KEY POINTS:
What's up with the long-awaited Pike River float? Brokers were expecting a prospectus for the IPO back in March and it seemed all that was needed was final sign-off for the offer - expected to raise up to $60 million - to finally get under way.
But another month has rolled on and all the while the New Zealand dollar has been soaring. This may be the cause of the latest delays.
Coal is a US dollar-traded commodity, making Pike River highly sensitive to any currency fluctuations.
Prospectus projections done on the basis of a dollar trading around the US65c range - as recently as a month ago - now look overly optimistic. So word around the marketplace is that the Pike River team and lead broker McDouall Stuart have had to take another look at forecasts.
Meanwhile, it seems Pike River's owners appear to be investigating other forms of capital raising for the $174 million development of a coal mine northeast of Greymouth.
Some "high net worth" investors have been approached to gauge interest for an issue of some form of capital.
Shares in Pike River owner NZ Oil & Gas closed at 98c yesterday.
Growing market
While we wait optimistically for the IPO "class of 2007" to materialise, at least the NZX hasn't stopped growing organically.
Equity raised on market in the first quarter was $622 million compared with just $272 million in the same period last year. That is down to already listed companies issuing new shares to raise capital - a good sign that there are plenty of local companies in growth mode.
Debt markets are also going strong. This week's Rural Portfolio Capital debt listing took the total capital raised on the NZDX Market past the $500 million mark, and the number of debt issuers to 49. Last year $920 million was raised on the debt market in quarter one but that included three big issues by Telecom, Infratil and ANZ, which saw $800 million raised in March alone.
While there haven't been any floats yet this year, local brokers haven't given up hope that this could be a pretty good year. Works and engineering firm Opus is still expected to list and everyone seems to think there are more prospects in sectors like property and agriculture.
Retail revision
Forsyth Barr has revised its outlook for a couple of retail stocks. Michael Hill is moved from a "hold" to a "sell" recommendation, largely due to its soaring share price which is now almost 25 per cent ahead of Forsyth Barr forecasts.
Ironically, analyst Guy Hallwright has actually raised his valuation of the stock by 20c to $7.70 in the wake of the company's third-quarter result. That's because Hallwright has pushed his discounted cash flow model out a bit further to include more of the expected growth in the Canadian market.
But, as he notes, that hardly makes a dent in the gap between DCF value and the current price. The shares closed at $9.52 yesterday.
Hallwright believes investors are factoring in too much value for Michael Hill's growth potential in what are likely to be increasingly competitive markets.
Meanwhile Hellaby Holdings - which owns retailers Hannahs,No 1 Shoe Warehouse and BBQFactory - is shifted from "hold" to "accumulate" by Forsyth Barr analyst John Cairns.
He has left his 2007 operating profit forecasts unchanged but has raised 2008 forecasts by 3.2 per cent to $38.6 million amid expectations that a stronger performance by the group's industrial and automotive engineering assets will more than offset any weaker retail performance.
He is also tipping (with at least a 60 per cent chance) that Hellaby will continue to sell off its retail assets in favour of the kind of automotive and industrial distribution assets that are already part of its investment portfolio.
It sold clothing chain Rodd & Gunn last year for about $10 million as well as several other retail assets.
Based on his latest forecasts and a valuation of $4.65, Cairns estimates the remaining retail assets would be worth about $94 million with 2007 and 2008 EBIT multiples of 11.8 and 7.7 respectively.
His view is that these multiples are realistic as any buyer would look through the short-term economic squeeze going on retail.
Hellaby Holdings shares closed at $4.01 yesterday.
Flawed farewell
Jenni McManus, co-founder and long time editor of the Independent, departs this week. In its latest edition, the Independent has published a well-deserved eulogy which highlights the investigative work done by McManus which ultimately led to Sir Ivor Richardson's Winebox Commission of Inquiry in 1994. Except it was actually Sir Ronald Davison's Commission of Inquiry wasn't it? The assiduously accurate former editor is only just out the door and standards are already slipping.
Dollar doldrums
We all know that the high dollar has some exporters really struggling, which is bad for the economy. But for long-term stock market investors it may also mean buying opportunities.
The share prices of several of New Zealand's best quality listed exporters have drifted back slowly in the past few weeks.
Hot stocks Pumpkin Patch and Rakon for example are both priced on the basis of exciting growth prospects. Rakon hit $5.03 on March 23, but has since drifted back to a close of $4.76 yesterday. Pumpkin Patch hit $4.56 on March 12 and has drifted back to a close of $4.26. Neither is looking cheap but the past month has at least presented would-be investors with a relatively rare lull in demand.
New Zealand's two blue chip manufacturers, Fisher & Paykel Healthcare and Fisher & Paykel Appliances, have both been hit hard by the dollar.
But both are strong companies and the threat of takeover if their stock falls too far provides a nice hedge for investors. F&P Health is down from $4.29 on February 9 to $3.60 yesterday. F&P Appliances is down from $3.92 on January 23 to $3.59.
Another NZX 50 manufacturer to feel the squeeze is Steel & Tube. Its share price dropped from $4.94 on January 17 to close at $4.25 yesterday.
And the share price for Delegat's has drifted sideways for the past five weeks. The wine exporter's shares hit $2.75 on March 9 after a Goldman Sachs JBWere research note highlighted favourable conditions in the global wine market. But the high dollar is taking the shine off that, and shares closed at $2.60 yesterday.
The big unanswerable question (even the currency gurus don't know) is how long the kiwi will stay this high. That's got as much to do with the weaknesses of the US dollar as any domestic conditions. But only a few believe the current strength of the currency is a reflection of New Zealand's economic might. Odds are we are overvalued and it's just a matter of by how much and when the correction comes.