Stocks to watch: Telecom settlement, oil's surge

Thursday 7th May 2009

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

Themes of the day: Telecom and Vodafone settled their dispute over their high-speed mobile networks. The Household Labour Force Survey, released today, is expected to show unemployment has risen to 5.3%, the highest since March 2003. In the US, banks stocks rallied on expectations the stress tests show a smaller capital infusion is required Bank of America, Wells Fargo, GMAC and Citigroup are among 10 of the largest 19 banks in the US deemed to need more capital.

New Zealand Oil & Gas (NZO): Crude oil led a rally in commodity prices after US Energy Department data showed supplies rose by a less-than-expected 605,000 barrels to 375.3 million barrels last week, still the highest since 1990. Crude oil for June delivery rose 4.6% to US$56.30 a barrel on the New York Mercantile Exchange. The shares were unchanged at $1.44 yesterday.

Restaurant Brands (NZE:RDB): First NZ Capital analyst Sarndra Urlich lifted her discounted cashflow valuation from $1 to $1.09 after the fastfood group’s results, reflecting the company's lower-than-expected debt profile, the ShareChat website reported. Debt fell to $33.9 million from $42.3 million a year earlier. The shares traded unchanged yesterday at 94 cents and have advanced 49% in the past three months.

Telecom (TEL): Rival Vodafone Group dropped its court injunction after teelcom agreed to increase filtering on its network to prevent interference. Telecom declined to give the costs of the steps, which will delay the launch of its network by about two weeks until the end of the month. The shares rose 1.8% to NZ$2.83 yesterday, bringing their gain this year to 21%.

Tourism Holdings (THL): The shares slipped 1.9% to 51 cents yesterday after the company laid off 64 workers at its Ci Munro campervans unit in Hamilton, amid dwindling demand. “The changes, whilst difficult, place the business on a much more secure footing,” said chief executive Grant Webster in a statement. “Whilst nobody can predict the future we are here to support this business and we will do so with a positive outlook.”

Warehouse Group (WHS): The biggest retailer on the NZX 50 said the short-term outlook is “highly uncertain” but the downturn favours its positioning and consumer spending will eventually recover. The retailer is targeting debt/debt plus equity of 25% this year, according to its briefing by CFO Luke Bunt to the Macquarie Australia Conference in Sydney yesterday. Warehouse stock rose 0.8% to $3.78 yesterday.

Businesswire.co.nz

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