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MARKET CLOSE: NZ shares gain on tweaked earnings outlooks

MARKET CLOSE: NZ shares gain as tweaked earnings outlooks boost A2, weigh on Fletcher

By Paul McBeth

Aug. 19 (BusinessDesk) - New Zealand shares snapped a six-day decline, rising ahead of a flurry of company results this week as investors adjusted their earnings expectations to the benefit of A2 Milk and detriment of Fletcher Building.

The S&P/NZX 50 Index increased 47.12 points, or 0.4 percent, to 10,702.48. Within the index, 23 stocks rose, 23 fell, and four were unchanged. Turnover was $128.3 million.

The domestic corporate earnings season picks up speed this week with blue-chip stocks including Mercury NZ, A2, Fletcher, Spark New Zealand, Air New Zealand and Auckland International Airport scheduled to report.

A2 led the market higher, up 3.4 percent at $16.23 on a volume of 807,000 shares, ahead of its 90-day average of 716,400. The milk marketing firm is scheduled to report on Wednesday, and Forsyth Barr analysts are predicting a near-60 percent gain in annual profit.

"People are coming back into the stock on an upgrade from one of the brokers," said Shane Solly, a portfolio manager at Harbour Asset Management. "There's a bit of earnings result tweaking going on."

Synlait Milk, which supplies A2, rose 0.3 percent to $9.38. Fonterra Shareholders' Fund units fell 1.1 percent to $3.50.

Fletcher, which reports the same day as A2, was the most heavily traded stock on a volume of 4 million shares, well up on its 1.05 million average. It fell 1.6 percent to $4.45. Solly said there were a few brokers who were "pointing at the potential for a little bit of weakness."

Of other upcoming major results, Mercury declined 0.2 percent to $4.94, Spark increased 1.5 percent to $4.04 on a volume of 2.6 million, Air New Zealand rose 1.1 percent to $2.75 in light trading of 264,000 shares, and Auckland Airport decreased 0.6 percent to $9.60.

Property For Industry rose 1.7 percent to $2.335 with 1.2 million shares changing hands, the most since Nov. 7. The real estate investor reported a 57 percent increase in first-half profit, underpinned by increased property revaluations.

NZX-listed company earnings have largely met expectations, with firms adopting a cautious outlook against the backdrop of a slowing local economy and lingering uncertainty in global trade. However, investors responded positively to US President Donald Trump's comments that he planned to talk to his Chinese counterpart, Xi Jinping, very soon.

Solly said that optimism among investors helped lift global bond yields, which hit record lows last week, and noted that some yield stocks gave up some of their recent gains today. Chorus fell 1.7 percent to $5.15, Meridian Energy was down 1.7 percent at $4.67 and Vital Healthcare Property Trust slipped 1.5 percent to $2.58.

Kiwi Property Trust rose 0.6 percent to $1.62 on a volume of 3.9 million shares and Infratil was up 0.4 percent at $4.68 on a volume of 3.2 million. Of other stocks trading on volumes of more than a million shares, SkyCity Entertainment Group advanced 0.8 percent to $3.87 and Goodman Property Trust increased 0.7 percent to $2.14.

Sky Network Television fell 0.8 percent to $1.23. The pay-TV operator today said the issue price for the equity component of its US$40 million RugbyPass acquisition was $1.24 per share. The RugbyPass vendors will end up with 25.1 million shares, or 6.1 percent of the enlarged company.

Z Energy fell 0.8 percent to $6.61 ahead of tomorrow's release of a draft study into fuel pricing by the Commerce Commission. The transport fuels firm will hold a conference for investors later in the day.

NZX declined 1.6 percent to $1.20 ahead of tomorrow's listing of Napier Port. The partial privatisation was oversubscribed at $2.60 a share and is the second initial public offering after a two-year drought. Cannasouth, which raised $10 million at 50 cents a share in June, fell 1.4 percent to 34.5 cents.

Tourism Holdings reported the day's biggest decline, down 2.6 percent at $3.77 on a volume of 163,000, down on its three-month average of 175,800. Pushpay Holdings fell 1.9 percent to $3.09.

The Local Government Fund Agency's 2021 bond paying annual interest of 6 percent was the most traded debt security on a volume of 320,000. The notes closed at a yield of 1.14 percent, up 2 basis points.


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