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

 

Scoop Business: RBNZ Keeps OCR At 3.5%, Signals Slower Pace Of Future Hikes

Reserve Bank governor Graeme Wheeler kept the official cash rate at 3.5 percent and signalled he won’t be as aggressive with future rate hikes as previously thought as inflation remains tamer than expected. The kiwi dollar fell to a seven-month low. More>>

ALSO:

Weather: Dry Spells Take Hold In South Island

Many areas in the South Island are tracking towards record dry spells as relatively warm, dry weather that began in mid-August continues... for some South Island places, the current period of fine weather is quite rare. More>>

ALSO:

Scoop Business: Productivity Commission To Look At Housing Land Supply

The Productivity Commission is to expand on its housing affordability report with an investigation into improving land supply and development capacity, particularly in areas with strong population growth. More>>

ALSO:

Forestry: Man Charged After 2013 Death

Levin Police have arrested and charged a man with manslaughter in relation to the death of Lincoln Kidd who was killed during a tree felling operation on 19 December 2013. More>>

ALSO:

Smells Like Justice: Dairy Company Fined Over Odour

Dairy company fined over odour Dairy supply company Open Country Dairy Limited has been convicted and fined more than $35,000 for discharging objectionable odour from its Waharoa factory at the time of last year’s ”spring flush” when milk supply was high. More>>

Scoop Business: Dairy Product Prices Decline To Lowest Since July 2012

Dairy product prices dropped to the lowest level since July 2012 in the latest GlobalDairyTrade auction, led by a slump in rennet casein and butter milk powder. More>>

ALSO:

SOE Results: TVNZ Lifts Annual Profit 25% On Flat Ad Revenue, Quits Igloo

Television New Zealand, the state-owned broadcaster, lifted annual profit 25 percent, ahead of forecast and despite a dip in advertising revenue, while quitting its stake in the pay-TV Igloo joint venture with Sky Network Television. More>>

ALSO:

Get More From Scoop

 
 
Computer Power Plus

Standards New Zealand

Standards New Zealand

Mosh Social Media
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news