NZ shares rise; Metlife jumps on takeover talk

New Zealand shares were led higher by Metlifecare after the retirement village operator said it had attracted a sub-par offer from a credible buyer.

Wednesday, November 20th 2019, 6:13PM

by BusinessDesk

The S&P/NZX 50 Index rose 83.25 points, or 0.8 percent, to 10,975.49. Within the index, 27 stocks rose, 16 fell and seven were unchanged. Turnover was $189.1 million.

Metlifecare jumped 12.8 percent to $5.73, a 12 month-high, with 576,000 shares traded. That was more than twice its 90-day average of 248,000, and comes a day after an investor bought 3.6 million shares at $5.05 apiece. Metlifecare's board suspended a $30 million share buyback programme while it engaged with the would-be buyer.

Michael McCarthy, chief market strategist at CMC Markets, said the weaker New Zealand dollar was making assets cheaper for cashed-up overseas buyers, and that the non-binding nature of the unnamed suitor had the hallmark of private equity.

"From an international point of view, some of these businesses are looking very cheap," he said.

McCarthy said boards need to weigh up highly conditional bids very carefully, because if they don't go ahead, they can be a big drag on a share price. However, "from the market reaction today, there seems to be a consensus view this one's going ahead."

Other retirement village and aged care operators were also boosted. Summerset Group Holdings rose 3.5 percent to $7.43, Oceania Healthcare was up 2.8 percent at $1.11 on a volume of 1.4 million shares, Arvida Group increased 1.9 percent to $1.61, and Ryman Healthcare increased 1.4 percent to $14.34.

Other healthcare stocks appeared to similarly enjoy the halo effect, with Fisher & Paykel Healthcare up 1.4 percent at $20.78 on a volume of 1.1 million shares, more than twice its average of 440,000. Ebos Group recovered some of yesterday's decline, up 0.6 percent to $22.95. Its cornerstone shareholder, the Zuellig Group, sold down its stake in a block trade yesterday.

A2 Milk rose for a second day, having upgraded its outlook at yesterday's annual meeting. The stock rose 3.9 percent to $14.67 on a volume of 1.6 million shares, more than twice its 768,000 average. Synlait Milk, which supplies A2, rose 2.5 percent to $9.48.

Investore Property fell 7.3 percent to $1.77 after it resumed trading following yesterday's $65 million placement at $1.75 a share. It also shed rights to a 1.9 cent dividend.

Westpac Banking Corp fell 2.6 percent to $27.41. The Australian bank was accused of breaching laws to prevent money laundering and terrorism financing by Australian authorities today. Australia & New Zealand Banking Group was also down, falling 0.7 percent to $26.63.

Power companies were largely weaker, with Meridian Energy down 2.3 percent at $4.35 on a volume of 3.2 million shares, Contact Energy fell 1.8 percent to $6.68 on a volume of 1.8 million, Trustpower fell 1.3 percent to $7.64 and Genesis Energy declined 1.1 percent to $3.16.

Spark New Zealand was the most traded stock on a volume of 5.8 million shares. It rose 0.5 percent to $4.47. Of other stocks trading on volumes of more than a million shares, Mercury NZ rose 1.1 percent to $4.77, Kiwi Property Group was up 0.3 percent at $1.55, Pushpay Holdings decreased 0.9 percent to $3.50, and Auckland International Airport rose 0.8 percent to $9.05.

Chorus extended its gain following yesterday's favourable draft decision by the Commerce Commission on how it would create a regulated pricing regime for fibre operators. It rose 1.8 percent to $5.65 on a volume of 1 million shares. Standard & Poor's today said the threshold for downgrading Chorus's credit rating was higher, citing the favourable regulatory framework.

Precinct Properties New Zealand rose 1.2 percent to $1.765 after saying at the annual meeting that it is eyeing new developments. Argosy Property was up 1.1 percent at $1.395 after reporting increased first-half profit due largely to property valuation gains.

Outside the benchmark index, Serko fell 0.9 percent to $4.54 after saying its rate of burning cash would accelerate in the second half as it pursues rapid growth in North America.

Tower rose 3.6 percent to 72.5 cents after returning to profit and signalling dividend payments will resume in the 2020 financial year.

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