MARKET CLOSE: Shares rise; Chorus gains as earnings meet estimates

New Zealand shares rose, paced by Chorus as its first-half earnings met with market expectations. Xero rose to a four-month high as a seller exited the stock.

The NZX 50 Index rose 5.409 points, or 0.1 percent, to 5754.357. Within the index, 24 stocks rose, 18 fell, eight were unchanged. Turnover was $253 million, including $76 million of Fletcher Building..

Chorus rose 1.1 percent to $2.86. The telecommunications network operator posted an 18 percent drop in first-half profit to $64 million, meeting estimates, as it contends with regulated price cuts to sell access to its copper line network, while narrowing the forecast cost to build its nationwide fibre network.

"A little bit more relative clarity in terms of the installation side of the equation and savings targets are positive, and their ability to hit key targets is positive," Shane Solly, director Harbour Asset Management. "There is still some uncertainty there, and the Chorus team seem to be focusing on marking sure they're doing their underlying rollout well."

Xero, the cloud-based accounting software firm, rose 1.8 percent to $20.05, paring an intraday high of $20.40 and has gained some 24 percent since last week. The climb in the share price saw the stock market operator and regulator issue a 'please explain' notice to the company, asking Xero to confirm it was disclosing all material information which might be behind the gain. The tech firm confirmed it was, without issuing any further explanation to the gain in its shares.

"As far as I know it is mainly the selling has dried up, there was one large seller in the market place and he is pretty much gone," said Grant Williamson, director at Hamilton Hindin Greene. "The buyers are definitely back in control of the stock at the moment."

Heartland New Zealand fell 2.2 percent to $1.35. The bank, which formed from the merger of Marac Finance with Southern Cross and Canterbury building societies, increased first-half profit 41 percent to $623.5 million, the mid-range of its earning guidance, as it focused on niche products. Its reverse mortgage business it bought added to earnings, but didn't grow as much as expected.

"A little bit disappointing, some of the growth parts of the business are yet to match expectations," Harbour Asset Management's Solly said. "The market has very high expectations at the moment, and when stocks don't meet those expectations they're generally coming off."

The market is about half way through financial reporting season, which has largely been mixed, Solly said.

"We're seeing slightly more earnings downgrades than upgrades and given where the market is priced, we need to see some more positive earnings stats for people to get excited," Solly said. "Companies are a little more cautious in their forward statements."

Freightways rose 0.5 percent to $6.07. The courier and logistics business posted a 21 percent gain in first-half profit to $26.3 million after lifting sales and fattening margins at its courier and information management units, allowing the company to declare a record interim dividend.

Sky Network Television fell 0.9 percent to $5.69. The country's dominant pay-TV operator increased first-half profit 13 percent to $92.5 million as it cut costs to stem the net loss of 8,707 subscribers.

New Zealand Oil and Gas led the benchmark index higher, up 4 percent to 65 cents.

Spark New Zealand, formerly Telecom Corp, fell 1 percent to $3.13.

(BusinessDesk)