Stocks to Watch: NZX buys more assets, THL revives

Thursday 30th 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 central bank is expected to cut the official cash rate by 50 basis points to 2.5% today, according to a Reuters survey, though some economists say Governor Alan Bollard may only cut by 25 basis points amid signs the economy may have bottomed. The Federal Reserve kepts its key rate in an exceptionally low range of zero to 0.25% and said there are signs the US recession is abating. Stocks on Wall Street rallied.

Australia & New Zealand Banking Group (ANZ): Australia’s fourth-largest lender fell 7.7% to $19.75 on the NZX yesterday after it posted a 28% drop in first-half profit as bad debts surged. Net income fell to A$1.42 billion while the lender’s credit impairment charge soared 98% to A$1.44 billion. ANZ National Bank, the wholly owned subsidiary and largest banking group in New Zealand, reported a 59% decline in net profit to $168 million.

Kirkcaldie & Stains (KRK): Wellington’s upscale department store yesterday posted a 42% drop in first-half net profit to $482,000, saying the first six months had been “a very challenging period.” The shares last traded at $2.10. With the prevailing lack of confidence in the economy, retail demand was low for the entire six-month period. Kirkaldie is confident full year profit will be similar to last year’s.

NZX (NZX): The stock market operator agreed to acquire the energy and related assets of Marketplace Co. for $13.1 million, adding to its platforms for trading bonds, stocks, derivatives and carbon credits. NZX will fund the acquisition through equity and debt. Its shares rose 1.2% to $6.90 yesterday and are up 25% this year.

Pumpkin Patch (PPL): The children’s clothing chain is rated ‘underperform’ by First NZ Capital analyst Sarndra Urlich, the ShareChat website reported. Urlich is forecasting operating losses from the retailer’s U.S. stores of about $14 million compared to operating profits from the company's other activities of about $62 million, according to the report. She estimates if the company completely exited the US, her discounted cashflow valuation would rise to $1.22 from $1.02 currently. Pumpkin Patch dropped 3.4% to $1.15 yesterday.

Telecom (TEL): the largest company on the index, rose 0.4% to $2.72, a six month high, as 15.4 million shares changed hands. The phone company has sought to move to the front foot this week, announcing the start of its new 3G mobile network a month early and proposing that its Chorus unit take a key roll in the government’s broadband strategy. The stock is up 18% this year.

Tourism Holdings (THL): The campervan operator rose 6.4% to 50 cents yesterday, leading the NZX 50 higher, as the Ministry of Tourism released figures showing spending by domestic travelers increased 6.2% to $8.1 billion last year holiday travelers lifting spending by 4% to $3.2 billion. The shares have decline 30% this year.

Businesswire.co.nz

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