Stocks to watch: ABA, AIA, CEN, FRE, KRK, PGC, PGW, TEL, VCT
Dec. 24 (BusinessDesk) – The following stocks may be active on the New Zealand exchange after developments since the close of trading. All prices are in New Zealand dollars unless specified.
Themes of the day: Agria Corp. and New Hope Group of China have teamed up in a partial takeover offer for PGG Wrightson at 60 cents a share, a 25% premium to its price yesterday. New Zealand markets largely shrugged off yesterday's lower than expected domestic product numbers, which showed the economy shrank 0.2% in the third quarter, with the NZX 50 closing 0.3% up at 3,333.75. The New Zealand dollar managed to hold above the 74 U.S. cents mark, and was last trading at 74.29 cents from 74.63 cents yesterday. Global equities were mixed as investors shrugged off stronger US home sales and better than expected consumer sentiment numbers ahead of the Christmas holiday. In late afternoon trade the Standard & Poor's 500 Index fell 0.25% to 1,255.72, while in Europe the Stoxx 600 closed 0.1% up at 281.76. Oil prices rose to a new high two-year high, with Brent Crude last trading at US$94.87 a barrel.
Abano Healthcare Group (ABA): The specialist healthcare clinic investor has extended its pathology contracts in the Greater Wellington region for another three years. The $75 million contracts with Hutt Valley and Capital & Coast District Health Boards build on existing five-year deal with Abano subsidiary Aotea Pathology. Shares rose 0.6% yesterday to $4.84.
Auckland International Airport Ltd. (AIA): Traffic at New Zealand's busiest gateway rose 3.8% in November, driven by visitors from China and South Korea. Total international passenger movements excluding transits rose to 554,363 last month. Growth in offshore movements was 4.3%, outpacing a 1.5% increase in traffic on domestic routes. Shares fell 0.5% yesterday to $2.16.
Contact Energy Ltd. (CEN): The third biggest company on the exchange rose 1.3% to $6.25 after the Electricity Authority said it would begin a formal review to look into high wholesale electricity spot prices in the New Year. Prices have been trading well above $200 per Megawatt hour at regular intervals since Dec. 1, up from an average of $55 per MWh in the last few months.
Freightways Ltd. (FRE): The express package company is rated a 'buy' according to Rob Mercer at Forsyth Barr, quoted on the ShareChat website. He said the company weathered the recession in good shape with a balance sheet well positioned to resume expansion opportunities. Mercer is forecasting normalised net profit will rise from $28.9 million this year to $30.0 million next year and to $37.3 million in 2012. Shares rose 1.6% yesterday to $3.15.
Kirkcaldie & Stains Ltd. (KRK): The Wellington retailer and property owner is to spend $5.5 million next year on refurbishing the Harbour City Tower building, next door to its flagship department store in Wellington’s central business district. The project will cut Kirkcaldie’s projected consolidated pre-tax earnings for the year to August 2011 to $500,000, down from a pre-tax profit of $874,000 from the Aug. 31 2010 result. Shares were unchanged yesterday at $2.45.
PGG Wrightson Ltd. (PGW): The rural services company today announced that Singapore's Agria Pte Ltd. has made an offer to acquire an additional 38.3% stake in the company at 60 cents a share, a 25% premium on the current share price. The bid, if successful, would give Agria control of Wrightson with a 50.01% stake. Shares fell 2% yesterday to 48 cents. Pyne Gould Corp. has signed a lock-up agreement with respect to its 18.3% stake in Wrightson. Pyne Gould (PGC) was at 37 cents yesterday.
Telecom Corp. (TEL): New Zealand's biggest telephone company rose 0.9% to $2.24 after the Commerce Commission released it draft recommendation on mobile termination rates, which if accepted, could dramatically slash the price of mobile calls and texts. David Price, a broker for Forsyth Barr said the shift had been anticipated by the market and already priced in, with little impact expected on EBIT.
Vector Ltd. (VCT): The Auckland electricity and gas distribution company is considering its options for challenging the Commerce Commission’s final decisions on natural monopolies’ allowable rates of return, on the grounds that local monopolies are not being allowed to earn as much as Australian counterparts. Shares fell 2.5% yesterday to $2.30.