Stocks to watch: New Zealand equity preview

Tuesday 4th November 2008

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

Themes of the day: The Reserve Bank of Australia is expected to cut the benchmark interest rate in New Zealand's largest export market by 50 basis points to 5.5%, with some analysts predicting a 75 basis point reduction.

Figure yesterday showed US manufacturing had the biggest slump in 26 years last month on weakening world demand for exports and a squeeze on credit at home. Crude oil fell more than US$3 a barrel to US$63.91 after the ISM report. The benchmark US stocks indexes ended the session lower.

APN News & Media (APN): Australia's Seven Network may be interested in bidding for Irish billionaire Tony O'Reilly's 39.1% stake in APN, the Sydney Morning Herald reported. O'Reilly's Independent News & Media has said it got approaches from potential buyers of the stake and is considering a sale to repay debt. APN's New Zealand shares last traded on October 21 at $2.85.

Briscoe Group (BGR): The retailer today said sales fell 11% to $77.8 million in the 13 weeks ended October 26, with homeware revenue sliding 10% and sports goods sales declining 13% to $24.7 million. Managing director
Rod Duke said results for August and September were "poor" and second half profit will lag behind last year's $$11.9 million. Still, the decline won't be as big as was indicated by the first-half results, he said. The shares were unchanged at 80 cents yesterday and have dropped about 44% this year.

Fletcher Building (FBU): Australia's Bureau of Statistics yesterday said an index measuring the weighted average price for sales of existing homes dropped 1.8% last quarter, the biggest quarterly decline in 30 years. Shares of Fletcher traded at $5.80 yesterday and have declined 50% this year.

New Zealand Oil & Gas (NZO): Crude oil for December delivery fell 5.8% to US$63.91 a barrel on the New York Mercantile Exchange, amid concern demand will weaken as the world's biggest economy slows. Crude is now down almost 60% from its record high US$147.27 reached in July.

PGG Wrightson (PGW): Meat cooperative Silver Fern Farms yesterday scrapped an agreement that would allow Wrightson to acquire a 50% stake after it failed to secure the funding. Wrightson shares rose 2.9% to $1.75 yesterday and have dropped almost 40% in the past three months.

Property For Industry (PFI): Industrial property investor managed by AMP Capital Investors posted a nine-month loss after lowering the value of its portfolio by 6.6%. Excluding the property revaluation and other unrealized items, profit rose. The stock was unchanged at $1.06 yesterday and has declined 26% this year.

Sanford (SAN): The fishing company's shares have gained 37% this year, marking it as one of the few companies on the NZX 50 to chart strong gains as the domestic economy shrank. The company benefits from a weaker New Zealand dollar, which swells the value of its export sales. The currency has fallen 19% slide against the US dollar in the past three months. The stock, rated 'buy' or 'outperform' by four of five analysts who follow the company, rose 3.6% to $5.75.

VTL Group (VTL): The directors of VTL Group resigned yesterday, inviting a receiver to take control of the company. The directors said they believe Remote Technology Systems, Shop24 and the vending franchise programme have value and hope that a restructuring will benefit stakeholders. The stock last traded at 1.5 cents on July 18.

By Jonathan Underhill

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