Leaders had their run in first half

By Peter V O'Brien

Friday 8th October 2004

Changes to the list of 10 highest share price performances between June and September suggest several of the companies featuring could have ended their run in the first half of the year. That possibility was noted when the National Business Review considered the highest and lowest performers for the six months ended June (NBR, July 2).

The high and low performers in the table excluded stocks priced at less than 20c on December 31, thereby removing beauty clinic franchiser Caci (up 88.9%), Rocom Wireless (plus 73.3%) and Pacific Edge Biotechnology (61.1% gain).

Those companies were also examples of stocks that showed their best gains between December and June, because Caci's price improved 111.1% in that period and Pacific Edge's 77.8%.

Mooring Systems' price movements this year were a similar situation, jumping 103.2% in the three months ended March, 92.4% between December 31 and June and gaining again to 105.4% when comparing December and September prices.

Companies appearing on the 10 high- performers list in June but missing at September 30 were Provenco Group, Broadway Industries, Just Water and New Zealand Exchange. None had a substantial slide and all were more than 38% ahead of December 31 prices.

Others overtook them, specifically meat processor Affco Holdings, telecommunications specialist Cabletalk Group, rail transporter Toll Holdings, Pod (formerly Designer Textiles), Opio Forestry Fund and energy operator Trustpower, the last inadvertently omitted from the June list.

The overall improvement of the New Zealand sharemarket this year was reflected in the cutoff for 10th position at September 30 being a nine months' gain of 56.2%, compared with 32% in June and 16.9% in March.

Special situations applied to each of the five "new" companies on the September high-performance list, confirming again that a sharemarket comprises many different companies whose individuality could be lost in the globalising effect of using index movements as absolute indicators of market trends.

Affco said in June that its profit for the year ended September would be more than the 2003 result. The company is holding a shareholders' meeting this morning to approve a $20 million capital return involving cancellation of shares on a 1:15 basis for cash payment 55.39c a cancelled share.

A capital repayment and good operational trading are bullish points for a share price.

Cabletalk repaid all its debt in July, when the annual meeting was told activities on an earning before interest, tax, depreciation and amortisation were "tracking significantly above last year." That was a solid call, given the group had a profit of $1.89 million for the year ended March, compared with a $11.37 million total deficit in the previous year.

A return to profit obviously had benefits for Cabletalk's share price, which was volatile in the past two years.

Toll Holdings' price movement was an understandable reaction to improved trading and a general clearing of the decks, including writeoffs of $344.8 million in the year ended June.

The latter reflected "the finalisation of the sale of assets to the New Zealand government, a detailed review of asset valuations and the resultant income tax implications."

Pod explained its name change three weeks ago and noted the former Designer Textiles had experienced strong results over the past year. Operating revenue increased 19.6% and operating surplus before amortisation and tax was 37.4% up on the previous year.

Pod's operating improvement and bright outlook resulted in excellent share price growth.

A takeover offer from Dunedin City Council's City Forests was the sole reason for Opio's share price gain. The fund's units were 58c as recently as July 31, but were 83c on September 30.

The book value of Opio's forests was written down substantially over the past two years when falls in international log and timber prices led to revaluations of all New Zealand forests.

Tower's continuing improvement and movement up the high performances' list was a feature of the three months ended September.

The company's share price improved 23.2% in the March quarter, 32% in the six months ended June and 69.6% for the December-September period, putting Tower fourth among the best performers and confirming it as a solid recovery story.

Price downturns among the 10 lowest performers were similar to those in the March and June quarters, although there were three changes from the June list, with Evergreen Forests, Wool Equities and Pacific Retail coming in.

Comparative performance exercises show the spread of percentage price changes in listed companies, a point buried in globalised indices.

The spread was substantial in the past nine months, being a combination of plus 105.4% and minus 44.8% and a timely reminder that sharemarkets comprise many individual companies whose price share price movements are never uniform.

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