MARKET CLOSE: NZ shares fall as Fletcher rights issue takes focus; AIA, A2, Comvita drop
By Paul McBeth
April 17 (BusinessDesk) - New Zealand shares fell as investors weighed up the impact of Fletcher Building's deeply
discounted rights issue soaking up demand from the broader market. Auckland International Airport and exporters A2 Milk
Co and Comvita dropped.
The S/NZX 50 Index declined 61.83 points, or 0.7 percent, to 8,344.52. Within the index, 26 stocks fell, 13 gained and 11
were unchanged. Turnover was a smaller-than-usual $82 million, with trading in Fletcher shares halted for the capital
raise.
Fletcher today announced a $750 million rights issue at a 23 percent discount to the last trading price of $6.27, with
an institutional offer running until Thursday, and trading of the shares halted until Friday. The capital raise is part
of a $1.25 billion refinancing plan shoring up the construction company's balance sheet having drawn $280 million in the
first three months of this year alone. Fletcher also announced plans to sell Formica and its steel roofing tiles
business.
"Fletcher building's capital raising's taken a lot of attention of the market," said Shane Solly, director portfolio
manager at Harbour Asset Management. "I think it's going to keep the focus for a few more days yet."
Auckland International Airport led the market lower, falling 2.7 percent to $6.215, while exporters A2 Milk declined 2.3
percent to $12.19 and Comvita dropped 1.9 percent to $6.88. A2 yesterday signed up an exclusive distribution deal in
South Korea, while the honey products maker yesterday cut earnings guidance over a poor honey season and said it was
subject to due diligence by a potential suitor.
Mercury NZ fell 1.7 percent to $3.25 after the electricity generator-retailer raised annual earnings guidance as
favourable rainfall continued to bolster its hydro schemes.
Harbour Asset's Solly said Fletcher's capital raising had the potential to keep the building products and construction
firm in the MSCI index, which put Mercury's spot in jeopardy.
Power companies' March metrics showed favourable rainfall for the entire sector on the generation side, although retail
remained tough. Meridian Energy fell 1 percent to $2.87, Genesis Energy declined 0.9 percent to $2.28, Contact Energy
decreased 0.2 percent to $5.23 and Trustpower was unchanged at $5.75.
The government announced the member of its interim climate change committee, which has been tasked with determining how
agricultural emissions should be brought into the Emissions Trading Scheme and to start planning for the transition to
renewable generation by 2035 in normal circumstance.
Primary industries stocks Fonterra Shareholders' Fund units and PGG Wrightson were both unchanged at $5.75 and 62 cents
respectively, livestock broker Allied Farmers fell 6.3 percent to 8.9 cents, while transport fuels firm Z Energy fell
1.2 percent to $7.18, and wind farm developer Tilt Renewables slipped 0.5 percent to $1.95.
NZX was the best performer on the index, up 1.9 percent to $1.10. The stock market operator held its annual meeting last
week where it outlined plans to introduce a new primary sector index, and elaborated on its dairy derivatives expansion
plans.
Restaurant Brands NZ fell 0.8 percent to $7.08 after reporting a 37 percent increase in annual profit and signalling
plans to keep expanding in Australia and the US.
Summerset Group Holdings increased 0.1 percent to $7.05 and Metlifecare fell 0.7 percent to $5.70 after each acquired
land for new villages. Ryman Healthcare slipped 0.1 percent to $10.65 and Arvida Group climbed 1.7 percent to $1.20.
Spark New Zealand fell 1 percent to $3.425 and Fisher & Paykel Healthcare dropped 1.3 percent to $12.55.
Outside the benchmark index, Smiths City Group sank 11 percent to 48 cents after downgrading its earnings outlook on
soft trading and a $4.8 million impairment charge on unprofitable stores.
(BusinessDesk)