Stocks to watch: Vector rated 'hold', GPG slashes debt, Windflow concerns

Tuesday 1st September 2009

The following stocks may be active on the New Zealand exchange after developments since the close of trading yesterday.

Themes of the day: Stocks on Wall Street slipped today after China’s Shanghai Composite Index slumped 6.7%, raising concerns the Asian economy won’t be able to underpin a global recovery. The yen gained against the greenback after the fall in stocks sapped demand for higher-yielding assets, and after Japan’s Democratic Party of Japan decisively won the snap election. The kiwi dollar gained to 68.54 US cents as fund managers wound down their holdings in US equities after the Standard & Poor’s 500 index rose 3.4% in August.

Dorchester Pacific (DPC): Investment group the Business Bakery LP yesterday said it acquired 7.1 million Dorchester shares at 5.6 cents apiece, amounting to 19.47% of the stock on issue. While Dorchester has had some challenges there are also significant opportunities in the financial services sector which Dorchester, if well capitalised, would be able to take advantage of, the Bakery said. The shares were unchanged at 63 cents yesterday.

Guinness Peat Group (GPG): The company’s biggest investment, the Coats threadmaker business, yesterday said net debt fell US$100 million to US$333.9 million by the end of June from a year earlier. That may help end losses at the investment group after GPG announced its first-half loss narrowed. The shares rose 5% to 84 cents yesterday.

PGG Wrightson (PGW): New Zealand’s biggest rural services company fell 4.1% to 70 cents yesterday, the lowest close in six months. Rural Portfolio Investments, the private investment vehicle of Craig Norgate and Baird McConnon, today said it may be forced to increase borrowing or sell assets to fund its cash requirements after 27%-owned Wrightson posted a full-year loss and omitted its final dividend. Wrightson said it may sell assets or raise equity.

Vector (VCT): The gas and power lines company is rated ‘hold’ by Forsyth Barr analyst Andrew Harvey-Green, according to the ShareChat website. While the company’s earnings climbed, this partly reflected one-time gains and the company has signaled challenging times ahead. Harvey-Green has cut his forecast of Vector's EBITDA for the year ending June 2010 by 2.8% to $584.8 million. The shares fell 1 cent to $2.02 yesterday.

Windflow Technology (WTL): The manufacturer of wind turbines said it’s facing a material impairment to its earnings if customer NZ Windfarms withholds further payments for completed work. The companies fell into dispute after it became apparent the turbines already supplied to Windflow will not meet international standards. The shares were unchanged at $1.48 yesterday.

Businesswire.co.nz

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