Stocks to watch: NZ Oil & Gas, Telecom

Monday 18th May 2009

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

Themes of the day: The New Zealand dollar tumbled on Friday in New York, reaching 58.50 US cents. Crude oil fell and shares on Wall Street ended the week lower. Europe’s economy shrank 2.5% in the first quarter.

Guinness Peat Group (GPG): The diversified investment group was the biggest gainer on the NZX 50 Friday, rising 6.7% to 80 cents. Chairman Ron Brierley said trading “has held up as well as could be expected” at its principal operating subsidiary, Coats, given the economic downturn. GPG is concentrating on “exit options to maximise the realisation of those investments which no longer have future potential” and examining new prospects,” Brierley said.

Kiwi Income Property Trust (KIP): The units rose 1.1% to 94 cents on Friday even after the trust posted a 1.8% drop in so-called distributable profit to $61 million. Full-year net income turned to a loss of $168.9 million as the value of its portfolio fell by 10%.

L&M Petroleum (LMP): The shares soared 17% to 21 cents on Friday after the gas explorer said it was “cautiously optimistic” after finding coal seam gas at a test well in western Southland.

New Zealand Oil & Gas (NZO): Crude oil for June delivery dropped 3.9% to US$56.34 a barrel on the New York Mercantile Exchange amid concern the global economy isn’t heading for a speedy rebound and demand will remain weak. NZOG’s shares fell 2% to $1.47 on Friday.

Sky Network Television (SKT): The nation’s biggest pay-TV company hasn’t bowed to urging by Broadcasting Minister Jonathan Coleman to make the prime channel available on Freeview, according to the Dominion Post. A meeting between Sky, Freeview and transmission company Kordia ended without agreement, according to the report. The shares fell 2 cents to $4.30 on Friday and have gained 16% this year. The stock is rated ‘outperform,’ based on estimates from nine analysts compiled by Reuters.

Telecom (TEL): The biggest company on the NZX 50 faces shrinking profit margins and tepid revenue growth in mobile and broadband services because of regulatory and competitive pressures over the next few years, according to brokerage McDouall Stuart, the ShareChat website reported. Full-year net profit is forecast to tumble to $510 million this year from $710 million a year earlier, and drop to $415 million in 2010.

The brokerage also questioned the sustainability of its dividend payments and said while Telecom’s AAPT unit should perform better after the merger with PowerTel, the company may yet withdraw from Australia. Telecom stock was at $2.60 on Friday and is up 14% this year.

Businesswire.co.nz

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