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NZ shares rise to record, Xero gains

NZ NewswireNZ Newswire 20/07/2016 Sophie Boot
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New Zealand shares rose to a new record with Xero, Metlifecare and Steel & Tube Holdings gaining while Air New Zealand dropped on its June operating statistics.

The S&P/NZX 50 Index gained 17.84 points, or 0.3 per cent, to 7,172.67. Within the index, 30 stocks rose, 14 fell and seven were unchanged. Turnover was $130.4 million.

Xero led the index, up 3.5 per cent to $18.80. The software-as-a-service firm held its annual meeting in Sydney, where chief executive Rod Drury told investors it will start offering new services as it seeks to transform the platform founded on accounting software into the online portal of choice for small businesses.

Xero affirmed its previous guidance that it has enough cash in the bank to start breaking even without raising more capital, and Mr Drury said the company will pass 1 million customers this year on its path to becoming a $1 billion revenue company.

"It's more of a steady as she goes for Xero at the moment rather than huge acceleration - the big risk for them is competitive threat that may come to fruition," Peter McIntyre, investment adviser at Craigs Investment Partners, said.

"It's an exciting company, but it's really a matter of confirming their presence in the United States because that's where they'll really make money, and that's going to be with subscriber rates far higher than the 62,000 which they currently have."

Air New Zealand was the worst performer, down 2.2 per cent to $2.18. In its operating statistics for June, the airline said it carried 4.8 per cent more passengers at 1.215 million, but its load factors dipped 0.9 percentage points overall to 80.8 per cent.

"It was possibly a little disappointing, and we've seen the share price weaken - obviously Jetstar is having an impact on domestic performance and that's having an impact on load factor, but in saying that the Tasman routes performed pretty solidly and on long haul the capacity they've added is able to be met," Mr McIntyre said.

"The load factors have been trending to the downside for the last couple of months, but we'll get more clarity in late August when their full year comes out."

New Zealand Refining rose 0.4 per cent to $2.57. In its throughput and margin report for May/June, the refinery said it had a gross margin of US $6.26 per barrel, while throughput for the period was 6.8 million barrels.

Metlifecare gained 2.9 per cent to $5.64, Steel & Tube Holdings rose 2 per cent to $2.02, and Heartland Bank advanced 1.6 per cent to $1.31.

Vital Healthcare Property Trust was unchanged at $2.20. It has raised $160 million after its existing investors took up 87 per cent of the units in the two-for-nine renounceable rights offer.

Tower dropped 2.2 per cent to $1.35 and Comvita fell 1.3 per cent to $11.06.

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