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Stocks to watch: Ecoya, Pike River Coal, FPA, GEN, NZS, TEL

Tuesday 4th May 2010

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Ecoya, the scented candle business lists on the NZX and Genesis Research suspends NZ operations as funds dry up. Pike River Coal went ex its rights issue and the RBA is expect to push up its interest rates later today.


Ecoya (NZX: ECO ): The body and bath, and home fragrance company listed yesterday, the first new NZX listing in six months. It has raised just over $10 million in the float, which will enable the Auckland-headquartered, Sydney-manufacturing company to firstly expand in North America, followed by an Asian development. Ecoya said the fact that global rival L’Occitane is about to list on the Hong Kong stock exchange demonstrates that the fragrance sectors are of strong interest to international investors. The $1 shares were trading at 99 cents yesterday. 

Fisher & Paykel Appliances (NZX: FPA ): The appliance manufacturer is rated a ‘hold’ by Goldman Sachs JB Were analyst Adrian Allbon, according to the ShareChat website. Stronger-than-expected earnings from rival appliance manufacturers, because of better demand in the US, bodes well for FPA’s earnings, Allbon said. He forecasts 2011 adjusted earnings of $42.1 million, compared with a consensus of $41.3 million. Whirlpool's first quarter earnings-per-share were US$2.13 compared with the analysts’ estimate of US$1.33 consensus forecast. The shares rose 1 cent to 65 cents yesterday.  

Pike River Coal (NZX: PRC ): The coal mine developer dropped 3.4% to $1.06 yesterday after the stock went ex-rights. Investors had to hold the shares on April 30 to be entitled to the coal miner's renounceable rights issue of 45.5 million shares at 88 cents apiece, raising $40 million to fund mine development and operations until it starts making export sales. 

Genesis Research and Development (NZX: GEN ):  The company which is trying to advance its gene silencing technology slumped 33% to 4 cents yesterday after announcing it has suspended New Zealand operations and said it may tip its assets into a new company as funds dry up.  It is awaiting word on whether a Japanese investor will put in more cash and has offered a discount to another group to pay an outstanding debt. 

NZ Farming Systems Uruguay (NZX: NZS ): The developer of dairy farms in South America shed 2.4% to 40 cents after Rural Portfolio, the investment vehicle of Baird McConnon and Craig Norgate, had its preference shares suspended was placed in receivership. Its remaining assets are shares in Farming Systems and a holding in PGG Wrightson (PGW). “The market is of the firm view those shares will come out sooner or later,” said Paul Robertshawe, who manages $220 million at Tower Asset Management. The holdings could either be liquidated by the trustee or distributed in specie to bondholders, he said. Wrightson was unchanged at 53 cents yesterday. 

Telecom  (NZX: TEL ): The nation’s biggest phone company is rated a ‘hold’ by Guy Hallwright, an analyst at Forsyth Barr, according to the ShareChat website. He said the Commerce Commission is likely to recommend regulating mobile termination rates when it reconsiders its position. That will probably erode Telecom's 2012 operating earnings by about $30 million. 


Economic themes of the day: Continuing good economic news out of America helped boost global risk appetite, though markets in the UK, Japan, China and Thailand were all closed because of holidays.

A US manufacturing report showed the fastest growth in six years, while April sales numbers from American auto manufacturers shows the recovery is well entrenched.

The Dow Jones rose 1.3%, the Standard & Poors 500 gained 1.3% and the Nasdaq Composite rose 1.53%. The US dollar index, which measures the greenback against a basket of six major currencies rose 0.59% to 82.35. The euro dropped 0.7% to US$1.3204; Richard Franulovich, senior currency strategist at Westpac Banking Corp. in New York said “the euro is just patently overvalued” and he predicts it will decline to $1.30 this month. The kiwi rose to US$0.7306 from $0.7289 overnight on the back of surging commodity prices.

The Reserve Bank of Australia meets today and is expected to again push up its interest rates, while New Zealand employment and wage data for the first quarter is due out today.

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