Stocks to watch: Contact, F&P Healthcare, Infratil, Affco Holdings

Monday 8th June 2009

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

Themes of the day: The Reserve Bank of New Zealand announces its review of monetary policy on Thursday, with economists divided on whether the bank will lower the official cash rate 25 basis points to 2.25% or keep the OCR unchanged. The kiwi dollar edged down to 62.63 US cents in New York on Friday. The US dollar rallied after figures showed the US economy shed fewer jobs than expected last month. Contact Energy cut its forecast for full-year earnings.

Affco Holdings (AFF): Indonesia blocked meat shipments, saying New Zealand halal certifications had lapsed and giving the nation until October 1 to bring them up to date. Shares of the North Island meat processor rose 2.2% to 47 cents on Friday.

Air New Zealand (AIR): The national carrier expects demand for air travel to deteriorate though it won’t revise its profit guidance at this stage, chief executive Rob Fyfe told Reuters on the sidelines of the annual International Air Transport Association's general meeting in Kuala Lumpur. Fyfe said Air NZ is expecting to make a profit this year. The shares rose 2 cents to $1.04.

Contact Energy (CEN): Managing director David Baldwin lower wholesale prices, resulting from excess hydro lake capacity and reduced demand in the South Island means 2009 underlying earnings after tax will be 30% to 33% below last year’s results. That’s a bigger drop than Contact predicted in January.

Baldwin said “extremely high hydro inflows in the South Island combined with lower electricity demand, largely due to an unscheduled outage at the Tiwai Point aluminium smelter, had seen hydro lakes frequently spilling water over the last three months.” That’s led to reduced demand for thermal generation. The shares fell 15 cents to $5.80.

Fisher & Paykel Healthcare (FPH): Research firm Morningstar downgraded its forecasts for the medical equipment manufacturer after its “downbeat” earnings outlook, according to the ShareChat website. The company’s forecast $75 million to $80 million profit forecast for 2010 is "well below our net profit forecast of $104 million," according to Morningstar.

Infratil (IFT): The investment group offered a call option over 19.9% of Energy Developments to a bidding group led by Archer Capital Pty that’s made a takeover proposal to the Australian alternative energy company. Energy Developments stock jumped 12% to $1.63 on the ASX on Friday, valuing Infratil’s holding at about A$72 million. Today, Infratil said the call option only becomes effective if and when a cash exercise price is agreed between Archer and Infratil and a takeover bid proceeds, at which time Infratil could sell its entire stake. The shares rose 4.3% to $1.70 before being halted on Friday and resume trading today.

New Zealand Oil & Gas (NZO): Crude oil fell from a seven-month high in New York on Friday after the greenback strengthened. Crude oil for July delivery slipped 0.5% to US$68.44 a barrel on the New York Mercantile Exchange, having reached an intraday high of US$70.32. NZOG shares rose 4.5% to $1.62 on Friday.

Businesswire.co.nz

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