KEY POINTS:
Ten days remain until Christmas, but it is not too early to declare Mainfreight the NZX-50 stock of the year. With gross returns to date (including dividends) of 137 per cent, nothing is going to catch it.
Well, unless there is some sort of generous last-minute bid for The Warehouse from the likes of Woolworths or Tesco.
The Red Shed is set to take the silver medal this year - propped up by all the ownership uncertainty, it has delivered a gross return of 105 per cent.
This is the second successive year that Mainfreight has been top performer on the NZX-50. Last year it returned 64 per cent.
It is a reflection of the market's strength this year that a 64 per cent return would only rate fifth in this year's rankings.
In fact, Mainfreight was trading at just $2.20 at the end of 2004.
It closed up 1c to $8 yesterday, hitting a high of $8.15 on December 1.
The company has gone from strength to strength and now sees itself as a global logistics company rather than just a New Zealand freight business. International operations in Australia, Asia and the US hit top gear this year.
Last month the company announced a first-half profit of $14.8 million (up 43 per cent from $10.3 million the previous year) as its foreign business generated more than its domestic for the first time.
Management is planning further international acquisitions next year, indicating there is still potential for plenty of growth, albeit with a degree of risk.
The worst NZX-50 performer was PGG Wrightson, returning negative 20 per cent. Not completely disastrous given the tough year for agriculture and the final bedding-down of the PGG and Wrightson merger. But, in the context of a market that has been booming, not so great either.
PGG Wrightson closed down 2c at $1.57 yesterday.
Of the 175 NZSE-listed companies, speculative mining stock Summit Resources leads the pack with returns of 384 per cent to date - its shares closed down 4c to $3.01 yesterday.
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MAYBE NEXT YEAR
You've got to give those Plus SMS chaps points for optimism. From the new website for European subsidiary Cre8:
"CRE8's parent company, Plus SMS Holdings Ltd, is a publicly listed corporation on the Alternative Market of the New Zealand Stock Exchange. Every year we aim to deliver exceptional financial performance, demonstrating sustained growth and effective risk management."
Plus SMS shares rose 900 per centlast year. This year they have delivered a return of negative 68 per cent thus far. The shares closed steady at 19.8c yesterday.
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TARGETING TOWER
It is no secret that finance company Hanover has lofty ambitions - it has already declared its intention to take on the investment banks.
It might also be worth considering the Mark Hotchin-owned outfit as a potential buyer for Tower NZ.
The takeover of Tower NZ is now being talked about in the kind of resigned tones one might expect to hear from English cricket fans - it's not if, but when.
The usual suspects include IAG and Promina which, like Tower, run life and general insurance businesses in New Zealand.
The big life insurers such as AXA, AMP and the Commonwealth Bank of Australia (through its Sovereign brand) may also be looking at it with a view to carving off the general insurance parts.
But with a current market of about $422 million, Tower NZ may just look the right size for an asset-hungry Hanover to buy its way, achieving its goal of becoming the largest locally owned financial services company.
Hanover once held a 9.5 per cent stake in Tower but sold out in 2004 after a scrap over whether it should have a seat on the board.
Tower NZ shares closed up 8c at $2.28 yesterday.
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LION'S ROAR ... OR WAS THAT A YAWN?
Pulling out of the inflated bidding battle for Independent Liquor has done Lion Nathan no lasting harm, says ABN Amro's David Cooke.
He's giving the old beast a pat on the back, an upgraded recommendation (to hold) and an increase in target price to A$7.40 from A$7.20.
Local "ready to drink" specialist Independent Liquor was nabbed this week by a joint private equity grouping for $1.26 billion.
ABN had said a bid of A$900 million ($1.02 billion) would be value-destroying for Lion and would have required an equity raising. So in their latest report the analysts are rather impressed with the self-discipline that Lion has exhibited.
Cooke is picking that Lion will now look to capital market management to improve short-term earnings per share. The previously announced 5 per cent on- market buy-back - which was suspended during the bid - is likely to be reactivated during the new year. That would increase earnings per share by 0.26c to A$8 a share.
The ABN team also believe it's curtains for Lion's Newmarket brewery which is likely to be rebuilt elsewhere at a cost of A$100 million.
On the plus side, the report concludes, the sale of the land is likely to net at least A$130 million, providing Lion with positive cashflow and a more efficient brewery.
One assumes that new factory might have increased capacity for RTDs.
Lion Nathan shares closed down A7c at A$8.11 on the ASX yesterday.
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ALL CHANGE
First NZ changed its recommendations on three stocks this week, triggered by dramatic price movements in the past few weeks.
Skellerup - which has shed 18c since hitting a year high of $1.64 on November 21 - is raised to neutral on the basis of its underperforming share price. Resins manufacturer Nuplex has been cut to "underperform" based on a price surge from $6.42 at the start of October to $7.50, at which it closed yesterday. First NZ has also cut Air New Zealand to neutral, based on its stellar run of the past few months. The shares hit $1.80 yesterday before easing to close at $1.76, a gain of 1c.
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BAILING OUT
With the Qantas deal sending Air NZ shares to new heights yesterday, it might be time for the Government to take a serious look at selling down some of its stake.
The state has an 82 per cent holding which it bought to bail out the airline when it was on the brink of collapse in 2001. It paid about $1 billion for the stake, which was worth about $1.5 billion yesterday.
Okay, Cullen & Co are hardly short of cash, but the demand for the stock is providing a rare opportunity to sell without causing the price to completely collapse.
And from a national interest view, it is only the first 51 per cent that the Government needs to retain. That leaves 31 per cent - worth a cool $550 million yesterday - which could be flicked on.
Crikey, you could upgrade a stadium and finish off the western ring road for that kind of dosh.
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MAERSK FALLOUT
Water has flowed under the wharf since shipping company Maersk threw its lot in with Ports of Auckland at the expense of Port of Tauranga. Basically the Danish giant will now direct most of its business through Auckland starting mid-January.
Marcus Curley at Goldman Sachs JBWere has readjusted his view on Port of Tauranga in the light of the decision.
Full year ebitda is expected to fall by $8 million and net profit forecasts are pulled back by 7 per cent for next year and 14 per cent for 2008.
But this is not the worst-case scenario, Curley says. It makes no allowance for any potential increase in rail costs by Toll or service charges by Hamburg Sud.
The decision also means Port of Tauranga will have less power in the merger proposal with Ports of Auckland. Curley has downgraded his merger valuation for Port of Tauranga from $6.90-$6.75 to $5.95-$5.75 a share.
In fact, the Maersk changes have resulted in permanent value loss to the merged company. That's because the ebitda reduction at Port of Tauranga won't be offset by gains at Ports of Auckland due to the low port charges on incremental Maersk Line volumes.
Curley retains his long-term hold recommendation, but downgrades the short-term recommendation to market perform (down from outperform). His valuation drops from $5.40 to $4.70. Port of Tauranga shares closed up 11c to $5.67 yesterday.