by BusinessDesk
The S&P/NZX 50 Index rose 238 points, or 1.8%, to 12,956.97. Turnover was $262 million.
A draft Commerce Commission decision has set the value of the regulated assets $80m lower than Chorus had argued it should be, but not as low as investors had prepared for.
The regulated asset base (RAB) determines how much revenue the infrastructure provider is permitted to earn from the network.
In May, Jarden analysts said the lack of progress on the regulated asset base (RAB) was a bad sign and trimmed their valuation partly on the assumption of a lower RAB of $5.25b
Chorus’s chair Patrick Strange was sufficiently worried about a being given a lower RAB, that he wrote to the commission warning of “regulatory failure” if the infrastructure firm was prevented from earning a fair return on its investment.
Ultimately the commission has delivered a valuation just below what Chorus had suggested at $5.427b, a level likely to be acceptable to all parties.
While this will trim allowable revenue by between 2% and 2.5% over the three years, it is a considerably better scenario than if the commission had gone with an even lower RAB.
Investors welcomed the result, sending the share price surging 12.4% to $7.16 – roughly where Chorus had been trading in March, prior to submitting its $5.5b proposal to the regulator.
The mood on the share market was generally jubilant with just seven stocks falling as strong earnings results coincide with an extended period of low interest rates.
Shares in Skellerup climbed 4.8% to $5.50 after it beat its earnings guidance, lifting net profit 38% to a record $40.2m.
Auckland Airport was one of the few decliners, falling 0.4% to $7.07, after posting its first ever full-year underlying loss as the covid-19 pandemic wiped out air travel.
The airport reported an underlying loss of $41.8m in the year ended June, turning around a profit of $188.5m a year earlier, and after delivering a profit every year since listing in 1998.
Mainfreight continued to lift further into record territory, with at least one trade being transacted at $88 per share today. The logistics firm closed up 4.2% at $86.50.
Infrastructure investor Infratil climbed 4% to $7.49 after holding its annual general meeting today, where it reiterated earnings guidance would be between $505m and $550m.
The kiwi dollar was trading 68.52 US cents at 3pm in Wellington, down from 68.81 cents yesterday.
The trade-weighted index was at 73.30, from 73.46 yesterday. The kiwi traded at 94.99 Australian cents from 95.01, traded at 75.44 yen from 75.34 yen, 58.64 euro cents from 58.74 cents, 49.91 British pence from 50.04 pence, and 4.4483 Chinese yuan from 4.4611 yuan.
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