Stocks to watch: Auckland Airport, Cavalier, Pike River

Tuesday 21st September 2010

Auckland Airport has recruited Virgin Blue's former boss to stand for election as a director of the company, Cavalier shares yesterday rose to their highest level since late 2007, while Pike River needs more funding to sustain its underground mine development.

Auckland International Airport (AIA): The airport’s board has recruited former Virgin Blue boss Brett Godfrey to stand for election as a director of the company at the annual meeting on October 28. Godfrey brings with him significant international airline experience, according to AIA chairman Tony Frankham. Shares rose 0.5% yesterday to $2.08.

Cavalier (CAV): The shares rose 3.3% to $3.10 yesterday, the highest level since late 2007, amid speculation rebuilding work after the Canterbury earthquake will spur demand for carpets. The latest Treasury and central bank estimate of the costs of damage from the quake is $4 billion, including $2 billion for residential housing and contents, $1 billion for commercial property and $1 billion for infrastructure.

Pike River Coal (PRC): Chairman John Dow said yesterday that the company needs more short-term funding to sustain its rate of underground mine development, with capital costs higher than expected in the latest quarter and installation taking longer than forecast. The shares fell 1.8% to $1.09 yesterday. New Zealand Oil & Gas (NZO), which owns 29% of Pike, fell 1.5% to $1.29 yesterday.

NZ Farming Systems Uruguay (NZS): Olam International yesterday said it had acceptances under its takeover offer that lifted its interest above 50%, the threshold for the deal to proceed. Farming Systems’ stock rose 1.5% to 70 cents yesterday. PGG Wrightson (PGW), which has agreed to sell its 11.5% stake in Farming Systems to Olam, was unchanged at 59 cents.

OceanaGold (OGC): The gold miner has completed a technical study for its Didipio Gold, Copper Project in Luzon, Philippines, with reserves estimated at 1.41 million ounces of gold and 374 million pounds of copper. OceanaGold chairman Jim Askew said the study demonstrates “a robust project with a long mine life”. Shares rose 4.3% yesterday to $5.30.

Restaurant Brands NZ (RBD): The fast food chain operator’s sales rose 3.7% to $100.4 million and same store sales increased 3.9% in the three months to September 13. The company said it enjoy sustained growth for its KFC brand and saw a return to same store sales growth for Starbucks Coffee, but Pizza Hut sales still remained slightly down on last year. Shares rose 0.4% yesterday to $2.50.

The Warehouse Group (WHS): The listed retailer’s decision to increase its dividend payout ratio from 75% of adjusted earnings to 90% is "more suitably reflecting a mature business", according to Goldman Sachs JB Were analyst Buffy Gill, quoted on the ShareChat website. The move is likely to attract income investors into the stock, putting a floor under the share price at about $3.50 which would reflect a 7% yield, Gill said. Shares rose 1.3% yesterday to $3.84.

Themes of the day: The NBER declared that the recession in the US, which started in December 2007, ended in June 2009. The 18 month long recession is the longest since WWII. Investor optimism has been on the rise in recent weeks as likelihood of a double-dip recession fades. The Standard & Poor's 500 Index closed at a four-month high after flurry of positive corporate news increased investor optimism. New Zealand Institute of Economic Research is set to release its consensus forecast for September today.

Businesswire.co.nz

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