Stocks to watch: Cavalier, Hellaby, Infratil

Tuesday 12th October 2010

Cavalier is offering existing shareholders a 2% discount on the current share price, Hellaby Holdings will redeem $50 million of capital notes six months before they are due to mature, while Infratil is expecting a boost in profit from Greenstone.

Cavalier (CAV): New Zealand's only listed carpet maker announced that it will offer existing shareholders a 2% discount on the current share price, as part of their dividend reinvestment plan. The price, $2.94 a share, is the volume weighted average all trades on the NZX between October 4 and October 8. Cavalier's dividend is payable on Friday. Shares rose 1% yesterday to $3.

Hellaby Holdings (HBY): The diversified group said yesterday it will redeem $50 million of capital notes six months before they are due to mature, to take advantage of lower interest rates available through its core bank debt. The 2011 notes pay an annual coupon of 8.5% a year. The early redemption announcement comes after Hellaby raised $28.4 million in a rights issue this month, which the company said it will used to strengthen its balance sheet while contemplating acquisitions. Shares rose 2.1% yesterday to $1.96.

Infratil (IFT): The investment management company's earnings are expected to get a boost from Greenstone, according to First NZ Capital analyst Rob Bode, quoted on the ShareChat website. Infratil and the Guardians of New Zealand Superannuation bought Greenstone, which owns petrol stations, 17.1% of the New Zealand Refining Company and 25% of Fly Buys, from Shell in April. Shares rose 0.6% yesterday to $1.79.

Pike River Coal (PRC): The company's new chief executive Peter Whittall said yesterday that the coal miner reached its target for roadway development and came close to meeting a September 24 target of extracting 1,000 tonnes of hydro coal. "There is a certain amount of relief that they have achieved a target," said Craig Brown, fund manager at ING New Zealand. The shares jumped 6.2% yesterday to $1.20.

Scott Technologies (SCT): The manufacturer has been on a two-day, 12% rally after announcing a rebound in profit. It rose 7.7% to $1.04 yesterday, the highest since February 2008.

Windflow Technology (WTL): Chief executive Geoff Henderson said yesterday he is "encouraged" by high UK interest in its 500 kW turbine and 29 sales orders generated through new distributor Ventus Green Energy. Incentives for landowners to invest in wind power will also stoke sales, Henderson said after his recent visit. The stock was last at $1.10 on October 7.

Themes of the day: European markets traded in a holding pattern overnight as investors remained on the sidelines ahead of the Federal Reserve’s decision on whether or not to implement another round of quantitative easing. The New Zealand dollar held above 75 US cents as the greenback rallied after China boosted the level of cash six of its biggest banks need to keep on hand. Statistics New Zealand is set to release its accommodation survey for August today.

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