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Stocks to Watch: NZ Equity Preview 10/2/09

Stocks to Watch: New Zealand Equity Preview

Feb. 10 – The following stocks may be active on the New Zealand exchange after developments since the close of trading yesterday.

Themes of the day: The New Zealand dollar extended its gains, reaching 54.09 U.S. cents as optimism for the U.S. fiscal stimulus package continued. Earnings season kicks off on Thursday with Fletcher Building Ltd. announcing its half-year results, in what is expected to show a deteriorating domestic economy.

Air New Zealand Ltd. (AIR): Low-cost travel agency Flight Centre has opened its first Flight Centre Business Travel store in Albany with plans for a further 10 to 12 around the country in a bid to attract business travellers wanting to travel on a budget. Ministry of Tourism figures show domestic business travellers spent 17% less in the year to September 2008. Stock in the national carrier rose 1% to 92 N.Z. cents yesterday.

Fletcher Building (FBU): Shares of New Zealand’s biggest construction company have fallen 8% in the past month on waning demand for housing in the U.S., Australia and New Zealand. The company, whose shares were unchanged at NZ$5.52 yesterday, may post a 20% decline in first-half earnings to about NZ$190 million.

New Zealand Oil & Gas (NZO): The shares rose about 3% to NZ$1.38 yesterday after Australian Worldwide Exploration, operator of the Tui oilfield, said it would drill two new oil prospects close by as part of its exploration program this year. NZOG owns 12.5% of Tui and exposure to another 10% through its recently acquired 15% stake in Pan Pacific Petroleum. AWE owns 42.5%. NZOG was one of only two stocks to rise on the NZX 50 last year.

Northland Port Corp. (NTH): The owner of 50% of port operator Northport yesterday reported first-half profit fell to NZ$1.79 million from NZ$8.8 million a year earlier, which included a one-time gain of NZ$7.6 million from the sale of shares in Marsden Cove. The stock was unchanged at NZ$2.69 yesterday.

Telecom Corp. (TEL): The nation’s biggest phone company this week is expected to report a drop in second-quarter earnings from last year’s NZ$172 million on higher costs and loss of customers from its fixed-line network. Telecom’s 10% holding in Hutchison Communications in Australia is expected to shrink to 5% if the merger between Hutchison and Vodafone Australia proceeds. The shares fell 0.4% to NZ$2.69 yesterday.

Warehouse Group (WHS): New Zealand’s largest listed retailer may see costs rise from Apr. 1 after the government announced a 4.2% increase in minimum wage to NZ$12.50 per hour, and a similar rise in the youth rate to NZ$10 per hour. The increases are likely to affect between 94,000 and 123,000 workers. Stock in the retailer fell 4.1% to NZ$3.50 yesterday.


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