Stocks to watch: New Zealand equity preview

Tuesday 5th August 2008

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

Themes of the day: New Zealand's economy fell into recession in the second quarter, according to a Treasury report today, supporting the view of many economists. Crude oil fell below US120 a barrel for the first time in three months, reaching as low as $119.50 in New York yesterday. The Reuters/Jefferies CRB Index of 19 commodities had the biggest decline since March, led by cocoa, natural gas and sugar. The Reserve Bank of Australia will probably keep its cash target rate at a 12-year high of 7.25% today, economists say.

Air New Zealand (AIR): Moody's Investor's Service changed the outlook on the airline's Ba1 senior unsecured rating to "stable" from "positive" because of weakening industry conditions.

Fletcher Building (FBU): House prices in Australia's eight state and territory capital cities fell for the first time in almost three years in the second quarter amid high home mortgage costs, according to a report yesterday. The shares traded at NZ$6.28 yesterday and have tumbled 50% in the past year.

New Zealand Oil & Gas (NZO): Crude oil futures fell to the lowest level since May 6 in New York and have tumbled more than $25 a barrel from the record $147.27 it reached non July 11. NZOG last week said annual revenue soared to NZ$234.6 million from NZ$4.2 million on its share of production from the Tui oil field. The stock rose two cents to NZ$1.65 yesterday.

Pike River Coal (PRC): The coal miner yesterday said its tunnel has cleared the Hawera Fault and should reach the coal seam by the end of the month. Pike River plans to extract at least 17.6 million tonnes over the next 18 years. Shares of Pike River rose 2% to $2.03 today

TrustPower (TPW): The utility controlled by Infratil today said the Marlborough District Council granted resource consents required to build its proposed 72 megawatt hydro scheme in the Wairau Valley. The $275 million development passes water from the Wairau River through six power stations. The stock has fallen 10% this year, better than the NZX 50 Index's 18% slide.

Briscoe Group (BGR): The retailer today said a "strong finish" to trading in the second quarter meant first-half profit was probably at the top end of the NZ$2 million to NZ$3 million range it predicted on June 26. The June statement marked the second forecast cut in as many months. First-half sales fell 4.4% to NZ$190.3 million, it said. Same-store sales dropped 7.5%. The stock fell 18% in the past three months and was at NZ$1.03 on Friday.

Contact Energy (CEN): Royal Dutch Shell Plc and BP Plc approached Contact's parent, Origin Energy about jointly developing the Australian energy company's coal seam gas assets, the UK's Sunday Telegraph reported. That could derail BG Group Plc's hostile A$13.8 billion bid for Origin, the newspaper said. BG has said it would sell the half stake in Contact if it succeeds in acquiring Origin. Contact has gained about 10% in the past month.

Dominion Finance (DFH): The finance company whose stock was suspended last month because it hasn't filed its annual report said on Friday it was developing a recapitalization plan that would result in "significant" further funds being injected into the group. It hopes to present the proposal to investors by the end of September. Prior to being suspended, the stock tumbled 85% in three months and changed hands at 13.5 cents on July 7.

Telecom (TEL): The biggest company on the NZX 50 Index is scheduled to release its full-year results on Friday. Net income in the first nine months of the year fell 23% to $537 million and the company has said annual earnings will decline. The stock has gained 12% in the past month.

Vector (VCT): The utility that sold its Wellington network to Hong Kong interests for NZ$758 million, plans to buy back about 2.5% of its stock to bolster the price, it said on Friday. Details of the buyback will be announced after its annual results on August 27, it said. The stock rose 3.2% on Friday.

By Jonathan Underhill

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