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Stocks to Watch: AMP Office Trust, Freightways, Kathmandu

Wednesday 4th August 2010

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AMP Office Trust has increased its distributable earnings to over $60 million, Freightways looks to have some new competition in the market and Kathmandu says trading conditions over the past four months have been tough, but sales are still $30 million (almost 14%) up on last year.

AMP New Zealand Office Trust (APT): The listed property trust trying to become a listed company posted a 2.5% increase in its distributable earnings to $60.7 million in the year through June. The trust is going through the required regulatory hoops before it can put a proposal forward to unit holders on changing its structure to align its manager’s incentives with those of investors. The shares were unchanged at 71 cents.

Freightways (FRE): The international transport firm is well positioned to benefit from the economic recovery, says Craigs Investment Partners. A key risk to its express package business could be a new player entry to a market where essentially a duopoly of Freightways and the NZ Post/DHL joint venture controls 80% of the market. Its information management business now accounts for 20% of the company’s earnings and is organically growing at between 8-10% a year. Its shares dropped two cents yesterday to $2.83.

Kathmandu Holdings (KMD): The outdoor clothing and equipment retailer released an earnings update to the NZX this morning, saying that trading conditions in the final four months of the year to the end of July, in all three countries that it trades in, have been very challenging and more difficult than it experienced in the first half of the year. Sales for the year were $245.5 million, up almost $30 million or 13.9% on the previous year. Its shares dropped four cents yesterday to $2.05.

Telecom (TEL): Commuications Minister Steven Joyce has agreed to regulate the fees phone companies charge each other for ending calls on their network. Joyce sent back an earlier recommendation not to regulate mobile termination rates after a Vodafone pricing plan caused some consternation among officials. The Commerce Commission had earlier accepted Telecom and Vodafone's pitch to gradually reduce the fees to 6 cents by 2014. Telecom's shares rose 1% to $2.02 in trading yesterday.

PGG Wrightson (PGW): The stock and station company’s shares rose 1.8% to 56 cents while NZ Farming Systems Uruguay increased 1.8% to 57 cents as Singapore-based Olam International’s takeover bid for NZS gets closer. Tyndall Investment Management equities manager Rickey Ward said Wrightson was well-placed in the Olam bid, charging fees from its management contract with the Singapore company likely to inject new life into NZS, which has been languishing for some time.

Ryman Healthcare (RYM): The retirement village and healthcare provider gained 2% to $2.08 amid news it is considering listing on the Australian Stock Exchange. The company’s looking to buy land in Victoria in the next 12 months, when it can build its first Australian retirement village. Meanwhile, New Zealand First leader Winston Peters has attracted media attention by claiming he would attempt to limit foreign investment in retirement care, if elected and included in a future government;

Themes of the day: Wage figures released by Statistics New Zealand yesterday were seen as evidence that the economy continues to recover, albeit weakly, with economists continuing to expect unemployment rates due on Thursday to show a slight decline to around 6.4%.

Fonterra recorded a further 11% drop in whole milk powder prices in its overnight globalDairyTrade auction.  While prices remain well above last year's, observers described the fall as "meaningful" when combined with movement in the Kiwi dollar. 

Meanwhile, concerns linger in the world economy, especially over mixed signals from the US economy. US equities declined as homes sales, factory orders and consumer spending fell short of expectations, as did earnings by Procter & Gamble and Dow Chemical. 

Contracts to buy existing houses unexpectedly dropped for a second month and factory bookings fell more than twice as much as economists estimated, adding to uneasy sentiment about the outlook for the world's largest economy.

Companies are taking direction from the global tone, according to Rickey Ward, equities manager at Tyndall Investment Management. "Volumes are really light and have been for some time, which is typical of the activity ahead of reporting season." Overnight the kiwi rose against the greenback to 73.40 U.S. cents, from 73.34.

Businesswire.co.nz



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