Stocks to watch: Nuplex, Diligent, Infratil

Wednesday 14th April 2010

The Securities Commission is bringing its first ever prosecution for failure of continuous disclosure against Nuplex, Diligent is aiming to be cash flow positive in the third quarter after a huge increase in license fees and the Infratil-NZ Super Fund joint venture bought Royal Dutch Shell assets "extremely cheap".

Diligent Board Member Services (DIL): The shares surged 17% to 55 cents yesterday, after the New Zealand-listed, New York-headquartered provider of online services to company boards, reported a 58% increase to $6.88 million in annualised licence fees and said it aims to be cash flow positive in the third quarter.

Infratil (IFT): The Infratil-NZ Super Fund joint venture that bought Royal Dutch Shell's local downstream assets gained an "extremely cheap" entry into the industry, according to brokerage McDouall Stuart. The purchase at just under $700 million has been made at the bottom of the economic cycle, and both Infratil and the Super Fund are longer term participants willing to see through that cycle, said John Kidd, head of research at McDouall Stuart. The stock fell 0.6% to $1.77 yesterday.

Nuplex Industries (NPX): The Securities Commission is bringing its first ever prosecution for failure of continuous disclosure, against Nuplex. "The Commission alleges that from 22 December 2008 until 19 February 2009 Nuplex breached its continuous disclosure obligations ... by failing to disclose to the market a breach of a banking covenant," commission chair Jane Diplock said in a statement. Nuplex responded this morning, saying it was "very disappointed" and that its directors believed they had complied fully with disclosure requirements relating to the renegotiation of the banking arrangements in question. "The board's view was, and remains, that while the company's negotiations with the banks remained incomplete, the company was complying with NZX listing rules in not making a disclosure." Nuplex shares were unchanged yesterday at $3.47.

Telecom Corporation of New Zealand (TEL): Telecom's chief rival in the mobile telephony market, Vodafone NZ, is signing up "huge:" numbers of disaffected customers of Telecom's fault-ridden XT mobile service, the NZ Herald reports. "There has been a massive swing of XT refugees to Vodafone, especially from the South Island and from business customers," Vodafone's Paul Brislen said. Telecom also announced yesterday the loss of another senior executive, head of wholesale and international services, Matt Crockett, the third such departure since the beginning of the year. Telecom was unchanged in trading yesterday at $2.20.

Warehouse Group (WHS): Government figures showed a jump in credit and debit card spending last month, stoking optimism the retail sector may be poised to strengthen. Retail spending data for February is due for release today. The shares rose 0.8% to $3.83 yesterday.

Wool Equities (WEL): The company said yesterday that it is in talks with Romney NZ over forming a joint venture for the production and marketing of wool rugs to the US The shares trade infrequently and were last at 15 cents on March 23.

Themes of the day: The quality of New Zealand corporate governance is in the spotlight, with former directors of Feltex in the District Court facing action by shareholders over the company's collapse, and Securities Commission prosecutions against the former directors of the failed Lombard finance company, which includes two former Justice Ministers, Doug Graham and Bill Jeffries. The commission is also suing Nuplex Industries over an alleged breach of continuous disclosure obligations.

On international markets, concern about the Greek economy and a tepid start to the US earnings season took the wind out of the sails for global stocks overnight as European indexes drifted lower and Wall Street ended little changed. US Treasury Secretary Timothy Geithner said he's "confident" China would pursue over time a more flexible exchange rate. Some observers predict a gradual appreciation of the yuan to start as early as next month.

Businesswire.co.nz

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