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Stocks to watch: New Zealand equity preview

Wednesday 19th November 2008

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Themes of the day: Shares on Wall Street extended their decline, the with Dow Jones Industrial Average bringing its two-month slide to 27% after reports showed declining house prices, a slump in homebuilder confidence and weaker prices paid to consumers. New Zealand’s dollar weakened to 55.08 US cents andv ANZ National bank predicts it will reach 49 cents by the end of 2009.

Air New Zealand (AIR): Air NZ chief executive Rob Fyfe said Qantas is preparing to replace its New Zealand services with its low-fare Jetstar unit. Air NZ's share price is trading at 91 cents and has fallen almost 55% in the last 12 months.

Charlie’s Group (CHA): Chief executive Stefan Lepionka told shareholders at their annual meeting yesterday that the juice maker’s gross sales in the first four months of the year were 7% ahead of the same period last year. “Gross margins have also shown a strong improvement” mainly reflecting the start of production in Australia. EBITDA was $328,000 in the first four months of the financial year, from a loss in the year-earlier period. The stock fell 4% to 12 cents yesterday and is up 14% in the past month.

Delegat’s Group (DGL): The winemaker’s shares were unchanged at $2.03 yesterday and have gained about 1% in the past month, while the NZX 50 Index fell 5%. Carmel Fisher, managing director of Fisher Funds Management, said the maker of Oyster Bay wine has fattened its trading margins and extended its earnings growth so far in the 2009 year after profit jumped 77% last year, “showing that some premium products can indeed be recession proof.” Fisher manages investment company Kingfish, which has been adding to its Delegat’s holding, she said.

Fletcher Building (FBU): Fund manager AXA Asia Pacific Holdings became a substantial holder of New Zealand’s biggest construction company, with a 5.06% stake, according to a statement to the NZX after the close of trading yesterday. The shares rose 1.4% to $5.72 yesterday and have declined about 50% this year amid falling demand in the US and weaker returns in its biggest markets of New Zealand and Australia.

New Zealand Oil & Gas (NZO): Crude oil for December delivery fell 1.1% to US$54.33 a barrel on the New York Mercantile Exchange. The stock has gained 12% this year.

Rakon (RAK): The maker of components for navigation systems has shed more than a third of its value since November 14, when the company announced a 38% slump in profit and forecasting a weaker outlook. The stock dropped 6.3% to $1.04 yesterday.

By Jonathan Underhill

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