MARKET CLOSE: Shares rise as NZ Refining, A2 Milk gain

New Zealand shares rose after New Zealand Refining Co reported better production volumes and margins and A2 Milk Co continued to benefit from Australian speculation that there's a shortage of infant formula in the face of rising Chinese demand. 

The S&P/NZX 50 rose grew 10.44 points, or 0.2 percent, to 6023.97, having retreated from the record-high close of 6,073.63 reached on Nov. 5. Within the index, 22 stocks rose, 21 fell and seven were unchanged. Turnover was $139.5 million.

NZ Refining led the index, up 6.8 percent to $3.63, its highest price since July 2011. New Zealand's only oil refinery expects to exceed its planned throughput guidance by 4.6 percent, up to 40.8 million barrels for the year, with a margin of US$9.47 per barrel, resulting in a processing fee income of $73.5 million.

"Refining markets have improved," said Grant Williamson, director at Hamilton Hindin Greene. "Today's throughput and margin report shows just how much oil they're refining. Both their numbers and their margins are very strong."

A2 Milk rose for the third consecutive day, up 4.6 percent to 91 cents. The trans-Tasman dairy company has gained nearly 20 percent in the past three days after Australian media speculation of rising Chinese demand, and Australian shoppers complained that baby formula was being bulk-bought and sold for a profit to China. A2 Milk said it has increased production as demand for its products skyrocketed over the past six months.

Wynyard Group soared 20.3 percent to $1.66, a four-month high. The security software developer will seek shareholder approval to raise $30 million over the coming year through a series of private placements, after touting its wares on a roadshow for foreign investors. The Auckland-based company wants to sell up to 15 million shares for at least $2 apiece, a 45 percent premium to the current trading price, after being well-received by institutional and high net-worth investors.

Williamson said Wynyard had "been under pressure for quite some time", but their special meeting today had given investors confidence. "It's not often you can sell shares above market price but they're saying they can, after their great reception at roadshows overseas."

Air New Zealand rose 2.6 percent to $2.72, and Australia & New Zealand Banking Group rose 2 percent to $29.01.

Steel & Tube Holdings dropped about 8 percent to $2.43. New Zealand’s biggest steel distribution company forecast a drop in first-half profit, citing the impact of lower-priced Chinese steel in eroding margins. Profit will undershoot last year’s $10.8 million first-half result, although the Wellington-based company wasn’t specific on the size of the decline. 

"This is disappointing news," Williamson said. "Investors have not liked this news, and we've seen their shares drop to the lowest level since 2013."

Meridian Energy fell 0.2 percent to $2.19 after chief executive Mark Binns said a new wind farm is one of the options on the table if it can’t convince Genesis Energy to keep open two ageing gas and coal-fired electricity plants at the Huntly power station. The Wellington-based company, which is the country’s biggest electricity generator, is urging Genesis to keep open two 250 megawatt Rankine units at the Huntly plant to protect the country’s security of electricity supply, but Binns told Parliament’s commerce select committee he has other options available if Genesis persists with its planned closure.

Stride Property was unchanged at $2.075 after it posted a 31 percent increase in first-half profit, reflecting a restructuring of its property portfolio that led to a drop in rental income but a hike in the value of its properties. Profit rose to $34.1 million or 11.48 cents per share in the six months ended Sept. 30, from $26 million or 8.74 cents in the year earlier period.

(BusinessDesk)