Market close: NZ shares surge on busy trading day

A2 Milk was among the gainers, up 10c to $6.82. Photo / NZME

The official cash rate remained unchanged, Fletcher Building and Ebos Group produced strong results, and the New Zealand sharemarket surged more than half a per cent in busy trading on the first day of the latest nationwide lockdown.

After falling sharply in the morning to an intraday low of 12,557.09, the S&P/NZX 50 Index rebounded in the afternoon to close at 12,718.88, up 83.56 points or 0.66 per cent.

There were 76 gainers and 65 decliners over the whole market of 185 stocks, and the volume of 93.97 million share transactions worth $301.98 million was boosted by the trade of 18.29m Smartshares NZ Top 50 Exchange Traded Fund (ETF) units worth $49.94m, and 14.6m S&P/NZX 50 ETF units worth $49.67m.

Mark Lister, head of private wealth research with Craigs Investment Partners, said the market had taken the lockdown in its stride.

"It's encouraging that there is no panic out there. People have been through this before and they know how it plays out. There will be a short-term hit on some businesses, but the wage subsidy does work and the economy will bounce back quickly."

Lister said it was unfortunate some pretty solid results and update from Fletcher Building, Ebos, Spark and Fisher and Paykel Healthcare were overshadowed by the uncertainty over the latest Covid-19 situation.

"By and large we have had a reasonable day on the reporting front, and the Reserve Bank has stayed the course with the official cash rate (OCR). Given the uncertainty, it was important for the bank to keep supporting the economy and not remove the stimulus too quickly," he said.

The bank's monetary policy committee decided to keep the OCR at the historical low of 0.25 per cent because of "the Government's imposition of Level 4 Covid restrictions on activity across New Zealand."

The bearish NZ dollar strengthened during the day, increasing from a low of US68.67c against the American greenback to US69.29c at 5.45pm NZ time.

Fletcher Building reported operating earnings (ebit) of $669m, ahead of its 2021 guidance of $650m-$665m, yet its share price fell 12c to $7.63. Fletcher turned around a loss of $196m in 2020 to net profit of $305m on revenue of $8.12 billion, up 11 per cent.

Fletcher's net debt is $173m, liquidity $1.6b and is paying a final dividend of 18c a share on September 17. Fletcher said the activity pipeline in New Zealand looks stronger for longer and in Australia the residential outlook also remains resilient, and supportive for further growth.

Lister said if it wasn't for the lockdown, Fletcher Building's price would have risen. "We know construction is one sector that is hit when the brakes go on in a lockdown."

Ebos Group, the largest supplier of healthcare and animal care products in Australasia, climbed 60c or 1.91 per cent to $32 after reporting a record result for the 2021 financial year ending June and exceeding $9b revenue for the first time. Ebos increased its net profit 14 per cent to $185.3m on revenue of $9.2b, up 5 per cent, and is paying a final dividend of 46c a share on September 24.

Fisher and Paykel Healthcare, a Covid beneficiary, rose 78c or 2.4 per cent to $33.24, despite telling the market its revenue for the first four months of the present financial year was down 2 per cent to $583m – with 74 per cent of the income coming from the hospital product group. There was increased demand in North America associated with localised Covid surges.

Lister said Fisher and Paykel's rise was much to do with the Covid situation and the weaker NZ dollar. "Business-wise, it had such a blinder last year and it was natural that things should taper off a little bit."

Spark increased 2.5c to $4.755 after reporting a 8.6 per cent decline in net profit to $384m because of higher depreciation and increased tax. Its revenue for the year ending June was down 0.8 per cent to $3.59b, mainly from a $38m drop from roaming services. Spark is paying a final dividend of 12.5c a share on October 1.

Hallenstein Glasson rose 21c or 3.15 per cent to $6.88, even though it has closed its clothing stores in New Zealand but is continuing online sales. Fellow retailer Briscoe Group fell 14c or 2.23 per cent to $6.13.

Other gainers were a2 Milk, up 10c to $6.82; Covid beneficiary Freightways rising 18c to $12.72; Port of Tauranga collecting 13c or 1.85 per cent to $7.17; Summerset Group Holdings picking up 22c to $13.08; and Ryman Healthcare increasing 18c to $14.39.

Meal kit company My Food Bag can expect more business during the lockdown and rose 4c or 3.08 per cent to $1.34. Harmoney gained 7c or 3.76 per cent to $1.93; and The Colonial Motor Company was up 16c to $10.35.

Decliners included Z Energy, down 5c to $2.91; Vista Group losing 7c or 3.08 per cent to $2.20; Serko falling 5c to $6.95; Turners Automotive decreasing 7c to $4.20; Sanford shedding 10c or 2.08 per cent to $4.70; and Comvita down 8c or 2.42 per cent to $3.22.