NZ stocks: All eyes on Telecom result

The dividend policy of New Zealand's largest listed company is in the spotlight this week as it reveals its half-year earnings and kicks off the company reporting season.

Telecom reports quarterly - its first-quarter net earnings after tax were $193 million, up 19.1 per cent on the same quarter in 2003.

Most forecasts are for a second- quarter net profit just above the $200 million mark - Direct Broking, for example, is picking $204.3 million.

Telecom's share price has risen above $6.20 in recent days as investors focus on Friday's announcement.

"The focus, as it has been for the last few results with Telecom, will be on the dividend policy," said ABN Amro Craigs broker Matt Willis.

He said the company had the capacity to pay special dividends this year but this was unlikely to be flagged to the market until later in 2005.

First NZ Capital strategist Jason Wong said in a market where returns might be hard to come by, a defensive stock like Telecom appealed - given the prospect of a high dividend yield and special dividends likely.

With 45 companies reporting full-year and 91 half-year results, the next few weeks will be a flurry of numbers.

While overall results are expected to moderate this year as the economy slows - either of its own accord or prompted by the Reserve Bank - BT's chief economist, Chris Caton, said it was too soon to look for the signs in this reporting season.

It will happen, though, he said, with the stock market likely to report high single-digit growth this year - a far cry from last year's more than 25 per cent returns.

Vector's attempt to buy the rest of NGC it does not already own closes on Friday. Vector bought the other 66 per cent of NGC from Australian energy giant AGL last year.

Vector is offering $2.91 per share but the market price has remained stubbornly around $3.10.

Shareholders are likely holding out hoping to receive preference rights in the Vector IPO due later this year. These were offered in the original takeover but removed after objections by the Takeovers Panel.

So canny shareholders will realise if they hold on, they are likely to get them later.

Vector is expected to be one of the hot IPOs this year - at least $500 million - and must take place before December 16 but is likely to happen earlier.