Stocks to watch: OceanaGold loss narrows, Wrightson weakens

Friday 20th 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 number of Americans remaining on unemployment benefits for more than a week jumped by 170,000 to 4.98 million in the first week of February, the highest since at least 1967. The world's biggest economy will probably stay mired in recession until at least June, with a tepid revival beyond that, according to Federal Reserve Bank of Atlanta President Dennis Lockhart. Crude oil surged 13% to US$39.15 a barrel after a US Energy Department report showed stockpiles unexpectedly fell 138,000 barrels to 350.6 million barrels last week.

Auckland International Airport (AIA): The nation's busiest gateway fell 1.1% to $1.89 yesterday after posting a 79% drop in first-half profit after reducing the value of the company's investment property portfolio. Earnings rose 8.3% to $51.6 million excluding property revaluations. Full-year profit would be at the low end of its $100 million to $110 million range, excluding property revaluations.

Michael Hill International (MHI): The jewellery chain fell 1.9% to 51 cents yesterday after reporting a 37% drop in operating profit to $17.9 million on weakening demand for its wares. Net profit rose to $65.6 million, boosted by a tax gain from its relocation to Australia.

OceanaGold Corp. (OGC): The owner of McCraes gold mine in Dunedin posted a net loss of $54.7 million for the six months to Dec. 31 as losses on undesignated hedges rose 60.1% to $75.6 million. The gold mining company boosted sales 108% to $217 million. Its stock jumped 15.5% to 97 NZ cents yesterday.

Pan Pacific Petroleum (PPP): The part owner of the Tui oilfield said first-half pretax earnings jumped to A$63 million from A$33 million a year earlier. The shares last traded on the NZX on Feb. 18 at 40 cents.

PGG Wrightson (PGW): The rural services company slumped 16% to 82 cents yesterday, after Silver Fern Farms rejected its offer of $10 million to settle the failed $220 million acquisition of a half stake in the South Island meat cooperative. Separately, Wrightson's part-owned South American offshoot, NZ Farming Systems Uruguay, today posted a wider first-half because of falling milk prices and the costs of a drought, denying Wrightson a management fee

ProvencoCadmus (PVO): The eftpos systems company said its debt levels remain "a major concern" though it is persevering with its asset sales and recapitalization, aiming to return to profits. The company is in talks to extend its bank facilities, which expire at the end of this month. Because of cash constraints, it will rollover its capital notes for about 12 months, paying just 2% annual interest. To appease noteholders, it will give them the opportunity to convert their notes to ordinary shares. The shares soared 15% to 5.5 cents yesterday.

Southern Travel Holdings (STH): The tour booking company yesterday said the continuing drop in tourist numbers and exchange rate movements will impact profit this year. The company forecast that the net profit before tax performance of the Group for the year ending 30 June "is most likely to result in a break even position." The stock last traded on Feb. 3 at 20 cents.

By Jonathan Underhill

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