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Stocks to watch: Mainfreight, Telecom, Ryman

Thursday 18th November 2010

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Mainfreight posts a 52% increase in first-half profit boosted by US and Asia performance, Telecom cites share price uncertainty for dividend reinvestment cancellation and Ryman Healthcare reveals a record 25% jump in first-half profit.

Dorchester Pacific (DPC): The finance company which kept receivers at bay by convincing investors to swap their debt securities for a grab-bag of new securities, posted a first-half profit of $15.7 million in the six months ended September 30, from a loss of $8.5 million a year earlier. Operating revenue tripled to $33.8 million, with $29 million coming from an item described as "Fair value adjustment - capital raising & capital reconstruction." Shares were unchanged yesterday at 11 cents. 

Fletcher Building (FBU): New Zealand's biggest construction company told shareholders at their annual meeting yesterday that rebuilding Canterbury after the earthquake and the government programme to fix leaky homes will be the impetus for growth in the construction industry. Profit in 2011 may be around $357 million, matching the average of analyst forecasts, from $301 million excluding a one-time tax charge last year. Shares rose 0.9% yesterday to $8.01.

Mainfreight (MFT): The nation's biggest trucking firm posted a 52% jump in first-half profit to $16.5 million, before one-time items, on a stronger performance in the US and Asia. The company raised its interim dividend by 0.5 cent to 9 cents and said sales and weekly trading results in October and November "are further improved raising our expectations for a strong third quarter." The shares rose 4 cents to $7.40 yesterday. 

Telecom (TEL): New Zealand's biggest telephone company yesterday said it has cancelled its dividend reinvestment scheme for the first quarter dividend because of share price uncertainty created by the delayed announcement of preferred partners for the government's ultra-fast broadband project. Shares fell 4.1% yesterday to $2.11.

Ryman Healthcare (RYM): First-half profit rose 25% to $36 million, a record for the company. Including unrealised valuation gains, net income was $52 million. The company raised its first-half dividend by 26% to 3.4 cents a share. "We are trading well and we are on track to achieve our target of 15% growth in realised profit for the full year," chairman David Kerr said. The shares fell 3 cents to $2.16 yesterday.

Windflow Technology (WTL): The Christchurch-based wind turbine manufacturer is looking at a $5.4 million equity-raising bid, said it sees fat margins both for itself under a British government subsidy scheme to encourage small-scale wind generation. The emergence of the British scheme has thrown Windflow a lifeline, as it has no forward orders beyond its sole customer, Te Rere Hau windfarm, where construction is almost complete. The capital-raising will be used to put foreign exchange hedging in place and strengthen its balance sheet. Shares fell 3.4% yesterday to 85 cents.

Themes of the day: Global markets steadied overnight on signs that Ireland is leaning towards accepting a bailout to prop up its ailing banks. In late trade the Standard & Poor's 500 Index rose 0.01% to 1,178.46, while in Europe the Stoxx 600 ended 0.5% higher. The New Zealand dollar rose to 77.07 US cents from 76.55 cents, after US inflation data for October came in lower than expected at 0.2%. The data brings the annual inflation rate in the US, excluding energy and food, to just 0.6% – the lowest since records began in 1957. Statistics New Zealand is set to release third quarter Producer Price Index and Capital Good Price Index data today.

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