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Stocks to watch: ATM, ECO, GEN, KMD, NZX, PGW

Wednesday 5th May 2010

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A2 has shelved talks of a full merger with Australia's Freedom Nutritional Products, 42 Below founders' latest venture, Ecoya, raises $10.1 million through an IPO, FBU rates as neutral hold and Genesis Research shares are slashed after its latest announcement.

A2 Corp. (ATM): The company which licenses techniques to identify milk with a protein variant claimed to have health benefits said it has suspended talks with Australia's Freedom Nutritional Products over a full merger and talks will continue on a part tie-up. The shares last traded at 8.5 cents on April 30. 

Ecoya (ECO): The scented candle company, the latest marketing venture from the team that promoted 42 Below vodka, ended up square with the IPO price of $1 yesterday, having slipped in their debut. The company raised $10.1 million to drive sales into North America and Asia. 

Fletcher Building (FBU): First NZ Capital analyst Kar Yue Yeo is rating FBU a neutral hold, valuing the share at $8.75 compared with yesterday's closing price of $8.40, but noting the company's exposure to any New Zealand economic upturn could be muted because residential home-building may be among the slower sectors to recover. 

Genesis Research and Development Corp. (GEN): The shares have halved in value to 3 cents in the past two days after chief executive Stephen Hall announced the company is closing its doors in New Zealand and will attempt to have its technology developed by a partner, while realizing other assets. 

Kathmandu (KMD): The outdoor equipment chain reiterated that it is confident of reaching its FY10 prospectus forecast net profit of $30.9 million, though the target is dependent on a successful second half. Key risks are weather through the retailer's key winter season and slack consumer spending in its biggest markets. The company confirmed its intention to pay a dividend of 6.7 cents a share in the second half. The shares fell 2.6% yesterday to $2.29. 

New Zealand Windfarms (NWF): NWF confirmed to the NZX this morning that subscriptions for its fully underwritten $31.4 million capital-raising had achieved 93.4% uptake, leaving a 6.6% shortfall which is able to be taken up by major shareholder Vector.  Fund managers Tyndall Investment and AMP Capital Investors now own almost 30% of New Zealand Windfarms after lodging substantial security holder notices yesterday. NWF shares rose 3.85% to 27 cents in trading yesterday. 

NZX (NZX): Trading growth on the exchange manager's markets stalled last month. Total trades dropped 11% to 45,284 in April from a month earlier, and were up 2% from the same month a year earlier. The total value traded fell 4.3% to $1.8 billion from March, and was down 11% from April 2009, which was "comparable with lower liquidity levels globally," the bourse operator said in a statement. The stock was unchanged at $1.80 yesterday.  

PGG Wrightson (PGW): The price of milk powder slipped 1.2% to US$3,932 per tonne in Fonterra Cooperative Group's latest monthly which may signal better times/a tepid recovery for the nation's biggest rural services company. The stock gained 3.8% to 55 cents yesterday as investors weighed whether Rural Portfolio Investments will be forced to sell its holding in Wrightson after running out of cash.

Themes of the day: Whole milk powder prices held last month's strong gains, with average price for whole milk powder slipping 1.2% to US$3,932 per tonne in this morning's Fonterra Cooperative Group online trading auction. Shares tumbled on Wall Street, sending the Standard & Poor's 500 down 2.4% amid fears Greece's fiscal crisis could spread. The drop in stocks weighed on higher-yielding currencies, and the kiwi dollar fell about US1 cent to 71.99 cents. 

Businesswire.co.nz



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