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Stocks to watch: GPG, Pumpkin Patch, Delegat's, WDT, NZR, ALF

Tuesday 2nd March 2010

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Guinness Peat Group shares jump as it's losses continue but places value return as priority, Pumpkin Patch is likely to report a jump in profit and share price rises in anticipation.  Wellington Drive Technologies shares surge 14% after reporting a gain in annual revenue and Delegat's continues to slide, after it forecast a cut in earnings.

Wellington Drive Technologies (NZX: WDT ): The maker of energy-efficient motors reported a 54% gain in annual revenue to $22.4 million, missing the $40 million forecast in its January 2009 prospectus. It reported a full-year loss of $16.7 million. Sales of motors to the commercial refrigeration sector, principally for soft drink bottle coolers and supermarket refrigerated display cabinets, rose 105%. The shares surged 14% to 8 cents yesterday.

Allied Farmers  (NZX: ALF ): The finance company released a valuation that showed Hanover and United assets it paid for with $400 million of its own shares are worth less than half that amount now. The company, which posted a $15.7 million first-half loss, said the assets have slumped to $175.5 million under NZ IFRS reporting, from a gross realisation value of $396 million at the time the deal was announced last year. The shares slipped 2% to 10 cents yesterday.

Delegat’s Group (NZX: DGL ): The maker of Oyster Bay wines tumbled 7.5% to $2.10 yesterday, adding to a 14% slide on Friday when it forecast a 30%-to-40% cut in full-year earnings as it prepares to write down the value of vineyards and their "biological assets" as wine industry oversupply sinks grape prices.

Guinness Peat Group (NZX: GPG ): The investment group yesterday said a “value return” to shareholders is top priority. While Coats, its biggest investment, had a loss of 3 million pounds, this reflected timing of tax and the threadmaker’s “strong” cash flow enabled it to repay debt. “Coats does look pretty encouraging, especially from a cash-flow business going forward,” said Paul Richardson, chief investment officer at BT Funds Management, which oversees $2.1 billion. Yesterday the stock jumped 6.1% to 87 cents.

Pumpkin Patch (NZX: PPL ): The retailer may report a 43% jump in reported profit to $13.6 million when it releases its first-half results today, according to Guy Hallwright, an analyst at Forsyth Barr. While Pumpkin Patch probably had a reasonable Christmas, UK trading may have been hampered by bad weather. The shares gained 2.6% to $2 yesterday.

New Zealand Refining Company (NZX: NZR ): The Northland-based oil refiner can’t expect any profit increase soon, with margins continuing to be squeezed said brokers McDouall Stuart in ShareChat. As signaled, annual profit compared to last year dropped 81% to $23.6 million, and the company experienced a second half-year loss as margins dropped from US$12 a barrel to US$1. New refinery capacity in Asia and constrained demand indicate margins won’t rise anytime soon. Its shares rose one cent yesterday to close at $3.37.

Economic themes of the day: Stocks on Wall St overnight rose 0.8% on the S&P 500 index. UK Prudential is to buy AIG Asia for US$35.5 billion. The Reserve Bank of Australia meets today to review monetary policy; economists are unsure whether it will raise its benchmark rate to 4% from 3.75%.

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