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Stocks to watch: DNZ Property, Rakon, Turners & Growers

Thursday 11th November 2010

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DNZ Property announces a net loss of $112.8 million, Rakon returns to profit on demand for emerging technologies and Turners & Growers say none of its orchards have been affected by the PSA outbreak.

Air New Zealand (AIR): The national carrier has had price-fixing charges over air cargo dropped by the European Commission after the region’s regulator fined 11 airlines, including Qantas. Air New Zealand still faces charges of collusion in New Zealand, Australia and the US. The shares were unchanged at $1.37 in trading yesterday.

DNZ Property Fund (DNZ): The property investor reported a net loss of $112.8 million in the six months ended September 30, up from a loss of $11 million, after the company was forced to book an $86.8 million tax bill due to changes in deprecation rules on buildings. Distributable profit, the preferred measure for property investors as it strips out changes unrealised fair value movements, was $9.8 million. The shares held at $1.20 on the NZX yesterday.

Kiwi Income Property Trust (KIP): Kiwi Income Property Trust has renewed and extended $302.5 million of bank debt facilities that were due to expire in the first half of 2011. The new facilities will add about 50 basis points to the trust’s weighted average cost of debt though chief financial officer Gavin Parker said KIP had managed through the global financial crisis on facilities negotiated before the downturn. The shares was unchanged at $1.03 in trading yesterday.

Rakon (RAK): The crystal oscillator manufacturer returned to profit in the first half of the year as demand for emerging technologies, such as femtocells and smart phones, returns after the global recession. Rakon report a profit of $5.6 million in the six months through September, compared to a loss of $6.2 million a year earlier. The shares last traded at $1.28 on the NZX.

Turners & Growers (TUR): The fruit marketer and distributer made a one-off payment of $1 per tray carton equivalent to Jazz apple growers to compensate the strength in the kiwi dollar. Separately, that comes as Ministry of Agriculture and Forestry officials investigate the contamination of kiwifruit orchards with Pseudomonas syringae pv. actinidiae (PSA). T&G said none of its orchards have been affected by the bacteria. The shares were unchanged at $1.40 yesterday.

Xero (XRO): The online accounting software maker extended its interim operating losses, but said it expects this to be the bottom of the trough as it heads towards breaking even. It reported a net loss of $4.7 million in the six months to September 30, from $3.8 million in the same period previously. The stock rose 1.2% to a new record high $1.82 in trading yesterday.

Themes of the day: Global equities were mixed as better-than-expected US jobless claims data was offset by increasing concern about Ireland’s budget problems. In late afternoon trade on Wall Street, the Standard & Poor's 500 Index rose 0.3% to 1,216.44, while in Europe the Stoxx 600 fell 0.7% from the highest level since September 2008 to close at 271.48. The New Zealand dollar recovered from its 1 cent slide yesterday as investors spurned the euro, and was last trading at 78.35 US cents from 77.98 cents yesterday. Global commodity prices fell, with the Reuters/Jefferies CRB Index, which tracks 19 raw materials, declining 0.72% to 316.81, while oil gained with US crude oil futures rising 67 cents to US$87.39 by 1543 GMT. Gold gave up some of its recent gains, and was last trading at US$1,389.37 an ounce after trading above the $1,400 range for much of the week.

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