Stock takes: Ready to drink

The long awaited NZX listing of Delegat's Wine Estate is almost ready to roll. "About a month" is the latest word although the exact timing is not yet set. Broker presentations start next week and there is a generally positive air of expectation in the market about the float.

Some brokers highlight general concerns about the state of the global wine market and the fickleness of stocks that are weather dependent. But Delegat's has strong brands, particularly when you throw in Oyster Bay - which, of course, proved to be worth more than most people thought. The battle for majority control of Oyster Bay was eventually won by Delegat's but only after a bidding war with rival investor Peter Yealands forced it to pay $6 a share.

The strength of both brands locally is likely to ensure good levels of interest from retail investors who are not averse to a glass or two of the good stuff.


Hart attack

Carter Holt Harvey shareholders expecting Graeme Hart to make a post-Takeover Panel decision to offer $2.75 a share in typically lightning fast style (as in today) are likely to be disappointed.

Although he is more than capable of moving at that speed, it seems he is happy to let investors sweat a bit this time as he mulls over whether $2.75 or $2.70 will be enough to get control of the forest products company in which he now holds 84.7 per cent.

There is, however, some possibility that his intentions could be signalled through the issue of regulatory information as part of negotiations with the stock exchange.

Hart got a rare taste of failure on Wednesday when the panel declared his two-tier offer unacceptable.

He had wanted to offer $2.70, which would be upped to $2.75 if shareholders accepted within seven days.


Dollar weighing on stocks

The impending fall in the dollar is weighing heavily on big NZX stocks like Telecom, says Wellington broker Ian Waddell.

It seems the overseas funds are getting nervous about losing money on the currency.

"Of course what happens is they sell Telecom," he says.

The effect is not limited to Telecom and, with a lot of the big funds reviewing their investment here, the likes of Sky City and Fletcher Building are also likely to come under pressure.

More than 50 per cent of the market is owned overseas and Telecom is the biggest single chunk of that.

The incumbent telco provider has had a lousy year so far. Its share price has fallen steadily from $6 at January 1 to $5.35 yesterday, a two-year low. There are numerous reasons for its unpopularity - the most obvious being regulatory hassles - but the currency factor is applying a frustrating thrust of downward pressure that the company can do nothing about.


Disclosure issues

Also frustrating was Telecom's failure to adequately disclose its next impending battle with the Commerce Commission - this time over hikes in its line rental charges.

Yes, the stock exchange was informed - technically. The relevant news was buried on page 45 of the management discussion section that accompanied the company's half-year result. But for the large chunk of the local market which didn't get past page 44, it was pretty galling to get the information second hand from an announcement to the US Securities Exchange.

That kind of market-sensitive information really deserves its own release on the NZX website.


Settling debts

There could be some relief in sight for long-suffering shareholders in RMG.

The listed debt collector - now in receivership - is tipped to be turned into a shell company later next month.

That means it can finally be sold off to another business looking for a backdoor listing on to the stock exchange.

An Eric Watson creation, RMG was an amalgamation of 22 small debt collection agencies.

It was launched with plenty of hype in 2000 with Watson's Cullen investments taking the cornerstone stake.

It failed spectacularly, losing $120 million in less than five years. If you think about the difficulties involved in mergers of two companies, it's not surprising 22 was too much to pull off, said a broker that followed the proceedings closely.

The shares were suspended last April at the oddly appropriate price of 2.2c each - 0.1 cent for each of the amalgamated businesses. They haven't traded since. Expect to see a sizeable share consolidation before RMG is reborn on the exchange under another name. 
 

The great divide

It's pretty fashionable to moan about New Zealand's economic performance relative to Australia's. But this week's flurry of half-year results provides a good example of a fundamental difference between the two economies. Mining company BHP Billiton notched up a net profit of $6.6 billion in the six months to December 31 - an Australian corporate record. Wow. You can fiddle about with productivity incentives and innovation initiatives but that's a lot of wealth that this country will never be digging out of the ground.


Meat premium

With beef and lamb prices in decline, listed meat exporter Affco needs all the good news it can get. The deal it has done with upmarket UK retail giant Marks & Spencer (and local genetics company Rissington Breedlines) looks like a pretty good start. Announced today, the agreement will see Affco supplying Rissington's trademarked Primera lambs to M&S stores. The "complete supply chain" approach is relatively new for lamb and will ensure Affco a good bite of market share at the top end of what is already a premium product category in the UK.


First contact

New Contact Energy chief David Hunt has already warned shareholders (at the last AGM) that the days of unfettered growth are over for the company. On Monday, he gets the chance to illustrate what he meant when he delivers his first half-year result.

It was an interesting period for Contact because of the low hydroelectricity output, said Forsyth Barr analyst Greg Main. Contact had to offset the hydro deficit with thermal power. It also had Otahuhu B closed for a while so the higher cost New Plymouth plant had to be run harder. That means wholesale prices were up but so were costs.

The great unknown for analysts is where Contact is hedged, based on its fixed retail prices. The fixed rate means that when the price is low it makes an opportunity profit but, when the price is high, it makes an opportunity loss.

Adding to the uncertainty about the result is the "IFRS factor" (the new international financial reporting standards) but Main is forecasting a solid operating profit (ebit) result of about $203 million.

Contact shares closed down 6c to $6.47 yesterday. 


Good on ya, Ralphie

Fletcher Building chief executive Ralph Waters delivered the goods again this week with another record result. The strong numbers were hardly a bombshell but Waters did surprise a few people at the briefing with his swipe at Don Brash and his Orewa speech of economic doom and gloom.

It was particularly surprising to those who read his interview in the February issue of Unlimited magazine. Waters said the biggest mistake he ever made was his public criticism of an Australian Government minister.

"He was a senior minister and probably does not even remember it. But I regret the manner in which I did it and have never publicly criticised a public official since," he told Unlimited.

Brash should feel quite honoured to have prompted such a u-turn. But given that he could still be the next Prime Minister, could it be another great mistake? Perhaps Waters knows something about the National leadership debate that we don't.

Fletcher Building shares closed at $7.65 yesterday, up 13c for the day.