MARKET CLOSE: NZ shares resume rally led by MRP; Kathmandu tumbles
New Zealand shares rose, heading back toward a record high after a two-day slide, as investors regained their appetite for companies offering relatively attractive, dependable dividend yields, such as MightyRiverPower and Spark New Zealand. Kathmandu tumbled after announcing a first-half loss.
The NZX 50 Index rose 12.692 points, or 0.2 percent, to 5756.687. Within the index, 25 stocks rose, 14 fell and 11 were unchanged. Turnover was $106 million.
MightyRiverPower rose about 3 percent to $3.46, leading the index higher. The stock trades at a forward dividend yield of 4.8 percent, while an average 2-year term deposit offers about 4.68 percent, according to interest.co.nz. Meridian Energy rose 1.3 percent to $1.94 and Spark gained 1.2 percent to $3.34. Goodman Property Trust led gains among some property investors, also held for the dividend yield, rising 1.3 percent to $1.195. The trust's manager last week said Singapore's GIC gained approval to invest in its Viaduct Quarter project in downtown Auckland.
"Some of the yielding stocks are getting a little bit of interest after they had a retracement last week," said Shane Solly, a portfolio manager at Harbour Asset Management.
Xero, the cloud-based accounting company, rose 2.3 percent to $16 after saying customer sales are tracking 79 percent ahead of the year earlier in the first nine months of its financial year, in line with its revenue growth forecasts. Xero had $147.8 million of cash to fund its growth at the end of the third quarter, down from $170.8 million at the end of the second quarter, meaning its burned through $23 million chasing sales in lieu of profits.
"People have highlighted it gives them a window of a year or so before they use that cash up and they might need to raise some more equity to support their growth before then," Solly said.
Kathmandu, the outdoor equipment retailer, tumbled 27 percent to $1.47 after saying Christmas and January trading lagged behind expectations, resulting in a loss of $1 million-to-$2 million for the 26 weeks ended Jan. 25, from a profit of $11.4 million in the same period a year earlier,
"The market reacted pretty violently to a seasonal miss in sales," Solly said. "The stock tends to depend on its winter sales so they'll be praying for a bit of cold weather."
Z Energy rose 1.2 percent to $5.01 and Infratil gained 1.1 percent to $3.195. Air New Zealand rose 0.8 percent to $2.63 and Fletcher Building gained 0.8 percent to $8.45.
Ryman Healthcare rose 0.7 percent to $8.31 and Metlifecare rose 0.2 percent to $4.81.
Abano Healthcare, the specialist medical investment firm, fell 2.4 percent to $8.30 after it announced it has quit its bid for pathology work across the lower North Island, saying the terms of the contract on offer weren't workable, and is reviewing the cost the loss of that work will have on its business.
Synlait Milk dropped 2.1 percent to $3.33 after the listed dairy processor cut its forecast market milk payout for the 2014/2015 season to $4.40 per kilogram of milk solids from a previous forecast of $5.00/kgMS citing weak world prices. A2 Milk fell 1.9 percent to 53 cents.