Stocks to watch: Cavalier, DNZ, Freightways

Monday 16th August 2010

Cavalier has been rated 'buy' by Craigs Investment Partners, DNZ will list on the NZX today after raising $45 million, while Freightways expects to post a decreased full year profit today after volume growth has stalled.

Cavalier (CAV): The carpet maker is rated a ‘buy' by Dennis Lee, an analyst at Craigs Investment Partners, according to ShareChat. He says the company is trading at a substantial discount to its peers. "Cavalier is a well-managed company with a quality franchise and a strong market position," Lee says. "Aggressive cost-out initiatives taken in the last 18 months have provided the company with a competitive cost base to benefit from an economic recovery." The stock was unchanged at $2.59 on Friday.

DNZ Property Fund (DNZ): The fund will list today at 97 cents on the NZX. The property investor that brought its management contract in-house raised $45 million through a pro-rata share issue and bookbuild, with new investors making up more than 80% of the new funds. The company had predicted a range of between 80 cents and $1.05 for its NZX listing, and last traded at 90 cents on Unlisted.

Freightways (FRE): The integrated logistics company releases its full year results today, with reported profit expected to fall 6.1% to $28.8 million with volume growth at a standstill due to the soft retail sector, according to Forsyth Barr. Shares were unchanged on Friday at $2.68.

Kathmandu Holdings (KMD): The outdoor equipment retailer touched a post-float low of $1.54 on Friday, after announcing this month that its profit margin is lagging behind the prospectus forecast. The shares were sold by private investment firms Goldman Sachs JBWere and Quadrant Private Equity last year at NZ$2.13, or A$1.70 a share, near the bottom of its prospectus range. The shares did end up, closing higher on the NZX at $1.64.

NZ Farming Systems Uruguay (NZS): The South American dairy operator rose 3.6% to 58 cents on Friday after announcing it has been granted tax benefits with an estimated current value of US$20 million under Uruguayan tax law. The company is currently facing a takeover bid from Olam International at 55 cents apiece.

Pyne Gould (PGC): The company said net profit for the year ended June 30 would exceed its $20.9 million guidance by 5% even though impairments were higher than expected. Profit would be about $22 million, with net operating income $17 million more than forecast. Asset impairment expenses of about $17.5 million more than forecast largely reflected property assets. The outlook on the BB+ credit rating of its Marac unit has been raised to ‘stable' from ‘negative' by Standard & Poor's. The shares rose 1 cent to 41 cents on Friday.

PGG Wrightson (PGW): The rural services company announced on Friday that full-year earnings were $23.3 million, from a loss of $66.4 million previously, while giving a downbeat assessment for the outlook. The stock sank 7.1% to 52 cents on Friday.

Telstra (TLS): Australia's biggest phone company announced that it was selling its 51% stake in SouFun, China's second-largest online real estate website, for about US$413.1 million. The stock fell 2.1% on the NZX to $3.65.

Themes of the day: Wall Street closed out its worst week in six on Friday, as investor risk appetite shrunk after July Consumer Price Index and retail sales showed the US economy has slowed in recent months. Earnings season begins in earnest this week with Freightways, Sky City Entertainment and Fletcher Building among companies set to report.

Businesswire.co.nz

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