Transtasman Punts by IRG: Orica to sell off Dulux

Orica is an explosives manufacturer whose products and services are essential to the mining and construction industry worldwide. But the company has another business in the form of Dulux.

The separation of Dulux from Orica has been on the cards for a while because the paint company is not seen as being in keeping with Orica's core business.

Now it looks like the spin-off is going to happen. Orica has said it will proceed with the demerger of Dulux into a stand-alone, ASX-listed company, in July this year.

Orica is expected to remain in the S&P/ASX 50 index and Dulux is expected to be included in the S&P/ASX 200.

While Dulux will be at the mercy of a cyclical Australasian construction sector, there is a strong chance that it will become a takeover target on listing.

With or without Dulux, Orica is a quality growth stock with dominance in an essential industry - mining.

WAREHOUSE DEFENSIVE
New Zealand's biggest listed retailer, the Warehouse, has felt the effects of a very subdued consumer market and suffered a slight decline in sales over the third quarter. And it expects retail conditions to remain subdued until 2011.

The company is living up to its reputation as a defensive retailer in a cyclical industry. The Warehouse has a high degree of leverage to the market and the economy, which means it is punished during downturns. But it has the capacity to show considerable growth during good times.

Subject to any material adverse change in expected trading conditions, the Warehouse expects its net for 2009-10 to be similar to previous years. It should be different next year, when the economy is expected to pick up. The Warehouse has low debt, pays a generous, reliable dividend and has good cash flow.

An IRG disclosure statement can be obtained free of charge by calling IRG 0800 474669, or by email info@irg.co.nz.