MARKET CLOSE: NZ stocks fall; Wrightson drops, CAV gains

MARKET CLOSE: NZ stocks fall; Wrightson leads decliners, Cavalier rises

By Jason Krupp

Feb. 21 (BusinessDesk) - New Zealand shares fell, retreating from a 2 1/2-month high with PGG Wrightson Ltd. leading decliners after a potential bidder for the company shelved its takeover plans. Cavalier Corp. rose after first-half profits beat market expectations.

The NZX 50 Index fell 30.8 points, or 0.9%, to3381.93. Within the index, 31 stocks fell, eight rose, and 11 were unchanged. Turnover was $115.1 million.

Wrightson fell 5.3% to 54 cents after an unnamed bidder pulled out of the bidding for the rural services firm. Although no financial details of the bid were ever released, the company said it was looking at a complete buyout.

The company is already facing a partial takeover offer from Singapore's Agria Corp. and China's New Hope Group, which are looking to lift their 19% stake in the company to 50.01% at 60 cents a share.

"It looks like Agria is going to get a reasonable chunk of Wrightson's shares, so that is going to make it difficult for anyone else to do a takeover," said Craig Brown, who helps manage $1.1 billion in equities for One Path New Zealand.

Sky Network Television Ltd., the pay TV operator, fell 2.3% to $5.54 with the stock paring last week's gains after the company reported a 19% jump in net profit to $60.4 million for the six months to Dec. 31 on the back of the success of its MySKY HDi decoder service and a rebound in advertising sales.

Air New Zealand Ltd., the national carrier, fell 0.7% to $1.39 on the news that it will be forced to dump a small portion of its stake in Virgin Blue Holdings Ltd. after an independent report found the airline's shareholding breached Australia's foreign ownership rules.

The Brisbane-based airline found Air NZ’s A$145 million stake had pushed foreign ownership levels to 49.78%, beyond the statutory 49% cap placed on airlines. The New Zealand carrier, which bought a 14.9% stake to cement its trans-Tasman alliance with the Australian airline and give it additional exposure to Australia’s domestic market, has already committed to selling it holdings until ownership ratios fell below the threshold.

Separately, the airline released its latest passenger numbers, showing it carried 990,000 passengers in January, 5.4% higher than the same month last year. Revenue passenger kilometres rose 7.8% and capacity climbed by 6.1%.

Bathurst Resources Ltd., the coal miner, fell 1.4% to $1.42. The company today announced that it had signed a heads of agreement with Westport to gain exclusive use of its coal handling facility to ship coal from the company’s Buller project. The deal is a key logistical milestone for the project.

Cavalier Corp., the carpet and wool processor seeking to control the nation’s scouring industry, rose 1.6% to $3.28 after it posted a 22% jump in first-half profit on growth in Australian sales, which made up for a flat domestic market.

Profit rose to $8.5 million in the six months ended Dec. 31, from $7 million a year earlier, the Auckland-based company said in a statement. Sales rose to 3% to $116.7 million, gaining 19% in the first half in Australia, while in New Zealand sales fell 15%. The results beat Forsyth Barr analyst John Cairns’ forecast $115 million sales and $7.6 million reported profit.

Property for Industry Ltd., the specialist industrial property investor managed by AMP Capital Investors, rose 0.9% to $1.15 after the company reported a 14.3% jump in profit, mainly due to lower tax costs as well as higher rentals.

Distributable profit, the earnings measure preferred by property investors, rose to $18.2 million in the 12-months to Dec. 31, compared to $15.9 million in the year before. That was mainly due to a 39% decline in tax costs to $2.2 million. The company recorded a full-year net profit $10.01 million compared with a loss of $12.5 million previously, when it took an unrealised $25.8 million hit to the value of its property portfolio related to changes in tax depreciation rules.

L&M Energy Ltd., the coal gas explorer, surged 13.3% to 17 cents after it last week reported that the thickness of a target seam within its Ohai pilot project is substantially bigger than anticipated based on preliminary exploration work.

The company had expected to find a gas seam of between 10 meters to 15 meters when it started the first of three wells, but instead discovered a seam measuring almost 40 meters.

(BusinessDesk)

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