Daily ShareChat: Fisher & Paykel Appliances Holdings

Fisher & Paykel Appliances (FPA) recent recapitalisation provides it with a solid balance sheet and a potentially valuable cornerstone shareholder and strategic partner in China's Haier, says First NZ Capital analyst Greg Main.

"The potential to access the high-end Chinese appliance market provides some upside for FPA," Main says. "However, we temper this with the view that this is more a five-year story and the market is likely to take a ‘wait-and-see' approach."

He expects FPA to offer a full range of its high end products in China but he expects initial sales will be heavily weighted toward refrigeration and some washing products which sell well for the company in Hong Kong and Singapore.

"We would then expect, over time, greater sales from cookware with good prospects for Elba's European product, washing and dishwashers."

Main has reinstated coverage after being restricted while his firm acted as co-underwriter of FPA's $142.9 million rights issue. FPA also made two placements totalling $57.7 million to Haier.

FPA has "moved from a laggard to an industry leader in relocating to low labour cost countries," Main says.

He says he is encouraged by the company's 2010 forecasts and "believe if FPA can generate a reasonable return, given current conditions, then it is poised for better things in a recovery."

BROKER CALL:  First NZ Capital rate Fisher & Paykel Appliances (NZX: FPA ) as outperform.

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