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Stocks to watch: NZFSU shares take off

Tuesday 20th July 2010

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NZFSU shares jumped almost 30% yesterday on news Olam International would purchase a stake in the company, while NZOG shares fell after it confirmed the second of its two exploration wells failed to show evidence of hydrocarbons.

New Zealand Farming Systems Uruguay (NZS): The South American dairy farm operator surged 29% to 53 cents yesterday after Singapore's Olam International said it wanted to acquire shares in the company it didn't already own at 55 cents apiece. Olam, which manages a globally integrated supply chain of food an agricultural products, has entered into an agreement to purchase PGG Wrightson's 11.5% stake in NZFSU, subject to regulatory approval, and is making a full takeover offer on the same terms.  Wrightson climbed 6.4% to 50 cents yesterday.

New Zealand Oil & Gas (NZO): The oil company's shares fell 3.2% to $1.21 yesterday after it confirmed speculation that the second of two exploration wells on the highly prospective Tui oil and gas zone had failed to find any evidence of hydrocarbons. The company owns a 12.5% stake in the field. "For an exploration company it is just lacking real fizzle right now," said Paul Robertshawe, who helps manage $220 million for Tower Asset Management. Pan Pacific Petroleum (PPP), with 10% of Tui, fell 5% to 19 cents yesterday.

Pike River Coal (PRC): The government is reportedly set to backtrack on plans to allow more mining in national parks, a move that would block access to reserves of minerals including coal and gold. Pike shares fell 1.1% to 94 cents yesterday.

Charlie Group (CHA): The juice company said EBITDA in the year ended June 30 was $3.2 million to $3.4 million, a turnaround from the previous year's loss of $925,000. Sales climbed 1.7% to $34 million. Net profit was in the range of $2.2 million to $2.4 million. The improvement in earnings allowed the company to reduce net debt to $1.6 million from $7.1 million. The shares rose to 8.2 cents yesterday from 8 cents.

Hellaby Holdings (HBY): The forklift, construction equipment and shoe store manager has reduced core debt by $50 million to $25 million in two years, when John Cairns of Forsyth Barr has forecast net bank debt of $45 million, ShareChat reports. The debt reduction program is being driven by the targeting of KPIs (key performance indicators) incorporating working capital as a key variable. It is well-positioned to take advantage of any pick up in activity after extensive restricting in recent years. Its shares dropped 13 cents yesterday to $1.57.  

Rennaissance Corporation (RNS): New Zealand's exclusive distributor of Apple PC products has benefitted from a 10% computer market share in the first quarter of last year, particularly in the consumer and education categories. Chief executive Richard Webb said the growth in the Apple business is a reflection of the company's improved execution. Its shares fell a cent yesterday to 24 cents.

Skellerup Holdings (SKL): The equipment seller and rubber manufacturer's profit upgrade shows changes made in its industrial division are gaining traction said Brooke Bone, a Macquarie Equities analyst in ShareChat. "We consider increased focus on new products and sales, when combined with an element of re-stocking, to be driving profit improvements," Bone said. It's shares fell two cents to $0.73 yesterday.

AMP (AMP): National Australia Bank won more time to try to meet Australian antitrust concerns about its proposed takeover of Axa Asia Pacific Holdings. The agreement may be a setback for rival bidder AMP, whose lower-value offer was rejected by Axa AP last December. AMP's NZX-listed shares fell 0.2% to $6.45 yesterday.

Themes of the day: Stocks in the US advanced as better-than-anticipated earnings outweighed a decline in homebuilder confidence, with the Dow Jones gaining 0.68%. The UK's FTSE 100 fell 0.2%, oil rose a dollar on early signs of improving oil demand, as price volatility falls and settle around US$75 a barrel. Overnight the kiwi dropped to 70.61 cents from 70.78.

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