MARKET CLOSE: NZ stocks fall led by Telecom; Fonterra Fund gains
By Suze Metherell
July 29 (BusinessDesk) - New Zealand shares fell led by Telecom Corp after an analyst's report cut the stock's target
price ahead of its name change next week. Units in the Fonterra Shareholders' Fund rose after Fonterra Cooperative Group
slashed its forecast milk payout and boosted dividends.
The NZX 50 Index fell 21.586 points, or 0.4 percent to 5165.556. Within the benchmark, 21 stocks fell, 20 rose and nine
were unchanged. Turnover was $158.5 million.
Telecom dropped 3.1 percent to $2.85,extending a fall from a six-year high. An analyst who rates Telecom a 'sell'
reduced the target price to $2.30 after reviewing the stock today, according to Reuters' data. New Zealand's largest
telecommunications provider is due to change its name to Spark next week as it chases earnings growth in a shift away
from its traditional bread and butter services to focus on data, mobility and cloud services, and last month
soft-launched its internet TV service Lightbox.
"Its seems to be profit taking, mainly on the back of a broker report that has a much lower target price than the
current market price," said Grant Williamson, director at Hamilton Hindin Greene. "A number of people quite like the
rebranding idea for Telecom but there's a number out there wondering why the company is spending so much money to
rebrand."
Units in Fonterra Shareholder's Fund, which give access to the dairy exporter's dividend stream, rose 1.2 percent to
$6.07. Fonterra cut its forecast 2015 milk price to $6 a kilogram of milk solids from $7 kgms, citing a decline in
global dairy prices in the face of strong global production, a build-up of inventory in China and falling demand in
emerging markets. At the same time the company forecast a dividend of 20 cents to 25 cents a share, up from the 10 cents
it plans to pay this year.
"It's probably good news for the fund, the potential for higher dividend payouts from the Fonterra Shareholders' Fund,"
Williamson said. "Overall, there is the possibility demand has levelled off and is starting to decline, and I think
Fonterra has made that point where China might be a little bit overstocked, so a little bit of concern in the dairy
sector."
A2 Milk Co, which exports infant formula to China, rose 1.6 percent to 64 cents. Outside the benchmark index, Synlait
Milk, which processes a2 Milk's formula and also exports to China, fell 0.3 percent to $3.34.
Fletcher Building, New Zealand's largest listed company, dropped 1.6 percent to $9.04. Xero, the cloud-based accounting
software firm, slipped 0.8 percent to $26.20.
OceanaGold was the day's best perfomer on the benchmark index rising 4.3 percent to $3.90. The gold miner will report
second-quarter earnings this week.
Retirement village operators rose after recent selling pressure made their lower prices more attractive to investors,
Williamson said. Metlifecare advanced 3.4 percent to $4.33. Summerset Group Holdings climbed 1 percent to $3.15. Ryman
Healthcare rose 0.6 percent to $8.09.
Outside the benchmark index, Pumpkin Patch fell 1.3 percent to 37.5 cents, after announcing founder Sally Synnott is
retiring from the childrenswear retailer's board to be replaced by Griffin's Foods executive Josette Prince as the
business continues a strategic review to revive falling sales and profit.
Takeover target Turners Auctions extended yesterday's gain, rising 0.3 percent to $3.06, a premium to the $3 cash, scrip
and note offer to buy the auction house by Dorchester Pacific. Dorchester's shares were unchanged at 23.5 cents.
Acurity Health, the private hospital operator, was unchanged at $6.58 after its three biggest shareholders yesterday
launched a $6.50 all-cash takeover bid.
Eroad shares were priced at $3, the bottom of the indicative price range, ahead of the logistics and fleet management
company listing on the NZX next month.
(BusinessDesk)