Listed companies play snakes and ladders over first quarter

By Peter V O'Brien

Friday 7th April 2000

Share price movements in the past three months showed again it is facile to treat the sharemarket as a single entity.

The range of percentage changes shown in the tables, from Sky TV's +65.1% to Trans Tasman's -31.5%, was not particularly unusual, because it has happened regularly in the past, whether on a quarterly or annual basis.

An examination of the top and bottom performers last year in The National Business Review on December 17, showed a range from +430% for Advantage Corporation to
-66.7% for Roller International.

Advantage was one of the top-10 performers in 1999 to continue its run this year. The e-commerce and transaction-
processing equipment supplier put on 39.7% between January and March.

Baycorp was another to carry on with solid price gains after a good year in 1999. The stock improved 67.5% last year and has since added another 32.5% from its December base.

Figures for the change in the NZSE 40 capital index and the small companies index (SCI) are additional evidence the market should not be treated as an entity.

Falls of 6.9% in the top-40 capital index and 7.5% in the SCI may seem relative, given the investment climate over the past three months, but each index comprises a range of stocks whose ups and downs tend to cancel each other out.

That would bring little joy to people who invested at the turn of the year in, for example, FCL Forest shares, Carter Holt Harvey and Tourism Holdings, three of the bigger companies with sizeable basic share prices that appeared on the list of bottom-10 performers.

The market's treatment of Tourism Holdings seemed unjustified, given the company's good result for the six months ended December, a 1:8 bonus share issue and indications the dividend will be maintained on bonus-increased capital.

Tourism Holdings' directors expected the strength of tourism markets and a sound performance in all the company's businesses would ensure the group achieved the planned tax-paid profit of $17.8 million forecast in an investment statement published in September when the company had a cash issue.

A profit of $17.8 million would be 2.7 times last year's earnings but the company's structure has changed considerably after acquisition of Australian-based Britz, a specialist in motor home rentals, and Maui Rentals.

Earnings a share figure are a better basis for comparison. The company earned 11.3c a share in the six months ended December, compared with 6.8c in the corresponding period of the previous year.

Advantage's rising share price was justified when the company reported a profit of $2.16 million for the six months ended December, compared with $1.04 million in the first half of the previous year and a forecast of $3.1 million.

The $2.16 million compared favourably with the forecast, because the group had net unusual items of $982,000 after tax which were deducted from operating profit.

Several companies in both sections of the table had a low share price in December, so a movement of a few cents was a sizeable percentage shift.

Tag Pacific, with a three months' gain of 102.2%, was excluded because the group has virtually no interests in New Zealand and is classified as an overseas issuer.

Although there were some healthy price gains since the end of 1999, overall the market was dull.

The assessment of price movements when preparing the table showed 74 stocks were down on the price at the end of December by more than a minor percentage and only 11 were up, again ignoring those that moved by a small amount.

Limiting the gainers and losers to 10 each and taking a full three-month period disguised the market's volatility since December, particularly in technology stocks, most of which have yet to obtain any sales revenue, let alone make profits (NBR, Jan 28).

Most of the companies' share prices raced up in the three weeks from the end of December to January, but they have since retreated to December 31 levels, which explains why only one - IT Capital - made the list of 10 bottom performers.

The diversity of activities among the companies at the top and bottom was another feature of the analysis to go with the range of share price performers.

The next three months will probably see changes in the performance packing order but there were some substantial price gains and losses in the first quarter.

Top-10 share performance - first quarter 2000

Company	Price 31.12 (c)	Price 31.3 (c)	% change
Sky TV	315	520	+65.1
Wil & Horton cum pref	925	1315	+42.1
Advantage	390	545	+39.7
Baycorp	830	1100	+32.5
Force	58	73	+25.9
DB	235	285	+21.3
Affco	32	37	+15.6
Broadway	32	36	+12.5
Newcall	47	51	+8.5
Colonial	855	927	+8.4

Bottom-10 share performance - first quarter 2000

Company	Price 31.12 (c)	Price 31.3 (c)	% change
Trans Tasman	27	18.5	-31.5
FCL Forests	77	53	-31.2
Aquaria	18.4	12.8	-30.4
CHH	250	174	-30.4
Cap Props	42	30	-28.6
Manor Inns	14	10	-28.6
IT Capital	75	54	-28.0
Tourism	318¹	230	-27.7
A Barnett	107	78	-27.1
Nat. Gas	180	132	-26.7

(1) adjusted for bonus issue

Market indices - first quarter 2000

Index	31.12	31.3	% change
NZSE 40 Capital Index	2206.69	2954.05	-6.9
NZSE SCI Index	5835.71	5399.25	-7.5

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