Stocks to watch: Earthquakes and energy key themes

Thursday 9th September 2010

Earthquakes and energy-related stocks are two key themes in the market at the moment, with announcements from Pike River Coal, LM Energy and Lyttleton Port.

Tower (NZX: TWR ): Insurance premiums are expected to rise nationwide as insurance and reinsurance companies look to recoup some of the massive losses from the Canterbury earthquake. Shares in the general insurer fell 0.5% yesterday to $1.87.

L&M Energy (NZX: LME ): The coal seam gas explorer jumped 9.5% to 13 cents yesterday following the company’s announcement this week that it had raised $1.4 million in a share purchase plan, adding to its placement in July. Some 15% of the company’s shareholders participated in the offer, buying shares at 9 Australian cents on the ASX and 11 cents on the NZX.

NZ Oil & Gas (NZX: NZO ): Oil prices rose overnight for the first time in three sessions, supported by buoyant equities and a weaker US dollar as concerns over the European banking system eased. The price is expected to rise further on speculation of forward buying ahead of a possible economic recovery in 2011, according to press reports. Shares in the energy exploration and mining company were unchanged yesterday at $1.28.

Lyttelton Port (NZX: LPC ): The South Island’s biggest port said yesterday that it had served major coal client Solid Energy with a Force Majeure notice following the quake and aftershocks, which damaged its facilities. “This is a precautionary measure and we will continue to work closely with Solid Energy to load coal,” the port said. The stock, which is controlled by Christchurch City’s investment company, was unchanged at $2.42 yesterday.

Nuplex Industries (NZX: NPX ): The chemical and resins company is expected to deliver modest growth in revenue in the year ahead after delivering a record profit, according to Aegis Equities Research analyst Nachiket Moghe, according to the Daily ShareChat. He said while the company expects demand to grow, the company is still highly leveraged to global automotive and industrial demand conditions which remain fragile. Shares were unchanged yesterday at $3.37.

New Zealand Experience (NZX: NZE ): The theme park operator issued a profit forecast today, saying it expects net profit for 2011 to be in the range of $1.3 to $1.5 million on the back of improved EBITDA and lower depreciation charges. Shares were unchanged at 37 cents.

Smart Pay (NZX: SPY ): The eftpos and merchant services company said it raised a further $4.3 mill through a placement of shares that will be used as working capital to meet customer orders and deliveries. The stock last traded on Sept. 7 at 3 cents.

Affco Holdings (NZX: AFF ): Talley's Group, the Nelson-based food conglomerate, has made a full takeover offer for all the shares it does not control at 37 cents apiece after securing an 80% stake in Affco, New Zealand's fourth largest meat processor and exporter. Shares were unchanged yesterday at 37 cents.

Economic Themes of the day: The New Zealand dollar gained against the greenback as fears about the state of Europe’s sovereign debt eased amid strong demand for Portuguese government bonds. The kiwi climbed to 72.21 US cents from 71.90 cents yesterday. Shares on Wall Street and in Europe rose as strong demand for debt auctions in Europe and the US Federal Reserve’s beige book comments gave rise to renewed optimism the global recovery was on track.

New Zealand house prices extended their decline for a fifth month as a backlog of unsold property sits on the market, according to QV Valuations.

Businesswire.co.nz

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