Stocks to watch: Telecom 3G stoush, Contact speculation

Monday 4th May 2009

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

Themes of the day: Shares rose on Wall Street on Friday as reports showing better-than-expected consumer confidence and manufacturing stoked optimism the US economic slump is past its worst point. The US dollar and the yen weakened as signs of recovery sapped demand for the most-liquid currencies.

Air New Zealand (AIR): The national carrier has asked managers to assist in filling the gap on Trans Tasman and Pacific flights when cabin staff stages a four-day strike this week. Volunteers would be given seats on flights though would be expected to “muck in” on handing out meals and drinks after take-off, according to a memo from Tasman Pacific Airline general manager Glen Sowry, the NZ Herald reported. Air New Zealand fell 1.9% to $1.03 on Friday.

Briscoe Group (BGR): The diversified retailer rose 1.2% to 83 cents on Friday, bringing its one-month advance to 9.3%. Managing director Rod Duke told BusinessWire he has “probably got a little less negative” about the outlook. The retailer has curbed costs, fattening margins as sales remain flat, he said.

Contact Energy (CEN): The utility’s biggest shareholder, 51%-owner Origin Energy may consider a takeover of the company, following Kirin Group’s bid for Lion Nathan, as strategic stakeholders take advantage of weak stock prices and, market commentator Arthur Lim said, according to the Dominion Post. He said an $8 share offer for the rest of Contact may be “too good an offer to turn down in the current environment,” he said. Contact shares rose 0.2% to $5.71 on Friday.

Freightways (FRE): The courier and fast package delivery firm will reduce its forecast net debt to operating earnings for the year ending June 30 from 3.1 times to 2.4 times as the result of its $50 million capital raising, according to ABN Amro Craigs analyst Geoff Zame, the ShareChat website reported. “Freightways management, strategy, market position and historical financial performance are well regarded and well understood by the market,” Zame said. The shares rose 2 cents to $2.92 on Friday and have gained 6% in the past month.

Infratil (IFT): Wellington International Airport, the capital city’s gateway, plans to spend NZ$450 million over 20 years to double capacity to over 10 million passengers. The airport controlled by Infratil plans to upgrade runways, add additional terminal space, add car parks and commercial projects, according to its draft 2030 Master Plan. Infratil rose 0.6% to $1.58 on Friday.

Telecom (TEL): Shares of the biggest company on the NZX 50 dropped 6.7% to $2.63 on Friday as mobile rival Vodafone Group said it had begun legal proceedings over interference to its customers from Telecom’s tests. The move by Vodafone comes just 13 days before Telecom is due to launch its so-called XT mobile network. Telecom will “vigorously resist the request for an injunction,” chief executive Paul Reynolds said.

Businesswire.co.nz

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