MARKET CLOSE: NZ shares chart new record; Orion extends gains, SkyCity drops as CEO quits

New Zealand shares rose, pushing the S&P/NZX 50 index to a new record, as Orion Health Group continued to benefit from a new Australian contract, while SkyCity Entertainment Group fell after its chief executive resigned.

The NZX 50 rose 20.95 points, or 0.3 percent, to 6,755.22. Within the index, 23 stocks rose, 17 fell and 10 were unchanged. Turnover was $243.3 million.

Orion led the index for a second session, gaining 4.6 percent to $3.84, an eight-month high. The health systems software company yesterday announced its second large contract in a fortnight, this time with the largest health service provider in the Australian state of Queensland, Metro North. The announcement followed a rally in the stock last week when Orion announced a contract with a major American healthcare provider. The shares have risen from $3.12 before the US announcement on March 30, having fallen to an all-time low of $2.53 in late February from a listing price in November 2014 of $5.70.

"It's been under enormous pressure, so it's just regaining a bit of ground," said Rickey Ward, New Zealand equity manager at JBWere. "They've still got a lot of work to do - they've come off their lows, that's all. It's a bit of bottom-fishing, for want of a better phrase."

The biggest news of the day came from SkyCity, which fell 3.8 percent to $4.76. Chief executive Nigel Morrison resigned from New Zealand's only listed casino company saying he is keen to take a break from the "demanding job" following an eight-year tenure.

Morrison's departure is effective April 29, and the Auckland-based company has appointed its New Zealand chief operating officer John Mortensen as interim chief executive pending a global search, it said.

"It has taken the market by a large degree of surprise," Ward said. "The share price weakened on the back of it, though it has had a pretty big run. People might see his announcement as an indication that all that can be achieved in the company has been."

Coats Group rose 4.4 percent to 60 cents, while Air New Zealand grew 2.9 percent to $3.03.

Meridian Energy advanced 2.7 percent to $2.70 and Fletcher Building improved 1.8 percent to $7.87.

"Anything that's got an income bent to it has been in pretty good demand today," Ward said. "It's that endless pursuit of income, taking equity risk in an environment where interest rates aren't expected to go up any time soon. Our market provides a lot of income and certainty behind it."

Infratil gained 1.7 percent to $3.35, and A2 Milk Co rose 1.6 percent to $1.94.

Fonterra Shareholders Fund lost 3.6 percent, or 21 cents, to $5.66 after giving up rights to a 20 cent interim dividend. Sky Network Television dropped 2.5 percent to $4.76.

Steel & Tube Holdings shed 2.2 percent to $2.25. After market close yesterday, the Commerce Commission said Steel & Tube's seismic steel mesh didn't meet the requirements of the standard and it understands the mesh will not be sold until compliance can be demonstrated.

Diligent Corp, which will likely be acquired by venture capital firm Insight Venture Partners for US$4.90 a share, dropped 0.8 percent to $7.06, near the $7.16 price implied at today's exchange rate.

"The share price tells you the vote will go through, otherwise it would've fallen by the wayside," Ward said. "The spread between where it's currently trading and the bid price has really closed up. You'd expect that to continue as the next few days progress before its trading halt."

There have been questions about whether investors would have to be taxed on the income generated from a takeover, which Ward said had pushed selling in the stock.

"It could be a taxable event - we recommend individuals seek personal tax advice, but this came about through a comment in Diligent's booklet," he said. "If it goes through, and ends up being a taxable event, you get taxed on the price of last financial year compared to the takeover, which is significantly higher, so you could be liable for a large bill for a company which doesn't pay a dividend. People have become a bit wary of that, I think that's why you've seen the volume steadily increase from the sell side."

(BusinessDesk)