MARKET CLOSE: Stocks mixed; Nuplex climbs, Warehouse falls

Wednesday 22nd April 2009

Shares were mixed, with Nuplex Industries leading gainers as some investors sought value among companies most beaten-up by this year’s rout and Warehouse Group falling after reiterating its forecast for falling profit.

The NZX 50 Index fell 12.46, or 0.5%, to 2698.80, snapping a five-day rally. Within the index, 21 stocks fell, 20 rose and nine were unchanged. Turnover was a ho-hum $65 million.
Nuplex gained 11% to 41 cents, bringing its gain in the past week to 23%. At today’s price the shares are trading at just 2.7 times earnings. They have rallied from a record low 19 cents on March 20, when the company’s ability to raise more funds was in doubt.

“Now people believe it is going to survive they are starting to return to the fundamentals,” said Ian Waddell, head of stockbroking at McDouall Stuart. “Those people who have taken the risk have done pretty well.”

Waddell likens the stock revival to US companies such as Citigroup, whose survival was considered in doubt, forcing it to seek government aid. Citigroup last traded at US$3.65 on the Dow Jones Industrial Average, from as little as US$1.02 on March 5.

Fisher & Paykel Healthcare rose 2.7% to $3.05. The company which gets 80% of its revenue in US dollars climbed above $3 for the first time in almost three weeks as the New Zealand dollar edged down to 56.67 US cents, the lowest since April 1.

Transport and logistics group Freightways rose 1.9% to $2.71, returning to a level it last reached on April 8, when it completed its $45 million placement at what was then a 12% discount of $2.44.

Waddell said more companies will be preparing to tap investors for equity capital as bank lending remains harder to secure. In Australia today, Onesteel, that nation’s No. 2 steelmaker, raised A$584 million selling shares at a 30% discount to bolster its balance sheet.

Equity raisings have to compete with fixed rates offered on corporate debt or preference shares as retail investors seek better returns than are available from deposits.

Infratil fell 0.6% to NZ$1.57. The investment group today announced the sale of three bus depots in Auckland for $23.1 million. Chief executive Marko Bogoievski said the funds will be used to reduce debt.

OceanaGold, owner of New Zealand’s largest gold mine, jumped 6.9% to 93 cents after reporting high-grade gold mineralisation beneath existing reserves at the Frasers Underground mine in the Macraes Goldfield. The shares have soared 123% in the past three months.

Warehouse Group, the biggest retailer on the NZX 50, fell 1.7% to NZ$3.48 after reiterating its forecast for profit growth to stall this year. In its first-half report, the company repeated the forecast first made with its interim results on March 12 that adjusted net profit for the full year will be similar to last year’s $80.9 million.

“So long as the prospect of high unemployment and low consumer confidence remains, the retail environment will continue to be challenging and retail spending under pressure,” the company said in the report’s outlook statement.

Jewelry chain Michael Hill International fell 1.8% to 56 cents, having gained 12% this year.

A survey today showed New Zealand's services industry picked up for a second month in March, while remaining in contraction. The Bank of New Zealand – Business NZ Performance of Services Index (PSI) rose to 47.1 last month from 46.3 in February. March marked the 12 straight month of contraction.

Fisher & Paykel Appliances fell 4.3% to 45 cents. The appliance manufacturer’s $80 million short-term loan-facility ends on April 30, increase the prospects for the company to announce new capital-raising initiatives. It gained a waiver to its debt cover ratio and interest cover ratio covenants for the term of the interim facility, buying more time to negotiate with its banking syndicate to refinance bank debt.

Businesswire.co.nz

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