MARKET CLOSE: NZ shares rise as SkyCity gains on guidance, NZ Refining up on margins

New Zealand shares rose on relatively light trading, led by SkyCity Entertainment Group and New Zealand Refining Co which both signalled better earnings outlooks. Diligent Corp, Ryman Healthcare and Goodman Property Trust fell.

The S&P/NZX 50 Index advanced 22.8 points, or 0.4 percent, to 6124.21. Within the index, 21 stocks rose, 23 fell and six were unchanged. Turnover was $87 million.

SkyCity led the index, rising 7 percent to $4.45, a 20-month high. New Zealand's only listed casino company said it expects first-half profit to rise as much as 30 percent as it benefits from improved trading in New Zealand, higher turnover from 'high roller' gamblers, lower costs at its struggling Adelaide property, and cheaper funding costs.

"In downturns like this, pretty much all stocks get hit and fundamentals go out the window. But when companies come out with results like that, investors can realise that a stock has been sold off for no reason at all, and it gets well-rewarded," said Grant Williamson, a director at Hamilton Hindin Greene in Christchurch. "It maybe also highlights tourism numbers, which are now extremely important for our economy. SkyCity could be getting a reasonable amount of benefit from that."

Government figures today showed guest nights rose in November for the 20th month in a row after earlier data showed annual visitor numbers rose 9 percent to a record 3.09 million for 2015. In addition to casinos, SkyCity owns hotels in Auckland, Hamilton and Queenstown.

NZ Refining rose 3.3 percent to $3.74 and has risen about 50 percent in the past 12 months. The operator of the country's only oil refinery today said its gross refining margin for November and December jumped to US$10.82 per barrel, from US$9.91 a barrel in the first two months of the year, and customers paid it a record processing fee of $378.7 million last year.

"They just continue to go from strength to strength," Williamson said. "That's a stock that has really turned around from 18 or 24 months ago when refining margins were extremely weak."

The falling oil price has meant a significant turnaround for refining margins, with weakness in the kiwi dollar also helping, he said.

Air New Zealand, which dominates domestic routes and benefits from cheap oil prices, was up 0.3 percent to $3.04.

Sky Network Television rose 2.4 percent to $4.35, and A2 Milk Co gained 2.4 percent to $1.74. Steel and Tube Holdings advanced 2.3 percent to $2.26, Skellerup Holdings increased 2.1 percent to $1.46, and Summerset Group was up 1.5 percent to $4.04, a two-week high.

The local market has largely followed global cues so far this year, with concerns over the strength of China's economy and falling oil prices weighing on investors' appetite for equities. With Wall Street closed yesterday for the Martin Luther King Day holiday, trading was light and global markets didn't spur a lead for local investors, Williamson said.

"Investors don't like all the volatility we're seeing offshore, that is certainly putting off buyers at this stage. With the reporting season not that far away, a number of investors will be waiting for confirmation before they buy some of these companies," he said.

Coats Group was the worst performer on the index today, falling 3 percent to 48.5 cents. Diligent Corp shed 1.8 percent to $5.89, Ryman Healthcare fell 1.3 percent to $8.15, and Goodman Property Trust lost 1.2 percent to $1.245.

(BusinessDesk)