Stocks to watch: Air NZ, NZX's Australian ambitions, Sanford outlook

Thursday 18th June 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 consumer prices had the biggest annual drop in 60 years last month, easing concern the Federal Reserve will be preparing to raise interest rates as the world’s biggest economy climbs out of recession. Stocks on Wall Street edged lower while crude oil climbed above US$71 a barrel.

Air New Zealand (AIR): The national carrier fell 3% to 98 cents yesterday, the first time since mid-April it has slipped below $1. The carrier said long-haul passenger volumes continued to slide in May, led by a 19% decline in numbers on routes through Asia, Japan and the UK, reflecting the global economic slump and fears about swine flu.

Charlie’s Group (CHA): The juice maker fell 4.4% to 11 cents after the unprofitable juice maker said it had rejected ‘low-ball’ offers from multi-national rivals and is mulling opportunities to raise capital and reduce debt as it aims to turn profitable in 2010. The notes to the juice maker’s first-half accounts, released on March 23, say the company was in breach of certain bank covenants at December 31 and had been granted a waiver by its bank, Australia & New Zealand Banking Group. The notes say that 19.69% shareholder Collins Asset Management, a private equity firm, has provided an additional guarantee to the bank over $1.5 million of Charlie’s facilities via a related entity, Cottisloe Holdings.

New Zealand Oil & Gas (NZO): The oil producer was downgraded to "hold" at Morningstar, which said the shares have run up sharply with gains in crude oil andhave limited scope to extend their rally. Excluding foreign currency and erivative gains, the research firm is forecasting adjusted net profit of about $42 million this year. the shares were unchanged at $1.62 yesterday and have climbed 28% this year.

Sanford (SAN): The fishing company said there was a prospect of international trading conditions improving in the second-half though with the current strength of the New Zealand dollar the company couldn’t usefully forecast its earnings. Sanford would continue through the rest of the year “without the need for any downsizing,” the company said in its interim report. The shares rose 0.2% to $5.51 yesterday.

Telecom (TEL): The Commerce Commission today released its decision the terms Telecom must make the unbundled sub-loop services available to other phone companies. The combined cost per customer for the unbundled sub-loop services is approximately 26% higher than the corresponding costs for local loop unbundling, though service providers will be able to provide customers with higher-value services over the sub-loop, it said. The shares rose 2 cents to $2.59 yesterday.

Tourism Holdings (THL): Fund manager Schroder Investment Management Investment reduced its holding in the campervan rental company to 6.19% from 8.57%, according to a filing to the NZX today. The company is to drop out of the NZX 50 Index. The shares fell 1 cent to 45 cents yesterday. Separately, the company said it is in full compliance with its banking covenants having renewed its banking facilities through to 2011. It made the comments in replay to a Shareholders Association inquiry.

Businesswire.co.nz

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