NZ stocks mixed, A2 Milk leads declines

New Zealand shares were mixed as last week’s FTSE index adjustments rippled through major stocks today. A2 Milk, which has entered the FTSE Russell All World Index, led the declines; Sky Network Television, which made way for it, led the gains.

Monday, September 24th 2018, 6:49PM

The S&P/NZX 50 fell by 38.46 points, or 0.4 percent, to 9,337.51. Within the index, 21 stocks fell, 19 gained and seven were unchanged. Turnover was $107.8 million.

A2 fell 5 percent to $11.84. Almost 9.4 million shares traded on Friday – a four-month high - as the firm entered the FTSE index.

Today’s decline trimmed the stock’s gain this year to 45 percent. Chief executive Jayne Hrdlicka sold her 357,232 shares late last week at an average $12.20 to meet tax obligations and fund commitments made before she joined the company in July, A2 said in a filing late Friday.

Synlait Milk fell 4.3 percent to $11.19 – the lowest close in a month. More than 2.9 million shares were traded on Friday when its weightings in the FTSE all capital index increased.

The stock has fallen about 12 percent since its full-year earnings last week. While the firm almost doubled its earnings, chief executive Leon Clement warned that infant formula sales will probably grow at a slower pace this year.

David Price, a broker with Forsyth Barr, said the index changes had a big impact in a day when volumes were light throughout Asia.

The market is also having to look harder, and in selective sectors, for the evidence of growth needed to push prices higher, he said. While the earnings season had been “okay”, it wasn’t enough to keep driving the market.

“When you look at the multiples the market is trading at, it needed some better results than people were expecting to keep going forward,” he said.

The S&P/NZX 50 is trading at a price to earnings ratio of 18.6 times.

Among the gainers, tourism sector players extended their gains.

Auckland International Airport, the country’s largest, rose 0.3 percent to $7.42. Campervan operator Tourism Holdings rose 1.1 percent to $5.53.

Tourist numbers in August were 5.4 percent higher than a year earlier, Stats NZ said on Friday. Arrivals for the year through August reached a record 3.8 million and were 3.6 percent higher than a year earlier.

Price said the monthly data was good. The relatively weak currency against the Australian and US dollars will also support the sector.

Infratil rose 0.4 percent to $3.3.535. The infrastructure investor company is considering raising $125 million through offers of six- and 10-year bonds. It may accept up to $125 million of oversubscriptions across both instruments.

Fisher & Paykel Healthcare rose 0.3 percent to $15.30. An investor presentation in the US shows the firm remains optimistic for further expansion of its Mexican manufacturing site where it will complete a second building at its La Encantada Campus by the end of the year.

Price said it is more important the firm get another breathing mask into the market and tackle its patent issues.

Earlier this month the firm filed a patent complaint against rival ResMed with the US International Trade Commission. The firm has been in litigation with ResMed since 2016 and warned earlier this month that defending the actions could trim earnings by as much as $10 million.

Retailer Warehouse Group rose 2.5 percent to $2.03.

FNZC raised its 2019-2021 earnings forecasts for the firm, citing in a note to clients the better-than expected gross margins the group achieved.

But it lowered its price target on the stock by 2 percent to $2.05. It also retained its “neutral” recommendation on the stock, which reflected the uncertainty created by the firm’s “necessary” repositioning in the changing retail market.

Steel & Tube Holdings rose 0.8 percent to $1.23.

The firm today reiterated the 2019 earnings forecast it made eight weeks ago citing new contracts and progress it has made reducing costs and streamlining its operations.

Among other blue-chip stocks, Sky Network rose 1.8 percent to $2.25, and Fletcher Building rose 0.8 percent to $6.35.

Chorus fell 15 cents, or 3 percent, to $4.00. The stock today gave up rights to the firm’s 13 cent final dividend.

Tags: Market Close