Stocks to watch: Allied Farmers, HLG, Kathmandu

Monday 9th August 2010

Allied Farmers' finance unit is in breach of one of its trust deeds and has been given 14 days to sort it out, Hallenstein Glasson says profit has soared as much as 57%, while Kathmandu shares fell on Friday to the lowest close since it listed on the NZX in November 2009.

Allied Farmers (ALF): The company’s Allied Nationwide Finance unit is in breach of one of its trust deed financial ratios, says Guardian Trust. The Trustee has given the finance company 14 days to remedy its position, Allied Farmers immediately suspended Allied Nationwide’s prospectus though it disputes there is a breach. Shares of Allied rose 9.8% to 4.5 cents on Friday.

Hallenstein Glasson Holdings (HLG): The clothing retailer said on Friday that full-year profit soared as much as 57% to $28.8 million, as it eased off on discounting, improved its product range and benefited from a strong kiwi dollar. “They have been able to buy their produce reasonably well and managed the currency reasonably well,” said Alan Moore of Milford Asset Management. The stock gained 6.1% on Friday to $3.82.

Kathmandu Holdings (KMD): The outdoor equipment retailer fell 4.6% to $1.68 on Friday, the lowest close since the company was taken public by its private equity owners in November. The retailer’s stock has fallen for three sessions since it said its gross margin was 63%, falling short of the forecast 64% in its prospectus.

Kirkcaldie & Stains (KRK): Wellington’s upscale department store on Friday lowered its full-year profit guidance by 15%, citing unplanned discounting to put its inventory in order. Profit will be $1.3 million in the year ended August 31, lower than the $1.53 million previously flagged. The retailer’s shares were unchanged on Friday at $2.70.

Pumpkin Patch (PPL): The children’s clothing retailer is rated a ‘buy’ by Buffy Gill, an analyst at Goldman Sachs JB Were. Second-half sales in New Zealand probably rebounded though at the expense of margins amid discounting. Exports for wholesale markets have rebounded in the past few months, suggesting a recovery in 2011 sales. The shares rose 5 cents to $1.76.

Satara (SAT): The orchard and post-harvesting group for kiwifruit and avocados said on Friday it is in “preliminary” merger talks with potential partners in the kiwifruit industry. The statement followed an earlier announcement last week of a strategic review. The stock rose 7.7% to 70 cents on Friday.

Turners & Growers (TUR): Chairman Tony Gibbs on Friday welcomed a private members bill from the Act Party that would allow owners of kiwifruit variants to export their own fruit. Act’s Kiwifruit Industry Restructuring (Plant Variety Rights) Amendment Bill is a key step to removing “hypocrisy” from regulations governing the fruit, said Gibbs, who has waged a campaign to strip Zespri of its export control. The shares last traded at $1.40.

Themes of the day: New Zealand property values continued to weaken last month, with the number of sales sinking to near their lows in 2008, at the height of the recession, according to QV. The ASB Housing Confidence Survey shows fewer people are anticipating house prices will rise over the next 12 months, though mortgage rates are expected to increase. Stocks in the US fell on Friday after government figures showed US non-farm payrolls tumbled 131,000 in July, almost twice as much as expected.

Businesswire.co.nz

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