Tamsyn Parker 's Opinion

Money Editor for NZ Herald

Stock takes: Here is the news ...

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BurgerFuel is on the air with a net-based radio station which it says will provide a soundtrack that suits its brand. Photo / Supplied
BurgerFuel is on the air with a net-based radio station which it says will provide a soundtrack that suits its brand. Photo / Supplied

Fund managers and research analysts are gearing up for the reporting season, which starts next week and hits full swing around mid-August.

First out of the blocks is Abano Healthcare Group, followed by a number of the property trusts and companies.

Craigs Investment Partners head of research Mark Lister said the market had got through the "confession" period where companies must announce a downgrade if its profits are not within guidance range, boding well for a no surprises results season.

Another market player suggested the only surprise would be if a company had a particularly rosy outlook for the next six months.

The expectation is that New Zealand will continue to have ho-hum growth for the next year. Still it could be worse, we could be in Europe.

BUILDING BLOCK

One business that has some market players feeling nervous is Fletcher Building.

Some had expected a profit warning from the building supplies and construction company.

But last month, when Fletcher announced the departure of chief executive Jonathan Ling, the company reassured investors it was on track to meet its market guidance.

Several analysts are understood to have given lower profit guidance for Fletchers because of its high exposure to Australia.

More than half of its earnings come from Australia and the lucky country hasn't been feeling so lucky of late.

New home building is significantly down. But others point to the fact that Australia's Reserve Bank is expected to continue reducing its official cash rate, providing stimulus to the housing market.

The rebuilding of Christchurch is also starting to gain momentum which is good news for Fletcher. The company will announce its year to June 30 result on August 22.

Shares in Fletcher closed up 13c at $5.90 yesterday.

WAITING FOR A CUE

Another stock on which investors are awaiting more guidance is Chorus. Shareholders have yet to hear what the company's dividend policy will be.

Expectations are that it will be around 20c to 25c a share.

Many investors have bought into the company believing it would pay a strong dividend.

A lower dividend could result in disappointment and a drop in the share price if some investors decide to exit.

The Accident Compensation Corporation reduced its stake this week dropping under the substantial shareholder threshold by cutting its holding from 5.6 per cent to 4.9 per cent.

Chorus will hold its annual result briefing on August 27.

Yesterday its shares closed down 1c at $3.12.

SOUNDS LIKE A BURGER

Listed fast food operator BurgerFuel has started its own internet-based "radio station", which is being streamed via the web into its stores throughout New Zealand.

The company, which has established a DJ studio in Grey Lynn, says the station will soon be played in its stores in Australia and the Middle East - even those in Saudi Arabia, where racy things like western music can rouse the ire of the kingdom's religious police.

Listeners can also tune in, or log on rather, to the station at www.radioburgerfuel.com.

BurgerFuel marketing manager Alexis Lam said the station, which would feature pre-mixed music as well as some live DJ shows, ensured the soundtrack in its stores suited the brand.

"Tracks can be ramped up or down depending on the time of day or night."

Artists featuring on the station yesterday afternoon included electronic producer Way Out West and Aussie alternative rock band Eskimo Joe.

BurgerFuel shares, which have gained 92 per cent this year, were trading at $1.08 yesterday.

RESEARCH ROUNDABOUT

Several market players have noted the high number of staff moves in the broking research community of late.

First NZ Capital has poached James Schofield from rival Craigs Investment Partners, and Craigs is said to have hired Stephen Ridgewell from Macquarie to replace Schofield, leaving Macquarie on the hunt for a new team member.

First NZ has been down on staff of late with Gina Meo heading off overseas and colleague Sarndra Urlich on leave for personal reasons.

First NZ's Jason Lindsay was also expected to leave to go to the Accident Compensation Corporation's investment team but seems to be staying put.

One fund manager said it showed there was still life in the industry and that research was still viewed as a valuable resource.

But one investment and research team which still has not been sorted out is that of the New Zealand Superannuation Fund.

Stock Takes understands at least three investment leaders were approached about the roles but none has taken them up.

HEALTHY INTEREST

The Stewart family's part in a partial takeover bid for Wakefield Health comes as no surprise because of its strong interest in the healthcare sector.

Shares in Wakefield rose more than 20 per cent on Wednesday after its two biggest shareholders announced the bid for 50 per cent of the Wellington-based private hospital owner at $6 a share.

The bid is through Austron, a joint venture company owned by Wakefield's two main shareholders, Royston Hospital Trust and Medusa. Combined they already own just under 40 per cent.

Medusa is part of Masthead Group, which represents the family interests of Christchurch-based businessman, Mark Stewart.

It's not the first time Masthead Group has tried a healthcare takeover. In 2008 the company made a bid for Abano Healthcare.

It pulled out of the bidding process after a rival buyer emerged but made a tidy profit of $17 million in the process.

Austron's offer is at a significant premium to what the company was trading at before the takeover bid started, and as AMP Capital has already committed to selling at least part of its 15 per cent stake, it is virtually guaranteed to go ahead.

It will be interesting to see what Masthead will do with its investment this time. Wakefield shares closed down 10c at $5.60 yesterday.

LOOKING UP

Morningstar has downgraded its recommendation on paint and resins maker Nuplex from buy to accumulate based on a recent recovery in its shares.

Nuplex shares dropped to $2.20 at the end of May as fears soared in Europe about the sovereign debt crisis.

Since then, the price has risen to $2.63, and fallen again to $2.47.

Morningstar's Nathan Zaia rates the company as modestly undervalued and has a fair value of $3.65 on it.

In a research note, Zaia said Nuplex's acquisition of Coating Resins had significantly expanded its geographical presence.

While there wasn't much chance for growth in Nuplex's main markets, Zaia said, the acquisition meant there was good scope for margin improvement from rationalisation and restructuring.

But the stock is not for the faint- hearted. Zaia said it suited those with a reasonably high appetite for risk.

Yesterday its shares closed up 4c at $2.51.

- 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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