Mainland firms boost worth

ALAN WOOD
Last updated 05:00 29/01/2014

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The total value of listed South Island companies rocketed to $10.9 billion in 2013, as measured by the Deloitte South Island index.

About $2.05 billion of the gain was the inclusion of four companies in 2013 to the index of 33 companies with the two big ones being Meridian Energy and Synlait Milk.

But even with the four excluded the South Island index jumped 49 per cent in value - or $3.6b - from the year before's total value of $5.68b, Deloitte said, outperforming the country's NZX 50 index which rose 16.5 per cent in 2013.

A good chunk of the gain is due to retirement home operator Ryman Healthcare, which had a December 31 capitalisation (value of their shares) of $3.93b, a $450m gain in the three months from September 30.

That's also $1.65b leap in value for Ryman whose capitalisation was $2.28b at the end of 2012.

The South Island index's 10 per cent gain in the three months to December 31 also beat the New Zealand-wide NZX50, which was flat for those same three months.

"This dominance, combined with the index breaking the $10 billion barrier, clearly indicates a boom period for investor confidence in South Island listed companies," Scott McClay, corporate finance partner in Deloitte's Christchurch office, said.

While the South Island firms were "punching above" their weight compared to North Island companies, the wider economic picture for the Mainland for 2013 and beyond was still "mixed", McClay said. "It's not all rosy."

Even in Christchurch the hospitality or cafe scene was hardly rip-roaring at the moment.

Christchurch economist Robin Clements, of UBS NZ, recently estimated the South Island achieved 4.6 per cent economic growth in the September 2013 quarter compared to the September 2012 quarter, whereas the North Island recorded 4 per cent between the same periods.

McClay said eventually the Christchurch earthquake rebuild would help foster stronger economic growth in the South Island though this would probably be reflected across wider New Zealand firms not just those in the Deloitte index, he said.

"From my view of the index, I don't think the earthquake is having a particularly big impact on these companies (yet)," he added.

"I think there's still more growth to come in Christchurch, in the South Island from the earthquakes when it (the rebuild) kicks off."

The Deloitte index grew by $995.8 million or 10 per cent to $10.9b in total market capitalisation for the three months to December 31.

McClay said the South Island index' had continued a remarkable run. "This positive trend is especially encouraging given the number of non-listed businesses that are struggling in post-earthquake Christchurch and the well-publicised recent losses of significant Dunedin employers."

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The standout performance in the three months to 31 December 2013 came from Pacific Edge, which increased its market capitalisation by 185 per cent following a rights issue of new shares and the increase of its share price. Pacific Edge closed the year with a capitalisation of $423.3m up from $150.5m at the end of 2012.

A good performance by the biotechnology sector led by Pacific Edge and Blis Technologies was a reflection of what was happening with smaller innovative firms in the south.

The worth of Synlait Milk grew 23 per cent to $577m in the December quarter within a strong rural economy. "It's in the right industry at the moment."

TOP 10 By market worth at December 31, 2013:

1: Ryman Healthcare $3.93b

2: Ebos Group $1.43b

3: Meridian Energy $1.31b

4: Kathmandu Holdings $704m

5: Synlait Milk $577m

6: Pacific Edge $423m

7: Heartland NZ $334m

8: Skellerup Holdings $334m

9: Skyline Enterprises $332m

10: Lyttelton Port $308m 

- BusinessDay

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