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Stocks to watch: Nuplex, Westpac, OceanaGold

Thursday 4th November 2010

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Nuplex told shareholders net profit for 2011 is likely to be in the region of $68 million to $75 million, OceanaGold shares lost ground as the gold price fell and Vital Healthcare Property comes under shareholder fire over its executive performance fee

New Zealand Oil & Gas (NZO): Oil prices edged high to near US$85 a barrel, after touching a six-month high yesterday, as US fuel stocks fell last week and traders bet on higher commodity prices on the back of the Federal Reserve’s second round of quantitative easing. Shares in the NZOG, the energy exploration and production company, were unchanged yesterday at $1.27.

Nuplex (NPL): The industrial chemical and resin manufacturer told shareholders yesterday that profit for 2011 is likely to rise by as much as 17% provided the Australian and New Zealand dollars don’t appreciate much further and margins hold. Net profit is anticipated to be in the region of $68 million to $75 million in the 12 months ending June 30, 2011. Shares rose 2% yesterday to $3.53.

OceanaGold (OGC): Gold fell, extending earlier losses, after the Federal Reserve said it would buy $600 billion of US Treasuries and pledged to keep the benchmark interest close to zero percent for an “extended period”. Gold was last trading at US$1,348.95 down from US$1,364.25 earlier. Shares in OceanaGold, the operator of the Macraes goldfield, fell 1.1% yesterday to $4.45.

Port of Tauranga (POT): New Zealand’s busiest port is well-positioned as the major hub port in the North Island, according to Jeremy Simpson, an analyst at Forsyth Barr. The port already handles the largest ships visiting New Zealand, and can relatively cheaply undertake the dredging required to accommodate the even larger ships expected over the medium term. The port reported a 10% rise in first quarter profit on the back of a 10% increase in trade volumes and a 25% increase in containers. Simpson’s forecast for net profit in the year ending June 2011 is $51.5 million to $53.5 million. Shares fell 0.1% yesterday to $7.44.

Vital Healthcare Property Trust (VHP): The specialist investor in medical clinics has come under fire from some shareholders over the threshold for the manager’s performance fee under its proposed $238.9 million expansion in Australia, according to press report. Under the deal the performance fee will kick in if unit holder returns exceed 10% annually. Currently Vital is paying a dividend of 8 to 8.2 cents per unit per year and the current share price is $1.24 per share. "In my view the proposed performance fee is a joke,” said Brent Sheather, a financial adviser whose clients control a block of units, quoted on the New Zealand Herald website. Shares rose 1.6% yesterday to $1.26.

Westpac (WBC): The Australian lender is looking to lift its profile among small and medium-sized businesses and the agricultural sector as it looks to boost its commercial book in New Zealand. Chief executive George Frazis said Westpac has previously been underexposed to the SME and farming sectors, and is looking to attract more of these customers. Westpac lifted its New Zealand cash earnings 36% to $322 million in the year ended Sept. 30 as it slashed its charges on impaired assets 39% to $347 million. Shares rose 1.7% yesterday to $30.50.

Themes of the day: Stocks on Wall Street rose as the Federal Reserve said it would buy an additional US$600 billion of US Treasuries through to June, in an effort to speed up the pace of recovery in the world’s largest economy. The Standard & Poor’s 500 Index rose 0.4%. The kiwi dollar rose as the US dollar weakened as a result of the Fed’s announcement, and was last trading at 77.90 US cents, from 77.17 cents. The falling greenback also saw the Australian dollar break parity and was last trading at US$1.01, from 99.68 US cents. Yesterday Republicans retook the House of Representatives with a gain of at least 60 seats, their biggest increase since 1938.

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