Stocks to watch: FPA capital raising, Fletcher rebound

Thursday 19th March 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 US Federal Reserve announced plans to buy as much as US$300 billion of Treasury bonds and purchase more mortgage-related debt to ease credit conditions and revive the world's largest economy.

The Fed also said it will keep its interest rate target at zero to 0.25% for an extended period to help keep borrowing costs as low as possible. Stocks rose on Wall Street and US Treasuries soared. The kiwi dollar climbed above 54 US cents.

Fisher & Paykel Appliances (FPA): The manufacturer fell 8.7% to a record low 42 cents yesterday amid concern Nuplex Industries' efforts to raise capital are proving harder than expected and the appliance manufacturer may face similar problems if it taps investors for more funds to shore up its balance sheet.

Fletcher Building (FBU): The nation's biggest construction firm rose 6% to $6.05 yesterday, bringing its 10-day advance to about 18%. Figures this week showed US housing starts unexpectedly jumped last month, reviving sentiment toward the US property market.

Nuplex Industries (NPX): The shares have been halted since Monday to allow the company time to organize the sale of at least $110 million of shares to repay debt. Institutions didn't all bite when the company offered shares at a deep discount, amid concern it may have to seek more funds down the track. The capital raising is now expected to be larger and at a lower price. The shares last traded at $1.07 and are due to come off trading halt at the close today at the latest.

PGG Wrightson (PGW): Baird McConnon's Aorangi Laboratories will inject new capital into Rural Portfolio Investments, the investment vehicle of PGG Wrightson's chairman Craig Norgate, to cover payments to investors. RPI is due to pay $46.3 million for redeemable preference shares in April. The rural supplier's stock has slumped almost 50% in the last 12 months to $1.10.

Telecom (TEL): A draft Commerce Commission report backhaul services, the handover point where the telephone exchange meets an access seeker's nearest point of interconnection, has found some areas it previously thought to be competitive are not. The Commission is calling for submissions with a view to release the final report in mid-April. Stock in the largest listed company in the country rose 2.1% to $2.40 yesterday.

By Jonathan Underhill

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