By Peter V O'Brien
Friday 11th April 2003
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Some direction changes and acquisitions could be seen as effective "backdoor listings" for former private companies and others as attempts to survive in competitive environments.
Feverpitch International was set up as a new capital market (NCM) company specialising in software for online betting. The company had problems with a share issue last year and in general operations. It acquired privately owned childcare company Kidicorp and moved from the NCM list to the NZSE main board. The acquisition was effectively a reverse takeover, giving Kidicorp a backdoor listing under its own names.
Software ownership was retained but the company said in January it would investigate ways to maximise the software's values after completion of the Kidicorp transaction. The directional change meant Kidicorp/Feverpitch was excluded from the table of technology company share prices.
It was convenient to consider companies with some form of technological base, although the technologies used were considerably different. Blis Technologies, Botry-Zen and Genesis Research & Development are biotechnology groups, in the broad sense, despite variations in operations.
Biotechnology companies warned their activities were long term. Publicised breakthroughs were short-term phenomena that could take years to produce acceptable returns on investment.
That was normal. There are regular media news bulletins and articles about medical scientists making breakthroughs dealing with numerous diseases. They usually end with a comment that eventual applications are subject to more research, trials among control groups, peer assessment and approvals from regulatory authorities. It is a long process that does nothing for investors' desires for instant gratification.
Computer software specialists operate in a crowded market. Only Finzsoft Solutions improved its share price among that group in the past six months.
Market treatment of Software of Excellence, which provides software to dental specialists, seemed illogical, given the company's steady penetration of its targeted areas.
Telecom is a technology company, in the sense that all facets of its business involve advanced electronics. Its daily share price movements regularly lead reports on the New Zealand sharemarket, recent comment being based on apparent improvements. The price has fallen 6% in the past six months.
Remaining companies in the sector maintained longstanding share price weaknesses over the past six months. Provenco Group's name change from Advantage Group did nothing for its price. The change was ironic, assuming the new name was adopted to show the company was "proven," in view of the former Advantage's history.
Some companies seem to be desperate for survival, given their buying bits of other minor operators and attempts to redefine themselves.
The sector provides opportunities for private companies to get listings on the Stock Exchange at low cost, whether at their instigation or after approaches from people trying to salvage wreckage.
Folding a private company into a weak listed organisation, after appropriate shareholder resolutions can be cheaper than the rigmarole of prospectuses, investment bankers and brokers and other costs.
The Stock Exchange outlined proposals to encourage and assist non-listed companies to list and thereby develop the country's equity market. We will see what happens.
It is worth noting a stock exchange is the epitome of free market forces. There is now talk to encouragement and assistance.
Potential listers will decide the merits and demerits of listing. Some will avoid encouragement and assistance, using market forces to achieve objectives.
They could look at reverse takeovers of languishing companies, particularly among technology stocks, a possibly ironic outcome in view of the exchange's encouragement of the technology fad a few years ago.
Company 7.10.02 4.4.03
Blis Tech $0.42 $0.35
Beauty Direct 9.5c 9.5c
Botry-Zen $0.16* $0.12
Cabletalk $0.28 $0.21
Cadmus 9.8c 6c
Cube Capital 20c(1) 9.5c
e-Cademy 0.5c 0.4c
Finzsoft Sol $0.50 $0.85
Genesis $1.65 $1.20
GDC Comm $0.80 $0.65
Newcall 5.1c 4c
Provenco(2) $0.33 $0.27
Renaissance $0.36 $0.20
Retail X $0.20 $0.10
Rocom $0.18 $0.14
Selector 1.5c 1.2c
Software of Exc $1.70 $0.75
Spectrum 1.6c 0.2c
Strathmore 2c 0.4c
Telecom $4.89 $4.60
Vending Tech $1.60 $0.64
* Listed 21.11.02
(1) Adjusted for 2:1 bonus
(2) Formerly Advantage Group
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