Stocks to watch: Air New Zealand, Allied Farmers rights

Thursday 16th April 2009

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

Themes of the day: The Federal Reserve's Beige Book regional economic assessment showed that the rate of deterioration in some parts of the US has slowed, stoking optimism the recession may be reaching its bottom. Still, other Fed figures showed industrial output fell a greater-than-expected 1.5% in March. The US dollar gained against most major currencies.

Air New Zealand (AIR): The national carrier is likely to avoid profit downgrades like its trans-Tasman rival, the Dominion Post reported. Goldman SachsJBWere analyst Marcus Curley said Air NZ doesn't face the intense competition Qantas has in Australia. The stock rose 2% to $1 in trading yesterday.

Allied Farmers (ALF): Shares of the rural services and finance group dropped 7.7% to 60 cents yesterday, after the company joined a growing list of corporate tapping investors for equity capital. Allied's $7.5 million renounceable rights offer will start next week and the company plans to have the rights trade on the NZX. Shareholders will be offered six stapled securities, comprising an ordinary share and an option to buy another in a year's time for every seven shares held.

Hellaby Holdings (HBY): The Accident Compensation Commission reduced its stake in the diversified holding company to 4.69% from 5.37%, according to a filing yesterday. The shares jumped 10% to 53 cents yesterday, having tumbled 63% in the past three months. Of three analysts who follow the company, two rate it a 'hold' and one 'under-perform.'

Kiwi Income Property Trust (KIP): Craig Tyson, investment manager at ING (NZ), said the trust's divestment of BP House in Wellington for $26.3 million could have been done the better, the National Business Review report. Tyson, whose company holds an 8.6% stake in the property group, criticised Kiwi Income's $50 million capital raising, saying he doesn't support placements that discount net tangible assets. The shares were unchanged at 90 cents yesterday.

Nuplex Industries (NPX): The shares rose 13% to 35 cents yesterday, when rights to subscribe to seven new shares at 23 cents apiece for each one held ended trading. The rights soared 91% to 10.5 cents yesterday. The $132 million capital raising will help pay debt and bring the company back within its lending covenants. Nuplex has tumbled 72% this year.

By Jonathan Underhill

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