NZ shares rise as Heartland posts strong result

Heartland rose 2.2 per cent to $1.89. Photo / Google Maps

New Zealand shares rose as the local earnings season continued with investors heartened by a strong result from Heartland Group Holdings.

The S&P/NZX 50 Index rose 61.86 points, or 0.5 per cent, to 11,935.84. Within the index, 32 stocks gained, 11 fell, and seven were unchanged. Turnover was $139.4 million.

Heartland rose 2.2 per cent to $1.89 after announcing net profit for the six months ended December rose to $39.9m from $33.1m in the corresponding prior period.

Head of research at Fat Prophets, Greg Smith, said this was a good result considering the cloud of higher capital restrictions hanging over the banking sector.

Heartland said the current low-interest rate environment contributed to an easing of net interest margin by 7 basis points to 4.27 per cent, a headwind Smith said would also ease as the Reserve Bank indicated it would not lower the official cash rate any further.

"So, we'll start to see rates tick higher long term and as bond yields go up that will be positive for bank margins as well," Smith said.

He said there was still a lot of focus on coronavirus, but investors seemed to be increasingly looking through to the other side of the outbreak.

"The infection rate appears to be plateauing and an interesting sign is the Asian markets - particularly the Chinese markets - have recouped losses from the early February lows," he said.

"What's good for China, is good for New Zealand."

Shanghai's index SSEC was weaker today, although has climbed 8 per cent from its precipitous drop after the lunar new year, bringing it back in line with levels traded in December.

Smith said this was good news for New Zealand stocks with exposure to the Chinese market.

Mainfreight led the market higher, up 3.2 per cent at $42.11, and Synlait Milk rose 2.5 per cent to $6.55.

Smith said last week's selloff of Synlait was quite harsh and the stock was now attracting some value hunters.

Fonterra Shareholders' Fund units rose 1.5 per cent to $3.95 and A2 Milk held at $16.28.

Property for Industry rose 2 per cent to $2.54 after reporting a 60 percent increase in annual profit yesterday. The real estate investor is shifting its portfolio to become a pure industrial play.

Goodman Property Trust also rose 2 per cent to $2.355, Vital Healthcare Property Trust rose 1.4 per cent to $2.92 and Precinct Properties rose 0.3 per cent to $1.875 on a volume of 6 million shares well up on its 905,000 average. Precinct will report its earnings on Thursday.

Meridian Energy increased 1.7 per cent to $5.62 as utilities continue to see strong growth as they are unaffected by concerns around the coronavirus. Mercury NZ and Contact Energy both rose 1.5 per cent to $5.40 and $7.62 respectively.

Scales Corporation fell 1 per cent to $4.47, posting the biggest decline of the day.

Among other stocks trading on volumes of more than a million shares, Oceania Healthcare increased 0.8 per cent to $1.24, Auckland International Airport rose 0.2 per cent to $8.42, Kiwi Property Group rose 0.7 per cent to $1.56 and Spark New Zealand decreased 0.3 per cent to $4.75.

Smith said the global market would get more direction tonight after US markets reopen.

"The backdrop there is the global economy seems to be going along okay, as evidenced by the earnings season in the US where big tech has been a driver," he said.