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MARKET CLOSE: New Zealand shares fall as Fonterra units cut to sell; Wynyard, tech stocks gain

Wed, 11 Jul 2018

New Zealand shares fell as a brokerage put a sell rating on Fonterra Shareholders' Fund ahead of what's expected to be a hike to its forecast milk payment tomorrow. Wynyard Group, Xero and Diligent Board Member Services rose.

The NZX 50 fell 11.8 points, or 0.3 percent, to 4706.506. Within the index, 25 stocks fell, 17 gained and eight were unchanged. Turnover was $133 million.

Fonterra dropped 2.1 percent to $6.10. Last month the dairy giant flagged a $157 million charge against inventory at its NZ Milk unit because of a squeeze between rising input costs, represented by the farmgate milk price, and prices for value-added products such as casein and cheese. Craigs Investment Partners analyst Arie Dekker cut the units to sell, lowered his 12-month price target and reduced his forecast for 2014 earnings.

"The market in general doesn't really understand the relationship between the milk price and Fonterra's profit," said Greg Easton, an adviser at Craigs. "Farmers just want a high milk price."

Air New Zealand ended the day down 0.6 percent at $1.62 after the Auckland-based carrier said normalised earnings before tax is expected to increase about 20 percent in the six months ending Dec. 31. The results will include about $10 million of redundancy costs.

"They are performing exceptionally well in what is a tough sector," Easton said. "They've done a lot of work in optimising their routes and fleet."

Wynyard Group jumped 8.6 percent to $1.14 after the intelligence software developer grabbed its third new client in as many weeks. The Auckland-based company signed up the Thai Customs Department today, where Wynyard's software will be used in preventing drug trafficking at the South East Asian nation's northern border.

The deal adds to Wynyard's growing customer list, with recent additions including Manayer Marketing Management and TransCash Corp, and Galadari Brothers in the United Arab Emirates.

"The fact they are getting these contracts is having a product that sells in the market," Easton said.

Among other tech companies, Diligent climbed 4.2 percent to $3.75 and Xero rose 3 percent to $33.

Companies with exposure across the Tasman fell after the kiwi rose to fresh five-year highs against its Australian counterpart, reducing the value of revenue derived in Australia. Fletcher Building, the biggest listed company on the exchange, fell 0.3 percent to $8.82, outdoor equipment retailer Kathmandu dropped 2.9 percent to $3.30, clothing chain Hallenstein Glasson dropped 1.7 percent to $3.95 and jewellery chain Michael Hill International declined 1.4 percent to $1.44.

Pyne Gould Corp was unchanged at 45 cents after shareholders agreed to re-domicile the asset management firm to Guernsey and seek a London Stock Exchange listing. The company is in the process of selling its remaining New Zealand assets and wants to headquarter itself closer to a more astute investor base.

Tower was unchanged at $1.66. After the close of trading the general insurer said it will return some $70 million in capital to shareholders in a 1-for-5 buyback at $1.81 apiece.

Fast food operator Restaurant Brands gained 1.1 percent to $2.30 after government figures showed spending on credit and debit cards rose more than expected in November, driven by increased spending on consumables. Z Energy fell 0.9 percent to $3.50 after as the figures showed lower spending on petrol.


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MARKET CLOSE: New Zealand shares fall as Fonterra units cut to sell; Wynyard, tech stocks gain