KEY POINTS:
New Zealand Oil and Gas recently took analysts out to see its Taranaki facilities, showing some smarts by getting some Australians along who were on their way to a presentation by Contact in Queenstown.
In addition to its 12.5 per cent stake in the Tui oil field and
15 per cent in Kupe, the bright prospects for coal likely mean its Pike River investment will prove a good one, various setbacks aside. But chief executive David Salisbury and his team are also talking up their two exploration opportunities in the Tui area with drilling expected next year.
They have hopes of lifting sustained production to 2 million barrels of oil equivalent a year and increasing reserves to 25 million barrels by 2012 from 14 million currently.
In February the company paid its first dividend in a decade and posted a first half net profit of $41.4 million, up from $500,000 a year earlier.
Analysts Aspect Huntley are picking a full year net profit of $88 million but only $38 million the following year. Stock Takes understands this is to do with the production profile of Tui, which remains at this point the company's only productive asset.
The longer the black stuff keeps flowing from Tui, the more it is diluted with water.
With oil prices still trundling along things are going well for the company, and if it maintains the feel good factor and its shares keep on rising, it stands a good chance that its 138 million options with a strike price of $1.50 which expire in June will be in the money.
But Stock Takes understands the firm doesn't really need the $207 million it could potentially raise from the issue, and management has been describing it to analysts as "a nice problem to have". Shares closed yesterday at $1.39.
MORATORIUM ENDS
The six-month moratorium that Geneva Finance successfully gained from its investors in early November finishes at the end of this month.
Geneva owes about $138 million to its debenture investors and the Bank of Scotland, with which it has a $50 million credit facility. Under the terms of the moratorium Geneva was to continue to trade and lend, "while maintaining business operations, building up cash reserves and reducing costs".
While it was not being paid out, interest was accruing on investors funds.
Chief executive Shaun Riley says Geneva will be making a statement about its future ahead of the moratorium's end, probably by the middle of the month.
Riley has been pretty upfront with the media during his company's problems and yesterday he sounded upbeat.
This has been a big week for finance company news, with Lombard's troubles and reduced or delayed payments for investors in Bridgecorp, Five Star and Nathan.
While the big players such as Marac trumpet their strength and ability to raise funds, it would be nice to see some good news from those companies where investors funds are at serious risk.
GOOD CATCH
A couple of weeks ago Fisher Funds' Carmel Fisher, commenting on the sale of 6 million Pumpkin Patch shares to Briscoe Group's Rod Duke at what is now looking like a bargain, said the move was about building up cash reserves in what are clearly tough times.
Fisher Funds' this week secured a very handy boost to its cash reserves with the exercise of just under 20 million $1 Kingfish warrants. Nice.
Fisher Funds has attracted a fair amount of attention, including from Stock Takes, for its investment style which involves highly concentrated holdings in a relatively small number of quite illiquid stocks.
As Morningstar head of research Anthony Serhan this week put it, somewhat charitably some would argue, "in volatile periods returns will get pushed around".
Good to see some of Kingfish's key holdings on the rise again after their vertiginous descent in recent weeks.
Pumpkin Patch continues to make ground, closing yesterday up a cent at $1.95, while over the last three weeks it has risen 30 per cent, while Ryman Healthcare is up around the same amount, Mainfreight is up 14 per cent and Rakon is up almost 60 per cent.
Makes the benchmark index's 6 per cent gain over the same period look positively sluggish by comparison.
SIR RON STRIKES
Sir Ron Brierley's Guinness Peat Group has succeeded in one of the takeover bids it has on the go at present.
On Wednesday it said it had snagged more than 90 per cent of Gosford Quarry Holdings, triggering compulsory acquisition of the remainder of the shares.
Gosford is a supplier of sand and gravel, but its appeal to GPG lies in some valuable property holdings.
GPG offered A55c a share for the company, valuing it at A$31.73 million. GPG shares closed at $1.76.
BACKDOOR BLUES
Lombard Finance's problems, discussed in Stock Takes last week and which came to a head yesterday, have again highlighted the woeful record of many companies that come to the market via back-door listings.
Lombard Group, which has no links with the reputable NatWest Bank-owned company of the same name that operated in New Zealand in the '70s and '80s, listed on the sharemarket in late 2005 through a reverse takeover of Pure New Zealand. Lombard Group has some businesses other than the finance company which is now seeking a moratorium, including mortgage businesses it bought off Hanover and Blue Chip.
In February, Business Herald columnist Brian Gaynor pointed out the generally lower level and quality of information provided to the market and investors by many companies that list in this way. One of the market's strengths is supposed to be the way it requires a high standard of disclosure from companies. Stock Takes wonders whether the alarming decline in the quality of Lombard Finance's loan book and the dangerous concentration of lending disclosed in its amended prospectus was of sufficient significance that it should have been also disclosed to the sharemarket.
Shares in Lombard Group closed down 59c yesterday at 20c
HOPING FOR A RENAISSANCE
Apple's now-ubiquitous music player the iPod was launched in late 2001 and by September last year had sold 110 million units worldwide.
The gadget's popularity has undoubtedly been the driving factor in the share price of local distributor Renaissance, which rose 700 per cent between 2002 and early 2006, when the iPod probably started to approach saturation level in the local market.
Little wonder then that Renaissance warned this year that it expected softer sales and profits from its Apple business after signing a new contract with the company allowing some retailers to "multi source" Apple products, as happened overseas.
In fact, Renaissance shares have been in decline for the past two years, losing 65 per cent of their value.
With the company reporting a 45 per cent fall in full year net profit to $3.3 million this month, its shares hit a four-year low of 45c this week.
Are the company's glory days over?
Maybe, but its management is expecting modest growth in net profit from here on the back of higher contributions from its non-Apple businesses.
Aspect Huntley notes its strong bounce back last year from a weak first half and its strong balance sheet.
Renaissance shares closed steady at 55c yesterday.