Stocks to watch: Contact praised, NZ Farming Systems

Tuesday 17th March 2009

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

Themes of the day: Shares rallied in Europe for a fifth straight session after Barclays Plc said it had a "strong start" to 2009 and is in talks to sell its iShares exchanged-traded funds unit. Barclays jumped 23%, pacing a rally in financials. Federal Reserve chairman Ben Bernanke said the world's biggest economy will avoid depression and, with enough political will, can climb out of its slump by the end of this year.

Contact Energy (CEN): Prime Minister John Key warned the taxpayer-owned energy companies need to improve their performance, pointing to Contact Energy, the largest listed power company, as an example of a company doing a better job. The government will push for greater transparency in the state-owned enterprises, and SOE Minister Simon Power said there needs to be an improvement of commercial expertise on their boards. Stock in the power company rose 1.8% to $5.77 yesterday.

Guinness Peat Group (GPG): Accident Compensation Corp., the government department that provides no-claims accident coverage, has reduced its stake in GPG to 3.98% from 4.03%. The department's investment portfolio has been under scrutiny following a budget blowout threatened to increase levies. GPG's stock fell 1.4% to 72 N.Z. cents yesterday.

Nuplex Industries (NPX): The stock was halted from trading yesterday after the company said it gained approval from its banks to amend terms of its loan covenants and announced plans to raise $110 million selling shares to help repay debt. Shares of the specialty chemicals manufacturer last traded at $1.07 and have plummeted 64% this year.

NZ Farming Systems Uruguay (NZS): The dairy farm developer surged 14% to 57 cents yesterday, leading the NZX 50 higher, after Fitch Ratings awarded it an A- (uy) investment grade credit rating to raise debt funding in Uruguay. The rating is the first step in raising capital after its expansion plans were thwarted by the credit squeeze last year. The shares have dropped 17% this year.

Pike River Coal (PRC): The coal miner yesterday released an investment statement for its plan to raise $45 million selling shares to tide it over until coal sales start. AMP Capital Investors, New Zealand's largest fund manager and 30% owner New Zealand Oil & Gas (NZO) are supporting the capital raising. The shares rose 1.3% to 81 cents before being halted for the capital raising and have fallen 11% this year. NZOG fell 3.5% to $1.39 yesterday and has gained 13% this year.

Pulse Utilities NZ (PLU): The power retailer which offers its own metering system announced an overhaul of its management. Director Dene Biddlecombe was named chief executive effective March 30. Biddlecombe, formerly CEO of NZSX listed Horizon Energy, replaces Pulse founder James Martin who remains a director on the board. The shares trade infrequently on the NZAX market and were last at 55 cents on March 12.

By Jonathan Underhill

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