MARKET CLOSE: NZ stocks rise; Abano leads gainers, NZR falls

MARKET CLOSE: NZ stocks rise; Abano leads gainers, NZ Refining falls

By Jason Krupp

Feb. 17 (BusinessDesk) - New Zealand stocks rose to their highest level since June 2008, led by Abano Healthcare Group after it said there was no material explanation for the recent decline in its share price. New Zealand Refining Co. fell after it reported a lower-than-expected dividend and said it planned to ramp up capital spending.

The NZX 50 Index rose 11.21 points, or 0.3%, to 3395.69. Within the index, 25 stocks rose, 8 fell and 17 were unchanged. Turnover was $96.4 million.

Abano, the listed specialist health clinic investor, rose 3.4% to $4.55 after its board preempted a "please explain" notice from the NZX, and said it had no explanation as to why shares had dropped 11% in February to a near a two-year low.

Skellerup Holdings Ltd., the rubber goods and milking equipment manufacturer, rose 1.6% to $1.27, a day after it tripled its first-half profits. Net profit rose to $9.8 million, or 5.12 cents a share, in the six months ended Dec. 31, from $3.3 million, or 2.03 cents a year earlier. Sales rose to $96 million from $85 million.

"Skellerup delivered a sound result and the stock has got some good momentum behind it," said Shane Solly, portfolio manager for Mint Asset Management. "The company seems to be quite conservative in terms of their outlook, but given where the world is at the moment that is not a bad thing."

NZ Refining, the company which operates New Zealand's only oil refinery, fell 2% to $5 with investors reacting poorly to the company's expansion plans and a lower-than-expected return to dividends despite a 145% increase in net profit for the year to Dec. 31.

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The company reported a post tax profit of $57.7 million for the year, compared with $23.6 million in 2009, and a 10 cents per share final dividend, bringing final dividends for the year to 12 cents per share. The company paid no dividends after a disastrous result 2009, while dividends in the previous year totalled 45 cents per share.

The company also announced the board was examining plans to spend a further $400 million to $500 million to increase its New Zealand market share to between 75% and 80%.

Despite positive profit figures "it was the cautious outlook statement that was a little bit behind expectations," Solly said. "The capex spend also slowed sentiment a little."

Vector Ltd. rose 1.6% to $2.54 after Crown Fibre Holdings, the vehicle overseeing the government’s national broadband plan, added the lines company's Auckland bid to its priority list.

Vector joins Telecom Corp., Enable Networks, the Flute joint venture and Alpine Energy Ltd. in box seat negotiations with the government, with its pitch for the country’s biggest city meeting criteria on pricing, funding, financial backing and industry experience.

Shares in Telecom, the country's biggest phone company, were unchanged at $2.23.

NZ Farming Systems Uruguay Ltd., the South American farm developer, rose 3.5%
to 59 cents after it said earnings are likely to stay in the red for another two years before turning positive, and wants to raise up to US$110 million to implement its new business plan.

Farming Systems, which was taken-over by Singaporean commodity firm Olam International Ltd. last year, reported a net loss of $6.8 million in the six months ended Dec. 31, smaller than the loss of $7 million a year earlier. The company is targeting positive net profit in the 2012/13 financial year, and positive earnings before interest and tax in the 2011/12 year.

Fletcher Building Ltd., the country's biggest construction firm, rose 1.4% to $8.34 after New Zealand's Overseas Investment Office cleared its acquisition of Australia's Crane Group. The announcement, which was never seen as a major hurdle by Fletcher, follows a similar clearance by Australian antitrust authorities last week.

Michael Hill International Ltd., the jewellery chain, was unchanged at 89 cents, after it posted a 7.2% gain in first-half profit as more consumers in
Australia and New Zealand splashed out at its stores. Net income rose to $23.9 million, or 6.23 cents a share, in the six months ended Dec. 31, from $22.3 million, or 5.82 cents a year earlier, the Brisbane-based company said in a statement. Sales rose 9.9% to $269 million.

Auckland International Airport Ltd., New Zealand's busiest gateway, was unchanged at $2.24 after it said it would appeal the Commerce Commission's new disclosure requirements aimed at boosting transparency and competition among the country's three main airports.

Under the commission's new input methodologies rule, Auckland, Wellington, and Christchurch airports will now be required to provide regular updates on financial information, quality measures, pricing information, and revenue forecasts from the start of the 2012 financial year.

Banking counters traded softer on the exchange today after Moody's Investors Service, one of the three major rating agencies, put New Zealand's banks on notice of a potential downgrade as it looks into the wholesale funding of them and their Australian parents.

Australia and New Zealand Banking Group, the country's biggest lender, fell 0.7% to $34.00, and Westpac Banking Corp., the Australian lender, fell 0.4% to $32.19.

The threat comes after the Reserve Bank of New Zealand's tougher prudential and liquidity requirements came into effect in April last year, with lenders required to source more domestic funding, and lengthening the term of offshore funding. The four major banks said they were comfortably meeting the core funding ratio.

(BusinessDesk)

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