Stock takes: Good as gold

OceanaGold is listed in New Zealand, Australia and Canada. Photo / OceanaGold

The country's biggest gold miner OceanaGold is trading at a discount of up to 65 per cent below its ASX-listed peers, analysis from Austock has found.

Sydney-based analyst Anna Kassianos has increased her firm's 12-month target price for the stock from A$3.38 to A$4.61 following a site visit to the company's New Zealand South Island mines at Reefton on the West Coast and Macraes Flat near Dunedin.

OceanaGold is listed in New Zealand, Australia and Canada and closed here at $3.40 yesterday.

Kassianos - who was ahead of other analysts with a buy recommendation early last year - says the continued positive outlook now results from the cost of buying out its gold hedges coming in below what was expected, a ramp-up of exploration and an expected 86 per cent increase in ore reserve conversion rates.

OceanaGold had moved to Austock's number one pick for Australian-listed, middle-sized gold companies.

The company is the fifth largest ASX-listed gold producer but given new reserves and extended mine life, should be recognised as the third biggest physical producer, she said.

SHERIFF BOTHERWAY?

The announcement of new super regulator the Financial Markets Authority at Wednesday night's New Zealand Herald INFINZ awards had tongues wagging about who might be the right person to head up such an important organisation.

Sources say the name on everybody's lips was former activist fund manager Simon Botherway. Botherway is already one of the commissioners on the Securities Commission and has managed to find his way on to the board of Fisher & Paykel Appliances since selling his stake in Brook Asset Management at the end of 2008.

Market commentators believe Botherway could be a force to be reckoned with although he doesn't have a lot of experience on the chief executive front. Botherway himself couldn't be contacted over speculation as he is out of the country on a trip to Asia this week.

SWEET AS

Comvita brought some much welcome positive news to the markets yesterday with a profit upgrade ahead of its full year results announcement on May 21.

Shares in the natural healthcare company soared nearly 10 per cent to a year high of $2.26 after the company said its net profit was expected to hit $4.9 million in the year to March 31 - more than six times the $800,000 net profit in the previous year.

Chief executive Brett Hewlett attributed its earnings improvement to sales growth and operating efficiencies.

The company has also slashed its debt in the last year from $30.3 million to $11.6 million after reducing inventory and selling global licensing rights for its Medihoney product to Derma Sciences in February.

The company is on a strong recovery path after hitting a low of 73c in April last year although it still has a long way to go to beat the $4.05 high it achieved in 2007 before the global financial crisis. Yesterday it closed 20c higher at $2.25

FLYING THE FLAG

Talk of a possible sale of the Yellow Pages Group by its bankers has some wondering if things are getting a bit desperate for the directories business, given the haircut the banks are likely to face if it goes to the block.

Blogsite Valuecruncher valued British directories business Yell Group at 6.83 times earnings before interest tax, depreciation and amortisation.

That could suggest a possible valuation of around $1 billion for the New Zealand firm but the Yell Group valuation assumes a sensible capital structure is in place.

That doesn't seem to be the case for the Yellow Pages which was the highest ever leveraged buyout done in New Zealand. The $2.24 billion deal includes $1.72 billion worth of debt and up to 36 different funders - another factor which is likely to make it difficult for any decision to be made.

It seems unlikely any white knight buyer will emerge at this stage - why would they when they could wait and possibly pick it up at a rock bottom price?

Investment banker Mark Clare believes a recapitalisation is most likely but it will be interesting to see if it is the shareholders or the banks which end up putting in more capital. At least this is one company where mum and dad Kiwi investors won't be making a loss.

LIGHTING THE WAY

All eyes will be on Geoff Ross' new scented candle and bodycare business when it lists on Monday.

Ecoya's capital raising closed last Monday and the marketing maestro has been surprisingly quiet on the outcome so far. Ecoya's PR man says the cheques are still coming in through the post and it expects to release official figures today.

The company is said to have backing from both institutional investors and interest from the US. Stock Takes understands the raising got close to its $10 million target but didn't shoot the lights out.

The listing will be the first successful initial public offer since Kathmandu in November last year and could be the first of many. NZX boss Mark Weldon promised a raft of potential listings to come earlier this year but so far they have yet to emerge.

NAME IS GOLDEN

Investigations by the US Securities and Exchange Commission and a Senate grilling of Goldman Sachs Group hasn't put the local Australian and New Zealand arms off using the Goldman name.

In an internal email to staff yesterday, Australian bosses Stephen Fitzgerald and Simon Rothery said Goldman Sachs JBWere (NZ) would be renamed Goldman Sachs & Partners NZ from August 2.

The name change, which is subject to shareholder approval, has been on the cards for some time after the business sold 80.1 per cent of its private wealth management business JBWere to BNZ-owner National Australia Bank last year.

Goldman Sachs JBWere (NZ) is part of Australia's Goldman Sachs JBWere (which will be renamed Goldman Sachs & Partners Australia). The Australian company is 45 per cent owned by Goldman Sachs Group and 55 per cent owned by about 100 local equity partners. It has its own management and board.

THE LIGHTER SIDE

While the investigation is obviously being taken very seriously by Goldman Sachs locally there has been also been some light relief over the issue. In accepting the award for best equity deal of the year (for its help with Fletcher Building) at the INFINZ awards on Wednesday night, Goldman's John Duncan said: "Can I just say these microphones make me feel like I'm in front of a Senate investigation committee.

Senator Power, ranking members, can I just take this opportunity to say this transaction's a perfect example of why Goldman Sachs always puts its clients' interests first."

THE BLAME GAME

Top corporate lawyer Roger Wallis of Chapman Tripp, the legal architect of most of the finance company moratoriums to date, took a swipe at the media when he presented his submission to Parliament's inquiry into finance company collapses last week.

One of the inquiry's main thrusts is the lack of regulation around moratoriums and quality of information investors are presented with when considering them. By and large most of these arrangements have failed to deliver.

"It's frustrating to me as an adviser that the media and commentators have painted the moratoriums as a way of promising that people would be repaid 100c in the dollar," Wallis told the committee.

"That was never the objective. The objective was to try and get a better outcome for investors. In some cases the moratorium did not work out."

Sorry, who painted moratoriums this way?

"The bottom line is there will be additional money put in to ensure the investors get their money back" - that was Hanover co-owner Mark Hotchin before the moratorium plan was put to investors.

Hanover's chief executive Peter Fredricson also told media the company believed its asset book was sufficiently sound to achieve its objective of paying 100c in the dollar to all secured investors over five years.

Kingsley Turner, chief executive of another of Wallis' clients MFS Boston, told media ahead of his company's moratorium vote he was confident investors would be paid interest as well as all their capital.

Instead of having a go at the media now, perhaps Wallis should have encouraged his clients to be more realistic about their investors' prospects. But then of course their investors may not have voted in favour of them.

This story has been corrected from an earlier version. Roger Wallis was originally misquoted and said that in some cases, the moratorium did not work out - not that some cases were never going to work.