Boredom brings benefits for nondescript listed resinmaker

By Nicholas Bryant

Friday 1st September 2000

Being "boring" is paying off for low-profile stock Nuplex Industries.

The manufacturer of resin products, used in the making of everything from carpets to computers, Nuplex has been burdened with the tag of nondescript and it seems few investors have noticed its recent feverish activity.

Last year it swallowed up Australian resin companies Dulux Resins and National Starch and Chemical.

"Your paper described us as 'that boring little company' many years ago," Nuplex chairman Fred Holland said.
"We're perhaps a boring medium-sized company now."

Back in 1998 it became the only New Zealand listed company since the late 1960s to take over an Australian listed company, Australian Chemical Holdings.

Further growth was planned in Australasia with an eye on a restructuring Asian market.

"We see potential acquisitions in Asia because, like pre-reform Australia and New Zealand, it has a lot of capacity developed under protection.

"As protection is removed that capacity needs to be rationalised," Mr Holland said.

In growing rapidly, the company intends not only to improve its already healthy bottom line but also fix a severe liquidity problem.

With only 56.2 million shares on issue but market capitalisation which places it well inside the ASX200 index, some institutional investors have re-weighted their interests down of late.

"I believe we have to address liquidity. We're part of an Australasian market in every sense so we need to be bigger," Mr Holland said.

He said upcoming acquisitions were likely to be of a scale that would require the issue of new shares, unlike recent buys which had been funded through revenue.

One institutional investor, BIL's would-be saviour Shamrock Holdings, has increased its stake from 7% to 17%. The California-based investment company is best known here for offering the ailing Brierley Investments a rescue package.

Mr Holland said Shamrock bosses had told him they were value investors for the long term, happy to be cornerstone shareholders with less than 20% of the company.

"I think they'd probably like a seat on the board and I'd welcome it when one comes available. Their skills in merchant banking would be valuable as we continue to grow," Mr Holland said.

On Friday, Nuplex announced its annual profit had risen to $16.7 million for the year to June 30, up from $11.6 million last year.

The company lifted sales 22% to $382 million and declared a final dividend of 7c a share, bringing the full-year dividend to 15c a share.

Its shares traded strongly on the NZSE on Wednesday, up 10c to $3.20.

Nuplex resins are used in plastics, textiles, the binder for the ink in most Australasian newspapers, yachts, underground petrol tanks, translucent roof sheeting, bathroom components and floors of shopping malls.

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