Contact, Heartland drive market higher
Freightways dips, Opus International Consultants up on takeover prospects
New Zealand shares gained as Contact Energy and Heartland Bank rose on positive earnings, while Freightways dropped on concern over margin pressure. Opus International Consultants soared on the prospect of a takeover.
The S&P/NZX50 Index rose 42.83 points, or 0.6 per cent, to 7761.94. Within the index, 27 stocks rose, 17 fell and six were unchanged. Turnover was $123 million.
Contact led the benchmark higher, rising 3 per cent to $5.54. The electricity generator-retailer reported a 10 per cent fall in underlying earnings to $141m for the year to June 30. The company also announced it would be moving to a new dividend policy with payouts based on 80-to-90 per cent of free cash flow which would let it make larger returns than under the existing policy.
Genesis Energy Fletcher Building Heartland
rose 2.9 per cent to $2.47 while gained 1.8 per cent to $8.06.
gained 2.2 per cent to a record $1.90. The bank boosted annual profit 12 per cent to $60.8 million as it managed to maintain relatively wide margins while ex- panding its loan book across all three of its main target sectors. Heartland expects annual earnings to keep rising in the current financial year, forecasting net profit of between $65m and $68m in the year ending June 30, 2018.
“They've given guidance 12 per cent up on PCP, there has also been an improvement in the cost ratio so it's a good earnings result. They've been able to build a really good track record,” said Peter McIntyre, investment adviser at Craigs Investment Partners.
Freightways
was the worst performer, dropping 1.9 per cent to $7.95. The shares fell despite a 22 per cent lift in annual profit on the strength of volume growth and margin in the express package and business mail division, and an upbeat outlook for the current financial year.
Outside the benchmark index, Opus soared 72 per cent to $1.70. WSP Global Inc, a Canadian listed consultancy firm, has made a “very full” offer of $1.78 per share, more than 10 times 2016 earnings for Opus, in what it calls “a very transformative acquisition for the region”.
The company also released its earnings after trading closed. It posted an improved first-half profit, at $6.2m in the six months ended June 30, from $900,000 a year earlier, as a gain in Australia and New Zealand made up for losses in other regions.
Synlait Milk
was unchanged at $4.65. The NZX-listed milk processor said regulatory approval for its “grass- fed” infant formula in the US is taking longer than expected. The FDA process, which had been expected to be completed this year, is now expected to take a further four-to-12 months.
The stringent process, known as a New Infant Formula Notification (NIFN), includes a range of trials, audits and documentation. The company has previously said that significant manufactured volumes for the US market weren't expected until the 2018 financial year.
“The understanding . . . is that they can still sell their stage two formula without FDA approval,” McIntyre said. “At this stage, it doesn't seem to be material, but it's probably something they want to get sorted out as quickly as possible.”