Shares up as a2 and Comvita bounce back

New Zealand shares gained as Comvita and a2 Milk Co recovered from selling, while Air New Zealand and Steel & Tube Holdings fell.

The S&P/NZX 50 index rose 47.63 points, or 0.6 per cent, to 8638.4. Within the index, 32 stocks rose, 13 fell and five were unchanged. Turnover was $157 million.

Comvita led the index higher, up 2.8 per cent to $5.96. The manuka honey company’s shares had been down 14 per cent this week since Monday, when it pulled out of talks with an unnamed third party looking to take it over when it couldn’t reach a deal on price.

“That’s obviously had a fairly good shellacking since the supposed bidder didn’t turn up,” said David Price, broker at Forsyth Barr. “It’s quite interesting now — that price must be pretty close to where the supposed bidder would probably have been if there was a void between the buyer and seller. That stock has been plagued with disappointment, downgrade upon downgrade, so it’s going to have to do a lot of work to regain the market’s confidence.”

A2 Milk gained 2.6 per cent to $10.94. The stock, one of the most volatile on the index, has also had a turbulent week. The milk marketer’s shares slumped 13 per cent last week and a further 9.3 per cent in the first half of this week after it missed expectations, but rebounded on Thursday and continued to make up lost ground yesterday.

Spark New Zealand rose 2.5 per cent to $3.55. It expects annual earnings to fall by as much as 2.5 per cent this year as it brings forward restructuring costs and accelerates its “Quantum Programme”.

It anticipates earnings before interest, tax, depreciation and amortisation of between $971m and $991m in the year ending June 30 as it doubles this year’s restructuring costs to $50m-$55m.

Synlait Milk gained 2.2 per cent to $10.38, and Tourism Holdings advanced 1.7 per cent to $6.61. Air New Zealand was the worst performer, down 2.3 per cent to $3.225. SkyCity Entertainment Group dropped 2 per cent to $3.92 and Sanford fell 1.2 per cent to $7.7.5

Outside the benchmark index, Steel & Tube dropped 4.3 per cent to $1.55. The stock has dropped 22 per cent this week following a downgrade. It now expects to post a loss before interest and tax (ebit) of about $38m this financial year, from positive ebit of $31.1m a year earlier, and breach its banking covenants after a restructuring that will see it exit its plastics business and write down the value of its assets.

Veritas Investments dropped 10 per cent to 18c. Director Michael Morton will step down from the board next month, after a meeting where shareholders will vote on whether to agree to a $27.5m loan from Japanese investment bank Nomura Holdings.