Stocks to watch: Auckland Airport rating, Mainfreight outlook, Telecom

Tuesday 2nd June 2009

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

Themes of the day: General Motors filed for bankruptcy as expected, aiming to emerge as a leaner automaker controlled by the government, having shed unprofitable brands and slashed debt. The New Zealand dollar held its gains to trade at above 65 US cents. Stocks rallied on Wall Street after US economic data stoked optimism the worst of the recession has passed.

Auckland International Airport (AIA): The country’s largest gateway had its credit rating cut to A- from A by Standard & Poor’s, which cited a tough aviation market in the midst of the global economic slump. “The stable outlook reflects our expectation that AIAL's credit metrics will track around the fiscal year 2008 level for the next two-to-three years,” said credit analyst Danielle Westwater said on Friday. “A sustained and significant underperformance in passenger traffic could put negative pressure on the rating, but this is considered unlikely.” The shares rose 0.6% to $1.60 on Friday.

Mainfreight (MFT): The transport company is rated a ‘buy’ by Forsyth Barr economist Rob Mercer, according to the ShareChat website. The company’s short-term earnings growth has stalled but it is well positioned for growth to resume as the economy recovers, Mercer said. He values the stock at $5.77. The shares fell 1.5% to $4.52 on Friday. Mainfreight last week posted full-year profit before items of $40 million, from the year-earlier record $40.8 million a year earlier.

Pike River Coal (PRC): The coal miner was asked for the second time in as many months to account for the surge in its shares, which have soared 81% since early March. Chief executive Gordon Ward said the company isn’t aware of any information not already announced that may have helped fuel the stock price. He noted that coal production has resumed and the company is on scheduled with repairs to its main ventilator shaft. The stock jumped to $1.23 on Friday from $1.08 the previous day.

Telecom (TEL): The government will consider reviewing restrictions on foreign ownership of the nation’s biggest phone company, the Dominion Post reported, citing a Cabinet paper. The Treasury will lead the review of the Kiwi Share, the report said. Telecom shares fell 0.4% to $2.51 on Friday.

Tenon (TEN): The wood products company forecasts earnings before interest, tax, depreciation and amortisation of US$10 million to US$11 million in the year ending June 30, with a little changed second half. The stock rose 5% to $1.05 on Friday.

Tower (TWR): The insurer jumped 7% to $1.68 on Friday after posting a 32% jump in first-half profit on earnings from general insurance and an accounting gain on the valuation of life risk policy liabilities. “Tower continues to operate successfully in a highly competitive and very uncertain market,” said managing director Rob Flannagan.

Businesswire.co.nz

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