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Stocks to watch: Charlie's, Contact, Pike

Wednesday 24th February 2010

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

Themes of the day: Equity markets and commodity prices tumbled as investors steered clear of higher yields after weak consumer confidence and housing data in the U.S., while across the Atlantic, a disappointing IFO survey in Germany raised fears that Europe's largest economy may be stagnating. The divergence between the trans-Tasman economies was further highlighted by RBA Deputy Governor Ric Battellino's upbeat assessment of the so-called 'lucky country'. Pike River Coal will meet their cash shortage through the sale of $50 million of shares and the issue of US$28.9 million of convertible bonds. The kiwi dollar sank to just above 69 U.S. cents amid the ongoing gloom, and investors are likely to stay on hold until Federal Reserve Chairman Ben Bernanke testifies before the Senate.

Charlie’s Group (CHA): The beverage company yesterday announced that it had turned to a profit in the first half, helped by rising sales in Australia, where the company is expanding. Net profit was $1.9 million in the six months ended Dec. 31, from a loss of $700,000 a year earlier, the company said today. Gross sales in Australia surged by 37%. The stock jumped 5.2% to 10 cents yesterday.

Contact Energy (CEN): The biggest utility on the NZX 50 yesterday posted first-half underlying earnings of $80.1 million, missing some estimates. Contact's retail margins were "unsustainably low" and electricity prices in the first half had not covered the costs of having gas-fired capacity available to run, CEO David Baldwin said. The results were “a bit light compared to consensus,” said Craig Brown, who helps manage $3.3 billion at ING New Zealand.

New Zealand Oil & Gas (NZO): The company reported a first-half loss of $6.5 million, reflecting lower production from the Tui oilfield, $40 million of foreign exchange losses and a $10 million write off of its failed Albacore well. The shares traded at $1.57 yesterday.

Pike River Coal (PRC): The coal mine developer today announced plans to raise $50 million selling shares and a further US$28.9 million from the issue of convertible bonds, both supported by major shareholder New Zealand Oil & Gas. Pike separately posted a first-half loss of $14 million, up from a year-earlier loss of $9.6 million. The stock was at 94 cents yesterday.

Telecom (TEL): The shares fell 2.5% to $2.30, just 9 cents above the record low reached last November as Chief executive Paul Reynolds was forced to apologise yesterday for further outages on the XT network. Reynolds outlined an increased compensation package for customers amounting to $15 million after further disruptions on its XT network. Full-year earnings would be at the bottom of its $400 million to $440 million range, he said.

Tourism Holdings (THL): The campervan rental company that was dropped from the NZX 50 index last year remained profitable in the first half of the financial year posting a net profit of $1.4 million, or 1.3 cents a share, in the six months ended December 31, compared to a loss of $265,000 a year earlier. Chairman Keith Smith said the company expects to make a full-year profit of between $3 million and $4.5 million, including a tax investment allowance of $1.4 million. The shares were unchanged at 96 cents in trading yesterday, and have jumped 20% this year, well ahead of the NZX 50’s 3.1% decline.

Businesswire.co.nz



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