Stocks to watch: F&P Appliances may need bailout

Tuesday 17th February 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 fell across Europe after Japan reported an economic slump, the UK faced the prospect of its worst downturn in 30 years and losses at Lloyds Banking Group's HBOS unit drove financials lower.

Air New Zealand (AIR): The prospect of Qantas Airways' Jetstar unit entering domestic main trunk routes is like to create a greater abundance of low-fare seats, as four airlines compete for a smaller pool of passengers Air New Zealand stock fell 4.3% to 90 cents yesterday.

CDL Investments New Zealand (CDI): The property developer yesterday posted a full-year operating profit after tax of $1.7 million, down from $15 million a year earlier, Revenue tumbled to $5 million from $39.5 million. Managing Director B K Chiu said the results reflect "the dramatically negative market trading conditions experienced in New Zealand during 2008."

The value of its land portfolio fell to $170 million from $202.7 million. The company won't pay a dividend and said 2009 may see current depressed market conditions continue throughout the year. The stocks last traded at 24 cents on February 13.

Fisher & Paykel Appliances (FPA): The manufacturer yesterday tumbled 35 cents to 65 cents, wiping $102 million from its market value, and pushing the shares to the lowest since the company was split off from its healthcare sibling in 2001. Bank debt will balloon out to $570 million by the end of March, or about twice the value of its shares. It forecast no profit this year amid a slump in demand and rising costs.

Fletcher Building (FBU): The Commerce Commission yesterday cleared the country's largest construction company to acquire Stevenson Group's masonry assets in Auckland and Whangarei. The shares fell 3.6% to $5.63 yesterday.

Millennium & Copthorne Hotels New Zealand (MCK): New Zealand's largest hotel operator yesterday posted a full-year operating profit of $17.8 million, down from $24.2 million a year earlier. The results reflected "a sharp decline in tourist numbers and bookings seen in the last three months of the year," the company said. In 2009, the company expects to face "the most challenging economic and financial conditions in many years." The shares traded unchanged yesterday at 38 cents.

New Zealand Oil & Gas (NZO): The price of light crude oil traded below US$37 per barrel before settling on US$37.17 on speculation that a global recession will trim demand for fuel consumption. The oil and gas explorer's stock fell to $1.38 yesterday.

Telecom Corp. (TEL): The country's largest telecommunications provider is downplaying rumours that its underperforming Australian arm, AAPT, may be folded into the new Hutchison-Vodafone mobile venture in Australia. Telecom wrote down the value of PowerTel by $68 million, part of the AAPT, after its forecast earnings and cash flows no longer supported the higher value. Telecom's stock tumbled 6% to $2.49 yesterday.

By Jonathan Underhill

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