Stocks to watch: New Zealand equity preview

Wednesday 18th February 2009

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

Themes of the day: The New Zealand dollar fell below 51 US cents as investors worldwide became more risk averse. Stocks tumbled on Wall Street, led by banks after Moody's Investors Service said it may downgrade firms with units in Eastern Europe, where it expects the recession to be more severe. General Motors tumbled before its release of restructuring plans needed to secure further government aid. Crude oil sank below US$35 a barrel on the prospects of falling demand for fuel.

Fisher & Paykel Appliances (FPA): The whiteware manufacturer surged 11% to 72 cents yesterday, making it the biggest gainer on the NZX 50. The previous day it slumped 35%, leading the index lower, after the company said it won't make a profit and may have to raise capital as debt levels rise.

New Zealand Refining (NZR): The nation's only oil refinery yesterday posted a full-year profit of $124.9 million, up from $112 million in 2007. Profit was at the top end of the company's $115-$125 million forecast range. Earnings reflected lack of breakdowns, strong refining margins and a favourable exchange rate, it said. The shares fell 0.7% to $7.20.

PGG Wrightson (PGW): The rural services company will take a $10 million one-time charge against first-half earnings to resolve claims from its failed attempt to buy a half stake in Silver Fern Farms for $220 million. Its offer also involves using a retired judge as a mediator. Wrightson couldn't settle the transaction after some of its banks opted not to provide funding. The shares fell 4% to $1.20 yesterday.

Sanford (SAN): The fishing company, the best performer on the NZX 50 last year, climbed 2.4% to $5.58 yesterday, as the New Zealand dollar weakened, helping lift the value of its overseas revenue in kiwi dollar terms.

Solution Dynamics (SDL): The software company said it won't achieve its goal of returning to profit in 2009 after forecast net income of $400,000. "We are making excellent progress, but we do not believe that we will achieve this goal," it said in a statement. "Direct marketing activity in the New Zealand market has softened and the level of uncertainty facing businesses globally makes it more difficult to secure sales of high value software products." The shares trade infrequently on the NZAX market and were last at 27 cents on December 5.

TeamTalk (TTK): The company said the economic downturn will curb sales this year as customers defer spending. Earnings before swap revaluations and the sale of an asset are expected to match 2008's though net income will lag behind last year's $3.98 million, it said. The shares trade infrequently and were unchanged yesterday at $2.14.

Tourism Holdings (THL): The country's largest tourism operator posted a $300,000 six-monthly loss as demand for rental motorhomes from international visitors dwindled. The loss was offset by the company's sale of Kelly Tarlton's Underwater World and its assets in the Milford Sounds. Its stock was unchanged on 65 NZ cents yesterday.

By Jonathan Underhill

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