Stocks to watch: Air New Zealand, Nuplex, Restaurant Brands

Wednesday 3rd November 2010

Australia's competition watchdog considers whether to allow the Air New Zealand alliance with Virgin Blue, Nuplex is expected to face pressure at its AGM over its executive bonus scheme and NZX reported a slump in trading volumes last month.

Air New Zealand (AIR): Australia's competition watchdog has asked Jetstar to provide details of its domestic and Tasman expansion plans for the next three years as it considers whether to allow the alliance between Air New Zealand and Virgin Blue. The airlines have already won over several opponents to the proposed deal, including Wellington Airport and a group of business leaders, by promising to increase capacity and flights on the New Zealand-Australia route. Share

Fisher & Paykel Appliances (FPA): The strong kiwi dollar erodes the value of overseas revenue when it is accounted for in the appliance manufacturer’s books. The shares are rated ‘outperform,’ based on the consensus of six recommendations compiled by Reuters and have gained 15% in the past three months.

Nuplex Industries (NPX): The industrial chemical and resin maker is expected to come under pressure today at its AGM over a scheme to allow a portion of executive bonuses to be based shareholder returns even if it is in the bottom half of its benchmark, according to press reports. Under the proposed scheme half of executive bonuses will be based on how Nuplex share fares relative to the NZX 50, and will begin to vest if the company's returns are better than 40% of the index. Shares rose 1.8% yesterday to $3.46.

NZX (NZX): Trading volumes and value on the securities market operator’s NZX debt and equities trading platforms slumped last month, compared to volumes for the same month a year ago. Operational statistics for October show a 21% drop in total trades to 42,230 and a 10.3% fall in the value of daily trading to $102 million, although this was up 4% from the September 2010 average. The total value traded was $2 billion, a 14.5% decline, during a month marked by a string of negative economic indicators, which cast a cautionary pall over business sentiment. Shares were unchanged yesterday at $1.58.

Oyster Bay Marlborough Vineyards (OBV): Chairman Sandy Maier said in the grape grower’s annual report that the wine industry “continues to forecast a supply imbalance for the foreseeable future.” He said while Oyster Bay’s relationship with Delegat’s Wine Estate ensures a buyer for its crop, “the change in average market grape prices has left the company exposed.” Oyster Bay has hired an investment bank “to advise us on how best to achieve a sustainable capital structure and we are also in discussions with our majority shareholder.” Delegat’s last month announced a takeover offer for the 45% of Oyster Bay it didn’t already own at $1.80 a share. Oyster Bay last traded at $1.85 on Nov 2.

Restaurant Brands NZ (RBD): The fast food chain operator is rated “outperform” by First NZ Capital analyst Sarndra Urlich, quoted on the ShareChat website. The company recently reported at 50.4% rise in net profit to $13.9 million for the six months ended Sept 13. Management maintained its guidance for net profit for the year ending February at between $24 million and $26 million, which Urlich said was “overly, although not surprisingly, conservative”. Shares rose 0.7% to $2.84.

Windflow Technology (WFT): The wind turbine manufacturer is looking to raise $5 million in a one-for-two rights issue to fund its marketing push into the UK. A total of 5,996,745 new shares will be offered at an issue price of $0.90 per share, representing a 14% discount to the last sale price immediately prior to the company’s annual meeting, and is at the lower end lower end of the 84 cents-to-$1.51 trading range of Windflow shares over the past 12 months. The shares were unchanged yesterday at 99 cents.

Themes of the day: The kiwi dollar rose to a 29-month high of 77.38 US cents as the looming announcement from the Federal Reserve on how much money it will print to stimulate the US economy sapped demand for the greenback. Prices were little changed in Fonterra’s latest milk powder auction, with the trade-weighted index measure showing no change. The Australian dollar climbed to a 28-year high against the US dollar of US$1.0025 after the surprise interest rate increase by the Reserve Bank of Australia yesterday highlighted the relative strength of Australia’s economy.

Businesswire.co.nz

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