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Stocks to watch: TEL, Allied, Charlie's, Glass Earth, HLG, NPX

Monday 1st February 2010

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Trading is expected to be light on the NZX today as it is Auckland Anniversary Day. However Telecom will be in the spotlight following its troubles with the XT network. Also Nuplex and Hallenstein are likely to attract attention following recent profit guideline announcements.

Themes of the day: The US economy expanded at a 5.7% annual pace in the fourth quarter, the fastest in six years, as companies increased spending. Shares on Wall Street weakened by the close of trading on Friday in New York amid concern about fiscal instability in Greece, Portugal and Spain. Today is Auckland Anniversay Day.

Allied Farmers (NZX: ALF ): Low levels of trading in Allied shares since it issued 1.9 billion in new stock to investors of Hanover Finance has caught some analysts by surprise, according to McDouall Stuart. Financially pressed Hanover investors were expected to dump their shares for the cash though only 57 million of the stock have changed hands,  equivalent to just $16m of original Hanover debenture money.

“It appears most investors are prepared to take the time to see what unfolds as ALF starts to realise the loan assets it has acquired,” the brokerage said. On Friday, the shares traded unchanged at 10.5 cents. 

Charlie’s Group (NZX: CHA ): The Auckland-based owner of the Charlie’s and Phoenix Organics brand drinks on Friday said it turned to a first-half profit, from a year-earlier loss, on the sale of an Auckland property, cost cutting and growth in its Australian business. “We’ve been working pretty hard on turning the business around,” chief executive Stefan Lepionka told BusinessWire.” The shares jumped 7.8% to 9.7 cents on Friday.

Glass Earth Gold (NZX: GEL ): The company has scheduled a meeting of shareholders in Vancouver on February 24 to vote on a five-for-one share consolidation, reducing shares on issue to 31.5 million from 157.7 million. Shrinking the number of shares on issue will assist in attracting further equity “and more accurately reflect the business direction of the company,” it said. The shares last traded on January 28 at 7.7 cents valuing the NZAX-listed company at $11.9 million.

Hallenstein Glasson Holdings (NZX: HLG ): The clothing retailer clothing retailer forecast a 50% jump in first-half profit on buoyant trading over the Christmas-New Year period and raised its dividend. “We have experienced consistent demand from our customers to our offer during this key trading period, and we have been able to protect and grow our margin,” chairman Warren Bell said on Friday. The stock surged 11% to $3.60, leading gainers on the NZX 50 on Friday.

Nuplex Industries (NZX: NPX ): The specialty chemicals company is rated a ‘buy’ by Dennis Lee, an analyst at Craigs Investment Partners, according to the ShareChat website. The company’s third profit upgrade in as many months reflects the company’s increasing confidence in its operating performance, Lee said on a note. Trading conditions were solid in November and December and raw materials costs have also been stable. Nuplex’s earnings are “highly leveraged” to the economic recovery. The shares fell 0.3% to $3.24 on Friday.

Pike River Coal (NZX: PRC ): The coal miner continues to operate at a substantial discount to its Australian counterparts, according to McDoull Stuart. “If and when it can prove itself as a 1 million tonne a year coking coal producer, PRC will undergo a rapidly and substantial re-rate,” the brokerage said in its weekly note. The shares fell 3.1% to 95 cents on Friday after its announcement of further production delays because of delays in completing its mine.

Telecom (NZX: TEL ): Telecom will be trying to rehabilitate its XT brand after the extended failure of the network last week. Analyst Rosalie Nelson told the NZ Herald that the impact on customer churn is unclear because many XT business customers are tied to two or five-year deals. The company is expected to offer some form of compensation to customers. The shares fell 1.2% to $2.38.

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