Stocks to watch: Freightways placement, Warehouse cutbacks

Tuesday 7th April 2009

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

Themes of the day: US stocks pared a five-day gain on concern over the financial sector, while technology stocks stalled amid rumours that the merger talks between Sun Microsystems and IBM had broken down. The Reserve Bank of Australia reviews monetary policy this afternoon, while the NZIER Quarterly Survey of Business Opinion comes out this morning.

Fletcher Building (FBU): The nation's biggest construction company rose 5.1% to $6.20 yesterday, gaining in line with its Australian rivals on optimism about demand across the Tasman.

Freightways (FRE): Logistics company Freightways has been put on a trading halt as its seeks to raise $50 million to reduce debt and strengthen its balance sheet. The placement price will be $2.44 per share, with existing shareholders given the opportunity to subscribe for up to $12,500. The stock fell 1.1% to $2.78 in trading yesterday.

Michael Hill International (MHI): The jeweler advanced 6% to 52 cents yesterday, after reporting a 9.9% gain in sales. The increase reflected a gain in revenue from Australia, mainly on the back of the weaker New Zealand dollar. In Australian dollar terms, sales across the Tasman gained 1.1%. The retailer said sales growth was "achieved on lower margins" as a result of increased discounting.

New Zealand Oil & Gas (NZO): Crude oil fell for a second day in New York after Qatari Oil Minister Abdullah bin Hamad al-Attiyah said oil probably won't recover back as high as US$70 a barrel. Crude oil for May delivery fell 3.7% to US$50.55 a barrel on the New York Mercantile Exchange. The shares rose 0.7% to $1.38 yesterday.

People Telecom (PEO): Shareholders yesterday voted overwhelmingly in favour of a scheme of arrangement under which M2 Telecommunications Group will acquire People. A hearing before the Federal Court of Australia to approve the Scheme is scheduled to be held on April 9, it said. On the ASX, the shares rose 4% to 5.2 Australian cents. They seldom trade in New Zealand.

Telecom (TEL): Vodafone NZ is accusing the largest listed company's network division of not leaving enough room in roadside cabinets for competitor's D-Slams, the hardware that takes the fibre connection from the exchange to the cabinet and feeds into an ADSL2+ copper connection, the National Business Review reported. Telecom said the cabinet size was constrained by the Resource Management Act, and that Vodafone could buy a feed from Telecom Wholesale rather than install its own devices. Telecom's shares rose 2.1% to $2.45 yesterday.

Warehouse Group (WHS): The country's largest budget retailer has embarked on a programme to reduce labour costs and improve productivity, Businessday reported. Chief financial officer Luke Blunt said the scheme may result in staff being paid fewer hours rather than redundancies. The stock sank 3.3% to $3.47 in trading yesterday.

By Jonathan Underhill

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