Dull first quarter sees mixture of sharemarket rises and falls

By Peter V O'Brien

Thursday 28th March 2002

The first three months of 2002 were a ho-hum period for the New Zealand sharemarket.

The 10 biggest gains ("pluses") and falls ("minuses") are in the table and compared with movements in the NZSE40 capital and SCI capital indices.

Share price gains for the 10 best performed ranged from 70% for BIL International to a cutoff 21% for Taylors Group, as at last Friday. Things were unlikely to have changed much in this short week. Comparable figures in the first three months of 2001 were a range of 191.7% for Mooring Systems to 17.5% for Calan Healthcare Property Trust.

The downers this year went from Submarines Australasia's 74.3% price erosion to meat processor Richmond's 10.3%.

The first-quarter range last year was from 64.3% in Strathmore Group to Retailx's 25%.

Changes for the 10 best and worst performed were overall flatter than in 2001 but they also disguised minimal movements for most listed companies. There was a much broader spread last year.

Concentration on leaders in market commentaries is valid in the context of the heavyweights' dominance in the indices and the related fact that they are relevant to the affairs of institutional and private investors.

Minor percentage movements in Telecom, for example, get headlines. The telecommunications company dominates the market, accounting for about 17-18% of total market capitalisation on any day.

That proportion takes account of the New Zealand- held content of overseas-based stocks listed on our exchange.

Telecom's share price declined only 4.4% from December 31 to March 22 but the movement knocked $410 million off market capitalisation.

The market capitalisation of many second-line listed groups must be aggregated to reach $410 million.

There was nothing incomprehensible about the reasons for the main gainers and losers in the share price changes.

BIL International's price jumped after subsidiary Thistle Hotels sold 37 UK hotels for £600 million. Thistle retains management of the hotels. Its balance sheet improved, which will spin off to BIL.

BIL's report for the six months ended December 31 referred to the post-balance date sale. The effect will show up in the parent company's accounts for the full year ended June 30.

There was little else in the report to excite shareholders.

The company has four major investments, two of which have been laboured over for years to get a realistic return, and also profits from opportunistic share trading.

BIL says its primary role is "as an active investor with strategic shareholdings and active investment management aimed at extracting and maximising shareholder value."

There was a day when extracting and maximising that shareholder value was supposed to refer to companies in which BIL had a stake, strategic or otherwise.

We saw the results of that in recent years, so I now presume the extracting and maximising refers to BIL's shareholders.

Submarines Australasia was the big price loser since December. The downturn in big-spending US visitors hit the company's Milford Sound submersible ventures.

A statement last week suggested the end could be nigh.
Discussions were being held with potential partners and directors felt alternative business models had a greater chance of succeeding if an appropriate partner could be found.

"In the event that the directors determine that there are no viable alternatives then all the assets of the company will be disposed of in an orderly manner. If this is the case, then the directors will evaluate the best use for the resulting listed shell company."

That potential situation is a reminder that only a few "good ideas" out of, say, 100 realise business success.

Unforeseeable international events affected Submarines Australasia. US reaction to lower than expected performance hit F & P Healthcare.

The overall share price rises and falls in the March quarter could be indicative of the bigger issue of dull international markets.

BEST AND WORST PERFORMING SHARE PRICES
From 31.12.01 to 22.3.02

Best performed			Worst performed
Rank	Company	%	Rank	Company	%

1	BIL	70.0	1	Submarines	-74.3
2	Designer	48.8	2	F & P Healthcare	-39.9
3	Mooring Syst.	38.9	3	Wgton Drive	-29.2
4	Broadway	28.6	4	Renaissance	-22.7
5	North Port	28.4	5	Kirkcaldies	-21.3
6	Eldercare	26.1	6=	Advantage	-16.7
7=	Steel & Tube	22.6	6=	Richina	-16.7
7=	Metlifecare	22.6	8	Tourism	-12.1
9	Taylors	21.0	9	Vending Tech	-11.4
10	Auckland Air	20.8	10	Richmond	-10.3
NZSE 40 capital index		+0.3%
NZSE SCI capital index		+1.6%

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