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Stocks to watch: New Zealand equity preview

Tuesday 4th November 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: The Reserve Bank of Australia is expected to cut the benchmark interest rate in New Zealand's largest export market by 50 basis points to 5.5%, with some analysts predicting a 75 basis point reduction.

Figure yesterday showed US manufacturing had the biggest slump in 26 years last month on weakening world demand for exports and a squeeze on credit at home. Crude oil fell more than US$3 a barrel to US$63.91 after the ISM report. The benchmark US stocks indexes ended the session lower.

APN News & Media (APN): Australia's Seven Network may be interested in bidding for Irish billionaire Tony O'Reilly's 39.1% stake in APN, the Sydney Morning Herald reported. O'Reilly's Independent News & Media has said it got approaches from potential buyers of the stake and is considering a sale to repay debt. APN's New Zealand shares last traded on October 21 at $2.85.

Briscoe Group (BGR): The retailer today said sales fell 11% to $77.8 million in the 13 weeks ended October 26, with homeware revenue sliding 10% and sports goods sales declining 13% to $24.7 million. Managing director
Rod Duke said results for August and September were "poor" and second half profit will lag behind last year's $$11.9 million. Still, the decline won't be as big as was indicated by the first-half results, he said. The shares were unchanged at 80 cents yesterday and have dropped about 44% this year.

Fletcher Building (FBU): Australia's Bureau of Statistics yesterday said an index measuring the weighted average price for sales of existing homes dropped 1.8% last quarter, the biggest quarterly decline in 30 years. Shares of Fletcher traded at $5.80 yesterday and have declined 50% this year.

New Zealand Oil & Gas (NZO): Crude oil for December delivery fell 5.8% to US$63.91 a barrel on the New York Mercantile Exchange, amid concern demand will weaken as the world's biggest economy slows. Crude is now down almost 60% from its record high US$147.27 reached in July.

PGG Wrightson (PGW): Meat cooperative Silver Fern Farms yesterday scrapped an agreement that would allow Wrightson to acquire a 50% stake after it failed to secure the funding. Wrightson shares rose 2.9% to $1.75 yesterday and have dropped almost 40% in the past three months.

Property For Industry (PFI): Industrial property investor managed by AMP Capital Investors posted a nine-month loss after lowering the value of its portfolio by 6.6%. Excluding the property revaluation and other unrealized items, profit rose. The stock was unchanged at $1.06 yesterday and has declined 26% this year.

Sanford (SAN): The fishing company's shares have gained 37% this year, marking it as one of the few companies on the NZX 50 to chart strong gains as the domestic economy shrank. The company benefits from a weaker New Zealand dollar, which swells the value of its export sales. The currency has fallen 19% slide against the US dollar in the past three months. The stock, rated 'buy' or 'outperform' by four of five analysts who follow the company, rose 3.6% to $5.75.

VTL Group (VTL): The directors of VTL Group resigned yesterday, inviting a receiver to take control of the company. The directors said they believe Remote Technology Systems, Shop24 and the vending franchise programme have value and hope that a restructuring will benefit stakeholders. The stock last traded at 1.5 cents on July 18.

By Jonathan Underhill

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