Stocks to watch: Telecom competition improving

Tuesday 14th April 2009

The following stocks may be active on the New Zealand exchange after developments since the close of trading on Thursday before the Easter break.

Themes of the day: US financial stocks outperform as the earnings season builds up this week, with 30 major companies expected to report. Speculation the Chinese government is considering boosting its stimulus package to lift growth helped bolster investor sentiment. February retail sales may show the local economy still has a way to go before dragging itself out of recession.

Contact Energy (CEN): The offshore Taranaki Maui gas field is expected to continue producing past 2020, but BusinessDay reports sources saying it would be surprising if more gas came on to the market. The largest-listed power company has contracted to buy gas from the Maui owners until 2014, and has first right of refusal on new gas. Efforts to source new gas "at a decent price" after 2017 have so far been unsuccessful, BusinessDay reported. Contact's shares closed at $5.75 last week.

Infratil (IFT): The owner of New Zealand Bus is planning to sell or redevelop bus depots, as part of an asset divestment programme to raise between $125 million and $150 million, BusinessDay reports. The infrastructure company sold Fuller's Ferries in Auckland for $40 million last week. Its stock last traded at $1.48.

New Zealand Oil & Gas (NZO): The price of Brent crude fell to US$52.14 per barrel as International Energy Agency said demand this year may slump to its lowest level in five years as manufacturing dwindles and the auto industry collapses. The stock last traded at $1.38 before the Easter holiday.

Telecom (TEL): The country's regulator, the Commerce Commission, has found signs of improving competition in fixed line markets, according to its telecommunications market monitoring report for 2008. Approximately $1.5 billion was spent on telecommunications capital investment last year, most of it by the country's largest listed company to replace existing assets. The shares last traded at $2.36.

Tourism Holdings (THL): An analysis by the country's largest tourism operator has warned the global credit crunch has dented the local tourism industry, the Otago Daily Times reported. Without a strong balance sheet, companies would probably fold due to volatile pricing and yield upheaval, said Tourism Holdings. Shares in the company last traded at 47 cents.

By Jonathan Underhill

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