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Stocks to watch: New Zealand equity preview

Wednesday 20th August 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: US stocks tumbled amid concerns losses at finance firms will continue. The Standard & Poor's 500 Index fell 1.1%. Housing starts in the US fell 11% to an annual 965,000, the lowest in 17 years. Prices of gold and oil rose as the US dollar weakened against the euro.

Air New Zealand (AIR): Virgin Blue yesterday said its Pacific Blue unit in New Zealand would break even by November after losing less than NZ$4 million in the eight months ended June 30. Pacific Blue's debut on domestic routes last year has forced down fares. The stock rose one cent to NZ$1.26 yesterday and has declined 33% this year.

Fletcher Building (FBU): AXA Asia Pacific Holdings and associated interests reduced their holdings in the building products company to 4.8% from 5.2%. Separately, ASB Bank today said sentiment in the New Zealand housing market is picking up though is still at relatively weak levels. The stock has fallen 40% this year. The company last week posted a 3.5% drop in annual profit.

PGG Wrightson (PGW): The rural services company's offer to buy 50% of Silver Fern Farms has "a number of significant positive benefits" for shareholders of the cooperative, according to an independent report on the deal from Grant Samuel. A half stake in the meat processor formerly known as PPCS is worth between $205 million and $225 million, putting Wrightson's $220 million price at the top end of the range, Grant Samuel said. Wrightson yesterday posted an 80% jump in full-year profit.

Tourism Holding (THL): The tourist operator posted a 7% increase in profit on increased sales and a gain on asset sales. Excluding the asset sales, earnings fell 11%. The company predicted "a challenging 12-18 months
for the tourism industry" because of the impact of oil price volatility and the global credit squeeze. The stock has fallen 36% in the past 12 months and was at NZ$1.42 yesterday.

Windflow Technology (WTL): The designer and manufacturer of wind turbines expects cash-flow from orders will be sufficient to cover working capital requirements on future orders, according to a presentation to prospective investors. The stock has gained 10% this year, surging in June after the company announced that generator Mighty River Power placed an order and agreed to buy a 19.95% stake.

By Jonathan Underhill

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