MARKET CLOSE: NZ shares rise; Orion, Comvita gain on news

New Zealand shares rose, led by Orion Health Group reporting another major contract, while Comvita is poised to enter the index of top 50 stocks.

The S&P/NZX50 gained 18.46 points or 0.3 percent to 6,734.27 on the same day as Nikko Asset Management's head of equities Stuart Williams described New Zealand's share market as "expensive". Within the index, 24 stocks fell, 17 rose and nine were unchanged. Turnover was $200.3 million.

Orion Health Group led the index, up 4.9 percent to $3.67, a five-month high. The health systems software company 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 follows 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.

"Orion's been one of the better performers in the last while based on these contract announcements," said Peter McIntyre, adviser at Craigs Investment Partners. "The market's been looking for Orion to sign those meaningful contracts. They've made some good progress after being one of the more high-profile floats - they've basically failed to deliver post-float, but they are making some good momentum."

Spark New Zealand rose 2.9 percent to $3.54.

Air New Zealand advanced 2.3 percent to $2.945. The airline is launching year-round direct flights to Manila in the Philippines from December. Last week, it announced it was looking at a sale of its 26 percent stake in Virgin Australia, less than a fortnight after committing to a one-year A$131.2 million loan to the airline.

"The market is still digesting whether Air New Zealand is going to be better off without Virgin," McIntyre said. "Investors are moving with a bit more certainty that their capital is going to be better utilised."

Auckland International Airport rose 1.1 percent to $6.42.

Fletcher Building gained 1.7 percent to $7.73.

"In a market that's seeking value, Fletcher Building's a company that probably has unlocked value, and selling off those underperforming businesses maybe is giving some institutional investors or retail analysts more confidence about the stock," McIntyre said.

Fisher & Paykel Healthcare edged up 1.2 percent to $9.77.

Steel & Tube Holdings advanced 0.9 percent to $2.30. The company, which is being investigated by the Commerce Commission after admitting selling "many thousands of sheets" of earthquake reinforcing mesh incorrectly labelled as being independently certified, says it will now only supply product that has been externally tested.

"It hasn't really driven the share price to a great extent," McIntyre said. "They're trying to tidy up an issue that was pretty untidy for them. They're trying to validate their compliance, which you can expect."

Heartland Bank was the worst performer, down 2.5 percent, to $1.15.

Kathmandu Holdings shed 2.4 percent to $1.66, Westpac Banking Corp lost 2.3 percent to $32.05.

Summerset Group Holdings dropped 2.1 percent to $4.24. The retirement village operator said it's on track to build 400 units this year after reporting first-quarter sales of occupation rights fell from a year earlier but was downgraded by First NZ Capital, which described recent performance as "underwhelming".

Comvita, the natural health products company, will enter the S&P/NZX 50 Index if the takeover of Diligent Corp by Insight Venture Partners goes ahead. Trading in Diligent shares is due to be halted on April 11, two days before a special meeting of stockholders. If the sale goes ahead it will be delisted. If the sale doesn't complete, then trading in Diligent will resume.

Comvita rose 5.1 percent to $10.60, while Diligent gained 0.1 percent to $7.12.

"Comvita's been a solid performer over the last wee while," McIntyre said. "It's been a bit of a standout, but that whole sector has been a standout. If you look at comparable companies in Australia they've done very well."

(BusinessDesk)