Stock Takes

A closer look at the markets by Tamsyn Parker

Stock takes: Air NZ in the pink over Pacific Blue

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Air NZ is expected to pick up some of Pacific Blue's business. Photo / Glenn Jeffrey
Air NZ is expected to pick up some of Pacific Blue's business. Photo / Glenn Jeffrey

Air New Zealand's share price has been given a boost this week after rival Pacific Blue revealed it was pulling out of the domestic market.

Air NZ is expected to pick up some of Pacific Blue's business from October 18 as passengers who have already booked on the Aussie-owned airline are re-accommodated on its flights. Then it will be down to just two main providers.

Jetstar has upped the ante by saying it will increase its fleet from three jets to five in the next year but Air NZ shareholders can't help but think one less competitor will be good news for the national carrier. Its shares have risen from $1.14 at the start of the week to close at $1.18 yesterday.

Early departure
Eyebrows have been raised at the resignation of Air NZ's international airline group general manager Ed Sims.

Sims, who has been with the company for 10 years and was thought to be a potential to take over the top job from Rob Fyfe at some point in the future revealed the shock decision last Friday but has so far not commented on his reasons.

Stock Takes hears Sims may have got sick of being played off against other contenders for the top job and he doesn't have another job to go to as yet.

Some in the market fear Sims will take the opportunity to move overseas after he finishes with Air NZ at the end of the year and have expressed concern that his departure will be a loss to the industry.

But Sims, who has three school-aged children, seems fairly settled in New Zealand.

D-DAY LOOMS
Singapore-listed Olam International is fast running out of time to meet the conditions of its agreement to buy PGG Wrightson's 11.5 per cent stake in New Zealand Farming Systems Uruguay.

PGW signed a lock-up deed with Olam on July 16, three days before Olam made its 55c per share takeover offer to the market.

But Olam has only until August 27, just one week away, to meet PGW's conditions before either party can pull out.

Those conditions include Olam getting the majority 50 per cent stake it is after and approval from the local authorities for the deal to go ahead.

The Overseas Investment Office seems unlikely to turn down a deal that involves land in Uruguay but it's hard to see how Olam will get to 50.1 per cent before the end of next week, especially now there is another offer on the table from Uruguay-based Union Agriculture Group for 60c a share.

NZFSU's board has still to release its independent report on the offer - expected out on Monday - and has told shareholders to hold off on any decision until then. The agreement does give PGW a neat way out of an offer which is now a lower bid.

Yesterday PGW chief executive Tim Miles said they hadn't decided what the company would do yet if Olam failed to meet the conditions in time for the deadline.

"We just don't know. What we are interested in is getting certainty around funding for NZSFU to complete the development of its farms in Uruguay and hopefully that is what will come out of this situation."

However, Stock Takes expects that a bit more money for its stake in NZSFU also wouldn't upset PGW too much. PGW shares closed steady at 54c yesterday.

AFTER HOURS
Stock market operator NZX sparked a mixed reaction this week when it decided to release its half-year result after the market closed.

Typically in New Zealand those who release news to the market after close have only bad news to tell and a quick look at the NZX results would have confirmed the assumption.

Net profit after tax for the six months to June 30 was down 91 per cent on the earlier same period although closer analysis revealed the drop was because of two one-off gains made in the first half of last year.

Adjusted for the one-offs it was pretty flat. One market commentator said it might be common practice to release results after close overseas but it's just not the done thing in New Zealand.

It can play havoc with analysts' deadlines, not to mention journalists who are furiously trying to get a comment from the analysts who haven't even had a chance to understand the figures themselves yet.

But NZX chief executive Mark Weldon says it decided to change the timing after receiving feedback in its last four results from analysts complaining they hadn't been given enough time from the result being released, before the market opened, to the briefing just a few hours later.

Weldon said it was common practice in the US for companies to release their results after market close and then have a briefing the next day. "If you release it at the end of the day you give people time to digest it." He said the change had resulted in better questions being asked by analysts.

NOT AS I DO
Some will be relieved to know the NZX won't be trying to get other listed companies to do the same. "We are not going to be prescriptive," Weldon said.

However, he believes with the increasing complexity of financial results and growing competition to get information out it is better to give analysts, fund managers and investors more time to understand the information.

Personally Stock Takes' experience with analysts and fund managers is that most like to be out the door soon after 5.30pm and then make an early start to their day.

NO BOTHER
Former fund manager Simon Botherway could face one of his toughest challenges yet as part of his role as chairman of the establishment board for the new Financial Markets Authority when it comes to deciding whether to license fund managers.

The recommendation is part of changes being proposed under the Securities Act Review. Financial advisers, auditors and trustees are already expected to come under the eye of the new FMA but a decision on fund managers has yet to be made.

Botherway could face flak from his former colleagues over the board's recommendation, although obviously he is just one person on the board and won't be the only one in charge of making the decision. But he appears ambivalent about the situation.

"There are a lot of people that recognise licensing is one of the things necessary to ensuring that people do have confidence in the industry," he says.

Botherway expects the bulk of the industry to accept the situation, if it came down to licensing, but says there are always going to be some who won't be happy with regulation.

REBRAND BILL
Speculation has been mounting over the cost of ANZ's rebrand of its fund management business ING to OnePath.

There is talk in the market of it costing as much as A$15 million ($19 million) to rename the New Zealand and Australian businesses but ANZ is staying mum. An ANZ spokeswoman said it would not disclose how much was spent on the new name but said it intended to "make the appropriate level of investment to ensure the OnePath brand is understood and resonates with our customers in Australia and New Zealand".

Some advisers have criticised ING for changing the name to cover up its frozen funds debacle.

But the company says it had to change the name anyway because its ING licence agreement only ran until later this year.

"The name reflects our role as a company which helps people shape and protect the quality of their lives, recognising that there is a different path for each and every one of us," ING chief executive Helen Troup told advisers in an email.

ING's two unit trusts will also be renamed although not under OnePath. Stock Takes can't wait to see what the company's brand experts come up with.

It will be the third name change for the ING Medical Properties Trust which used to be called Calan.

The other is currently called the ING Property Trust.

An announcement is expected to be imminent.

SECTOR CONFUSION
DNZ's listing on the NZX on Monday must have been such a shock to sharemarket operator NZX that it didn't know how to classify it.

The property company was originally labelled as an "energy processing" firm.

But fortunately the error had been put right by Wednesday.

It's not been a bad first week on the market for the property investor which opened at 99c - 2c above its book-build price - and has traded as high as $1.02. More than $7 million of shares have been turned over.

Yesterday it closed down 1c at $1.01.

- NZ Herald

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