Stocks to watch: Sky City, Air NZ fuel costs

Thursday 14th May 2009

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

Themes of the day: US retail sales unexpectedly fell last month, dampening optimism for an early economic recovery as the number of jobless Americans soars. Stocks on Wall Street fell and the dollar gained. The New Zealand fell more than 1 US cent to 59.09 US cents.

Air New Zealand (NZX: AIR ): The national carrier’s fuel costs will be $530 million lower next financial year because of new hedging and lower oil prices, the NBR reported. The majority of those savings are expected to be passed on to customers to stoke demand, First NZ Capital analyst Jason Familton told the paper. The shares slipped 0.9% to $1.08 in trading yesterday.

Fletcher Building (NZX: FBU ): New Zealand’s biggest construction company slipped 0.6% to $6.71 yesterday, trimming its advance this year to 18%. Lower interest rates and the decline in property values has helped lift activity in the real estate market real estate agent Harcourts said, according to the NZ Press Association. Sales last month were 44% higher than in April 2008.

NZ Farming Systems Uruguay (NZX: NZS ): The developer of dairy farms in South America fell 4.3% to 45 cents yesterday, the lowest close since late February. The stock has shed 37% of its value since April 28, when the company revised its forecast 2008/09 earnings before interest and tax (EBIT) to a loss of US$20 million from $US 11m loss due to flow-on impacts of recent drought in Uruguay. The average rating on the stock is ‘hold,’ according to the estimates of four analysts.

Pacific Brands (NZX: PBG ): The maker of Holeproof and Bonds underwear soared to NZ$1.05 yesterday, from 40 cents when its previously traded on April 6. Its more-active Australian stock jumped 23% yesterday. Three analysts raised their ratings on the stock this week after its A$165 million placement, which allows it bolster its balance sheet, reducing the threat it will be forced into a fire sale of assets.

Sky City Entertainment Group (NZX: SKC ): First NZ Capital analyst Rob Bode rates the company ‘outperform,” the ShareChat website reported in its Daily ShareChat column. After the casino and hotel operator’s $216 million capital raising, it will have “enhanced financial strength and flexibility which should widen the investor appear of Sky City's equity," Bode said, according to the report. Sky City’s key properties have good positioning and strong cash flow though there are questions about the earnings outlook for 2010, he said. Bode cut his discounted cash-flow valuation by 20 cents a share to $3.55, making the placement price of $2.52 good value, according to the report. The stock fell 2.1% to $2.85 yesterday.

Speirs Group (NZX: SGL ): The finance and food group agreed to sell its 8.7% holding in Allied Farmers (NZX: ALF ) to Allied Capital, including shares and options it applied for today under Allied Farmers rights offer. Speirs Group will receive $1.98 million from the sale, comprising cash and convertible redeemable preference shares in Allied Capital. Some conditions of the transaction have yet to be met. Allied Farmers was unchanged yesterday at 46 cents. Speirs last traded at 36 cents on May 11.

Businesswire.co.nz

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