KEY POINTS:
PGG Wrightson chairman Craig Norgate, who along with director Baird McConnon now owns 30 per cent of rural services provider PGG Wrightson, has lifted his holding in the company with the on-market purchase of relatively small parcels of shares over recent weeks.
A local broker reckons this may well have something to do with PGG Wrightson's bid to merge with meat processor Silver Fern Farms - formerly PPCS.
Norgate has said the $220 million his company intends paying for a 50 per cent stake in Silver Fern Farms will be raised through a mix of debt and $75 million in new capital.
If that new capital is to be raised through a rights issue to existing PGG Wrightson shareholders, the broker says Norgate's recent buying will have the happy effect of keeping the company's price up.
"Normally the price for a rights issue is done at a volume weighted average of the previous trading days. If you spend a bit of money to keep the price up you're able to make sure that the capital raising's a lot less dilutionary to existing holders of which, of course, he's the biggest one."
PGG Wrightson shares closed up a cent at $2.41 yesterday.
GUSHING OVER OIL
Analysts continue to praise New Zealand Oil and Gas, and with oil and coal prices where they are at present, why wouldn't you?
Aspect Huntley have raised their full year 2009 net profit forecast for the company from $58 million to $102 million based on management's increased estimates of oil reserves from the Tui field. They also raised their full year 2008 npat forecast by 7.3 per cent to $132 million.
Aspect Huntley has also raised its fair value estimate for the company by 10c to $1.83 a share.
Last night, NZ Oil and Gas closed 5c lower at $1.66.
Like other analysts that cover the stock, Aspect Huntley are wondering what the company will do with the $130 million it raised in its recent rights issue. The options they see include "an active exploration programme" or acquisitions.
NZ Oil and Gas has also benefited from the surging fortunes of Pike River Coal, in which it holds a 31 per cent stake.
McDouall Stuart analyst John Kidd says that despite Pike River's price appreciation, it remains attractively priced compared to its Australian peers.
McDouall Stuart values Pike River at $2.53 a share on a discounted cash flow basis and has a $2.75 a share 12-month target price on the stock.
Yesterday Pike River shares closed a cent higher at $2.13.
WHOOPS
The NZX has apologised to payments technology company ProvencoCadmus for mistakenly placing its shares on a trading halt on Wednesday afternoon, citing a material announcement.
The suspension at 2.22pm was lifted 90 minutes later - but that was more than enough time for clients, brokers, analysts and shareholders from as far away as China to flood ProvencoCadmus chief executive Jim Doyle with calls and messages.
In its apology released to the market yesterday morning, the NZX attributed the mistake to a "business process error" on its part.
But Doyle remains in wonderment as to how the mistake could have happened in the first place.
He believes an application for an NZX waiver to extend its working capital facility by up to $8 million - a credit extension that was to be underwritten by cornerstone shareholders Todd Capital and Peter Maire - may have prompted the NZX's gaffe.
"Our only assumption was that this waiver was requested and that's allowed someone to put it on trading halt, when it was obviously in error."
POKIE PARADISE
Like Fletcher Building, SkyCity is one of the NZX's blue chips that has been particularly badly mauled over the past year. From $5.50 in early November last year, it closed yesterday at $2.96.
Early this week the company confirmed its full-year profit guidance of $108 to $110 million after tax but before a $60 million writedown on its cinemas.
Both Goldman Sachs and Aspect Huntley rate the stock a buy at its present price, with Goldman noting it is trading at its biggest discount to its current discounted cash flow valuation since the 1991-92 recession.
Furthermore, Goldman analyst Marcus Curley says it is now the cheapest gambling stock in Australasia.
While gamblers would be tightening their belts in the current environment, Curley says SkyCity should outperform its peers thanks to a robust outlook for its Auckland Casino gaming revenue.
Curley's taken a pretty detailed and fascinating look at the economics of "EGMs" or pokies.
They are, he says, SkyCity's most important revenue source accounting for 42 per cent of group revenue last year. The majority - $190 million - of EGM revenue came from Auckland Casino.
Having done the numbers, Curley has raised his forecast EGM revenue growth at Auckland Casino. However, that has been offset by inflation-driven cost pressure and lower hotel revenue with slowing tourist arrivals.
Nevertheless, given the casino's outlook and where its shares are trading at the moment, not only does Goldman Sachs rate it a buy, it's also on their "conviction list" of those companies that its brokers hold their most resolute views on.
CLEAR AS MUD
The Shareholders Association's Bruce Sheppard continued to sling mud at stricken Dorchester Pacific this week. Sheppard reckons shareholders and investors should not accept the company's deferred repayment plan nor moratorium and instead have the company liquidated.
Stock Takes asked Sheppard why he and the association are concentrating on Dorchester rather than any of the other troubled, listed finance companies.
"Dorchester stands out as one of the worst example because of the stupidity of two major decisions under the now departed chief executive. The first was a move at exactly the wrong time into lending on property developments; the second was buying St Laurence to bolster that up."
Sheppard reckons the St Laurence purchase and subsequent dealings were major transactions which should have been put to shareholders at the time and weren't, and that relevant details were not fully disclosed to the market.
For its part, Dorchester rejects Sheppard's allegations and is somewhat peeved that Sheppard went to the media before giving the company a chance to address his allegations.
For some time now, Dorchester's affairs and that of its major shareholders have been very murky. Remember Dorchester founder and Sheppard's mate Brent King mystifying the market with his sell-down of the stock while bagging its management?
It's worth remembering too, that Rod Petricevic and Bridgecorp were players in this story, at one point holding 15.7 per cent of the company which was used as security when Bridgecorp borrowed cash off St Laurence.
That deal prompted Sheppard to make a complaint to the takeovers panel about St Laurence's shareholding in Dorchester. While the panel rejected that complaint, you can't help but wonder what the money-go-round between these companies is all about.
But Sheppard's recent attacks have been on some pretty arcane points. Ironic really for someone who has recently been attempting to demystify accounting by way of his blog.
The most important thing of course, is what does all this mean for Dorchester's minority shareholders and debenture investors?
Stock Takes can't tell you but let's face it, when things are this complicated and opaque, it can't be good. Dorchester shares closed up 2c at 23c yesterday.
