Mixed market
Sky City worst performer in index
New Zealand shares were mixed, with most of the market including Summerset Group Holdings and Westpac Banking Corp rising but a big trade in Sky City Entertainment tipping the index down.
The S&P/NZX 50 Index dropped 1.86 points, or 0.02 per cent, to 7624.49. Within the index, 23 stocks rose, 16 fell and 11 were unchanged. Turnover was $357 million. Sky City Entertainment was the worst performer, dropping 4.2 per cent to $4.07. Chairman Chris Moller will retire from New Zealand’s only listed casino company at the end of this year after nine years as a director, to be replaced by its new director, Rob Campbell.
Summerset led the index, rising 2.8 per cent to $4.78. The bestperforming retirement village stock in the past 12 months yesterday said 2017 underlying earnings may rise as much as 33 per cent, driven by new sales of occupation rights to its units.
Underlying earnings, which exclude property revaluations, are forecast at $72m to $75m in calendar 2017, from $56.6m in 2016, when profit jumped 50 per cent. The company didn’t provide a net profit forecast.
“They’ve given pretty upbeat guidance, they’ve been able to develop properties then sell them with good margin, that’s a continuation of upgrades seen from Summerset,” said Peter McIntyre, investment adviser at Craigs Investment Partners. “They have got a large development pipeline and there’s obviously good demand for their units driving into earnings.” Westpac rose 1.4 per cent to $31.70, Mainfreight gained 1.3 per cent to $23.50 and Comvita advanced 1.2 per cent to $5.94. Outside the benchmark index,
Tegel Group, which recently left the NZX 50 index, gained 7.1 per cent to $1.21. The stock on Tuesday fell 1.7 per cent to $1.13 after the company reported earnings near the bottom of an already downgraded guidance.
“There’s news out of Australia that there’s been some consolidation in the price war between Inghams and Tegel, some price movement to the upside, so the outlook was pretty reasonable,” McIntyre said. “In a market trading near all-time highs, value is getting harder to find, and Tegel probably represents some value at the current share price.”
Orion Health Group dropped 1.5 per cent to $1.28. The company was the subject of an NZX price inquiry after the stock gained 39 per cent between June 19 and June 27, going from 97c to $1.35. The company said it continued to comply with its continuous disclosure obligations.
“These stocks have a habit of being over-bought or over-sold, so with the rights issue at 90-odd cents and the share price having fallen back below a dollar I think you’ve seen bargain hunters come in,” McIntyre said.
“Particularly because the main shareholders are participating in that rights issue as well, that’s sending a signal to the market they’re putting their money where their mouth is. It is a stock that has, from a value perspective, gathered interest from investors.”