NZ shares mixed, A2, Fletcher rally while Tower drops 28pc

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New Zealand shares were mixed, with A2 Milk Co at a record high and Fletcher Building recovering some losses while Tower plunged 28 per cent after its merger application was declined.

The S&P/NZX50 Index dipped 2.47 points, or 0.03 per cent, to 7,710.59. Within the index, 24 stocks rose, 19 fell and seven were unchanged. Turnover was $156.3 million.

A2 Milk led the index, up 4 per cent to $4.20. The stock rallied in June after it lifted annual sales guidance for the second time in as many months as it beefed up production to meet sweltering Chinese demand for infant formula. Tighter Chinese regulation on formula sales has weighed on rivals such as ASX-listed Bellamy's, but A2 Milk has managed to navigate the changes with little impact on sales so far.

"There's been some more positive commentary coming out on that stock, and it's certainly getting a bit more traction," said Shane Solly, director, portfolio manager & research analyst at Harbour Asset Management. "What we've seen is people realising there are very different business models there, Bellamy's has a number of different issues to deal with that A2 doesn't and there's a distinction between the models starting to appear."

Fletcher Building rose 2.2 per cent to $7.78. The New Zealand Shareholders Association says the board of directors has "no choice but to seek a new mandate" at the company's October annual meeting following last week's firing of chief executive Mark Adamson after the second major profit downgrade this year.

Heartland Bank rose 2.3 per cent to $1.82 and Trustpower gained 1.6 per cent to $5.82.

NZX was the worst performer, dropping 2.5 per cent to $1.16. Chief financial officer Bevan Miller will leave the market operator in October to take up the same role at Cooperative Bank. NZX has begun an executive search to replace Miller and will provide a further update to the market in due course, it said.

Genesis Energy fell 2.3 per cent to $2.52 and CBL Corp dropped 2.2 per cent to $3.57.
SkyCity Entertainment Group declined 0.5 per cent to $4.20. It will write off all the goodwill in its Darwin casino complex with an A$95 million impairment, saying increased competition for gaming machines in the Northern Territory hurt revenue and earnings. The non-cash impairment will be recognised in its results for the year ended June 30 and will reduce the book value of the Darwin property to A$195m.

Outside the benchmark index, Tower dropped 28.2 per cent to 90.5 cents. Shares in the general insurer took a pounding at the opening of trading on the NZX this morning, falling as low as 86 cents from $1.26 yesterday after the Commerce Commission rejected a merger application at $1.40 a share from rival insurer Vero.

Owned by Brisbane-based Suncorp, Vero sought permission to acquire Tower's operations after winning a bidding war with Canada's Fairfax Financial Holdings in a deal that valued Tower at $236m. The Vero bid trumped FFH's offer at $1.17 a share and this morning's share price is the lowest since February, when the FFH bid first emerged.

"It's under some real pressure, this is the Commerce Commission baring its teeth and really pushing back on industry changes," Solly said. "It certainly may catch a few people by surprise."

Abano Healthcare gained 9.4 per cent to $10.50. Australasia's second-largest dental group beat its forecast for annual profit and announced plans to raise $35m to accelerate its growth. The healthcare investor posted a profit of $10.9m in the year ended May 31, ahead of its forecast profit of between $9.7m and $10.5m. The company's year earlier profit of $28.4m was boosted by the sale of its half share in audiology business Bay International, and when adjusted to include only continuing businesses the year earlier profit was $7.4m.