Stocks to Watch: ANZO, Telecom, FRE, RYM

Stocks to Watch: AMP NZ Office Trust, Telecom, Freightways, Ryman, PGG Wrightson

Aug. 4 (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: Wage figures released by Statistics New Zealand yesterday were seen as evidence that the economy continues to recover, albeit weakly, with economists continuing to expect unemployment rates due on Thursday to show a slight decline to around 6.4%. Fonterra recorded a further 11% drop in whole milk powder prices in its overnight globalDairyTrade auction. While prices remain well above last year's, observers described the fall as "meaningful" when combined with movement in the Kiwi dollar. Meanwhile, concerns linger in the world economy, especially over mixed signals from the US economy. U.S. equities declined as homes sales, factory orders and consumer spending fell short of expectations, as did earnings by Procter & Gamble Co and Dow Chemical Co. Contracts to buy existing houses unexpectedly dropped for a second month and factory bookings fell more than twice as much as economists estimated, adding to uneasy sentiment about the outlook for the world's largest economy.

Companies are taking direction from the global tone, according to Rickey Ward, equities manager at Tyndall Investment Management. “Volumes are really light and have been for some time, which is typical of the activity ahead of reporting season.” Overnight the kiwi rose against the greenback to 73.40 U.S. cents, from 73.34.

AMP New Zealand Office Trust (APT): The listed property trust trying to become a listed company posted a 2.5% increase in its distributable earnings to $60.7 million in the year through June. The trust is going through the required regulatory hoops before it can put a proposal forward to unit holders on changing its structure to align its manager’s incentives with those of investors. The shares were unchanged at 71 cents.

Freightways Ltd. (FRE): The international transport firm is well positioned to benefit from the economic recovery Craigs Investment Partners said in ShareChat. A key risk to its express package business could be a new player entry to a market where essentially a duopoly of Freightways and the N.Z. Post/DHL joint venture controls 80% of the market. Its information management business now accounts for 20% of the company’s earnings and is organically growing at between 8-10% a year. Its shares dropped two cents yesterday to $2.83.

Kathmandu Holdings Ltd (KMD): The outdoor clothing and equipment retailer released an earnings update to the NZX this morning, saying that trading conditions in the final four months of the year to the end of July, in all three countries that it trades in, have been very challenging and more difficult than it experienced in the first half of the year. Sales for the year were NZ$245.5 million, up almost $30 million or 13.9% on the previous year. Its shares dropped four cents yesterday to $2.05.

PGG Wrightson Ltd. (PGW) The stock and station company’s shares rose 1.8% to 56 cents while NZ Farming Systems Uruguay Ltd. increased 1.8% to 57 cents as Singapore-based Olam International’s takeover bid for NZS gets closer. Tyndall Investment Management equities manager Rickey Ward said Wrightson was well-placed in the Olam bid, charging fees from its management contract with the Singapore company likely to inject new life into NZS, which has been languishing for some time.

Ryman Healthcare Ltd. (RYM): The retirement village and healthcare provider gained 2% to $2.08 amid news it is considering listing on the Australian Stock Exchange. The company’s looking to buy land in Victoria in the next 12 months, when it can build its first Australian retirement village. Meanwhile, New Zealand First leader Winston Peters has attracted media attention by claiming he would attempt to limit foreign investment in retirement care, if elected and included in a future government;

Telecom Corp. (TEL): Commuications Minister Steven Joyce has agreed to regulate the fees phones companies charge each other for ending calls on their network. Joyce sent back an earlier recommendation not to regulate mobile termination rates after a Vodafone pricing plan caused some consternation among officials. The Commerce Commission had earlier accepted Telecom and Vodafone’s pitch to gradually reduce the fees to 6 cents by 2014. Telecom’s shares rose 1% to $2.02 in trading yesterday.

(BusinessDesk)

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