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Investors punish downgrades, PGG Wrightson rises

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Fuseworks Media
Fuseworks Media

Wellington, Feb 4 NZPA - Investors punished Tourism Holdings and Michael Hill for delivering bad news, while PGG Wrightson soared when it revealed a potential new bidder.

The overall tone of the market was positive and 13.8 million Telecom shares traded, while Fletcher Building's share price rose above $8, closing up 13c at 804.

The benchmark NZX-50 index closed up 17.93 points, or 0.54 percent, at 3367.82. Turnover was worth $110.39 million. There were 54 rises and 27 falls among the 113 stocks traded.

Tourism Holdings closed down 15c, or 20.3 percent, at 59 after the company signalled a breach of banking covenants in the March quarter, and cut its full-year forecast to a $4 million loss from a $2.5 million net profit previously forecast.

The camper van rental company attributed the sudden drop in forward bookings in its key trading period due to the Queensland floods and other factors.

"Unfortunately this company has a history of downgrades. It is obviously a difficult industry to forecast," Grant Williamson, director at Hamilton, Hindin, Greene said.

"Investors have been harsh with this stock," he said.

They were more forgiving of Michael Hill International when it said the floods and cyclone in Queensland would affect its business. Michael Hill shares closed down 1c at 89.

But PGG Wrightson rose 12.73 percent to 62 after the farm services company revealed an approach from another party interested in making a full takeover. Businessday.co.nz said the potential bidder is Australian company Landmark, a subsidiary of Canadian agriculture group Agrium.

"It is going to have to be a pretty attractive offer to get the Chinese to move," Mr Williamson said. He said the move appeared to be a little late as the partial offer from Agria was already open.

Telecom rose 4c to 224 and The Warehouse rose 4c to 364. Contact Energy fell 4c to 618.

Infratil rose 4c to 194, Ryman Healthcare rose 2c to 240 and SkyTV rose 5c to 538. Air NZ eased 2c to 137 and Port of Tauranga fell 3c to 765.

AMP rose 5c to 715 and TrustPower rose 3c to 723.

SkyCity fell 3c to 334, Sanford fell 10c to 500 and SkyCity fell 3c to 334. Ebos fell 5c to 750.

In the United States, stocks ended near session highs, with investors favouring shares of retailers after encouraging chain-store sales raised confidence.

The Dow Jones industrial average gained 0.2 percent at 12,062.26, the Standard & Poor's 500 Index was up 0.24 percent at 1307.10, and the Nasdaq Composite Index was up 0.16 percent at 2753.88.

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