MARKET CLOSE: Shares gain as F&P rises to record, Xero falls on first half result

New Zealand shares rose as Fisher & Paykel Healthcare advanced to a record after lifting its annual profit guidance. Xero fell as its first-half results showed a slower pace of growth. 

The NZX 50 Index rose 4.892 points, or 0.1 percent, to 5526.948. Within the benchmark, 22 stocks rose, 19 fell and nine were unchanged. Turnover was $132 million. 

Fisher & Paykel Healthcare climbed 2.5 percent to a record close of $5.76 after the maker of breathing masks and humidifiers raised its profit forecast for the sixth time in two years, cementing its place as a market darling. The Auckland-based company posted a 10 percent gain in first-half profit to $48.9 million and raised its expectation for annual earnings to a range of $105 million to $110 million as it benefits from the sale of new products, gains market share for existing wares and boosts margins. 

"It seemed to be slightly ahead of what the market was going for," said Ricky Ward, NZ equity manager at JB Were. "It's an expensive looking company on historical multiples, I always say the market is expensive relative to history at the moment and sometimes its worthwhile paying for quality and healthcare clearly is continuing to deliver."

The benchmark index has gained some 16 percent, fuelled by investors looking for yield in a low interest rate environment, since the start of the year, and is looking fully priced said Ward. 

"The only reason that we're trading up here is because there are really limited alternatives, you've got a low interest rate environment, it's going to remain that way for conceivably another 12 months, so people are having to revert to taking on added risk for the chance of a better income," Ward said. 

Xero, the cloud-based accounting software firm, dropped 2.6 percent to $17.05 after it widened its first-half loss to $24.5 million from $17.1 million after spending more on staff and marketing. The software developer wants a million customers, and is targeting growth in the US market where it sees the potential to take market share of an estimated 29 million small to medium sized business owners. In the six month period its customer numbers rose to 371,000. In terms of its North America segment the company said "Xero did not execute to plan. Key leadership changes are being made in the region and Xero expects to accelerate growth over future periods."

"It's still seeing some growth, it's just the rate of growth that's probably disappointing some people," Ward said. "I wouldn't read too much into the fallen Xero share price in some respects because it does come out of the MSCI Index that announcement which was released earlier on in the month probably places a little bit more pressure on the stock. It's probably a combination of both those things."

Investors who follow the international MSCI indices must hold a certain amount of the stock. 

Pacific Edge rose 2.5 percent to 82 cents. 

A2 Milk Co, the milk marketer, was the worst performer on the benchmark index today, falling 3.2 percent to 60 cents. 

Vital Healthcare Property, the hospital investor, was unchanged at $1.51 after the company announced a first quarter dividend of 2 cents per unit. 

Spark New Zealand, formerly Telecom Corp, declined 0.8 percent to $3.23. Fletcher Building, the construction and building supplies business, rose 0.5 percent to $8.44

Outside the benchmark index, Serko, the online travel booking business, climbed 4.2 percent to $1 after it widened its first-half loss to $3.6 million from a loss of $347,146,  in line with its May prospectus as it hired more staff to chase sales growth.

NPT, the listed property investor, rose 1.7 percent to 61 cents after it reported a 14 percent increase in first-half operating profit to $3.1 million as rental income was swelled by new properties including Auckland shopping precinct The Roskill Centre.

Horizon Energy Distribution, the Bay of Plenty lines company which exceeded its regulated price path in 2012, was unchanged at $3.30 after it said first-half profit fell 58 percent to $1.8 million as the Commerce Commission forced it to earn less.

(BusinessDesk)