Market close: Ryman, Diligent gain after good results but Xero falls

New Zealand shares were mixed, along with the results of companies with a September 30 balance date. Ryman Healthcare and Diligent Board Member Services rose as investors cheered their results, while Xero and Rakon fell after posting losses.

The NZX 50 Index fell 4.05 points, or 0.1%, to 3951.50. Within the index, 25 stocks fell, 15 rose and 10 were unchanged. Turnover was $85 million.

Diligent rose 2.8% to a record close of $4.07 after yesterday reporting a 145% gain in third-quarter revenue and wider earnings margins on its software for managing corporate governance information flows, known as Diligent Boardbooks.

Ryman, the biggest retirement village operator on the NZX, gained 1.2% to $4.13, edging back toward the record level reached in September. Today it posted a 15% gain in first-half profit and bumped up its dividend as fee income grew. Profit rose to a record $68.8 million, while revenue rose 19% to $87.9 million.

Ryman's results "were rock solid", says Matthew Goodson, a portfolio manager at BT Funds Management. The value of its villages and units is benefiting from a correlation to stronger house prices, he added.

Fletcher Building, the biggest company on the exchange by market capitalisation, rose 1.2% to $7.43. Telecom, the biggest phone company on the NZX 50, climbed 0.2% to $2.38.

Contact Energy declined 1.5% to $5.19 amid concerns about the impact of low wholesale electricity prices.

Mr Goodson says funds will be flowing back into the market after Haier's takeover of F&P Appliances and Guinness Peat Group's purchase of its capital notes. New Zealand is still a high-yielding market "and it's a world where it's very hard to find yield".

Guinness Peat was unchanged at 58.5 cents.

Xero, the cloud-based accounting service, fell 4.7% to $5.95 after saying it will continue to burn cash to build sales as its losses widen. The loss was $7 million in the six months ended September 30, up from a loss of $3.7 million a year earlier.

Sales soared 119% to $17.3 million, closely followed by a 105% jump in operating expenses to $22.8 million.

"With Xero, you're either a believer or not a believer. At this point it's impossible to apply any cashflow-based analysis," Mr Goodson says. "It's clear they have built a product and had some success getting some market share. At the moment it is engaging in a winner-takes-all strategy."

Rakon, which makes components for navigation systems and smartphones, fell 4.4% to 43 cents. The Auckland-based company posted a loss of $3.96 million for the six months to September 30 as revenues fell and operating expenses rose during a period of sluggish growth in major markets.

Jeweller Michael Hill International gained 1.6% to $1.24, while Kiwi Income Property Trust fell 1.7% to $1.14. Nuplex Industries declined 2.1% to $2.84.

(BusinessDesk)