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MARKET CLOSE: NZ shares break winning streak on Fletcher

MARKET CLOSE: NZ shares break winning streak on Fletcher downgrade, Comvita, A2 gain

By Sophie Boot

Oct. 25 (BusinessDesk) - New Zealand shares dipped, breaking a 15-day streak of gains as Fletcher Building faltered on another earnings downgrade, while Comvita, A2 and retirement village stocks gained.

The S&P/NZX50 Index edged down 7.43 points, or 0.09 percent, to 8,122.67. Within the index, 23 stocks rose, 22 fell and five were unchanged. Turnover was $267 milion.

Peter McIntyre, investment adviser at Craigs Investment Partners, said there was significant volume through the market at the moment, with a handful of stocks - Fletcher Building, Spark New Zealand, Ryman Healthcare, Air New Zealand and A2 Milk Co - all seeing more than two million shares traded today. The weaker Kiwi dollar has been good for exporters like A2 and Xero, he said.

Fletcher led the index lower, down 3.6 percent to $7.67. It has taken a further $125 million provision against problematic construction contracts including the Convention Centre and the Justice Precinct in Christchurch, and said its B&I unit would report a full-year loss of $160 million, including $35 million of overhead costs.

A trading halt was lifted on Fletcher's shares this morning after the announcement, which follows a review by KPMG. The company also announced its new chief executive today, Ross Taylor, who replaces former chief Mark Adamson who was sacked this year amid cost overruns at major building projects

"It was sold off quite hard but has recovered during the day, there was a whole lot of news from them today - some parts of the market probably considered it could have been far worse," McIntyre said. "If they can get their tendering right, they do have the ability to make significant dollars. The market is giving them a third chance. A couple of years ago they underpromised and over delivered, but for the last couple of years it has been the complete opposite."

Ebos Group dropped 1.9 percent to $17.65 and Synlait Milk dipped 1.4 percent to $7.98. Air New Zealand dropped 1.2 percent to $3.355, while Spark New Zealand fell 1 percent to $3.655.

Comvita was the best performer, up 2.8 percent to $8.02, while Port of Tauranga gained 2 percent to $4.57.

A2 Milk continued to make gains, up 1.7 percent to $8.42, a record. It has now risen 289 percent this year.

Retirement village stocks recovered today after recent sell-downs, with Ryman Healthcare rising 1.7 percent to $9, Metlifecare up 1.2 percent to $5.80 and Summerset Group Holdings gaining 1 percent to $4.90.

Infratil rose 0.3 percent to $3.16. The publicly listed infrastructure investor has concluded its NZ Bus negotiations with Auckland Transport while negotiations in Wellington are ongoing, and still expects the business will shrink by a third.

Outside the benchmark index, Skellerup gained 1.2 percent to $1.72. The industrial rubber goods maker said first-quarter trading had been strong and it expects improved earnings in 2018. Trading for the three months ended Sept. 30 was strong, generating earnings before interest and tax more than 10 percent ahead of the comparable quarter in the prior year, chair Liz Coutts said in a statement ahead of the company's annual meeting in the afternoon.

"The second half can be a bit problematic for them, but they have got some momentum in their favour with improving rural sentiment and dairy prices rising. It was a pretty strong update today," McIntyre said.

TeamTalk rose 4 percent to 78 cents. Chair Roger Sowry today affirmed it is on track to resume dividend payments and the dividend reinvestment plan at the end of the 2018 financial year at the company's annual meeting in Wellington.


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