NZ shares lift as Synlait rallies on A2 stake lift

New Zealand shares gained, led higher by Synlait Milk. Photo / 123RF

New Zealand shares gained, led higher by Synlait Milk as A2 lifted its stake in the company while Freightways and Ebos fell.

The S&P/NZX50 Index rose 15.36 points, or 0.2 per cent, to 8,864.52. Within the index, 22 stocks rose, 21 fell and seven were unchanged. Turnover was $107.7 million.

"There were reasonable offshore leads to run our market, and we started to gather a bit of strength after the Aussie market opened," said Peter McIntyre, investment adviser at Craigs Investment Partners.

"We're waiting for our own earnings season and still in that void of lack of information, but compared to Asia we're tracking up well."

Synlait Milk led the index higher, up 2.8 per cent to $11, while A2 Milk traded higher throughout the day but closed down 0.2 per cent to $10.42. A2 will buy another 8.2 per cent of Synlait Milk at a small discount, lifting its holding in the dairy processor to 17.4 per cent.

The milk marketing firm will buy the shares at $10.90 apiece, down 2.3 per cent from the NZX one month volume weighted average price of $11.16, for a total of $161.8m. The shares will come from Tokyo-listed Mitsui & Co, a general trading company which invests across sectors and bought 8.4 pe rcent of Synlait at the company's initial public offering in 2013.

"You've got interest like A2 taking a block stake in Synlait, and the way they've operated their business and wanting to increase production, the story is still pretty intact," McIntyre said.

"They're proving themselves to be a reliable and efficient operator as well, that's attracting the attention pretty much of everyone involved in the sector."

"Within that announcement, A2 said they're comfortable with their position. It's a key part of the business and I don't think it's any surprise they have increased the stake, but where they go from here will be interesting too."

Tourism Holdings rose 1.7 per cent to $6.11, Kathmandu Holdings gained 1.3 per cent to $3.14 and Pushpay Holdings advanced 1.1 per cent to $3.85.

Freightways was the worst performer, down 1.3 per cent to $7.85. Ebos Group dropped 1.1 per cent to $20.25 and Summerset Group Holdings declined 1.1 per cent to $7.56.

Outside the benchmark index, Briscoe Group was unchanged at $3.55. It lifted first-half sales 4.3 per cent to $292.2m and will report a slightly higher profit on wider margins next month. Homeware sales rose 4.5 per cent and its Rebel Sport chain revenue gained 3.8 per cent, while online sales accounted for 9 per cent of group sales.

"They're working hard to get what they're getting there, it's a tough sector," McIntyre said. "It's a well-run retailer but some of the numbers are borderline flat."

"The key segment for them is the sporting goods, that growth was 3.8 per cent and I'd probably say that was disappointing, it has been a stellar performer for them. Online is increasing, as it is for most of the listed retailers in New Zealand, but margins are tight and the impact of minimum wages - there's a cloud over the sector generally. They tend to manage their margins well, they're efficient operators but they're eking out average growth."