MARKET CLOSE: NZ shares drop, Orion Health and Xero lead index lower while Air NZ bounces

New Zealand shares fell in school holiday trading, with Orion Health Group and Xero dropping while Air New Zealand bounced after recent losses.

The S&P/NZX 50 Index dropped 11.95 points, or 0.2 percent, to 7,252.92. Within the index, 33 stocks fell, 12 rose and five were unchanged. Turnover was $120.9 million.

Orion Health Group led the index lower, falling 4.6 percent to $3.29. At its annual meeting last Thursday, chairman Andrew Ferrier told shareholders the strength of the kiwi is crimping revenue in local currency terms, meaning Orion will get less when sales are converted back into local currency. That currency movement also weighed on Orion's cash position.

"The stock has retraced from recent highs, it's been quite a move - there's a degree of focus returning to the profitability of the revenue generation and how the cash balance is looking, given the comments made," Matt Goodson, managing director at Salt Funds Management, said.

Xero shed 3.1 percent to $19.30, Heartland Bank fell 1.9 percent to $1.52, and Scales Corp dropped 1.9 percent to $3.09.

Property stocks weakened slightly, with Stride Property down 1.5 percent to $1.97, Goodman Property Trust falling 1.2 percent to $1.285, and Kiwi Property Group declining 1 percent to $1.485. Goodson said this was slightly surprising given local bond yields declined slightly overnight following global leads and were down a little today.

"Our property sector had outperformed quite sharply over the last few weeks when Australia had come under considerable pressure, so perhaps it could just be a little bit of catch-up at work there," Goodson said.

Air New Zealand was the biggest gainer, up 2.8 percent to $1.85 after hitting a 22-month low yesterday. It's dropped 32 percent this year, having hit a 14-year record high in January.

"There are two problems - there has been a pickup in oil prices of late, in hopes that OPEC may reach some deal at their latest meeting, and secondly there has clearly been very sharp yield competition from a number of new entrants on various of their routes. It now seems to have found its level and is finding some support today," Goodson said.

Fletcher Building rose 1.6 percent to $10.57 and Ebos Group gained 1.4 percent to $18.80.

Outside the main index, Intueri Education Group plunged 80 percent to 6 cents. The shares slumped as low as 4 cents after the company said an Australian government audit of its subsidiaries across the Tasman could threaten its viability.

"One would have thought the board of directors would, as standard practice, receive regular reports on compliance with all the standards in Australia. The company does have considerable amounts of debt, so just where that leaves it given one of its key profit generators in Australia looks to be at some considerable risk now is somewhat up in the air. The price reaction today suggests there might not be a lot of value left in the equity," Goodson said.

Hellaby Holdings gained 8.9 percent to $3.30. ASX-listed auto parts firm Bapcor has mounted a $322.5 million takeover bid for the investment firm as it looks to extend its reach into New Zealand's local auto market.

The Preston, Victoria-based company is offering $3.30 a share to take full control of Hellaby, an 8.9 percent premium to yesterday's closing price of $3.03, and has secured acceptances totalling almost 30 percent, according to a notice to the stock exchange. Bapcor wants to delist Hellaby and plans to sell the equipment, resources and footwear businesses to focus on the automotive segment.

(BusinessDesk)