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MARKET CLOSE: NZ shares up, but Air NZ drops as more flights cancelled

Sophie Boot
Tue, 19 Sep 2017

New Zealand shares inched up, with Synlait Milk touching records, A2 Milk gaining after Synlait's positive earnings and New Zealand Refining recovering.

The S&P/NZX50 Index rose 5.82 points, or 0.08 percent, to 7,764.53. Within the index, 19 stocks rose, 19 fell and 12 were unchanged. Turnover was $157.6 million.

Synlait Milk led the index, up 5.5 percent to $5.54. The shares rose to a record high on intraday trading after the company posted an 11 percent gain in full-year profit to $38 million and flagged further growth this year while signalling a move into branded consumer goods.

"It certainly beat our expectations and I think it beat other analyst expectations as well," said Peter McIntyre, investment adviser at Craigs Investment Partners. "It had a strong finish to the year and the growth outlook is positive, it was enough to really please investors. The share price has gone ballistic over the last week - it's up over 12.5 percent the week rolling, there has been a really strong price appreciation"

A2 Milk Co also gained, up 0.9 percent to $5.89. The stock has gained 174 percent this year, making it the best performer on the index.

"It's been breaking into new barriers all its trading life, a lot of analysts have got a really good view of it particularly after the presentation in Hong Kong and that's why it went through that $6 range, and it's settling down again. It's a news flow driven stock," McIntyre said.

New Zealand Refining bounced after yesterday's selling, up 2.1 percent to $2.44. Yesterday it announced a pipeline leak has disrupted jet fuel supplies at Auckland International Airport.

"It has bounced back, the impact is going to be around $10 to $15 million on revenue," McIntyre said. "The news is out there now, there are still a few complaining they should have had an announcement on Friday but there are maybe some investors taking an advantage of that pullback in price, noting there's nothing materially wrong with the company and it's just an unfortunate accident."

Air New Zealand dipped 0.5 percent to $3.20. Its domestic and international flights have been disrupted, as the shutdown is limiting available jet fuel to about 30 percent of normal usage. Late this afternoon, the carrier announced it had cancelled further international flights due to leave tomorrow, and expects further cancellations. The airline has also stopped all ticket sales on some international services.

McIntyre said some investors are using stocks with good liquidity to change their positions before the election, with strong trading in A2 Milk as well as stocks such as Spark New Zealand, Vector, Fisher & Paykel Healthcare and Contact Energy today.

Spark rose 0.3 percent to $3.82 while Contact fell 0.9 percent to $5.42, Fisher & Paykel dropped 1.1 percent to $12.15 and Vector declined 1.8 percent to $3.24.

Metro Performance Glass was the worst performer, down 2.9 percent to $1.02, while CBL Corp fell 1.4 percent to $2.86

Outside the benchmark index, New Zealand Oil and Gas dropped 1.3 percent to 74 cents.

OG Oil & Gas, the oil and gas division of Ofer Global Group, is pursuing a partial takeover of NZOG to keep the local energy explorer's NZX listing and the access to future capital it provides. The Ofer unit has offered 77 cents per share for a maximum of 70 percent of NZOG to trump a rival bid by Zeta Resources.

"Both companies have different outlooks for how they see the company, one wanting to return capital and the other looking at future exploration opportunities," McIntyre said. "It's not really surprising the share price is down, some that are not wanting to end up with a partial holding are probably using it as an opportunity to exit. In saying that, it's on really light volume, so it's neither here nor there really."


Sophie Boot
Tue, 19 Sep 2017
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MARKET CLOSE: NZ shares up, but Air NZ drops as more flights cancelled