Stocks to watch: Allied, Fletcher, HED

Wednesday 10th March 2010

Allied Farmers' recent writedown of Hanover/United investments may significantly dent what value Allied can draw from its newly acquired assets, while Fletcher Building says its outlook is dependent on the improvement in housing construction being sustained and Horizon directors are under investigation.

Allied Farmers (ALF): The firm’s $220 million writedown of recently acquired Hanover/United investments may significantly understate what value Allied could extract from its new loan assets in gross loan realisations, McDouall Stuart said in its market weekly update, rating the shares a ‘buy’. The stock fell 2.5% to 7 cents yesterday.

Fletcher Building (FBU): New Zealand’s biggest construction company told an investor conference in London that the outlook for 2010 is dependent on the uplift in new housing construction being sustained, while the end of Australia’s insulation scheme “will adversely impact second-half earnings.” The shares were unchanged at $8.10 yesterday.

Horizon Energy Distribution (HED): Directors of the listed electricity network are under investigation by the Takeovers Panel, following allegations of takeovers code breaches by a jilted suitor, Marlborough Lines. Horizon is 77.3% owned by the Eastern Bay Energy Trust. The stock last traded at $3.75.

Nuplex Industries (NPX): The resin maker’s first-half earnings of $68.8 million exceeded Forsyth Barr analyst’s John Cairns expectation of a $64m profit according to ShareChat. The company expects raw material costs to rise significantly, and while it may recover some costs, a contraction in margin appears inevitable. It is moving away from commodity resins into specialty items he said. Its shares remained unchanged at $3.35 yesterday.

NZX (NZX): The stock exchange operator yesterday released notes for a presentation in which it said 50% of its future revenues to come from fees on clearing and settlement services and derivatives trading. Clearing house facilities essential to running a derivatives trading platform would create a “fundamental change to NZX Business,” it said. The stock slipped 0.5% to $1.98 yesterday.

Postie Plus Group (PPG): The Christchurch-based clothing retailer expects a “tidy profit” this year, after narrowing its first-half loss by gaining market share and lifting sales, chief executive Ron Boskell told BusinessWire. The stock was unchanged at 40 cents yesterday.

Themes of the day: Data out today includes terms of trade for the fourth quarter, which may show improvement on a pick-up in exports. China also releases trade figures today, which will show how demand is tracking in the world's biggest consumer of copper and raw materials produced in Australia, New Zealand's biggest export market. The kiwi dollar strengthened to 70.26 US cents from 69.82 cents late yesterday. Stocks on Wall Street were mixed.

Businesswire.co.nz

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