Stocks to watch: Restaurant Brands, NZX acquisition

Wednesday 8th April 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 weakened on Wall Street amid concern first-quarter earnings will show no improvement from the record slump in the fourth quarter. Aluminium producer Alcoa, the first company on the Dow Jones Industrial Average to report, posted a quarterly loss of US$497 million. General Motors slumped on reports it is preparing for bankruptcy.

Briscoes Group (BGR): Initiatives implemented last year to reduce costs through staff cuts and change operational structures will "improve productivity, sales, margin", chairman Rod Duke said in his outlook statement in the retailer's annual report. The statement also notes the retailer will be required to seek re-tenders for all major supply contracts. The stock rose 10.5% to 84 cents in trading yesterday.

NZX (NZX): The stock exchange manager is investigating the acquisition of the Marketplace Company, or M-co, which operates the wholesale electricity market. "A particular focus will be bringing that expertise together to work on developing a liquid hedge market for New Zealand electricity," CEO Mark Weldon said. NZX fell 2.3% to $6.85 yesterday.

Fletcher Building (FBU): The construction company fell 0.8% to $6.15 yesterday, after a report from the Australian Industry Group and Housing Industry Association showed that nation's construction sector contracted for the 13th straight month in March.

Freightways (FRE): The logistics company successfully completed the first part of its $50 million capital raising, with a $45 million underwritten placement. The shares were discounted 12.4% at $2.44, and the proceeds will be used to reduce debt and strengthen the company's balance sheet. Freightways also hopes to raise a further $5 million via a Share Purchase Plan for existing shareholders. The stock was last at $2.78 before yesterday's trading halt.

Restaurant Brands New Zealand (RBD): Full-year profit for the company that holds the New Zealand franchises for KFC, Pizza Hut, and Starbucks slid 1.1% to $8.3 million as sales at its Pizza Hut outlets sank 6.5%. The improvement in profit was "driven purely by the KFC business" the company said in its outlook statement. The stock has climbed over 5% to 85 cents in the past 12 months.

Telstra Corp. (TLS): Australia's largest phone company rose 6.5% to $4.10 yesterday, making it the biggest gainer on the NZX 50, after it won a reprieve in the race to roll out that nation's high-speed phone network. Australia's federal government today said Telstra will be allowed to invest in the broadband network after it was earlier disqualified from the tender process.

Xero (XRO): The online accounting software company yesterday said it raised $23.2 million. Craig Winkler, formerly of Australia's MYOB, subscribed for $18 million of new shares at 90 cents apiece. The shares gained 4.4% to $1.19 yesterday.

By Jonathan Underhill

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