Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 


Craigs downgrades Fletcher on slow Canterbury rebuild

Craigs downgrades Fletcher on slow Canterbury rebuild

By Suze Metherell

May 8 (BusinessDesk) – Fletcher Building, which holds the mandate managing the Earthquake Commission’s repair programme in Christchurch, faces the prospect of sharply lower earnings than previously forecast because of a slower Canterbury rebuild, according to an analyst report.

Research and broking house Craigs Investment Partners expects Fletcher will reap just $33 million in earnings before interest and tax from the Canterbury rebuild in the 2015 financial year, having previously estimated an ebit contribution of as much as $91 million, according to the May 6 report. The rebuild will likely make up about 5.8 percent of Fletcher’s annual ebit between 2014 and 2017, down from a forecast 10.2 percent.

“Given the size and scope of the rebuild, we believe it is more realistic to factor in delays at this stage,” the report said. Craigs downgraded the stock to a ‘hold’ with a price target of $9.95, from a previous ‘buy’ recommendation with a $10.77 price target.

Fletcher shares rose 0.4 percent to $9.34 in morning trading, paring some of yesterday’s 2.7 percent decline. The stock has gained 9.3 percent this year.

Mark Lister, head of private wealth research at Craigs, told BusinessDesk the construction company has had “a good run this year” on an improving economic outlook and expectations for the Canterbury rebuild.

“Our Sydney-based analyst pulled it back to a ‘hold’ partly on the basis the shares have had a reasonably good uplift over the last few months,” Lister said. “It’s not to say we’re getting negative. It’s just a look at the value gap that has closed somewhat.”

New Zealand’s second-biggest city was devastated by a series of earthquakes in 2010 and 2011, leaving an estimated $40 billion bill to rebuild Christchurch. The reconstruction effort has started to gain momentum this year, though a survey of senior leaders in the city this year showed growing impatience with delays and concerns over the management and procurement of major projects.

The Craigs report also warned of potential structural issues Fletcher faces in its Australian businesses, which account for about half the group’s earnings, including the end of the Australian federal government’s subsidy on retrofitting insulation. Earlier this year Fletcher described Australian conditions as soft.

(BusinessDesk)


© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

BusinessDesk: APN's NZME Sees Future In Paywalls, Growth In Digital Sales

APN News & Media has touted a single newsroom concept for its NZME unit in New Zealand, similar to what Germany's Die Welt uses, saying an 'integrated sales proposition' is helping it win market share, including ... More>>

Labour Party: Global Milk Prices Now Lowest In 6 Years

The latest fall in the global dairy price has brought it to the lowest level in six years and shows there must be meaningful action in tomorrow’s Budget to diversify the economy, says Labour’s Finance spokesperson Grant Robertson. “Dairy prices ... More>>

BusinessDesk: NZ Inflation Expectations Creep Higher In June Survey

May 19 (BusinessDesk) - New Zealand businesses lifted their expectations for inflation over the next two years, sapping any immediate pressure on the Reserve Bank to cut interest rates, and prompting the kiwi dollar to jump higher. More>>

BusinessDesk: Lower Fuel Costs Drive Down NZ Producer Input, Output Prices

May 19 - Producer input and output prices fell in the first quarter, mainly reflecting lower fuel costs and weakness in prices of meat and dairy products. More>>

Media: Fairfax Media NZ Announces Senior Editorial Team

Fairfax Media New Zealand has today confirmed its new editorial leadership team, as part of a transformation of its newsrooms aimed at enhancing local and national journalism across digital and print. More>>

Science: Flavonoids Reduce Cold And Cough Risk

Flavonoids reduce cold and cough risk Research from the University of Auckland shows eating flavonoids – found in green tea, apples, blueberries, cocoa, red wine and onions – can significantly reduce the risk of catching colds and coughs. The research, ... More>>


BusinessDesk: RBNZ House Alert Speech The Catalyst For Government Action

Prime Minister John Key all but conceded that pressure from the Reserve Bank of New Zealand for concerted action on rampant Auckland house prices was one of the main catalysts for the government's weekend announcements about tightly ... More>>

BusinessDesk: How To Fall Foul Of The New Housing Tax Rules: Tips From IRD

Just because you rented out your investment property doesn't absolve you from paying tax, says the Inland Revenue Department in a summary of commonly made mistakes by non-professional property investors when it comes to their tax liability.More>>

Legal: Superdiversity Law, Policy And Business Stocktake Announced

Mai Chen, Managing Partner at Chen Palmer New Zealand Public and Employment Law Specialists and Adjunct Professor of Law at the University of Auckland, today announced the establishment ... More>>

Housing: More House Price Gains Expected

House price expectations remain high, with a net 56% of respondents expecting house prices will increase. Fears of higher interest rates are fading, consistent with the RBNZ’s signals this year. Affordability and a lack of houses for ... More>>

TDDA: State-Of-The-Art Drug Testing Laboratory To Open In Auckland

World leading drug testing agencies, The Drug Detection Agency (TDDA) and Omega Laboratories, open New Zealand laboratory More>>

Network: Bigpipe Launches Ultra-Fast Broadband Into Wellington

Bigpipe Launches Ultra-Fast Broadband into Wellington Naked broadband provider Bigpipe has extended its national reach, announcing today, the launch of its unlimited UFB offering into Wellington. The Spark Venture business is giving Wellingtonians the ... More>>

Get More From Scoop

 
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news