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Stocks to watch: Affco, Contact, Fletcher

Wednesday 1st September 2010

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Talley's has lifted its holding in Affco to 79.1%, Contact Energy management's outlook compensates for its disappointing earnings, while Fletcher Building shares fell 1.2% yesterday on news residential property consents retreated back into negative figures after reaching positive territory the previous month.

Affco Holdings (AFF): Talley’s Group, which has offered to buy the shares of the meat processor it doesn’t already own, said yesterday that it had lifted its holding to 79.1% from 78% at the time of its last filing. Prior to the offer, Talley’s had 52.8%. The shares last traded at 37 cents. 

Contact Energy (CEN): Management's comments about the energy generator’s outlook compensate for the company's disappointing earnings for the year ended June, according to Craigs Investment Partners, quoted on the Sharechat website. A year full-year EBITDA of $427 million was declared, $24 million lower than Craigs' forecast. Shares were unchanged yesterday at $5.51. 

Fletcher Building (FBU): The biggest company on the NZX 50 fell 1.2% to $7.52 yesterday, after figures showed New Zealand’s residential property sector slipped in July after edging into positive figures in the previous month according to data released by Statistics New Zealand today. Consents for new buildings, excluding apartments, fell 5.3% last month, after a 1.1% rise in June. 

Genesis Research and Development (GEN): The Auckland-based biotechnology company, which was forced to halt operations last year after running out of cash, announced it had narrowed losses. The company posted a net loss $511,000, or 1.37 cents per share, compared to a loss of $1.2 million, or 4.61 cents. It also said it may also get another cash injection from new cornerstone investor, May Wang. The stock was unchanged 4.5 cents yesterday. 

NZ Farming Systems Uruguay (NZS): Singaporean private investment fund Duxton Asset Management is said to be the third bidder for the South American dairy operator, according to press reports. Olam International is the lead bidder with an offer of 70 cents a share, and currently controls 37% of the takeover target. Shares were unchanged yesterday at 70 cents.

Pumpkin Patch (PPL): The children’s clothing chain is rated a ‘buy’ by Buffy Gill, an analyst at Goldman Sachs JB Were, according to ShareChat. The company may face increased rivalry from the Witchery chain's plans to launch a children's range into 18 of its existing stores in Australasia. The Gap chain is also planning to add kidswear. Gill doesn't expect any material impact on Pumpkin Patch's Australasian operations, given the lead time it will take for the new brands to reach critical mass and gain traction with consumers. The shares rose 3 cents to $1.74 yesterday. 

Themes of the day: US stocks posted modest gains overnight, as better-than-expected consumer confidence and housing data provided helped lift sentiment among investors bracing for a slowing economic recovery. European stocks closed down. The Australian Reserve Bank is set to release is GDP figures for the June quarter today. The country posted its lowest current account deficit in more than eight years, which may boost GDP. The New Zealand dollar held below 70 US cents after it tumbled 1.2% yesterday after the collapse of South Canterbury Finance, the nation's second-biggest finance company.

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