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Stocks to Watch: New Zealand Equity Preview

Stocks to Watch: New Zealand Equity Preview

Dec. 18 – The following stocks may be active on the New Zealand exchange after developments since the close of trading yesterday.

Themes of the day: The U.S. dollar fell as much as 3% against the euro, the biggest drop since the euro-zone introduced the currency in 1999, and weakened against the yen, extending its slide since the Federal Reserve cut rates to a record. The New Zealand dollar gained to the highest in a month. The government is scheduled today to release its budget update, which is expected to show a deteriorating position in the wake of a local recession and ongoing worldwide slump.

Dorchester Pacific Ltd. (DPC): The finance company’s investors voted in favour of a deferred repayment plan yesterday. Under the proposal, the investors get their principal back over 3 years, with debenture stockholders getting an initial 20% and noteholders 10% before Christmas. The stock traded unchanged at 9.5 cents and has advanced more than 30% in the past month.

Horizon Energy Distribution Ltd. (HED): Chairman Rob Tait said full-year profit will be at the low end of the NZ$5.7 million to NZ$6 million range forecast in September, according to the company’s first-half report. The stock last traded at NZ$3.29 on Dec. 15.

New Zealand Oil & Gas (NZO): Oil fell below $40 a barrel on speculation production cuts by the OPEC cartel won’t be enough to prop up prices in a weaker world economy. OPEC has agreed to cut output by 9% percent, its biggest decrease ever. Crude oil for January delivery fell 7.9% to US$40.15 a barrel on the New York Mercantile Exchange as futures sank to as low as US$39.88. NZOG traded at NZ$1.32 yesterday and has gained about 15% this year.

NZ Farming Systems Uruguay (NZS): The company setting up dairy farms in Uruguay using intensive New Zealand techniques said the decline in global prices for milk and current tough trading conditions mean it will probably make an EBIT loss in the year ending June 30 of US$7 million to US$11 million. With production from Uruguay being predominantly exported, movements in international prices will hurt revenue at the company, it said. The stock slipped to 75 cents yesterday and is down 55% this year.

Pan Pacific Petroleum (PPP): New Zealand Oil & Gas yesterday disclosed a 5.8% holding in the oil company and said it wanted to secure a strategic stake, giving it greater exposure to the Tui oil field. The shares rose 2 cents to 35 cents yesterday and has soared 53% in the past month.

Sanford Ltd. (SAN): The biggest fishing company on the NZX said prevailing lower exchange rates mean exporting “has a renewed opportunity to contribute to the growth and
prosperity of the New Zealand economy,” Chairman Bruce Cole said in the annual report. The stock fell about 1% to NZ$5.10 yesterday and has climbed more than 25% this year, making it one of the few stand-outs on the NZX 50 Index.



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