MARKET CLOSE: Orion extends gains, Sky TV keeps falling

MARKET CLOSE: NZ shares rise as Orion extends gain, Sky TV keeps falling

By Sophie Boot

Feb. 29 (BusinessDesk) - New Zealand shares rose, as Orion Health Group continued to rally on a new US deal, while Sky Network Television extended its fall.

The S&P/NZX 50 Index gained 5.9 points, or 0.1 percent, to 6230.88. Within the index, 31 stocks rose, 16 fell and three were unchanged. Turnover was $157.8 million.

Orion Health gained 5.9 percent to $3.04, continuing its upwards trend from Friday when it jumped 15 percent after announcing a deal to provide its Amadeus platform to Nasdaq-listed Cognizant Group. The contract has the potential to triple the number of patients it reaches, boosting a metric it says is increasingly used to value businesses in the healthcare sector. Shares of the unprofitable company have declined 55 percent since listing in November 2014 as Orion Health chases sales growth in lieu of profits.

"From an international perspective it's under-owned, its recent trading has been weak and it did need an announcement like that to drive the share price higher," said Peter McIntyre, investment adviser at Craigs Investment Partners. "The shares seem to be reasonably good value compared to the IPO and how heavily sold down they've been. That sector has had a bit of M&A activity - we are expecting 2016 to be the year of M&A, and it would seem to be quite a value play at the moment. It's a share that held a significant amount of promise and was oversubscribed at IPO, but wasn't owned a lot internationally, and it's possibly disappointed with some of its targets."

Coats Group advanced 5.9 percent to 54 cents, the highest it has traded this year. On Friday, the UK-based threadmaker committed to retaining the 342 million pounds generated from asset sales in an attempt to resolve its impasse with the UK Pensions Regulator over its three pension schemes. The company plans to delist from the NZX and ASX on June 24, leaving its shares tradable only on the London Stock Exchange.

Investors may have seen the stock as having been somewhat oversold when it announced its intention to de-list, McIntyre said.

Fletcher Building gained 2.1 percent to $7.15. Today, the Commerce Commission said it will conduct an investigation into the national and regional markets for construction aggregates before it decides whether to clear Fletcher's bid for construction firm Higgins Group Holdings. Fletcher announced on Feb. 2 it will pay $315 million for Higgins, New Zealand's third largest road construction and maintenance company, subject to regulatory approval.

Westpac Banking Corp advanced 2.1 percent to $31.17, while Ebos Group rose 2.1 percent to $15.62, and NZX gained 2 percent to $1.02.

Sky TV dropped the most on the index, down 4.4 percent to $4.31. Last week, the pay-TV operator posted a 5.8 percent decline in first-half profit as the cost of securing content rose in an increasingly competitive market.

"You've seen some significant downgrades today, a lot of analysts are cutting back their price 3, 4, 5 percent," McIntyre said. "There was nothing to get excited about in the earnings, there was no special dividend, there was no strong forward outlook. It's a business model that's coming under attack from other platforms and it'll be interesting to see how they cope."

Contact Energy fell 1.8 percent to $4.48, Auckland International Airport dropped 1.6 percent to $6.10, and Spark New Zealand shed 1.4 percent to $3.44.

Trade Me Group lost 1.4 percent to $4.34, and Property For Industry fell 1.2 percent to $1.59.

Outside the benchmark, CBL Corp gained 2.3 percent to $2.25. The NZX-listed company that sells credit surety and financial risk insurance outperformed its initial public offering profit forecast to lift annual net profit 83 percent in 2015.

Diligent Corp rose 1 percent to $7.15. The governance software app developer posted a 14 percent decline in annual profit as it ramped up spending on marketing and research and development. The company is currently facing a takeover offer from US venture capital firm Insight Venture Partners, which is offering US$4.93 a share, a 31 percent premium to Diligent's trading price before the bid emerged.

(BusinessDesk)

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