Stocks to watch: Air NZ, Comvita, New Image, Rakon, Westpac

Thursday 5th November 2009

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

Themes of the day: Stocks rose on Wall Street and the U.S. dollar weakened after the Federal Reserve said it would keep interest rates in the world’s biggest economy “exceptionally low” for an extended period. Reserve Bank Governor Alan Bollard is to give a speech to the Trans-Tasman Business Circle today on the differences and similarities between the two nations’ economies. Labour data today is expected to show the unemployment rate is continuing to climb.

Air New Zealand Ltd (NZX: AIR ): The national carrier may have secured a 50% discount on the US$1.1 billion list price for its new domestic fleet of 14 Airbus A320 aircraft this week, says Macquarie Equities, according to the Dominion Post. Macquarie said the airline will use operating leases wherever possible to reduce risk and cash outflows. The shares fell 1 cent to $1.29 yesterday.

Comvita Ltd (NZX: CVT ): The honey products company yesterday said it has acquired 100% of Kyoto Forests of New Zealand, set up in 2005 to develop commercial opportunities from the anticipated Emissions Trading Scheme, gaining income from carbon credits. The plan had the added benefit of increasing the area of reverting manuka that beekeepers had to produce manuka honey. Still, with “lengthy” delays in the establishment of an ETS, Comvita has dissolved the JV that owned Kyoto Forests. The shares fell 0.8% to $1.18 yesterday.

New Image Group (NZX: NEW ): The company responded to an NZX query on the 26% slump in its shares this week by saying it reflects the sale of two parcels of shares including one from former director Ray Thomson, sold at a discount to an institution. The company said media coverage of sales by Thomson, who resigned last month, may have “unsettled” some investors. The shares fell 6.6% to 57 cents yesterday.

Rakon Ltd (NZX: RAK ): The manufacturer of crystal oscillators used in navigation systems and mobile phones is well-placed to benefit from growing demand for GPS systems as they become standard in a wider range of mobile phones says Goldman Sachs JB Were's head of asset management Stephen Walker. “Rakon is able to give high-spec performance to these phones, which can then perform much better than previously,” he said. The shares slipped 0.9% to $1.14 yesterday.

Westpac Banking Corp. (NZX: WBC ): Chief financial officer Phil Coffey yesterday said the bad-debt cycle may have peaked, boding well for 2010. "We are right now at the top of the credit cycle," Coffey told reporters as the lender released its annual results. Credit growth may be 2% to 3% this financial year, led by demand for home loans, which would help make up for weaker home-loan activity. Westpac’s NZX shares rose 0.9% to $32.20 yesterday, after it posted a 10.7% decline in annual profit on increased bad debt provisions.

Businesswire.co.nz

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