Stocks to watch: Fletcher Building, PGG Wrightson, Rakon

Friday 16th October 2009

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

Themes of the day: Goldman Sachs Group posted third-quarter earnings that more than tripled and Citigroup Inc. surprised investors by reporting a profit, adding to signs that lenders have shaken off the effects of recession. In contrast to New Zealand's unexpectedly strong September quarter inflation of 1.3%. US consumer prices rose 0.2% last month, slowing from a 0.4% pace in August, according to the Labor Department.

That stokes the case for those Federal Reserve policymakers who have argued to keep interest rates near zero, while the Reserve Bank of New Zealand may now be under greater pressure to raise rates earlier than late next year - its previously stated intention. The kiwi dollar rose sharply yesterday, threatening to breach US75 cents. Americans filing for unemployment benefits for the first time fell to a nine-month low, a sign that companies are shedding fewer jobs.

Fletcher Building (FBU): New Zealand's largest construction company, with a large degree of exposure to new residential housing, may have suffered a share price downturn following yesterday's stronger than expected quarterly inflation figures. Its shares finished at $7.89, having started the day at $8.00.

Goodman Property Trust (GMT): The trust's manager yesterday announced the sale of Aurecon House, in Newmarket, Auckland, for $26.7 million. The sale brings the trust's asset disposals to more than $100 million, said chief executive John Dakin. Proceeds will repay debt and fund development opportunities. The shares rose 1% to $1.06.

NZ Farming Systems Uruguay (NZS): The shares rose 6.8% to 47 cents yesterday, the biggest gain on the NZX 50, after the company renegotiated the terms of fees payable to PGG Wrightson, which established and manages the South American dairy farm development company. Farming Systems is instituting annual reviews and gaining more control after pressure from institutions and Uruguayan bondholders. The share price rise came despite a stormy annual meeting in Auckland where shareholders questioned the company's performance and strategy.

NZX (NZX): The listed market operator's purchase of Melbourne-based grain exchange operator Clear Group may lift per-share earnings by 2% in 2011, according to Craigs Investment Partners analyst Daniel Reynolds, the ShareChat website reported. Earnings will be diluted by about 6% this year and 8% in 2010, said Reynolds, who rates the stock a ‘hold,' saying it is about fair value. The shares fell 4 cents to $8.06 yesterday.

PGG Wrightson (PGW): A major announcement is expected from the battling national stock and station company this morning. Speculation is that details of a capital raising programme will be given to investors and the wider business community. Wrightson shares traded at 65 cents yesterday, a rise of 2 cents.

Rakon (RAK): The manufacturer of crystal oscillators used in navigation systems and mobile phones raised $21.7 million in a placement of 18.8 million shares at $1.15 apiece. About half the funds raised will go toward a new manufacturing plant in Chengdu, in southwest China. The announcement was made after the close of trading yesterday, when the shares fell 0.8% to $1.19.

Businesswire.co.nz

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