MARKET CLOSE: NZ shares mixed, A2 and Mercury gain while Metro Glass falls

New Zealand shares were mixed as trading picked up, with A2 Milk Co and Mercury Energy gaining while Metro Performance Glass fell.

The S&P/NZX50 Index gained 16.46 points, or 0.2 percent, to 8,324.09. Within the index, 23 stocks fell, 21 rose and six were unchanged. Turnover was $129m.

"It's slowly picking up - there's a bit more news coming through the market today," said Peter McIntyre, investment adviser at Craigs Investment Partners. "We've got this familiar trading pattern where it's light trading until midday, and when the Australian market opens up it seems like institutions are getting active in New Zealand. A lot of brokers and fund managers are positioning themselves ahead of earnings seasons."

Pushpay Holdings was the best performer, up 5.5 percent to $4.06, while Metro Performance Glass dropped furthest, down 2.1 percent to 92 cents.

A2 Milk Co rose 2.6 percent to $9.06, having hit a record $9.11 on intraday trading.

"That's on the back of good announcements earlier this year but it's really keeping pace with Bellamy's as well," McIntyre said. "Bellamy's are up 48 percent month rolling, week rolling 16.89 percent, and A2's up 13.88 percent week rolling. We've seen a lot of significant target price upgrades to Bellamy's and A2's following them. They're both growth-oriented stocks and they tend to deliver."

Mercury New Zealand gained 1.7 percent to $3.375. It has raised its annual earnings guidance for a second time, as a spell of wet summer weather around Taupo has the power company anticipating increased generation at its North Island hydro stations. Earnings before interest, tax, depreciation, amortisation, and fair value adjustments are expected to be $530 million in the year ending June 30, up from a previous forecast of $515 million.

Kathmandu Holdings rose 0.8 percent to $2.41. The outdoor equipment retailer expects a 20 percent lift in first-half net profit on a 4 percent lift in total sales and wider gross margins. It expects net profit will be at least $12 million in the six months to Jan. 31 versus $10 million in the first half of the 2017 financial year. Same-store sales grew 1.9 percent in Australia while in New Zealand they fell 6.4 percent.

"It seems like they're getting a bit more margin, and have been able to maintain inventory control, but the New Zealand sales declining would have to be a disappointment," McIntyre said. "The CEO indicated their gross margin has been pretty positive, but it's a bit mixed. It's a stock which gets bounced around a wee bit and some investors are in there seeking a bit of value."

Outside the benchmark index, Michael Hill International gained 5.2 percent to $1.42. The jewellery chain will wind up its US operations after a decade-long investment failed to build a profitable business, and is overhauling its Emma & Roe jewellery line.

"I think the market is applauding a conviction call to exit - they're going to concentrate on Canada, NZ and Australia," McIntyre said. "Sometimes the market applauds hard decisions, there's no point continuing on a loss-making venture."

ASX-listed Volpara Health Technologies dropped 1.4 percent to 72 Australian cents. The Kiwi digital health firm reported record quarterly sales in the third quarter and is still on track to exceed its annual recurring revenue growth target for the year.

(BusinessDesk)