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NZ shares up, led by A2 on formula update

NZ Newswire logoNZ Newswire 21/12/2016 Sophie Boot

The milk marketer played down fears about the infant formula market stemming from ASX-listed rival Bellamy's Australia's extended trading halt. © Startraks Photo/REX/Shutterstock The milk marketer played down fears about the infant formula market stemming from ASX-listed rival Bellamy's Australia's extended trading halt. New Zealand shares edged higher, led by A2 Milk Co after it reassured the market about its infant formula business, while Tourism Holdings gained on a US acquisition.

Intueri Education Group sank by a fifth after missing out on Australian government funding.

The S&P/NZX50 Index advanced 13.08 points, or 0.2 per cent, to 6,802.75. Within the index, 26 stocks fell, 19 rose and five were unchanged. Turnover was $139.7 million.

A2 Milk led the index, up 5.9 per cent to $2.16. The milk marketer played down fears about the infant formula market stemming from ASX-listed rival Bellamy's Australia's extended trading halt.

The stock fell as much as 15 per cent after Bellamy's entered the trading halt last Monday. Bellamy's was to have lifted the trading halt on Wednesday but now expects the suspension to stay in place until Jan. 13.

"They've added a bit of flavour by talking about their value proposition in the marketplace, their supply contracts and sales channels, risk minimisation - basically trying to allay any fears investors might have from what's happening with Bellamy's," Peter McIntyre, investment adviser at Craigs Investment Partners said.

Tourism Holdings rose 5.3 per cent to $3.59. It will pay $US65m ($NZ94 m) for US campervan rental and sales business El Monte Rents to expand its operations in the world's largest recreational vehicle market.

The acquisition, for an enterprise value of $94m including transaction costs, will be funded through $82m of debt from its existing lenders and through the issue of 3.4 million Tourism Holdings shares.

"On the surface it looks earnings accretive, though it certainly increases their debt burden - debt-to-equity will be around 50 per cent - but they haven't diluted the shareholder base by any real significant per cent," McIntyre said.

Contact Energy was the worst performer, down 1.9 per cent to $4.65, while Restaurant Brands dropped 1.8 per cent to $4.97 and Stride Property declined 1.7 per cent to $1.71.

Fonterra Shareholders Fund rose 0.3 per cent to $5.98.

Outside the benchmark index, Intueri Education Group fell 20 per cent to 3.6 cents. It said the Australian Department of Education and Training declined its application for funding for its Conwal unit and the company slashed 2016 earnings guidance by that amount to $3.2m as a result.

Intueri shares have tumbled 94 per cent this year. It listed on May 2014 at $2.35.

Airwork Holdings fell 1.6 per cent to $4.82 and Abano Healthcare dipped 0.1 per cent to $8.20.

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