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MARKET CLOSE: NZ shares rise, Air NZ at 16-year high and Restaurant Brands hits record after investor updates

Sophie Boot
Thu, 01 Jun 2017

June 1 (BusinessDesk) - New Zealand shares rose, led by Air New Zealand and Restaurant Brands New Zealand, while Intueri Education Group's shares were suspended as the company went into voluntary administration.

The S&P/NZX 50 Index gained 32 points, or 0.4 percent, to 7,450.9. Within the index, 21 stocks rose, 18 fell and 11 were unchanged. Turnover was $143.5 million.

Air New Zealand was the best performer, up 5.2 percent to $3.02, the highest it's traded since August 31, 2001. The airline lifted its full-year guidance at an investor day presentation as it benefits from lower jet fuel prices and improving revenue.

Based on the current market environment and jet fuel prices, the company said its 2017 earnings before taxation are likely to exceed $525 million. In February, it said its 2017 earnings before taxation would be in a range of $475 million to $525 million.

"A lot of analysts doubted whether they could replicate last year's result but it looks like they've got a lot of those variables that influence profitability under control, particularly fuel pricing, it looks like oil is going to stay below that $50 range and that's positive for Air New Zealand," said Peter McIntyre, senior investment advisor at Craigs Investment Partners. "Strong domestic activity is likely to benefit them as well. It's been a result that's got stronger during the day as Australian investors have had a look as well, and that's pushed volume along."

Restaurant Brands New Zealand gained 4.9 percent to $5.95, a record. The fast-food operator boosted first-quarter sales by 67 percent to $161.2 million after expanding in Australia, Hawaii, Guam and Saipan. On a same-store basis, sales rose 7.2 percent.

"Their acquisitions have added to total revenue but I think market participants were really impressed with the same-store sales growth and the ability of management so far to execute those transactions," McIntyre said. "It's another good rise from them, but on quite low volume today."

Sky Network Television gained 1.9 percent to $3.68 and Spark New Zealand rose 1.9 percent to $3.83.

Infratil was the worst performer, down 2.8 percent to $2.955, while Westpac Banking Corp declined 1.9 percent to $31.65 and Trustpower fell 1.7 percent to $5.15.

Chorus dipped 0.7 percent to $4.485. The telco responded positively to news the government announced the final details of the reform package for the Telecommunications Act, which refines regulatory settings that will apply to fibre and copper fixed line services from 2020.

Outside the benchmark index, Orion Health Group gained 8.5 percent to $1.15, bouncing back after dropping on Tuesday when the company said it will raise $32.9 million in a discounted two-for-nine rights issue to shore up working capital after posting a $34.2 million full-year loss that reflected weaker sales in Europe, the Middle East and Africa.

"That was a disappointing result, there's a lot of work to be done within that business and the market's wary of where they're heading and maybe there's some credibility issues around forecasting," McIntyre said. "Their cash in the kitty was getting low, but the question is if this is enough to keep them going or should the capital raising have been higher."

Intueri Education Group was suspended at 1.1 cents. it has been placed into voluntary administration after a strategic review garnered an offer for its operating assets that is less than the value of its debt.

Cavalier Corp dropped 9.1 percent to 50 cents. The carpet maker's outlook has deteriorated further since its last earnings downgrade in February and it is warning it now expects to post a loss of around $2 million on a normalised earnings after tax basis in the year to June 30.


Sophie Boot
Thu, 01 Jun 2017
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MARKET CLOSE: NZ shares rise, Air NZ at 16-year high and Restaurant Brands hits record after investor updates