Stocks to Watch: New Zealand equity preview

Thursday 18th September 2008

The following stocks may be active on the New Zealand exchange after developments since the close of trading yesterday.

Themes of the day: Wall Street erased early gains on the rescue of American International Group amid concern the government bailout won't be enough to soothe global credit markets. The Standard & Poor's 500 Index fell 4.7% to 1156.39 and the Nasdaq Composite Index dropped 4.9% to 2098.85. The New Zealand dollar bought about 65.80 U.S. cents.

Contact Energy Ltd. (CEN): wholesale spot power prices have declined for a second week on rising levels of hydro lakes and has national demand fell, according to market operator M-Co. Separately, a report by Grant Samuel for Contact's parent Origin Energy concluded that the New Zealand company is a difficult takeover prospect because institutions are reluctant to sell their holdings in the utility. Contact stock was at NZ$8.76 yesterday and has gained 6% this year.

Goodman Property Trust (GMT): the property investor released a presentation after the close of trading on the NZX yesterday, saying that unlike previous economic downturns, the occupier market is in good shape with a low vacancy rate. The trust has property assets of NZ$1.6 billion and borrowings of NZ$420 million. The credit crunch is boosting borrowing costs and the trust is likely to seek early renegotiation of credit facilities that run through until 2010. The stock has fallen 18% this year and was at NZ$1.19 yesterday.

Lion Nathan Ltd. (LNN): the brewer is among defensive stocks in times of economic turmoil, Paul Robertshawe,
who helps manage the equivalent of $750 million at Tower Asset Management, said yesterday. The stock was at NZ$10.75 on the NZX yesterday and has gained 2% in the past year, while the NZX 50 Index fell 22%.

Turners Auctions Ltd. (TUA): The company said its 55% profit gain in the first half was "a very good result, given that the current environment is the most challenging
experienced in the industry for many years," the company said in its interim report. "Rapidly declining
consumer confidence, pressure on household incomes, fuel price increases and emission regulations resulted in the second-hand car market being hit extremely hard in the first half of the year," it said. The stock was unchanged at 70 cents yesterday and has fallen 36% this year.

Telecom Corp. (TEL): the biggest company on the NZX 50 Index has complied with all its Telecommunications Service Obligations (TSO) quality measures this year, according to the Commerce Commission. The TSO measures internet connection speeds, emergency 111 calls and unsuccessful residential calls. The stock traded at NZ$2.81 yesterday and has dropped 36% this year.

By Jonathan Underhill

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