Stocks to watch: Briscoe, Cynotech, Fletcher, Telecom

Tuesday 11th August 2009

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

Themes of the day: Shares on Wall Street snapped a four-week rally amid concern prices have risen beyond levels justified by the outlook for earnings. Investors are awaiting trade and manufacturing data out of China today, which may provide a clue to the likely speed of recovery in the global economy. The kiwi dollar held above 67 US cents.

Briscoe Group (BGR): The retailer is rated ‘hold’ by Goldman Sachs JBWere analyst Buffy Gill, according to the ShareChat website. Gill says there would be room for a rating upgrade “if we saw further scope for earnings upgrades." The diversified retailer has fattened its margins thanks to its revamped inventory management and IT systems, she says. Gill raised her profit forecast for the year through January 2010 to $15 million from $10.4 million. The shares were unchanged at $1.15 yesterday.

Cynotech Holdings (CYT): Chairman Allan Hawkins said the finance, seating systems and ice-cream cone group expects the next six months to be “difficult trading.” While some commentators have reported a slight pick-up in the economy, “we do not believe the worst has been seen in the property and credit sector and this will continue to impact on the finance industry,” Hawkins said in Cynotech’s mid-year report. The shares soared 17% to 16 cents yesterday.

Fletcher Building (FBU): New Zealand’s biggest construction company is expected to report an annual profit before one-time items of $295 million, according to Forsyth Barr, down from $467 million in the previous year. Including costs to close plants and write down the value of its Formica unit, the company may post a net loss of about $50 million, its first since 2001. The company reports on Wednesday. The stock fell 1.9% to $7.18 yesterday.

NZX (NZX): The shares rose 3.2% to $7.85 yesterday, the highest close in a month. The company on Friday posted a gain in first-half net income of more than 1000% to $60.8 million on asset sales. The stock has climbed 54% this year. Chief executive Mark Weldon “has done some pretty good deals and for that reason I’m happy to be holding the stock,” said Alan Moore, who helps manage $300 million at Milford Asset Management.

Telecom Corp. (TEL): A strike by 900 engineers employed by Telecom lines contractors Transfield Services and Downer EDI entered its second day over demands for redundancy provisions as the workers are to be forced to become independent contractors. The shares fell 2 cents to $2.75 yesterday.

Tourism Holdings (THL): Tourist spending fell by $161 million in the year through June, according to the Ministry of Tourism. Spending by Australians, the biggest source of overseas visitors, fell 3.3%. The shares of the campervan rental company rose two cents to 62 cents yesterday.

Businesswire.co.nz

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