MARKET WRAP: NZ shares rise as Air NZ lands in hot water

New Zealand shares rose today as the market reacted to a surplus of $294 million in the merchandise trade balance for May, and several key news developments.

The S&P NZX50 index rose 6.72 points to 8996, on turnover of $130 million.

Fat Prophets head of research Greg Smith says Synlait Milk investors are responding well to yesterday’s announcement ex-Fonterra executive Leon Clement is stepping in as chief executive.

“Investors have digested that today and realised he’s got a very strong pedigree and there’s nothing to be feared by an orderly change at the top.”

Today Synlait Milk shares gained 2.68% to $11.50.

A2 Milk, which Synlait supplies, was also up 0.69% to $11.73.

Pushpay shares had a strong day, gaining 2.7% to $4.18 after the NZX and ASX-listed mobile payments company recently announced co-founder Eliot Crowther was exiting the company, and it would no longer list on a US exchange this year.

Mr Smith says investors are still reacting to Mr Eliot’s exit, but remain encouraged by the growth story.

Air New Zealand ran into some turbulence today, but that didn’t result in a rough landing for the share price which rose 2.22% to $3.22.

Australia’s Federal Court ordered Air New Zealand to pay $A15 million in penalties, after it found the airline agreed with others to fix the price of fuel and insurance surcharges on air freight services from Hong Kong, and insurance and security charges from Singapore, to various locations between 2002 and 2007.

“Those penalties won’t affect full-year guidance, [which] should beat last years’ $527m.

“It is still to see some headwinds coming with rising oil prices, which were up 4% overnight,” Mr Smith says.

Yesterday Mainfreight released its annual report, stating revenue was up 12.2% to $2.62 billion, and net profit up by 6% to $107.9m but that wasn’t enough to keep the shares afloat today. Shares fell 1.72% to $27.50.

Vista Group shares were up 4.59%, to $3.87.  

Earlier this month the cinema software provider that it had signed a deal with Les Cinémas Pathé Gaumont, France’s largest cinema chain.

Les Cinémas Pathé Gaumont will engage the Vista Cinema management software suite for the sale of tickets and concessions across the French circuit of 69 sites and a total of 773 screens.

“That announcement is still winning favor with investors. It’s a ringing endorsement for Vista when France's largest cinema chain signs up as a customer,” Mr Smith says.

NZ Refining fell a further 0.4% to $2.48. The company yesterday said it was forced to shut down its hydrocracker unit after a leak, with no immediate timeframe for the closure.

Kathmandu’s share price continued to gain after Monday’s profit upgrade of $48-52m (up from $38m last year), for the year ended July 31, 2018. Today it climbed another 0.7% to $2.88. 

Fletcher Building has recovered from its April lows but couldn’t stay out of the red today. Shares fell 1.55% to $6.99.

“They’re bringing changes to the board and certainly there are no questions over the quality of the CVs but perhaps there is a question mark over the relevant experience to the industry. I think investors are scratching their heads a little bit on that one,” Mr Smith says.

Looking ahead Mr Smith says investors will be keeping a close eye on trade wars, which he thinks will “linger for some time yet”.

“The question that has to be asked is whether this is a big game of chicken by the Trump administration.”