Stocks to watch: New Zealand equity preview

Friday 9th January 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 of Wal-Mart Stores, the world's biggest retailer, fell 7.4%, dragging the Dow Jones Industrial Average lower after announcing earnings would miss forecasts. Other retailers in the US, including Gap, also announced weaker trading conditions. Crude oil and copper tumbled on concern a prolonged economic slump will erode demand.

Genesis Research & Development Corp. (GEN): The Auckland biotechnology company advised the market that it hasn't received the $2 million payment from Pure Power Global for sale of shares in BioJoule. Genesis chief executive Stephen Hall said they are looking to find a resolution to the situation, and haven't resumed ownership of the shares. Its own stock is unchanged at 9 New Zealand cents, having fallen over 55% in the past 12 months.

Guinness Peat Group (GPG): The investment company fell 4.1% to 94 cents yesterday, bringing its two-day slide to 9.6% after it released a valuation of assets that amounted to $1.33 a share while saying profit would miss its target.

Michael Hill International (MHI): The jewellery chain is the biggest gainer on the NZX 50 so far this year, rising almost 12% to 57 cents. Last month the company said it was reorganising itself by selling the intellectual property in its selling system to its Australian subsidiary, generating tax benefits that would lift profit. The shares were down 50% in the past 12 months.

New Zealand Oil & Gas (NZO): The oil company's stock fell 2 cents to $1.26. Crude for February delivery fell 2.3% to US$41.65 a barrel on the New York Mercantile Exchange.

ProTen (PROTEN): The contract chicken grower's shares joined the Unlisted platform in November though the company's strategy has been to sell assets in New Zealand and target the Australian market. The company "has an impressive track record as a yield stock, but with a strong growth component," Roger Paterson, an analyst at McDouall Stuart, said in a report, rating it a 'hold.'

ProTen supplies two of the three biggest chicken companies in Australia and is in talks to form a venture with the third and largest, Ingham Enterprises, Paterson said. The shares were sold at 50 cents apiece and haven't yet traded.

Telstra Corp. (TLS): Chief executive Sol Trujillo told an investor conference in Phoenix, Arizona that Australia's largest phone company "continues to excel operationally against almost any benchmark and that is not fully reflected I would say today clearly in our share price."

Trujillo said Telstra may lose as much as A$2 billion in sales over an extended period when Australia's national high-speed Internet network is built, after its bid to build the network was rejected by the federal government. The shares fell 2% to A$3.68 on the ASX yesterday and were unchanged at $4.80 on the NZX.

By Jonathan Underhill

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