SkyCity slumps in return to trading; NZX50 shrugs off Friday slump to end week higher

SkyCity Entertainment Group sank 29% when it resumed trading after completing the institutional component of its discounted $240 million capital raising, with the shares holding above the 70 cents offer price.

The casino operator led the S&P/NZX 50 index lower, with heavyweights Fisher & Paykel Healthcare, Ebos Group and Mercury NZ weighing on the bourse, although the index still managed a 1.2% gain for the week.

Sky Network Television was among the highlights on the day after securing rights to broadcast domestic All Blacks matches until 2030 and lifting its annual dividend, while NZX dipped on unusually heavy volumes as it increased first-half earnings.

And Fonterra Cooperative Group accepted a $3.85 billion offer from France’s Lactalis in the auction for its Mainland consumer business, with shareholders and fund unitholders set to receive a $2 per share or unit payday.

Muted Friday

The NZX50 dropped 151.31 points, or 1.2%, to 13,042.76, tipping it back into negative territory in the year to date, with 29 stocks declining, 13 gaining and eight unchanged. Turnover was $144.4 million across the main board.

Still, the Friday slump wasn’t enough to derail a third weekly gain for the benchmark as it rose 1.2% to hold above the 13,000 level heading into the weekend.

SkyCity led the benchmark lower on the day, sinking 29% to 71 cents when trading of the casino operator’s shares resumed after their halt for the institutional component of its $240 million capital raising at 70 cents a share. Some 17.3 million shares changed hands, in the heaviest trading of the day.

“It’s a company that’s pretty much at the pointy end of our economic weakness,” said Greg Smith, head of retail at Devon Funds Management. “They’ve been through the wringer.”

The weakness was widespread on the benchmark index, with Serko declining 5% to $2.46, KMD Brands sliding 3.9% to 24.5 cents and Freightways falling 3.2% to $12.10.

Among heavyweight companies weighing on the NZX50, Ebos fell 2.9% to $40.05, Mainfreight declined 2.6% to $59.44, Mercury NZ slipped 2.1% to $6.56 and Fisher & Paykel Healthcare decreased 2.1% to $37.65.

NZX slipped 0.7% to $1.45 on a volume of 7.5 million, of which two trades at $1.455 accounted for about 7.2 million of that volume. The stock market operator reported a 5.4% increase in first-half operating earnings, with trading activity knocked in April when US President Donald Trump revealed his plans to upend international trade, while the relaunch of the equities index futures is being pencilled in for early next year.

Rugby rights

Sky TV rose 4.4% to $3.11 lifting its annual dividend almost 16% with annual earnings down 3%. The pay-TV operator signed a five-year broadcast deal with NZ Rugby to keep SANZAAR internationals, Super rugby and the provincial NPC competition. State-owned Television New Zealand will sub-license a selection of NPC matches.

Heartland Group Holdings posted the biggest gain on the day, up 4.7% at 90 cents, extending gains from yesterday when it reported an upbeat outlook in its result.

Fonterra Shareholders’ Fund units gained 2.7% to $7.15, and farmer-owned cooperative shares surged 20% to $6 after the dairy exporter agreed to sell its consumer business to Lactalis for $3.85 billion, with another $375 million if disputed Bega licences are included in the deal.

Fonterra plans to pay $2 per share or unit to investors once the deal is completed.

“It’s probably better value than was expected in a hotly contested process,” Devon’s Smith said. “Lactalis is going to be the biggest customer, so the good news keeps flowing for the dairy sector.”

Synlait Milk jumped 11% to 71 cents, while a2 Milk Co increased 0.7% to $9.75.

Rural services firm PGG Wrightson slipped 0.8% to $2.41, while NZ Rural Land Co, which reported after trading closed yesterday, rose 1% to $1.05.

Rakon climbed 11% to 89 cents after announcing a strong outlook ahead of a tense annual meeting, where former chief executive and founding family member Brent Robinson comfortably saw off a vote against his re-election by the New Zealand Shareholders’ Association over his manoeuvring to take over the board.

Chair-elect Mark Bregman chose not to seek election, while chair Lorraine Witten decided to retire to help ensure the company didn’t face suspension over a lack of independent directors.

The kiwi dollar traded at 58.06 US cents at 5pm in Auckland from 58.18 cents yesterday ahead of US Federal Reserve chair Jerome Powell’s keynote speech at the central bankers’ annual symposium in Jackson Hole, Wyoming.

Reporting by Paul McBeth. Image from Curious News.