MARKET CLOSE: NZ shares rise; Spark, Contact gain; Xero down

MARKET CLOSE: NZ shares rise; Spark, Contact gain; Xero falls

By Suze Metherell

April 30 (BusinessDesk) - New Zealand shares rose from a two-month low, paced by Spark New Zealand and Contact Energy as the prospect of lower interest rates fuelled investor demand for income-paying equities. Xero extended its decline.

The NZX 50 Index rose 50.52 points, or 0.9 percent, to 5791.336. Within the index, 28 stocks rose, 12 fell and 10 were unchanged. Turnover was $132 million.

The central bank kept interest rates on hold at 3.5 percent this morning, and flagged it may have to lower the rate should demand and inflationary pressures track lower than would be consistent with its inflation target. The stoked demand for income-paying stocks in a low interest rate environment, while the drop in the New Zealand dollar against its Australian counterpart lifted sentiment for companies with exposure across the Tasman.

Spark, formerly Telecom Corp, rose 3.3 percent to $2.97. Contact, the energy retailer and generator, gained 2.9 percent to $5.68. MightyRiverPower, the partially-privatised energy company, advanced 2.7 percent to $3.01. SkyCity Entertainment Group, which operates casinos in Australia and New Zealand, climbed 2.2 percent to $4.20. Construction company Fletcher Building rose 1.2 percent to $8.31.

"When the Kiwi/Aussie weakens, as it has today, it certainly supports some stocks," said Matthew Goodson, managing director at Salt Funds Management. "A number of companies could have been at risk from the strong Kiwi/Aussie cross, but that coming back somewhat releases a degree of pressure - that's one force potentially supporting this market."

Xero, the cloud-based accounting software firm, was the worst performer on the benchmark index, dropping 3.6 percent to $19.90. Across the Tasman its rival MYOB is preparing to list on the ASX, with its share price being set today, Goodson said. Last week Xero said it widened its annual loss to $69.5 million, from $35.5 million a year earlier, while it also announced its US-based chief financial officer Douglas Jeffries has left the company after only two months in the role.

"MYOB is pricing today and there's some talk that it's pricing quite strongly," Goodson said. "Maybe people are viewing that as an alternative to Xero and selling it."

Genesis Energy extended yesterday's 7.6 decline to fall 2.3 percent to $1.95. New Zealand's largest energy retailer cut its forecast for annual earnings to between $330 million and $345 million in the year ending June 30, lower than its $363.4 million prospectus estimate from March last year.

Units in the Fonterra Shareholders' Fund fell 1.3 percent to $5.31 after Fonterra Cooperative Group cut its forecast payout to farmers by 20 cents to $4.50 per kilogram of milk solids, while retaining its estimated dividend of between 20 cents and 30 cents. The fund gives investors exposure to Fonterra's dividends, and a lower milk price is typically seen as a positive due to its nature as a input cost to the company.

A2 Milk Co, which markets milk with a protein variant, was the biggest gainer on the day, up 6.1 percent to 52 cents.

Outside the benchmark index, Tourism Holdings surged 12 percent to $1.80. The largest campervan rental business in Australia and New Zealand boosted full-year guidance for a third time and hired First NZ Capital to review its capital structure to maximise value for shareholders. The Auckland-based company said it expects annual profit to be between $19.5 million and $20 million in the year ending June 30, from the $11.1 million it recorded in 2014.

OceanaGold Corp, which operates the Macraes gold mine in Otago, fell 1.2 percent to $2.48. The gold miner reported a 58 percent drop in first-quarter profit with sales down from a year earlier, and announced plans to buy the Waihi Gold Mine for US$101 million. Net profit fell to US$24.5 million in the three months ended March 31, from US$58.9 million a year earlier, the Melbourne-based company said in a statement.

IkeGPS fell 2.5 percent to 78 cents. The remote measurement software developer said will miss its prospectus revenue targets for the 2015 financial year, but says that's because sales of its new smartphone application, Spike, are running three months behind schedule and are expected to exceed targets. Giving guidance on the current financial year, the company said it would make a smaller loss than its prospectus forecast of $5.33 million, although revenue would come in below the forecast of $6.46 million, "primarily due to anticipated sales from its start-up smartphone solution falling just outside the March 31 2015 financial year end."

Trilogy International rose 2.3 percent to 96 cents. The skincare products and scented candle maker has appointed its head of natural products Angela Buglass as its next chief executive, effective from July this year.

(BusinessDesk)

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