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Stocks to watch: Fletcher earnings, Contact rated 'buy'

Wednesday 17th February 2010

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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 rose in Europe and the US after Barclays Plc posted earnings that beat estimates and figures showed stronger growth in New York manufacturing, stoking optimism the global recovery is gathering pace. Earnings out today include Fletcher Building, the nation’s biggest construction company, which beat analysts’ expectations, though the outlook is mixed. The prospect of more rate hikes by the Reserve Bank of Australia bolstered support for the trans-Tasman currencies. Some Asian markets return today after celebrating Chinese New Year.

Cavotec MSL Holdings (CCC): The owner of Christchurch-based MoorMaster boosted its new orders by 17.3 million euros to 54.7 million euros in the three months through December amid a “noted upswing in interest for the MoorMaster range.” Cavotec secured a contract with the Kingdom of Bahrain to supply ground service equipment at Bahrain International Airport, worth some 30 million euros. The shares rose 0.4% to $2.36 in trading yesterday.

Contact Energy (CEN): The nation’s largest listed utility is rated a ‘buy’ by Craigs Investment Partners analyst Grant Swanepoel, according to the ShareChat website.  Contact’s peaking power station and gas storage combination give it the flexibility to increase earnings no matter the climatic conditions. The shares fell 1 cent to $5.61 yesterday.

Fletcher Building (FBU): The nation’s biggest construction company posted an 11% fall first-half earnings to $154 million today as government stimulus “offset the worst effects of the recession,” according to chief executive Jonathan Ling. The result beats Forsyth Barr’s prediction of a 23% decline in profit, though the dividend of 14 cents a share came in below the predicted 16 cents. Yesterday the stock rose 2.4% to $7.64.

NZ Farming Systems Uruguay (NZS): The developer of dairy farms in South America sank 4.8% to 40 cents yesterday, returning to the low it last plumbed on August 27, after reporting a first-half loss of just under US$7 million and forecasting a full-year loss of US$10 million, down from almost US$46 million a year ago.

New Zealand Refining (NZR): The nation’s only oil refinery yesterday said shrinking refining margins drove a sharp drop in profit for last year, with only a slight improvement in margins expected in the near future. The company’s refining margins dropped to around US$1 a barrel from US$12 per barrel, while profit plummeted to NZ$23.6 million from NZ$125 million a year earlier. The stock fell 0.6% to $3.55 yesterday.

Sky City Entertainment Group (SKC): New Zealand’s biggest casino company yesterday reported a 30% jump in first-half profit to $71 million after slashing interest costs by buying back US debt with a favourable exchange rate. Interest costs fell 29%. “It’s a very solid result and modestly positive after a weak start to earnings season,” said Paul Robertshawe, who oversees $250 million at Tower Asset Management. The shares gained 1.9% to $3.19 yesterday.

Telecom (TEL): The country’s largest phone company has had more problems with its troubled XT network, with some customers south of Taupo having problems sending text messages. The company’s much-vaunted network experienced two outages in December and January, and chief executive Paul Reynolds will announce who will perform the independent inquiry into XT this week. Shares climbed 0.4% to $2.32 yesterday.

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