MARKET CLOSE: NZ stocks rise; Steel & Tube gains

MARKET CLOSE: NZ stocks rise for first day in 4; Steel & Tube, banks gain

July 14 – New Zealand stocks rose for the first day in four, as a rally on Wall Street spilled into the Asia Pacific, Singapore raised its GDP forecast and Reserve Bank Governor Alan Bollard said the economy may revive faster than its trading partners. Steel & Tube Holdings led gainers, and banks advanced.

The NZX 50 Index rose 11.6, or 0.4%, to 2748.50. Within the index, 18 stocks rose, 14 fell and 19 were unchanged. Turnover was a lacklustre NZ$54.9 million, continuing a pattern of light trading volumes in the run-up to earnings season.

Steel & Tube rose 4.3% to NZ$2.90, the highest since June 25. The shares are trading at 7 times earnings, less than Fletcher Building’s P/E of 8.17 and Australian building supplies company Boral Ltd., on 12.8%.

STU has “significant earnings risk” and its illiquid stock gets pushed around, said Paul Robertshawe, who manages NZ$250 million of equities at Tower Asset Management. Still, it’s “perhaps cheaper than Fletcher right now and is a more focused exposure without Laminex, North America or Europe.”

Fletcher, which is part of the winning consortium for Auckland’s NZ$406 million Victoria Park roading contract, gained 0.6% to NZ$6.60.

Westpac Banking Corp. rose 3.4% to NZ$24.11, joining a rally in bank stocks on the ASX that helped lift the S&P/ASX 20 Index up 3% to 3849.30. Australian business sentiment turned positive last month for the first time since December 2007, according to a National Australia Bank index today.

Australia & New Zealand Banking Group climbed 1.5% to NZ$20 on the NZX.

Infratil Ltd., the investment group that controls TrustPower and has holdings in airports, buses and energy assets, gained 1.8% to NZ$1.69. Infratil’s IFTWB warrants expired on Friday, with underwriting arranged by First NZ Capital for at least 68 million and other major shareholders committing to exercise about 30 million, helping bolster its balance sheet.

“The way they did the underwriting means they will get pretty much the maximum they expected, which is a net positive,” Tower’s Robertshawe said. With the potential sale of energy assets and the option to sell back Luebeck airport, “the balance sheet looks much more sustainable,” he said.

Guinness Peat Group gained 1.6% to 65 cents. The shares have shed a quarter of their value in the past six months, amid concern about losses at its biggest investment, the Coats threadmaker business.

Robertshawe said some investors are concerned that Coats may be getting close to its bank covenants, which could force GPG to pump in cash on its own balance sheet. Guinness Peat could be rerated if the company comes out next month and says it didn’t need to make the cash infusion, he said.

Mainfreight Ltd., the trucking firm, was the biggest decliner on the NZX 50 today, falling 2.9% to NZ$4.07. Logistics and courier company Freightways Ltd. dropped 2.8% to NZ$2.80.

Fishing company Sanford Ltd. fell 1.9% to NZ$5.10 and Skellerup Holdings fell 1.8% to 55 cents.

Hellaby Holdings jumped 5.5% to NZ$1.16 after the diversified holding company was raised to ‘accumulate’ from ‘hold’ by Forsyth Barr analyst John Cairns. Hellaby has made "excellent progress" in reducing debt though trading conditions in its four divisions remain challenging, Cairns said, according to the ShareChat website.

Air New Zealand climbed 2.3% to 88 cents after the airline said it expects to save more than six million litres of fuel and cut carbon emissions by 16,000 tonnes a year by installing performance-enhancing winglets on its fleet of Boeing 767 aircraft.

(BusinessWire)

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