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Stocks to watch: Contact, Freightways, NZX, Sealegs

Tuesday 16th February 2010

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Sky City Entertainment posted a 30% increase in first-half profit after the casino operator cut interest costs by repaying debt. Shares in NZX drop due to the market operator taking an accounting charge against payments from its TZ1 carbon registry and Freightways posted a decline in first-half earnings.

Contact Energy (NZX: CEN ): After two years of declining profits, the electricity generator should be in a good position to increase earnings, said Craig Swanepoel of Craig Investment Partners, according to ShareChat. The company’s peaking power station and gas storage provide a flexibility of output. With State Owned Enterprise-owned power companies expected to improve their asset returns, Contact could be rewarded for its dry year capacity. He expects EBDITA earnings for the year ended June to be $493 million. The shares fell 1.2% yesterday to $5.62.

Freightways  (NZX: FRE ): The owner of courier brands including New Zealand Couriers, Post Haste and SUB60 yesterday posted a 14% decline in first-half earnings and saying it expects a gradual pick-up as the domestic economy improves. The company trimmed its first-half dividend by 1 cent to 7 cents and refrained from giving a forecast for the second half. The shares fell 4.7% to $3.06 yesterday.

NZX  (NZX: NZX ): The shares of the market operator dropped 8.7% to $1.99 yesterday, the lowest close since April last year. The company said a drop in participation in carbon trading forced it to reduce the carrying value of its shares in Markit, which it got for selling its TZ1 registry, by $19.9 million. “With everybody not trading credits then their volumes have dropped away – that filters through to what NZX gets in its back pocket,” said Craig Brown, who helps oversee $3.3 billion at ING New Zealand.

PGG Wrightson (NZX: PGW ): The nation’s biggest rural services company has a management contract with NZ Farming Systems Uruguay, which pays out provided certain earnings targets are met. Farming Systems is due to report its first-half results tomorrow. It may post a narrower operating loss because of improving global dairy prices and better weather. Wrighton fell 5% to 57 cents yesterday, the lowest since December 1. NZ Farming Systems (NZS) declined 2.3% to 42 cents.

Sealegs (NZX: SLG ): The manufacturer of amphibious boats yesterday said had no information that could help explain its 21% share price drop last week. The shares were unchanged at 15 cents yesterday.

Sky City Entertainment Group (NZX: SKC ): The nation’s largest casino company today reported a 30% jump in first-half profit and said full-year profit will rise as much as 15%. The shares were unchanged at $3.13 yesterday.

Economic themes of the day: US markets were closed overnight for the Washington’s Birthday break and some markets in Asia are closed for Chinese New Year. Meantime, European Union finance ministers are meeting to consider a bail-out for Greece.

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