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Stocks to watch: Abano, AMP, NZR, Pike, WHS

Tuesday 9th February 2010

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Property investors will be all ears today when Prime Minister John Key outlines details of the government’s tax reform plans, including moves to reduce incentives for property investment. Abano reports robust results and New Zealand Refining drops nearly 4% on low processing margins.

Abano Healthcare Group (NZX: ABA ): The medical services provider announced a net profit of $3.4m for the first half of the year to November 30, down from $4.1m in the corresponding period a year before. The results are “surprisingly robust” said brokers McDouall Stuart given the vulnerability of many of its businesses to discretionary spending. The company has no New Zealand debt, and is strongly tipped to continue its growth strategy through both greenfield investments and acquisitions. Its shares dropped two cents yesterday to $5.78.

New Zealand Refining (NZX: NZR ): The nation’s only oil refinery fell 3.9% to $3.66 yesterday, after releasing a statement showing its processing margins fell to a six-year low last year. The average charge in 2009 was US$4.16 a barrel, down from US$9 in the previous year. “Supply-demand fundamentals have not yet changed sufficiently to expect a sustained recovery in refining margins at this stage,” the company said.

Pyne Gould (NZX: PGC ): The company's Marac finance unit has turned up irregularities relating to a business loan and will take a $2.5 million provision against its first-half results, the company said yesterday. It is still confident of meeting its full-year earnings target. The shares have tumbled have tumbled 63% in the past six months and fell 4.4% to 43 cents yesterday.

AMP  (NZX: AMP ): Australia’s biggest pension fund provider yesterday said it is considering its position on the potential takeover of rival AXA Asia Pacific Holdings after an exclusivity agreement with the target’s parent, AXA SA, expired. The shares fell 0.3% to $7.73 yesterday.

Pike River Coal (NZX: PRC ): Investors are awaiting word from the mining company on how it will raise more capital to continue developing its mine to full production after announcing further delays. “They are out of money – they need to raise it,” said Stephen Walker, head of asset management at Goldman Sachs JBWere. “The market assumes the most likely outcome is a placement or rights issue, so why buy them now.” The shares dropped 3.2% to 91 cents yesterday. 

Warehouse Group (NZX: WHS ): The retailer was raise to ‘buy’ from ‘hold’ by Daniel Reynolds, an analyst at Craigs Investment Partners, according to the ShareChat website. While the company faces a lacklustre first-half result, the recent slide in the retailer’s stock is overdone and provides a buying opportunity, he said. Warehouse may look to raise its dividend payout ratio or make more frequent special dividends. Separately, the retailer today announced plans to raise $100 million selling five-year bonds. The stock rose 0.8% to $3.78 yesterday.

Economic themes of the day: Prime Minister John Key is due to give a substantial speech at the opening of the parliament today, which will include details of the government’s tax reform plans, including moves to reduce incentives for property investment. The kiwi dollar held near a 5-month low, trading at 68.49 U.S. cents. Stocks on Wall Street edged lower in late trading.

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