MARKET CLOSE: New Zealand stocks rise; Air NZ up

MARKET CLOSE: New Zealand stocks rise; Air NZ up on prospects for domestic routes

By Jason Krupp

August 23 (BusinessDesk) – New Zealand stocks rose for the third time in four sessions, led by Air New Zealand after Moody’s Investors Service said it would benefit from Virgin Blue’s exit from the domestic market. Sky City Entertainment Group and Telecom Corp paced the index’s gains.

The NZX 50 rose 16.3 points, or 0.5%, to 3016.8. Within the index 15 stocks rose, 14 fell and 21 were unchanged. Turnover was $54.8 million.

Air New Zealand, the national carrier, rose 2.5% to $1.22. Virgin Blue’s announcement last week that it would exit New Zealand domestic routes to curb losses will benefit the remaining two airlines plying the trade, Air New Zealand and Qantas Airways, Moody’s said today. Its departure “will ease what had been cut-rate competition and support the other two carriers’ profitability.”

Telecom rose 2% to $2.07, having earlier sunk below $2. The nation’s biggest phone company on Friday posted a 2.4% increase in EBITDA on favourable currency movements and intercarrier charges.

“Results from companies have so far been mixed, with the last quarter starting to show some signs of a recovery, and I think the market just took the weekend to digest the news,” said Karl Willscroft, a senior dealer at Direct Broking.
Still, “a lot of the reports from brokers have been down beat over the course of the day on stocks like Telecom,” which was rated ‘underperform.’

Sky City, the casino and hotel operator, rose 2.5% to $2.92.

Fisher & Paykel Appliances Holdings, the whiteware manufacturer, rose 2% to 52 cents. The company announced earlier at its AGM that it would struggle to achieve its guidance for full-year earnings if key markets deteriorate.

Earnings before interest and tax for the appliance business will be at the lower end of the broker consensus range of $45 million to $52 million, while finance EBIT will be at the top end of the $25 million-to-$34 million range, the company said today.

Allied Farmers Ltd. was unchanged at 3 cents after the receivership of its Allied Nationwide on Friday and the announcement today that chairman John Loughlin has resigned.

Allied put its $19.3 million capital raising on hold and pulled a prospectus after Guardian Trust said Nationwide had breached its trust deed.

NZ Farming Systems Ltd., the South American dairy operator, was unchanged at 63 cents. The company had earlier reported a lower loss than last year and advised shareholders not to sell to Singapore-based Olam International, saying the offer price is “too low”. The company said the other suitor for the business, Union Agriculture Group, has advised it intends making a higher offer.

PGG Wrightson Ltd., the rural services company which own an 11.5% stake Farming Systems, fell 3.7% to 53 cents.

Pyne Gould Corp., the financial services company, fell 4.6 to 42 cents, leading declines on the day.

Westpac Banking Corp., the Australian lender, fell 1.9% to $27.80. The company earlier said cash earnings rose 27% to about A$1.4 billion (NZ$1.76 billion) in the June quarter. Last year, it said June quarter cash earnings were about A$1.1 billion. It didn't report net profit for either quarter.

Guinness Peat Group Plc, the investment holding company, fell 1.5% to 64 cents, Rakon Ltd., the crystal oscillator manufacturer fell 0.9% to $1.05, and

Steel & Tube Holdings, the maker of steel products used in the construction industry, fell 0.9 % to $2.20.

(BusinessDesk)

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