MARKET CLOSE: NZ shares fall as Kathmandu, Xero give up gains; A2 reaches record
By Sophie Boot
Aug. 4 (BusinessDesk) - New Zealand shares fell, with Kathmandu Holdings and Xero dropping while A2 Milk Co hit a record
high
The S/NZX 50 Index dropped 7.63 points, or 0.1 percent, to 7,746.12. Within the index, 22 stocks fell, 18 rose and 10 were
unchanged. Turnover was $155.5 million.
Kathmandu Holdings dropped 1.8 percent to $2.24. Yesterday, the retailer announced full-year profit rose as much as 13
percent to between $37.4 million and $38 million after a successful winter sales season and increased revenue from
Australia. Earnings before interest and tax were in a range of $56 million to $57 million, from $50.9 million in the
previous year.
"The week rolling they're down 3 percent despite that guidance to the market - investors still have concerns about
online retailing and weather patterns determining how sales mixes go," said Peter McIntyre, investment adviser at Craigs
Investment Partners. "That retail sector is weaker across the board, on low volume, it's still a very tough environment
for retailers out there."
Xero gave up some recent gains, down 1.6 percent to $27.36, with Fletcher Building also seeing some profit taking,
dropping 1.1 percent to $7.88.
"Even though we're trading near flat, we've had reasonable volume through the market," McIntyre said. "I think offshore
investors have some more comfort about our inflation data and that the Reserve Bank are not going to increase interest
rates, that has probably been bothering some international investors on the basis our dollar could get a lot stronger,
so the dollar weakening off has probably been a positive for investing."
Summerset Group led the index lower, down 2.2 percent to $4.87, while Trustpower fell 2.1 percent to $5.70.
A2 Milk Co was the best performer on the index, up 3.6 percent to $4.66, while Synlait Milk gained 0.4 percent to $4.57.
A2 and Synlait released a statement today saying the two are confident with the progress of their application to export
a2 Platinum infant formula to China from Jan. 2018. Sales of the formula currently comprise about 8 percent of A2's
total infant formula sales, it said.
"Confirmation of that is another positive step for A2, a number of brokers have upgraded that stock in recent times and
it's had a tremendous run," McIntyre said. "It's a stock which has moved from being one which was high growth and higher
risk, to become more of a mainstream style investment for a number of investors and institutions as more and more
research comes out on that company."
Outside the benchmark index, Eroad gained 2.3 percent to $2.22. It expects to post record sales in the current financial
year as its second generation of technology is embraced by New Zealand firms keen on improving driver safety and as a
looming North American compliance regime drives US buyers.
The logistics and fleet management company anticipates New Zealand and the US will be key in reporting record sales in
the year ending March 31, 2018, with growth in Australia likely to be more modest, chief executive Steve Newman told
shareholders at yesterday's annual meeting in Auckland.
(BusinessDesk)