Solid old-economy firms return with a vengeance to record rises

By Peter V O'Brien

Friday 29th September 2000

The old economy hit back in the first nine months of the sharemarket's year as the new- economy technology and internet-related stocks took a dive.

The tables show companies whose share prices improved more than 30% from the end of 1999 to last Friday and the groups where prices fell more than 40%. It was only a coincidence there were 14 companies in each section.

Reborn mineral exploration companies and other bits and pieces associated with technology, telecommunications and internet trading and services accounted for eight of the 14 in the right-hand table (Largest falls) with only three in the left-hand (Largest rises).

The three were Renaissance, GDC Communications and Baycorp and it was not surprising they have solid businesses in supplying goods and services and reasonable profit growth.

Advantage Corporation was the surprise in the list of largest falls, because the stock was the best performer last year, going from 66c on December 31, 1998 to close 1999 on $3.90, a rise of 491%. It hit a high of $5.65 this year, before retreating to $1.79 last week.

The company has expanded rapidly but there was a slight stir in the market when it reported a "normalised" profit of $6.7 million on August 9 for the year ended June 30 and issued a full report to the Stock Exchange two days later showing net profit at $2.97 million, including a $1.23 million gain on the sale of Strathmore rights. That was an increase of 12.5% on the previous year, when there were no unusual items.

Capital Properties also had an unusual year up to last week but a reverse of what happened to Advantage. The company's shares were the fourth-worst performer last year when they went from 66c at the end of 1998 to close 1999 at 42c, a drop of 36.4%. They more than doubled in the period to last week.

Technology stocks had a big run in the last weeks of 1999 and early this year, before US investors reassessed their high-flying technology and internet sectors and slashed share values, knocking the Nasdaq index in the process.

The 11 companies below Renaissance, Capital Properties and GDC Communications on the list of largest rises were representative of the old economy, with two - Frucor and Mowbray - being new listings.

Percentage changes for new listings in the tables were calculated from the closing price on the day of listing, rather than the offer price, if the latter differed from the former.

For example, GDC Communications' shares were offered at $1.50 each but closed on listing at $2.15.

Fletcher Challenge Energy's price jump since December was understandable, given the rapid movement in oil prices this year and the profitability of its investment in US-based Capstone Turbine
Corporation, a designer and manufacturer of micro-turbines.

Tasman Agriculture benefited from strong gains in milk production, an increase in farmgate milk prices, a favourable outlook for the dairy industry, the drop in the currency's value and the re-rating as the result of a share buyback of 22.99 million shares at $1.20 a share.

A bid in January at $2.80 a share from DB's major shareholder, Asia Pacific Breweries, for the outstanding shares accounted for part of the increase in the company's share price. Asia Pacific took its holding from 58.39% to 74.98%. Montana's shares rose strongly in recent weeks as a result of Lion Nathan taking a stake in the company and news last week the winemaker had bought Corbans Wines for $151 million, a move that had obtained regulatory approval.

Rises and falls among individual stocks since December reflected the general state of the market. There were 69 companies with declines in their share prices and only 40 with rises. The trick was to be among the 40 or get out of the 69 before they hit bad weather.

Notable falls not included in the tables were Telecom, down 35%, Air New Zealand A
(-24.1%, although the B shares retreated only 7.1%), Carter Holt Harvey (-27.6%), Contact Energy (-24.2%) and Ports of Auckland (-29.1%).

It will be interesting to see if places in the table have changed much when 2000 closes.

Largest rises
30.12.99 to 22.9.00 (%)

Company	Plus
Renaissance	142.0
Cap Props	104.8
GDC Comms	86.0 (1)
FCL Energy	80.0
Tasman Ag	67.5
Frucor	41.9 (1)
Montana	41.1
DB	38.3
Northport	37.7
Mowbray	34.0 (1)
The Warehouse	32.6
Baycorp	32.5
Cedenco	31.6
Affco	32.1

Largest falls
30.12.99 to 22.9.00 (%)

Company	Minus
Acquaria	85.3
Spectrum	80.0
Pure	70.0
IT Capital	65.3
E-force	64.3
Beauty Direct	64.2 (1)
Newcall	61.7
Eldercare	61.6
E-phone	60.0
Advantage	54.1
Strathmore	54.0
Metlifecare	47.7
Seafresh	46.4
Force	44.8

(1) from closing price on day of listing

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