Stocks to watch: Cynotech, IRG, Mainfreight, Renaissance

Thursday 6th August 2009

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

Themes of the day: Stocks weakened on Wall Street after figures from ADP Employer Services showed companies shed more than expected jobs, while the US services sector contracted, stoking concern recovery from recession will be slow. The kiwi dollar held above 67 US cents, helped by the positive sentiment from the price boost at Fonterra’s online milk powder sale yesterday. Employment figures due out today are expected to show the jobless rate rose to 5.6% from 5%, with the rate expected to continue climbing into 2010.

Cynotech Holdings (CYT): The diversified holding company run by former 1980s high-flier Allan Hawkins posted a 2.9% gain in first-half profit as debtors began repayments on impaired loans that had previously been valued at nil. Net income rose to $1.3 million in the six months ended June 30 from $1.2 million a year earlier, the company said. The shares last changed hands on August 4 at 14 cents.

Energy World Corp. (EWC): The company said its Cuban 1 oil and gas well in Queensland’s Cooper-Eromanga basin found coal rich in methane at depths between 620 metres and 730 metres. It said the Permian Coal Seams were much thicker than expected with a net thickness of 20 metres. The shares last traded on the NZX on July 1 at 87 cents.

Investment Research Group (IRG): The financial services company that trades on the NZAX market tumbled 64% to 1 cent yesterday after saying it was in breach of banking covenants as at March 31 and needs about $500,000 to remedy the breach relating to shareholder funds.

Mainfreight (MFT): The trucking company is rated ‘neutral’ by First NZ Capital analyst Kar Yue Yeo, according to the ShareChat website. The decline in volumes in the first quarter will more than offset the company’s cost saving measures. First-quarter EBITDA will fall 33% to $11 million. The shares rose 4 cents to $4.80 yesterday.

Millennium & Copthorne Hotels New Zealand (MCK): New Zealand’s largest hotel owner-operator said first-half operating profit tumbled to $5.38 million from a year-earlier $13.3 million, reflecting losses at its majority owned property investor CDL Investments New Zealand. “Trading conditions remain challenging and will remain so for the near term,” said managing director BK Chiu. “In spite of this, we expect to remain profitable.” The shares fell 5.6% to 34 cents yesterday.

New Zealand Oil & Gas (NZO): Crude oil gained after US Energy Information Administration figures showed inventories of distillates such as heating oil and diesel fell by 1 million barrels last week. US crude edged up 55 cents to US$71.97 a barrel. The shares fell 1 cent to $1.63.

Renaissance Corp. (RNS): The Apple Inc. products reseller yesterday posted an 87.4% decline in first-half profit to $280,000. "Predictions are reasonably hazardous because our annual result depends so heavily on the December quarter of the year," the company said. "We are targeting a profit before tax of between $1.7 million and $2 million” for the full year, it said. The shares were unchanged at 31 cents yesterday.

Restaurant Brands NZ (RBD): The latest company to join the NZX 50 index will be watching Australian private equity firm Anchorage Capital Partners, which is tipped to be taking over the Burger King master franchise, according to The Independent newspaper. Anchorage wouldn’t comment on the detail, but has confirmed it’s in “fairly serious discussions” with current owner, Tasman Pacific Foods. Shares for the holder of the Pizza Hut, Starbucks and KFC franchises in New Zealand were unchanged at $1.02 in trading yesterday, and have jumped almost 40% in the past 12 months.

Businesswire.co.nz

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