Daily ShareChat: Fisher & Paykel Appliances

Fisher & Paykel Appliances shares have declined since mid-August while shares in international competitors Electrolux and Whirlpool have continued to rally, increasing the relative valuation gap, says Greg Main at First NZ Capital.

"This is despite the Australian market continuing to perform, an improving (but still cautious) outlook for New Zealand and the US and potential upside from Fisher & Paykel Appliances' association with Haier," Main says.

China-based whiteware manufacturer Haier bought 20% of the company in May as part of the company's $189 million re-capitalisation.

When Fisher & Paykel shares were trading at 73 cents last week, it was 14.1 times forecast 2010 earnings when Electrolux was trading at 16.7 times 2010 earnings and Whirlpool at 13.7 times 2010 earnings, Main says.

Main says the New Zealand company has realised about $65 million of its targeted $106 million cash from property sales so far, "meaning it will sit comfortably within its term loan facility."

Net debt is expected to fall from $459 million at March 31 this year to $153 million at march 31, 2010.

US housing data picked up in July and the US government has announced a "cash-for-clunkers" type rebate scheme for inefficient appliances which suggests a possible improvement in US appliance sales in Fisher & Paykel's second half (the six months ended March 2010), he says.

BROKER CALL:  First NZ Capital rate Fisher & Paykel Appliances (NZX: FPA ) as outperform (upgraded from neutral).

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