MARKET CLOSE: NZ shares fall, Sky TV drops after profit warning, A2 continues decline

New Zealand shares dropped after Sky Network Television gave a profit warning, while A2 Milk Co extended its decline on uncertainty about the Chinese infant formula market.

The S&P/NZX 50 Index fell 52.34 points, or 0.8 percent, to 6,797.87. Within the index, 28 stocks fell, 20 rose and three were unchanged. Turnover was $163 million.

Sky TV was the worst performer, down 10.8 percent to $4.28, a one-month low. It cut its 2017 earnings guidance citing rising content costs, and falling revenue and subscribers. Earnings before interest, tax, depreciation and amortisation for the year ending June 30, 2017, is expected to be 5 percent to 7 percent below the $296 million forecast it gave in June. The Commerce Commission has delayed its ruling on a proposed tie-up with Vodafone until Feb. 23.

"There are a number of question marks that have to be raised after this, it wasn't long ago that we had another series of events so definitely a few question marks there," said Shane Solly, a portfolio manager at Harbour Asset Management. "The stock is pretty well held by offshore investors now, particularly those with a dividend income bias so there will be a question mark raised by then about the sustainability of dividends. There's still the Commerce Commission decision to get through - it's certainly been a tough year for Sky Television."

A2 Milk Co continued to drop, down 5.8 percent to $2.13. It began declining on Monday on the news that Australian formula producer Bellamy's had gone into a trading halt on the ASX.

"There's still no news from Bellamy's, the company has been in a trading halt for three days now after saying two - that's obviously got people anxious about whether there's more issues regarding particularly the sales of infant formula," Solly said. "It's potentially a case of the company not having disclosed information to investors in a timely fashion. There's some evidence there has been a market share gain by A2 from Bellamy's, Blackmores and others - it may not all be negative news for A2."

SkyCity Entertainment Group declined 3.8 percent to $3.85, Summerset Group Holdings fell 2.8 percent to $4.50, and Freightways declined 2.2 percent to $6.65.

Australia & New Zealand Banking Group was the best performer on the index, up 1.2 percent to $31.31. Air New Zealand gained 1.2 percent to $2.15 while New Zealand Refining Co rose 1.2 percent to $2.58.

Outside the benchmark index, Veritas Investments was placed in a trading halt at 22 cents before announcing it will wind up its unprofitable Nosh supermarket business to keep in the good graces of its lender, ANZ Bank New Zealand. It's dropped 54 percent this year.

Intueri Education Group shares slumped 25 percent to a record low of 3 cents amid signs Australian investors are trimming their holdings ahead of the private education provider's delisting from the ASX next month.

Abano Healthcare gained 2 percent to $8.15. The company beat guidance as it lifted first-half earnings 62 percent from a year earlier to $6.3 million, on an expanding dental network, giving the board confidence in the current strategy as they rejected a partial takeover bid by dissident shareholders as significantly undervaluing the business.

(BusinessDesk)