Stocks to watch: Wrightson heads to mediation, Metlifecare loss

Tuesday 3rd March 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 tumbled worldwide after American International Group posted a record loss for an American company, putting it in line for a further US$30 billion of government aid. HSBC Holdings, Europe's biggest bank, announced plans to raise 12.5 billion pounds to bolster its balance sheet. Crude oil fell almost 10%. The New Zealand dollar held below 50 US cents for a second day.

Auckland International Airport (AIA): New Zealand's biggest gateway said international passenger numbers fell 0.9% to 720,140 in January, while domestic passengers declined 7.5% to 427,158. The shares fell 1 cents to $1.76 yesterday and are up 9.3% so far this year.

Downer EDI (DOW): The construction firm yesterday said its engineering division won a contract with Xstrata Coal with a total works value of about A$440 million for the development of a coal handling and preparation plant in the Upper Hunter Valley in New South Wales. The 18-month contract reinforced the company's strong relationship with Xstrata and demonstrated the company's sound outlook, managing director Geoff Knox said. Downer's ASX-listed shares rose 7.5% to A$4.02 yesterday.

Guinness Peat Group (GPG): The investment group's shares fell 8.3% to 55 cents yesterday, adding to Friday's 13% slide after the investment company chaired by Ron Brierley posted a full-year loss as it wrote down the value of its portfolio and its Coats threadmaker unit was hit by the economic downturn.

Metlifecare (MET): The retirement village operator posted a first-half net loss of $61.9 million and suspended its dividend payments after writing down the carrying value of its investment properties. Chairman Jim McKay yesterday said "challenging market conditions" have resulted in a reduction in sales volumes and resales of occupation rights at its retirement villages. The shares last traded on February 27 at $1.80 and are down 30% in the past month.

NZ Windfarms (NWF): The company yesterday reported its net operating surplus before discount on acquisition of the remaining 50% interest in the Te Rere Hau Joint Venture, asset impairments and tax, was $295,000. Net profit in the six months ended December 31 rose to $2.6 million from $1.3 million a year earlier. The shares were unchanged yesterday at 64 cents.

PGG Wrightson (PGW): Silver Fern Farms agreed to mediation with Wrightson over the failed $220 million purchase of a half stake in the meat cooperative. Silver Fern and the rural services company haven't been able to agree on compensation after Wrightson's $10 million offer was rejected as to low.

The two companies have appointed retired High Court judge Robert Fisher to try to mediate an agreement by April 18. The mediation doesn't prevent Silver Fern from beginning litigation. Wrightson shares climbed 8.8% to 99 cents yesterday, adding to a 15% jump on Friday, after the rural services company said it would maintain its dividend, easing concern that major shareholders may dump their stock to raise funds, and gained an extension on its loan facilities.

Pike River Coal (PRC): The shares fell 2.4% to 80 cents on Friday, before being halted pending an announcement. The shares have fallen 11% since February 19 when the coal miner reported a rock fall had blocked a ventilation shaft critical to venting mine air and gases to the surface and providing fresh air.

"The timing was unfortunate coming just as Pike River was about to commence its ramp-up of coal production," the company said. It posted a $9.6 million interim loss, reflecting mine development costs prior to any coal being extracted and now has to find the funds for remedial work.

Sanford (SAN): The fish exporter gained 2.8% to $5.50 yesterday as the New Zealand dollar held below 50 US cents, near a seven-year low, swelling the value of its export sales.

By Jonathan Underhill

Comments from our readers

No comments yet