Tamsyn Parker 's Opinion

Money Editor for NZ Herald

Stock takes: Mighty competition

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Australia's TruEnergy is being tipped to float around the same time as Mighty River Power. Photo / Thinkstock
Australia's TruEnergy is being tipped to float around the same time as Mighty River Power. Photo / Thinkstock

Concerns are being raised among the investment community about competition for Mighty River Power's initial public offering.

Australian power company TruEnergy is being tipped to float around the same time as MRP in either September or October.

TruEnergy has begun its tender for investment bankers and is expected to raise up to A$3 billion ($3.8 billion) in one of Australia's largest floats this year.

Local players aren't so concerned about New Zealand investors being attracted to the Australian proposition but about it drawing Aussie money and other potential foreign investors away from Mighty River Power.

The lack of foreign investment may sound appealing to many but it's perceived as essential for getting some of the harder state-owned-enterprise floats away.

While Mighty River Power is expected to prove highly popular with the retail investing public others, such as coal plant-owner Genesis, may not be.

When the floats were first announced there was some suggestion of a foreign investment cap but that seems to have gone by the wayside.

CLOSE CALL

The New Zealand Refining Company's shareholder vote next Friday for its planned $365 million upgrade of the Marsden Point Refinery could be a close call.

Talk among both staff and investors is that some of the major oil company shareholders are being "sticky" on the decision.

NZ Refining is 23.6 per cent owned by BP, 19.2 per cent owned by Mobil, 17.1 per cent owned by Z Energy and 12.7 per cent owned by Chevron. Canadian investment trust Garlow Management owns 8.17 per cent while individual shareholders have around 17 per cent of the shares.

It would take at least two major shareholders to veto the decision which needs a 50 per cent majority to go ahead.

The New Zealand Shareholders Association is urging all small investors to cast their vote to ensure the voice of one of the bigger players does not have an overwhelming effect on the decision.

None of the companies would talk about which way they were voting this week.

Shares in NZ Refining closed down 3c yesterday on $2.82.

GOOD RUN

AMP NZ Office Trust has had a very strong start to the year raising questions about whether it can continue its good run.

The listed property trust, which on Wednesday announced a $50.4 million deal to buy a large piece of commercial property in Wellington, is up 18.4 per cent since the start of the year compared to 7.5 per cent for the NZX 50 index and 9.1 per cent for the property sector.

Craigs Investment Partners head of research Mark Lister says the stock has been driven up by yield-chasing investors as well as some good decisions made by its management team.

But he reckons it's now looking "a bit pricey" with the shares trading well above its 88c net asset backing and a dividend yield which is lower than other property stocks. Shares in Anzo closed up 1.5c on 95.5c yesterday.

ROUGH DEAL

Investors in Insured Group, the Australian insurer who used Lombard Group for a backdoor listing on the NZX, look like they will be stuck between a rock and a hard place when it comes to voting at a special shareholder meeting next month.

The company announced last week that it needs shareholders to put their hands in their pockets and come up with A$2.25 million ($2.85 million) for it to continue as a going concern.

It wants investors to pay A45c per share for five million shares despite shares currently being worth just 3c.

The company said in its statement that the the board did not believe the current share price was an "accurate measure of their real value".

The board has warned that if it doesn't get the funds the company's ability to operate will be "uncertain".

Those who do not buy the new shares will have their holding diluted. If it manages to raise the money the firm also wants investors to agree to the company being delisted from the NZX and listed on the ASX.

The company failed to get a $10 million institutional placement off the ground in 2010 and has since been fined twice by the NZX for listing rule breaches.

CORPORATE ACTION

Looks like there could soon be more corporate action in the agriculture sector with sharemarket small-cap A2 Corporation appointing Australian corporate advisers Greenhill Caliburn to undertake a strategic review this week.

The alternative milk producer says it has received approaches from parties potentially interested in partnering with it and wants to look at its options.

A strategic investment or takeover could be on the table. The company has been growing quickly in Australia and also has a partnership with Robert Wiseman Dairies to market its products in Britain and Ireland.

It also has plans to launch an A2 baby formula in China and has recently entered into an agreement with Synlait to manufacture and supply nutritional powders into international markets.

A2's share price has almost doubled in the last few months. In December it was trading at 25c and it's now 49c.

ON HOLD

First NZ Capital analyst Gina Meo has downgraded her rating of Diligent Board Member Services from outperform to neutral because of its strong share price. The technology company held its AGM this week and also posted first quarter sales figures.

In a note Meo said Diligent had had another strong sales result driven by growth in Europe and Asia. The company has a strong cash position but has declared no plans to pay a dividend any time soon.

Meo valued the company at $3.46 with a 12 month target price of $4. Yesterday it closed on $3.61.

- NZ Herald

Tamsyn Parker

Money Editor for NZ Herald

Tamsyn Parker is the NZ Herald's Money Editor. A business journalist for ten years, she has worked in the UK and NZ for the New Zealand Herald, the National Business Review and a specialist publication on investment products for financial advisors. She is passionate about helping readers learn more about to make their money work for them.

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