Defensive buyers send Contact to record high

Shares in Contact Energy, New Zealand's biggest publicly traded electricity generator, rose to a record high as investors sought stocks that will be less affected as the nation's economic growth slows this year.

Contact shares rose 1.9 per cent to $8 by the close of trading. The stock reached a record $8.02 during the day, more than the 12-month price target of four out of five analysts surveyed by Thomson Financial and amounting to 23.5 times the company's forecast per-share earnings.

Contact, half-owned by Sydney-based Origin Energy, sells about a third of New Zealand's power. Earnings before interest and tax has risen an average 14 per cent in each of the past five years as increased energy demand and delays building new power stations pushed up prices.

Contact has "an earnings growth profile which is pretty low risk to either rising interest rates or an economic slowdown", said Paul Robertshawe of Tower Asset Management in Wellington. "People are prepared to pay a premium for high-quality cash flows."

Shares in Contact have gained 18 per cent in the past two months, making it the biggest contributor to the 13.5 per cent rise in the NZX 50 index in the same period.

- BLOOMBERG