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Stocks to watch: Contact, NZ Windfarms, NZX, Allied Farmers, IFT, NZR, SFF

Monday 29th March 2010

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Contact Energy shares climb as the company benefits from rising wholesale power prices and NZ Windfarms gets resource consent to expand which will make it more productive. NZX may be beaten in the race to launch dairy derivatives and Allied Farmers $24 million mortgage on the Kinloch Golf Club could be at risk.


Contact Energy  (NZX: CEN ): The biggest utility on the NZX 50 is benefiting from rising wholesale power prices. Terrence Currie, Chairman of the Major Electricity’ Users’ Group, said high wholesale prices, “are out of step with current lake levels, which are average for this time of year” at around 100% of average for this time of year. The shares rose 1.8% to $6.23 on Friday.

NZ Windfarms  (NZX: NWF ): The electricity generator on Friday announced it had gained consent to expand its Te Rere Hau site into a windier area, making its turbines more productive. The company has received a confidence boost after Tyndall Investments disclosed that it had increased its stake in the company, to 11.5%.  "Our view is that the company offers more value than the current share price is suggesting," said Rickey Ward, who helps manage about $500 million at Tyndall. The stock rose 10% to 33 cents on Friday.

NZX  (NZX: NZX ): The stock exchange operator will be beaten in the race to launch dairy derivatives by Chicago-based CME, the world's largest futures exchange, which announced on Friday it will begin trading international skimmed milk powder futures and options contracts from May 9, a month ahead of NZX's plans to launch similar products.  The shares fell 1.6% to $1.91 on Friday.

Allied Farmers (NZX: ALF ): The finance group’s $24 million mortgage on the Jack Nicklaus-designed Kinloch Golf Club near Lake Taupo could be at risk as the Inland Revenue Department attempts to liquidate the golf course's current owner, Coromandel Investment Trustees, the NZ Herald reported. If Coromandel Investment Trustees goes into liquidation, Allied will be third in line for its money behind the IRD and first-mortgage holder Instant Funding. The shares slid 1.6% to 6.2 cents on Friday.

Infratil  (NZX: IFT ): A consortium owned 50% by Infratil and 50% by the Guardians of New Zealand Superannuation agreed to buy Shell New Zealand’s distribution and retail businesses and 17.1% interest in the New Zealand Refining Co. for $696.5 million. The deal, scheduled to complete on April 1, 2010, is conditional on the drawdown of bank facilities, Infratil said. Total equity provided by Infratil and the NZ Superannuation Fund will be $420 million with the balance to be bank debt funded. Infratil shares were unchanged on Friday at $1.65.

New Zealand Refining (NZX: NZR ): Infratil’s purchase of Shell New Zealand’s 17% stake in the nation’s only oil refinery is “a positive move that will help secure New Zealand’s transport fuel supply for years to come,” according to chairman, David Jackson. “We are especially encouraged by the transfer of much of the local expertise employed by Shell to the new company,” he said. The shares fell 3 cents to $4 on Friday. 

Silver Fern Farms (SFF): The meat company, whose shares trade on the Unlisted platform, will push on with plans to expand in China’s premium lamb market after a partnership with two other processing companies collapsed, the Press reported. Alliance Group and Anzco were the other partners. Alliance has said returns were unconvincing. The shares last traded unchanged on Friday at 62 cents.


Economic themes of the day: Stocks on Wall Street edged higher on Friday, with the Standard & Poor’s 500 rising 0.1%, rounding out its fourth week of gains on optimism growth is returning to the world’s largest economy.

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