MARKET CLOSE: NZ stocks fall, Pumpkin Patch leads; SAN gains

MARKET CLOSE: NZ stocks fall, Pumpkin Patch leads; SAN gains

By Jason Krupp

Jan. 27 (BusinessDesk) - New Zealand stocks fell for a second session, with Pumpkin Patch Ltd. leading the market lower after downgrading its full-year profit forecast, while Sanford Ltd. rose.

The NZX 50 Index fell 3.78 points, or 0.1%, to 3350.93. Within the index, 21 stocks fell, 18 rose, and 11 were unchanged. Turnover was a lower-than-average $33.8 million.

Pumpkin Patch, the children's clothing retailer, fell 7.6% and hit an 18-month low of $1.45 after saying full-year earnings will be down as much as 37% on last year's $25.5 million. The company expects to post between $16 million and $18 million in the 12 months ended July 31, with between $7.5 million and $8.5 million coming in the first half.

The announcement follows earnings downgrades from Warehouse Group, New Zealand's biggest listed retailer, and Hallenstein Glasson Holdings, the clothing chain.

"Investors had anticipated that there would be some weakness with other retailers saying earlier that sales levels were weaker," said Shane Solly, portfolio manager for Mint Asset Management. "It is a disappointment but not unexpected."

Telstra Corp., Australia’s biggest phone company, fell 1.4% to $3.60 after it said it will substantially unwind its Reach joint-venture which will result in an accounting gain of up to A$150 million.

Most of Reach's international assets will be divided between Telstra and Hong Kong-based partner PCCW. Reach will continue to manage the remaining joint assets which are predominantly located in Hong Kong.

Fletcher Building Ltd., whose takeover offer for Australia's Crane Group was knocked back as inadequate, had its stock halted from trading pending a statement.

New Zealand biggest construction company yesterday said it was awaiting further details of the independent assessment of its Crane Group offer from Ernst & Young Transaction Advisory Services, which deemed the hostile proposal "not fair and not reasonable".

Shares were last trading at $7.89 before the halt.

NZ Farming Systems Uruguay Ltd., the South American dairy farm operator 78% owned by Singapore-based Olam International, was unchanged at 55 cents after it named David Beca as its new managing director.

Building Society Holdings Ltd., the merged entity made up of Marac Finance and Southern Cross and Canterbury building societies, expects its shares to list at 88 cents when it joins the NZX next week.

The financial services company will list its 300 million shares on Feb. 1 with a net tangible asset backing of some $265 million, based on pro-forma accounts. Pyne Gould Corp., the parent of Marac, will distribute most of its 72% stake in the holding company among shareholders in the first half of the year.

PGC shares were unchanged at 36 cents in trading today.

Sanford, the fisheries company, rose 2.7% to $5.03, leading gainers on the NZX 50.

The company yesterday announced that it was teaming up with rival Sealord to tap government funding for research and development into lifting the value of New Zealand mussel exports.

Restaurant Brands NZ Ltd., the fast food franchise operator, rose 2.5% to $2.49, a day after the NZX asked company to explain why its share price had declined over 10% since January 10.

The company was the second best performing stock on the exchange last year, having gained 64% in 12-months to peak at $2.68 at the end of last year.

Restaurant Brands did not give an explicit explanation for the fall, and said it is comfortable with the full year profit guidance which is seen in the regions of $24 million $26 million.

"There have been some concerns about maintaining the rate of sales growth, and people seem to have gotten anxious about that," Solly said.

National Property Trust, the property investor which dumped its St Laurence-linked manager last year, rose 1.9% to 53 cents after it reported distributable earnings of $2.41 million in the three months ended Dec. 31, marginally ahead of forecast.

That took underlying profit to $6.85 million in the nine month period, down from $7.24 million a year earlier. Investors will receive a third-quarter distribution of 1.3329 cents per unit, up from 1.125 cents for the same period a year earlier.

(BusinessDesk)

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