Stocks to watch: Telecom, Air NZ, Allied Farmers, Pike River

Wednesday 21st April 2010

Passenger numbers remain stable for Air NZ, Allied Farmers has explained its 44% slump in stock, while AMP is now in the box seat for its bid to take over AXA. Meanwhile, Pike River Coal announced details of a plan to raise $50 million to cover costs of moving to full production.

Air New Zealand (AIR): The national airline estimates the net cost to its business from the disruptions in Europe from volcanic ash runs to $500,000 a day. The airline yesterday reported passenger numbers in March of 1.2 million was unchanged from the same month of 2009. Short-haul passenger numbers rose 0.5% while long-haul fell 3.6%. The stock was up a cent yesterday, at $1.38.

Allied Farmers (ALF): The finance company rose 5.3% to 6 cents yesterday. The company has been forced to explain a 44% slump in its stock price since March 1, which it says was probably a reaction to its first-half results and reduced valuation of its assets. Allied Farmers traded as high as 65 cents yesterday before closing 3 cents up on the day, at 60 cents.

AMP (AMP): The life insurer fell 1.8% to $8.15 yesterday after Australia’s antitrust regulator shot down a rival bid for AXA Asia Pacific, leaving AMP in the box seat with its bid, which it now needs to fund.

Pike River Coal (PRC): The shares rose 1.9% to $1.10 yesterday after the coal miner announced details of its plans to raise $50 million in equity to cover the costs of moving to full production, including ramping up to hydro-mining. The shares are being offered at 88 cents apiece, amounting to a 20% discount, on the basis of two for 19 already held. The capital raising is split $10 million in a placement and $40 million in a rights offer. New Zealand Oil & Gas (NZO), which will take up its entitlement to Pike shares and subscribe for new bonds to repay existing debt, gained 2% to $1.54 yesterday.

Postie Plus Group (PPG): The clothing retailer said in its interim report that the New Zealand retail sector is exposed to “variable economic conditions, with the turnaround from last year’s recession likely to be protracted.” “Our focus is on continuing to achieve increased profitability across all of our retail assets and maximising the positive result that we are confident the group will report for the August year,” chairman Peter van Rij and managing director Ron Boskell said. The stock was unchanged at 34 cents yesterday.

Telecom (TEL): Telecommunications Commissioner Ross Patterson has recommended that Communications Minister Steve Joyce study a new pricing plan from rival Vodafone New Zealand when he decides whether to regulate what phone companies charge rivals for ending calls on their networks. Meanwhile, TelstraClear chief executive Allan Freeth told a telecommunications conference in Wellington that Telecom's Chorus unit is the logical party to lay fibre for the government's ultra-fast broadband network. "I am simply at a loss as to why you would set up a system for regional cricket teams to play the Rugby World Cup having excluded the All Blacks because they are involved in merchandising," said Freeth, referring to the likelihood that local monopoly electricity networks and other bit players will lay sections of the UFB fibre if the national telco does not. The stock fell 0.9% to $2.15 yesterday.

Themes of the day: The impact of New Zealand's weak economic recovery on the local currency versus its largest two-way trading partner, Australia, looks set to continue delivering short term export competitiveness gains over coming months. The Reserve Bank of Australia has signaled a further interest rate hike in May, while yesterday's inflation figures in New Zealand suggest abating pressure to raise the Official Cash Rate from its current historic low-point mid-year. On international markets, the Japanese yen is under pressure while Canada has announced it will be the first of the G-7 nations to raise rates. Strong earnings and a rebound in commodities prices helped pace equities higher in Europe and on Wall Street in overnight trading. European air travel remains disrupted by Icelandic volcanic ash.

Businesswire.co.nz

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