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Stocks to watch: New Zealand equity preview

Wednesday 29th October 2008

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The following stocks may be active on the New Zealand exchange after developments since the close of trading yesterday.

Themes of the day: Stocks rallied on Wall Street amid perceptions valuations have become cheap after the slump. The yen fell against the euro, the US dollar and the kiwi dollar. Government figures today may show the nation's merchandise trade deficit narrowed to NZ$550 million last month from NZ$750 million.

Abano Healthcare Group (ABA): The healthcare investor said it has confirmed funding arrangements with banking partners, ensuring it has sufficient fund to expand. In New Zealand, the Abano Group has committed debt funding lines of NZ$80 million, with an additional uncommitted facility of NZ$20 million, it said today. Abano said it acquired dental and audiology networks that will add more than NZ$9 million to annual revenue. The stock was unchanged at NZ$4.35 yesterday and is down 15% this year.

Mark Stewart, who owns 10% of the company through Masthead Portfolios, yesterday said at the AGM his intention is to be an investor rather than to "gobble up" the company.

Auckland International Airport (AIA): The nation's busiest gateway yesterday released figures showing a 5.9% drop in passenger numbers last month. Standard & Poor's said in a report yesterday that airports in New Zealand and Australia should be able to weather a slowdown in passenger traffic over the next few years. The stock traded at NZ$1.72 yesterday and has dropped 40% this year.

Cavotec MSL Holdings (CCC): The company said its order book held at a record 47.9 million euros in the third quarter. Forward orders will help reduce the impact on a global economic slowdown, it said in a quarterly report released today. The shares were unchanged at NZ$3.26 yesterday and have fallen 29% this year.

Dairy Equities (DEL): The company yesterday posted a full-year loss of NZ$1.88 million, reflecting a reduction in the carrying value of its investments in ownership of Fonterra shares. It has stopped investing in Fonterra Fair Value Shares because of the prospect of lower returns from the dairy company, which is reviewing its capital structure. The shares last traded at 24 cents on October 24 and have fallen about 48% this year.

Ebos Group (EBO): Mark Waller, chief executive of the medical equipment distributor, told shareholders at their annual meeting yesterday that the company feels "invigorated and very positive about the business looking one to two years out, despite any shorter term difficulties brought about by current market conditions." Healthcare activities "tend to be regarded as defensive business sectors in times of economic stress," he said. The stock fell 3.9% to NZ$4.18 yesterday and are down 16% this year.

Fletcher Building (FBU): The building products company yesterday fell to the lowest since November 2004 and has declined almost 8% since Australian rival Boral on October 24 said annual profit may drop 18%. Fletcher fell 4.7%, to $5.53 yesterday. Boral, Australia's largest building products company, last week said earnings will decline because of a slump in US housing starts and weaker demand at home.

Investment Research Group (IRG): Managing director Brent King said the company has had approaches from a number of advisory groups and is "investigating potential acquisitions." Transactions generally take three to five months, he said. The stock trades infrequently on the NZAX market and was at 7 cents on October 14. It has dropped 30% in the past three months.

Telecom (TEL): The phone company, traditionally held as a bellwether stocks, may gain after the rally on Wall Street. The shares traded at NZ$2.27 yesterday and is down 45% this year.

By Jonathan Underhill

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