Stocks to Watch: New Zealand Equity Preview

Friday 10th October 2008

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

Themes of the day: Stocks on Wall Street tumbled, sending the Dow Jones Industrial Average below 9000 for the first time in five years. General Motors fell as much as 22%. Dominique Strauss-Kahn, managing director of the International Monetary Fund, said the world is "on the cusp of a global recession' at a media conference in Washington. New Zealand's dollar weakened against the yen as investors eschewed higher-yielding assets.

Diligent Board Member Services (DIL): The company that provides management services to company boards said quarterly sales rose 85% to US$800,000. It reported "positive income growth" in the third quarter, despite severe financial market pressures. The stock last traded at 20 cents and has tumbled almost 75% this year.

Fletcher Building Ltd. (FBU): funds associated with Macquarie Group reduced their holding in New Zealand's biggest building products company to 4.96% from 6.5%, according to a filing to the NZX today. The shares traded at NZ$6.39 yesterday and have slipped 17% in the past month.

New Zealand Oil & Gas Ltd. (NZO): Crude oil fell in New York amid concern the global economy is heading for recession, sapping demand for fuel. Crude oil for November delivery fell 1.8% to US$87.31 a barrel on the New York Mercantile Exchange. It has fallen from a record US$147.27 a barrel reached in July. The stock traded at NZ$1.19 yesterday and has declined 22% in the past month.

OceanaGold Corp. (OGC) and Heritage Gold NZ Ltd. (HGD): The price of gold fell for the first time in a week in New York, tracking a broader decline in commodities. Gold futures for December delivery fell 1.7% to US$891.20 on the New York Mercantile Exchange. OceanaGold was unchanged at 38 cents yesterday and has slumped 85% this year. Heritage Gold NZ Ltd. traded at 2.2 cents yesterday and has dropped 65% this year.

OPI New Zealand Ltd. (MFN): the finance company appointed voluntary administrators yesterday after a review of its remaining assets and liabilities. The ailing firm posted a loss after writing down the carrying value of is subsidiaries and taking an impairment charge against the loans and investments of OPI Pacific Finance. The company concluded it has no prospect of financial support from Octaviar Group and won't get funds from Pacific Finance during that unit's moratorium. The stock last traded on Jan. 21 at NZ$1.10.

Warehouse Group Ltd. (WHS): the discount chain's decision to abandon its rollout of Extra hypermarkets, ending its foray into groceries, may stoke the prospects for Woolworths Ltd. to acquire the company. Woolworths, which is preparing to challenge a court ruling blocking a takeover, yesterday said it is evaluating Warehouse's move.

Foodstuffs managing director Tony Carter also will seek advice on mounting a bid. Warehouse shares jumped 13% to NZ$3.49 yesterday, paring its decline this year to 40%.

By Jonathan Underhill

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