MARKET CLOSE: NZ shares rise; Cavalier leads

MARKET CLOSE: NZ shares rise; Cavalier extends quake lift, Pike falls

Sept. 20 (BusinessDesk) – New Zealand shares rose for a third session, led by Cavalier Corp. as investors speculated the carpet maker will get a jump in orders as Canterbury rebuilds after the earthquake. Pike River Coal fell after saying it needs more short-term funding.

The NZX 50 Index rose 4.68, or 0.2%, to 3216.936. Within the index, 22 stocks rose, 17 fell and 11 were unchanged. Turnover was $71.2 million.

Cavalier rose 3.3% to $3.10, the highest level since late 2007. The latest Treasury and central bank estimate of the costs of damage from the quake is $4 billion, including $2 billion for residential housing and contents, $1 billion for commercial property and $1 billion for infrastructure.

“It seems to be a company that will benefit from the unfortunate circumstances in Canterbury,” said Rickey Ward, who helps manage $250 million at Tyndall Investment Management. “Without that it would have flat earnings.”

Fletcher Building, New Zealand’s biggest construction company, rose 0.4% to $8.50, the highest close since April 21.

Ward said while there’s a general sense that some companies will benefit from the quake, he is surprises the shares have performed so strongly given that there’s little detail of how the $4 billion would be paid out and when it would commence.

Pike River Coal fell 1.8% to $1.09 after Chairman John Dow said the company needs more short-term funding to sustain its rate of underground mine development, with capital costs higher than expected in the latest quarter and installation taking longer than forecast.

The news of a funding shortfall comes after Pike announced the departure of long-serving chief Gordon Ward, who will be replaced by mine manager Peter Whittall as of Oct. 2

“The increases in costs and the delay in the receipt of revenues from the second coal shipment have impacted short-term cash flow and led to the need for additional working capital,” Dow said.

New Zealand Oil & Gas, which owns 29% of Pike, fell 1.5% to $1.29.

Ward said today’s statement from Pike wasn’t unexpected, as some analysts had flagged the risks of Pike not having sufficient capital and the uncertain nature of mine development made you “pray for the best but prepare for the worst.”

Still, Pike “has been a company that has disappointed.”

NZ Farming Systems Uruguay rose 1.5% to 70 cents after Olam International said it had acceptances under its takeover offer that lifted its interest above 50%, the threshold for the deal to proceed.

PGG Wrightson, which has agreed to sell its 11.5% stake in Farming Systems to Olam, was unchanged at 59 cents.

Children’s clothing chain Pumpkin Patch fell 4% to $1.90, reversing a similar-sized gain on Friday, when 768, 293 shares changed hands, the biggest daily volume since Oct. 6 last year.

Among other stocks, Guinness Peat Group fell 1.5% to 66 cents. Freightways Ltd., the courier firm, rose 1.7% to $3.01 and Fisher & Paykel Appliances rose 3.3% to 62 cents.

(BusinessDesk)

© Scoop Media