KEY POINTS:
With the economy slowing at a faster pace than expected by many, it seems likely that at least some listed businesses will also be similarly surprised and may be forced to revisit earnings guidance ahead of the June year reporting season.
The retailers are already feeling the pinch,
with Hallenstein Glasson yesterday following The Warehouse and Briscoe Group in warning that sales were down.
Also yesterday, a much softer than expected retail sales number added to the growing weight of data pointing to a steepening slowdown.
While acknowledging "challenging market conditions", research house Aspect Huntley has retained its "Accumulate" rating on The Warehouse.
On fundamentals, Aspect Huntley reckons The Warehouse is worth $4.30 a share, well south of yesterday's close of $5.25. However the 50:50 chance it sees that Woolworths and Foodstuffs will win their ongoing legal battle with the Commerce Commission and gain approval to bid for the company means it has "fair value" for the stock at $5.80, slowdown and all.
NOT SO BRISK
Meanwhile, Briscoe Group's prospects are viewed more dimly by Goldman Sachs JBWere's Rodney Deacon. He's downgraded the company to sell from hold.
Deacon has also slashed his forecasts for Briscoe's 2009 full year net profit by 37 per cent to $13.7 million and its 2010 bottom line by 48 per cent to $12 million. This is well down on the company's full-year 2008 result of $22.4 million.
"This reflects lower same store sales growth forecasts in line with our estimates for New Zealand's household discretionary expenditure, and Briscoe's operational leverage".
Deacon has a 12-month price target on the stock of 87c. Yesterday it closed at $1.10.
NOT ALL DOOM AND GLOOM
Yesterday's retail sales number gave further confirmation of the slowdown that has hit The Warehouse, Briscoe and Hallenstein, thereby triggering a sharp fall in the kiwi dollar which has already been under pressure for the last few weeks.
That in turn did provide the market with some bright spots - mainly exporters and companies with significant overseas investments.
Fisher & Paykel Healthcare rose 9c yesterday to $2.70, Rakon and Sanford, which have both enjoyed something of a resurgence in the last couple of weeks, extended their gains too, rising 6c to $3.41 and 7c to $4.61 yesterday respectively.
A lower dollar is also good news for the local share price of Guinness Peat Group. Its shares have been making ground too recently.
Yesterday GPG said its key investment, giant multinational threadmaker Coats, had reached an agreement to refinance US$625 million of debt "on improved terms". In the current environment that's not bad going.
GPG gave up a cent of its recent gains to close at $1.85.
IN THE DARK
Investors in Octaviar Pacific Finance on Monday vote whether to give stricken parent company, the ASX-listed MFS or Living and Leisure Australia (LLA), as it is now known, a chance to make good on the cash it or its subsidiaries owe the local finance company or put it into receivership.
However an Auckland investment adviser contacted Stock Takes yesterday pointing out the average retail investor probably has next to no chance of making an informed decision.
He says the 111-page document is near impenetrable, and difficult enough for a professional to make sense of.
Moreover the proxy form is structured in such a way as to encourage a yes vote for the proposal as a near default position.
Most importantly of all, the adviser says there is precious little detail on the current position of LLA on which so much depends.
Yesterday an Octaviar spokesman confirmed there would be no LLA representative present at the meeting to provide additional information, which was in any case, he said, all included in the document dated April 30.
Much has changed since then though.
Singapore-based businessman Chris Scott has all but completed a management and boardroom coup at the company.
Scott inherited a large shareholding in Octaviar through the sale of his listed leisure business S8 two years ago.
Former Australian Liberal Party leader Andrew Peacock has quit his chairmanship at the company and Scott has installed an associate Craig Chapman as chief executive, replacing Craig White who was in the job less than three months.
It has been reported that Scott has plans to sell LLA's investment management arm to Wellington Capital, an investment firm with which he has links.
What does this all mean for Octaviar Pacific Finance and its investors? More importantly will there be anybody at Monday's meeting capable of explaining this?
WOUNDED VIKING
The collapse of ICP Bio yesterday is bad news for Brent King's Viking Capital and is a worse outcome than the voluntary administration position the company initially secured.
In a statement issued a very short time before it emerged that ICP had been placed in receivership, Viking told the market it had 114,040,971 shares in the company, $870,000 of advances to it and owned two quality freeze driers worth $1.3 million which were leased to the company. "Viking Capital has no reason to believe these assets have reduced in value at this point."
How quickly things can change.
Another Viking investment, Dorchester Pacific, has been taking a beating recently too, in no small part thanks to King's relentless attacks on the management of the company.
Little wonder then that Viking's shares closed 4c lower at 10c yesterday.
What chance now for Viking's $20 million bond issue which it registered a prospectus for last week?
CREATIVE SWITCH
A mainstay of the NZAX market and indeed of Stock Takes, Plus SMS has plans to list on the ASX and change its name to CRE8.
"An Australian listing will enhance liquidity and increase value for our shareholders. The re-listing is seen as a natural and positive step in the growth of the company since approximately 40 per cent of the existing Plus SMS shareholder base is from Australia," said chief executive Christopher Tiensch.
The company says it is planning further roll out of its implementation of Microsoft Windows Live for mobile phones across Latin America after this year's successful launch in Brazil.
It sounds as though the company is making some real progress with a plausible sounding business after an outlandish first couple of years when few had any idea what it was about and its stock was all over the place.
Maybe a switch of markets is just what is needed to leave some of its NZAX baggage behind.
Plus SMS shares closed 2c lower at 9c.
WARNING FROM THE SKY
Bernard Doyle at Goldman Sachs JBWere suggested this week that even some companies that had previously enjoyed "an air of invulnerability" might suffer a soft patch.
Sky TV, which commonsense suggests is sensitive to changes in discretionary expenditure, may be finding the going tougher.
It's currently offering free connections and movies from its pay-per-view service in order to coax new subscribers. Its shares closed a cent lower at $4.65.
BUY THE RUMOUR, SELL THE FACT
This week one of Stock Take's eagle-eyed colleagues spotted a sharp rise in high-tech electronic motor company Wellington Drive Technology's share price.
In little more than a week the company's stock rose 25 per cent to 40c.
"Expect an announcement in the next couple of days," he said yesterday, exhibiting the cynicism journalists are often noted for.
About 15 minutes later the company said it had secured a $1.75 million grant from government funding agency the Foundation for Research, Science and Technology. Uncanny.
Listed companies and their employees are, Stock Takes assumes, well aware of insider trading laws but public servants, including those at the highest levels, have in the past shown some carelessness in talking about them. Could it be that scuttlebutt from the foundation found its way to investors?
While it certainly appears as though Wellington Drive shares may have been bid up in anticipation of some glad tidings, perhaps the news wasn't quite as good as hoped - the shares closed a cent lower at 39c yesterday following the announcement.
