Stocks to watch: Abano, AMP Office, Kathmandu

Thursday 5th August 2010

Abano Healthcare has been rated 'buy' by McDouall Stuart, AMP Office Trust is facing a challenge to find tenants for some if its most valuable properties when current leases expire, while Kathmandu shares fell 12% on news margins fell short of projections.

Abano Healthcare (ABA): The specialist health clinic investor is rated a ‘buy’ by brokerage McDouall Stuart. The sale of its Bay Audiology unit last year removed a key earnings growth generator but bolstered the company’s balance sheet. Abano will now look to restore momentum from its dental operations and remaining audiology assets. The shares rose 8 cents to $5.48 yesterday.

AMP NZ Office Trust (APT): The property investor faces a challenge to fill empty office space in some of its most valuable properties when existing leases expire, the NZ Herald reported, citing analysts. The trust would return to profit this year, with Forsyth Barr analyst Jeremy Simpson predicting earnings of $58.7 million, compared with a loss of $152 million in the 12 months ended June 30. The stock rose 2 cents to 72 cents yesterday.

Kathmandu Holdings (KMD): The shares tumbled 12% to $1.80 after the retailer said gross margins fell short of last year’s forecast at 63%, which is below both the 64.4% result in the previous year and 64% prospectus figure. Annual sales climbed about 14% to $245.5 million. Among other retailers, children’s clothing chain Pumpkin Patch (PPL) fell 5.4% to $1.77 and Warehouse Group (WHS) fell 1.7% to $3.54.

PGG Wrightson (PGW): Fonterra is preparing to cut its forecast milk payout from the current $6.60 per kilogram of milksolids, reflecting ongoing weakening in global dairy prices, and the strength of the New Zealand dollar, chief executive Andrew Ferrier said yesterday. The announcement came after prices in its latest online auction fell 8.3%. The shares rose 1 cent to 57 cents yesterday.

Opus International Consultants (OIC): The company about doubled profit in the year ended June 30, to $10.4 million, on improvement at its British unit. Still, UK trading conditions remained "difficult," said chairman Kerry McDonald. The engineering firm fell 2.8% to $1.75 yesterday.

South Port New Zealand (SPN): The Bluff-based port operator yesterday said earnings were $3.5 million to $3.7 million, compared with earlier guidance of $3.5 million profit. The shares fell 1.5% to $2.64 yesterday.

Telecom (TEL): The phone company’s A/A-1 ratings were put on Creditwatch with negative implications by Standard & Poor’s yesterday following its announced proposal to structurally separate its fixed-line network business to participate in the government’s high-speed broadband rollout. The shares slipped 1 cent to $2.01 yesterday.

Themes of the day: Government figures today may show the unemployment rate grew last quarter, to 6.4%, while employment edged up 0.4%. The data may add to signs that the economy's revival is tepid and slower than expected. Stocks on Wall Street edged higher ahead of non-farm payrolls on Friday, expected to show the world's biggest economy shed 65,000 jobs last month.

Businesswire.co.nz

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