Stock takes: Fast food and rubber

New Zealanders have eaten more KFC during tough economic times, helping to life Restaurant Brands. Photo / Bradley Ambrose

It's been a lacklustre year overall for the New Zealand sharemarket with investors who stuck to the index barely making ground.

As of yesterday the NZX-50 had risen from 3230 at the start of the year to 3293 points - an increase of just 2 per cent and that includes dividends which New Zealand companies are generally quite generous with.

Hamilton Hindin Greene's James Smalley says those who tracked the index looking for share price growth would have been better to have put their money in the bank.

But it has been a year for the stock-pickers particularly those who chose Restaurant Brands and Skellerup.

"It seems New Zealanders have turned to KFC with a vengeance during the recession."

Shares in Restaurant Brands, which owns the local franchises for KFC and Pizza Hut, have risen more than 64 per cent this year from $1.69 to a high of $2.84 hit last month. The shares have fallen off a bit since then and yesterday closed on $2.60.

Skellerup, which produces industrial rubber products including the gumboot, has also been a top performer.

BOUNCING BACK

Shares in Skellerup, a company in its 100th year, have risen from 51c at the start of the year to close on a one-year high yesterday of $1.13, up 8c for the day.

Smalley said Skellerup's share price rise reflected a turnaround of the company by management.

The rubber maker also forecast a profit upgrade this week due to improved earnings across both the agricultural and industrial sectors.

It had predicted after tax profits to be between $16 million and $17 million for the 2011 financial year but has now revised it to between $18.5 million and $19.5 million.

In hindsight it's probably not surprising the company has done well given the boom in the dairy price this year pouring money into farmer's pockets.

But Smalley says anyone who picked both Restaurant Brands and Skellerup at the start of the year would probably have to be a contrarian investor as neither had been a strong performer in previous years.

Skellerup will also benefit from the Pike River Coal disaster. It will replace Pike in NZX-50 from Monday which will automatically guarantee it some new investors through those funds which track the index.

BOWING OUT

After consultation with the broking industry the NZX has decided to value Pike River Coal's exit from the NZX indices at zero cents per share.

Since November 19, Pike's share price has been frozen at 88c but on Tuesday the stock market operator decided to drop it from the index after receivers were appointed.

There had been mounting pressure from market players concerned that by keeping Pike in the index at 88c it was putting a false price on the indices and investors could be overpaying to enter.

NZX has also said it would continue to suspend Pike's shares because the disclosure of potentially material information was no longer under the control of the company.

It says the receiver has no contractual relationship to the NZX.

But surely PricewaterhouseCoopers, who were called in by New Zealand Oil & Gas after talks with Pike management, can be trusted to supply information to the market?

UNDER PRESSURE

With contractors to Pike River Coal near the back of the queue for being paid out of any proceeds from the receivership, the pressure is coming on secured creditors - New Zealand Oil & Gas and the BNZ - to dig deeper to help them out.

Some laid off workers also face the prospect of missing out if they are owed more than the legal maximum of $18,700.

PricewaterhouseCoopers receiver John Fisk has said he would talk to NZOG and the BNZ.

"We can have a talk with secured creditors to see whether anything more than the preferential entitlements can be paid."

An NZOG spokesman said anything the receiver asked for would be considered but it had already spent $140 million in buying shares in Pike River and loans to the cash-strapped company, including a $12 million loan following the initial blast.

Many of NZOG's 15,000 shareholders were of the mum and dad variety and they had already seen the value of their investment plummet. as a result of fallout from the Pike River disaster, he said.

NZ Oil & Gas owns a 29 per cent stake in Pike after floating it off in 2007 and this week hit five-year lows. It closed up 4c yesterday at 86c.

HIGHER CRANE

Fletcher Building's hostile bid for Australia's Crane Group may not be high enough after Crane's shares spiked on the takeover news.

Shares in the Sydney-based building and industrial products company soared from A$7.67 to close on A$9.40 on Wednesday, surpassing the value of the Fletcher bid.

Fletcher is offering one share and A$3.43 in cash for each of Crane's shares that it does not already own implying a price of A$9.35 a share and valuing the deal at A$740 million.

Fletcher's bid has come at a very low point in Crane's share price.

At the height of the boom in 2007 Crane's shares were worth just under A$20 but by March 2009 they they had fallen to a low of A$6.60. Earlier this year they traded as high as A$11.60.

Fletcher's rivals may also see the low share price as an opportunistic time to make a bid although the New Zealand construction company has already acquired a blocking stake of 14.9 per cent which puts it in a good position.

Crane's response to the bid will be interesting to watch. Fletcher's shares closed down 3c on $7.72 yesterday.

SELL-UP IN HAND

South Canterbury Finance receiver Kerryn Downey says the sales processes for the stakes in Helicopters NZ and Scales Corporation are progressing well.

"Goldman Sachs have very strong interest, albeit the marketing has just commenced."

Vendor due diligence was almost complete and indicative bids were expected to be made early in the New Year. It was possible the sales could be finalised by the end of June next year, he said. It was also in constant discussions with Deutsche Bank over the sale of the good bank and bad bank assets.

"We are very pleased at where we are at. I think we are a little bit ahead of where we thought we would be."

Downey this week appointed First NZ Capital to jointly sell a 33.6 per cent stake in Dairy Holdings alongside Murray & Company which have already been working on behalf of three US investors and Humphry Rolleston to another 28.9 per cent. Downey said he had not expected to have appointed investment bankers to Dairy Holdings until February. The first receivers report for Southbury Group and Southbury Corporation are also due out next week.

MOTORING ON

Wellington-based fund manager Harbour Asset Management yesterday increased its stake in Wellington Drive Technologies from 10.11 per cent to 11.83 per cent.

Wellington's share price has plummeted from 7.5c per share after it revealed plans to raise more capital hitting a year low this week of 1.3c.

Chief executive Ross Green has said it may have to consider the possibility of a takeover if it fails to raise the $8.4 million it is hoping for. Its shares closed up 0.1c on 1.9c yesterday.