Stocks to watch: Fletcher Building, Contact Energy, Freightways, Cue, Diligent, THL

Tuesday 9th March 2010

Fletcher Building says the outlook for 2010 is dependent on the uplift in new housing construction being sustained and Freightways has noted signs of improvement in the domestic economy but suggests that it will have a gradual effect on the company. Investors expect that Bollard will retain the cash rate at 2.5% on Thursday.

Contact Energy (NZX: CEN ): A new report out from New Zealand's independentengineering authority, the Institute of Professional Engineers questions thewisdom of electricity reforms splitting the Tekapo A and B stations fromMeridian Energy, warning it could lead to lost efficiencies and decreasedoperational resilience. However, IPENZ is confident there will be demand forand construction of substantial new thermal peaking plant, such as Contact'sStratford peaker plant projects. CEN was up 3 cents to $6.11 in tradingyesterday;

Fletcher Building (NZX: FBU ): New Zealand's biggest construction company told an investor conference in London that the outlook for 2010 is dependent on the uplift in new housing construction being sustained, while the end of Australia's insulation scheme "will adversely impact second-half earnings." The stock was unchanged at $8.10 yesterday;

Freightways (NZX: FRE ): The courier and logistics firm noted signs of improvement in the domestic economy but said it hasn't yet experienced "sustained, across-the-board improvement, which indicates to us continuing market volatility and suggests that the impact on Freightways of an improving economy will be gradual." The comments were in the company's interim report. The shares fell 0.7% to $3.07;

Cue Energy Resources (NZX: CUE ): The oil and gas production and exploration company made a $10.9m profit for the half year to December, helped by a big boost from the offshore Taranaki Maari oil field. Its Caterina gas prospect in the Carnarvon Basin, Western Australia, shows promise of containing 11 trillion cubic feet of gas. This would be sufficient for a large LNG development, and the company has begun a ‘farm-out’ campaign to bring in new large international oil companies. Its shares remained unchanged yesterday at 28 cents;

Diligent Board Member Services (NZX: DIL ): The provider of technology for boards of directors has continued its trend of increasing sales said McDouall Stuart analyst Roger Paterson in ShareChat. The company sold 41 licenses in the fourth quarter of 2009 for a gross profit of US$2.8m. Its loss for the year was US$4.1m, down from $17.1m last year. Paterson expects the operation to reach a cashflow breakeven point in the third quarter of this year, at which stage it will be attractive as a takeover option for a competitor. He rates it a ‘buy’, as its shares remained unchanged yesterday at 45 cents;

Lyttelton Port of Christchurch (NZX: LPC ): A confidential report said there is a strong business case for a merger between Lyttelton and Port Otago ports, which could happen by the end of the year following Commerce Commission approval. If a merger went ahead, each company would retain individual ownership of core infrastructural assets such as wharves, and a new merged company would be formed to manage the operations and commercial activities of both ports. LPC’s shares remained unchanged yesterday at 2.35;

Tourism Holdings (NZX: THL ): The campervan rental company expects full-year profit to be in the range of $3 million to $4.5 million, with a second-half decline in international tourist demand. The shares fell 1% to $1 yesterday.

Economic themes of the day: The Kiwi dollar remained little changed at 70.04 cents overnight as stocks on Wall St, and oil and gold prices remained flat. Investors are looking to Thursday's Reserve Bank of New Zealand announcement, with expectations that Governor Alan Bollard will retain the cash rate at 2.5%.

Businesswire.co.nz

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