MARKET CLOSE: NZ shares rise as A2 soars; Ebos, gains
MARKET CLOSE: NZ shares rise as A2 soars; Ebos, Infratil gain, Mighty River falls
By Sophie Boot
Dec. 21 (BusinessDesk) - New Zealand shares rose as A2 Milk Co extended its rally to a new record, Ebos Group and Infratil gained and Mighty River Power fell.
The S&P/NZX 50 Index rose 0.2 percent, or 12.98 points, to 6120.82. Within the index, 27 stocks rose, 19 fell and four were unchanged. Turnover was $161 million.
A2 led the index higher, up 16 percent to $1.66, a record, having surged 29 percent to $1.43 on Friday when the milk marketer raised its forecast for 2016 operating earnings before interest, tax, depreciation and amortisation to between $33 million and $37 million. The company had already raised guidance last month to $22 million from $12 million, compared with ebitda of just $4 million a year earlier. A2 said its infant formula is selling out even after it increased supplies, showing the appeal of its brand in Australia and China and signalling future growth potential in additional markets.
"There's an awful lot of hot money chasing the story," said Matt Goodson, managing director of Salt Funds Management. "There's a lot of euphoria, and they're probably not thinking about the multiple, they're actually paying for the earnings stream."
Among other dairy-related companies, Synlait Milk rose 1.6 percent to $3.10 and the Fonterra Shareholders' Fund rose 2.6 percent to $6.
Ebos rose 4 percent to $14.30, heading back toward the all-time high of $14.72 it reached two weeks ago. The health consumables and drug distributor has risen about 40 percent this year. Ebos is also listed on the ASX, and the dual-listed stock had reaped the benefits of the strong healthcare sector.
Infratil rose 2.9 percent to $3.22, and Trustpower rose 0.9 percent to $7.53. On Friday, Trustpower announced plans to spin out its windfarms and renewable development pipeline into a separate business, with the blessing of majority shareholder Infratil.
"It's not quite clear how that may all play out, but there is some thought it may be easier for both arms - its New Zealand arm and its Australian wind generation arm - to be of interest to others, that was the thought process from one broking house today," Goodson said.
Mighty River Power fell 4.1 percent to $2.665. The Court of Appeal on Friday dismissed an appeal by New Zealand Carbon Farming, the country’s largest supplier of post-1989 bulk carbon credits, against a High Court decision in favour of Mighty River Power over a $34.7 million liability NZCF claimed to be owed.
Serko rose 6.3 percent to 85 cents. The online travel booking company, which has downgraded its earnings guidance twice this year, raised $8 million from institutional investors at a 5 percent premium and will raise $1 million from existing shareholders to help fund a marketing push and product launch.
Abano Healthcare was unchanged at $7.90, and has risen 1.9 percent this year. The listed medical and dental centre investor posted first-half profit that met its guidance after the sale of its pathology and orthotics businesses a year earlier.