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Of Bulls & Bears

Friday 27th October 2000

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Submarine venture snubs torpedos

Submarines Australasia is an imminent New Capital Market listing that plans to take over Submarine Adventures, a company starting up an underwater tourism venture in Milford Sound. Submarine Adventures recently took delivery of its first submarine, purpose-built at great cost and aims to be taking tourists out as early as next month. This sub holds only four paying passengers at a time and Ferdinand thinks the company could have done better for its money. Take this listing on specialist internet site, for example. It is offering a Whiskey class ex-naval submarine that can do 13.5 knots submerged, has a range of up to 24,000km, can dive to 200m and can carry 56 people. All this and more (such as functioning torpedo tubes) are available for a mere $US497,000 from the builders of the Kursk.

Giant takes an interest in Genesis

Biotech company Genesis Research & Development Corporation has done pretty well since listing in September. Its shares, issued at $6, are trading at around $6.60, valuing the company at around $162 million. This may not be a lot in world terms but Genesis also has some big friends. One of these is Immunex Corp of Seattle, US, which recently reported taking a 6.5% stake in Genesis and whose head of research sits on the board. Rather than the $6-7 that Genesis shares trade at, Immunex shares change hands on the Nasdaq at more than $100. Genesis has a $162 million market capitalisation but Immunex is worth more than $51 billion. Genesis doesn't expect to make a profit in the near future and hopes turnover will grow to $18.6 million by the end of 2001. Immunex made $105 million last year on revenue of $1.3 billion and is on track to half as much again this year. The involvement of a company like this in a little New Zealand outfit is a big vote of confidence but it also shows how far Genesis has to go to become globally competitive.

Michael Hill shares shine (a little)

Not often is a falling share price a cause for celebration but Michael Hill International is doing the best it can. In its latest annual report it notes its share price has gone from $3 at the end of June last year to $2.85 this year, a decline of 5%. That is rarely a reason for investors to break out the champagne but on a large graph the company points out the NZSE40 capital index moved from 2136 to 2030 in the same period, a decline of 5.2%. This outperformance of the market is even greater if one looks at the company's share price this week. At around $3.05, it has gained 2% since last June, while the poor old NZSE40 has declined 7.3%. Such news makes Ferdinand want to splash out on a diamond ring or two.

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