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Stocks to watch: NZS, Infratil, NZX, Telecom, Warehouse, AIA, PPL, WDT

Tuesday 18th May 2010

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NZ Farming Systems Uruguay shares jump after Olam buys 10 million shares lifting its stake to 18.4%.  NZX first-quarter profit falls 3% as costs growth outpaces revenue and Warehouse reiterates forecast for no growth in FY profit as 3rd-qtr sales slip. Wellington Drive shares soar 24% on distribution deal with America's AO Smith.


NZ Farming Systems Uruguay (NZX: NZS ): Shares of the South American dairy farm developer jumped 5% to 41 cents after Olam International, the Singapore-based food commodities group, disclosed it had acquired 10 million shares in the company, lifting its stake to 18.4%. Olam paid 41 cents apiece for the shares from Kerryn Downey and Andrew Grenfell, the receivers of Rural Portfolio Investments.

Infratil  (IFT): The investment group reported a full-year profit of $29 million, from a year-earlier loss of $191 million, which reflected impairments. It forecast 2011 EBITDAF of $390 million to $430 million, up from $363 million in the 12 months ended March 31. The shares fell 2 cents to $1.68 yesterday. 

NZX  (NZX: NZX ): The stock market operator yesterday reported a 3% decline in first-quarter earnings as acquisitions pushed up operating costs more than revenue. Net income fell to $2.9 million in the three months ended March 31, from $3 million a year earlier, the Wellington-based company said in a statement today. Operating revenue jumped 46% to $11.9 million. The shares fell 1.7% to $1.72 yesterday.

Telecom  (NZX: TEL ): The phone company has launched a major advertising campaign for its network business, Chorus, as the government scrutinizes confidential bids to build out New Zealand’s fibre network, the NZ Herald reported. Telecom, which has already laid fibre in parts of the country, is up against lines company Vector and 16 other organisations to win the work. The shares fell 1.4% to $2.07 yesterday. 

Warehouse Group  (NZX: WHS ): The biggest retailer on the NZX 50 reiterated its forecast for full-year profit growth to stall as the company posted a 1.9% decline in third-quarter sales. The decline reflects weak sales of music, DVDs and winter items such as clothing and heating, chief executive Ian Morrice said. The shares fell 5 cents to $3.57.

Pumpkin Patch (NZX: PPL ): The stock is rated ‘outperform' by ASB Securities analyst Florian Burch, according to the ShareChat website. He said the retailer's decision to launch a new lower-cost chain "looks like a good move" though it remains to be seen whether it can be "implemented profitably for shareholders." Burch said there's too much uncertainty in the plan to factor into his valuation. The shares fell 2 cents to $2.13 yesterday. 

Wellington Drive Technologies  (NZX: WDT ): The shares soared 24% to 9.9 cents yesterday after the manufacturer of energy efficient motors for commercial fridges agreed to a distribution with AO Smith, one of the biggest US electric motor makers. Smith will sell Wellington Drive’s ECR One and EC85/95 refrigeration motors used in supermarket display cases and bottle coolers, co-branded with its own range, the Auckland-based company said in a statement today. 

Auckland International Airport (NZX: AIA ): Property development, based on the airport's 440 hectare land bank, are stepping up with the creation of seven specialised precincts that are better designed to showcase development opportunities for realtors and prospective tenant Craigs Investment Partners analyst Geoff Zame said in ShareChat. He expects international passenger growth of 6% in the year ending June 2012, up from 5% previously, and reflecting expected visitor arrivals for the Rugby World Cup. "We would view any share price weakness under $2 as an opportunity to accumulate, given the broader economic recovery underway," he said. Its shares lifted 2 cents yesterday to $1.98.


Economic themes of the day: Shares in Europe and the US fell, as did oil to a five month low, on concerns the European debt crisis could curb global growth.

Also weighing on the US equity market was a report that New York manufacturing slowed and that home improvement retailer Lowe's Cos forecast lower than expected earnings.

In late trading, the Dow Jones Industrial Average fell 0.6%. The Chicago Board Options Exchange Volatility Index, or VIX, which is known as Wall Street's ‘fear gauge', rose 5.7% to 33.03. The euro slid to a four-year low against the US dollar to US$1.2340 on persistent concerns that efforts to rein in European government spending would dampen global growth.

The euro has fallen almost 14% against the greenback during this year, making it the worst-performing major currency. Overnight the kiwi fell to 69.72 against the US dollar, from 70.09, its lowest level in 2 1/2 months.

The Producers Price Index is out today, while the Reserve Bank of Australia releases this month's minutes of its recent meeting.

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