks of August.

"Whether our market is up or down this week is probably dependent on overseas markets," Lister said. "Outside of Z Energy, I can't think of any profit downgrades we've had. One would think that by now if you were going to disappoint in a material way you'd have to say so, confession season is drawing to a close, so no news is good news in that period."

Freightways led the index higher, up 1.9 percent to $7.95, while Sky Network Television rose 1.9 percent to $2.71 and Genesis Energy gained 1.6 percent to $2.55.

Kiwi Property Group advanced 1.5 percent to $1.355 and Metlifecare was up 1.5 percent to $6.17.

Contact Energy gained 1.1 percent to $5.78. It is selling its Rockgas LPG business to gas network operator Gas Services NZ Midco for $260 million, which it will use to pay down debt.

"That whole sector is getting a bit of support anyway - it's just a good, safe place to be if you're concerned about the outlook and after a bit of safety," Lister said.

Gentrack Group was the worst performer, down 1.7 percent to $6.77. Yesterday, the company completed its $90m capital raise with a retail shortfall bookbuild conducted today, following a stock offer to retail investors which it completed last week. Together, the retail component raised about $38m, with the institutional component completed earlier this month.

The funds raised will go towards repaying bank debt taken on after a series of four acquisitions totalling $138m before earn-out payments. Gentrack says this will leave it with almost no bank debt and give it a strong enough balance sheet to make more acquisitions.

"I wouldn't read too much into that, they have recently raised some capital via a rights issue so people need to wait for the dust to settle on that," Lister said. "You always see a bit of movement in share prices after raising some money, it's more technical factors than fundamental."

Ebos Group fell 1.7 percent to $20.20, Kathmandu Holdings dropped 1.6 percent to $3.08, and A2 Milk Co declined 1.5 percent to $10.46.

The ANZ business outlook survey for July, released this afternoon, showed that New Zealand business confidence reached a 10-year low in July, with headline confidence and firm's views of their own prospects dropping. It's the lowest that measure has been since May 2008.

Lister said that while the headline business confidence figure is "a bit of a red herring", businesses are facing increased pressures and it will make for an interesting reporting season.

"From where I sit a lot of businesses are seeing a bit of slowdown in growth and increasing cost pressures. It's getting a bit tougher to keep your margins constant and keep your profits where they are, because your revenue is coming off the boil and all these costs are creeping in," Lister said. "We'll be watching lots of companies closely to see if that comes through in their earnings or outlook."

Outside the benchmark index, Evolve Education Group fell 12.5 percent to 56 cents. It expects its 2019 annual earnings will be $3 million to $5 million lower and said it continues to see takeover interest. Its shares dropped 7.8 percent.

Serko rose 3.6 percent to $2.85. The online travel booking software developer has lifted its 2019 revenue expectation slightly due to a planned extension of its partnership with Flight Centre Travel Group.

(BusinessDesk)

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