Friday, October 26, 2007

Share Investor Friday Free for all: Edition 9

Airport lands big numbers in 2011

The airport hopes to enhance the arrivals experience for 2011 World Cup fans.
Auckland Airport

News today that Auckland Airport(AIA) is going to plunk down a huge NZ$180 million to expand the international terminal to coincide with the 2011 Rugby World Cup-the year we get the cup back,yeah right-means that the company clearly needs to borrow more or has a partner with deep pockets.

The extension will almost completely revamp the entire terminal and mean extra revenue streams through extended retail, car parking and the like.

No more news about the Canadian Pension Fund takeover yet but an extension such as this could make any possible sale more palatable given that Manukau and Auckland City Councils are shareholders and would want the airport to cope with all those South Africans springboking over here in 2011.

Long-term, Auckland Airport looks good for growth and shareholders would be much better off holding on to their shares.

Sky City Folds

Auckland Sky Tower,
just above the Casino

I'm not sure about you but the Sky City Entertainment(SKC) Annual meeting today left me none the wiser.

Recent profit guidance's were confirmed, much was made of the revamp of Auckland Casinos main floor and the usual blah.

Of more concern was news that the Adelaide Casino sale process was on hold and shareholders wont find out whether the company is going to be bought until the end of November.

We were told not so long ago that we would find out at the end of October and that Adelaide would still be on the block.

Now there is talk of revamping Adelaide in a similar way to the Auckland Casino because they know they can get it right, after years of getting it wrong and this is a turnaround from a few months back where management were "identifying assets to sell" and Adelaide was a prime candidate.

You would have to ask what has changed?

At least management have confirmed that the Cinema division is still on the block and we will know what for at the end of October.

Contact has Gas
Contact Energy Geothermal Plant

Contact Energy(CEN) also got together for an annual meeting today. The biggest subject on the agenda, the appointment of some directors, particularly little Timmy Saunders, who was a director of failed Feltex Carpets.

Like all boards, Contacts board is supposed to be made up of independent directors but Tim Saunders allegiances lie with Origin Energy, the majority Aussie owner of Contact.

Institutions want Saunders removed because of his involvement with the Feltex collapse and his twice advocating a bungling a sale of Contact, that cost the company millions but Origin want him to stay to keep them primed for another attempt at a takeover.

NZX up in the Charts
Mark Weldon

Stock Exchange operator NZX today reported a 49 per cent lift in third quarter net profit after tax to $NZ2.3 million.

The company said the lift in net profit for the three months to the end of September from $1.5m in the third quarter of 2006, was achieved on operating revenue up 34 per cent to $8m.

We have seen a dearth of listings this year, unless you count spectacular failures like Burger Fuel(BFW) and Xero(XRO), a number of companies have been swallowed up and a high number of the larger blue chips look set to go as well, with The Warehouse(WHS) Auckland Airport(AIA) and Sky City Entertainment(SKC) under the cloud of a sale process.

Weldon said that he looked forward to more quality listing in 2008, with a number of private equity owners looking to sell down.

One he mentioned was the owner of Griffins and Tegal, Pacific Equity Partners.

NZX Market Wrap

A slide to one-month lows for top stocks Telecom(TEL) and Contact Energy(CEN) depressed the New Zealand sharemarket today, in contrast to solid gains for markets around the region.

The NZSX-50 benchmark index closed down 40.43 points, or 0.9 per cent, at 4226.71, on turnover totalling just $88 million. Falls outnumbered rises 62 to 40.

"Our market bucked the trend really. We were down, but mainly around company-specific news like Contact," said Philip Hunter of First NZ Capital.

Telecom fell 11c, or 2.5 per cent, to a month low of $NZ4.31 after announcing an undertaking to have fast broadband to every town in the country within four years. Telecom will spend $1.4 billion on its next generation network and fast broadband over five years.

Contact Energy fell 19c, or 2 per cent, to $9.05 after it told shareholders that earnings would be flat, as the company battled high gas prices and low wholesale power prices.

"They just reiterated that the environment was going to be a bit tougher this year, so the market took that as a cue to just bring the stock price back a bit," Mr Hunter said.

Sky City(SKC) was down 2c to $5.40 after it said it was quitting the sale of its Adelaide casino while bidders sized the company up. It said it was comfortable with its August projection of a 10-12 per cent increase in profit in fiscal 2008.

NZX jumped 19c to $9.50 after it reported a 49 per cent rise in third quarter net profit to $2.29m.

Mainfreight(MFT) rose 8c to $7.40, continuing a strong run recently, (FRE)Freightways lost a cent to $3.79.

The general tone is that the domestic economy is getting a little bit tougher, costs are coming up a bit and margins are getting squeezed."

Auckland Airport(AIA) fell 5c to 306, Fisher & Paykel Healthcare(FPH) was flat at $3.28, F&P Appliances(FPA) shed 12c to $3.45, and NZ Refining(NZR) fell 15c at $7.41.

Air New Zealand(AIR) was down 2c at $2.12, Rakon(RAK) was 9c lower at $5.26, Pumpkin Patch(PPL) fell 3c to $3.05, and Fletcher Building(FBU) was off 8c at $12.18. Fletchers has dropped markedly this week over market worries related to a possible takeover by the company of Carter Holt.

Ryman(RYM) gained 4c to $2.15, Tourism Holdings(THL) was up 4c at $2.36, Nuplex(NPX) gained 8c to $7.58.

NZPA & Share Investor

NZ Dollar Wrap

Reuters currency rates:

4.30 today 5pm yesterday(NZ Time)

NZ dlr/US dlr US76.38c US75.36c
NZ dlr/Aust dlr A83.89c A83.47c
NZ dlr/euro 0.5334 0.5281
NZ dlr/yen 87.30 86.95
NZ dlr/stg 37.22p 36.81p
NZ TWI 71.03 70.24
Australian dollar US91.03c US90.28c
Euro/US dollar 1.4322 1.4269
US dollar/yen 114.28 114.07

Disclosure: I own SKC, AIA shares

C Share Investor 2007

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