Leaders muddle in the middle

By Peter O'Brien

Friday 2nd July 2004

The list of best share price performers for the six months ended June (to June 25, actually) suggested many could have their best run in the first.

The highest and lowest performers in the table excluded stocks priced at less than 20c on December 31, thereby cutting out the beauty clinic franchiser Caci (up 111.1%) and biotechnologist Pacific Edge Biotechnology (up 77.8%). Miners were also excluded, which explains the omission of Austral Pacific.

GDC Communications was a notable removal from the 10 lowest performers' list when compared with the March 31 list, (NBR, April 8). The telecommunications company's shares were priced at 24c on December 31 but fell 37.5% to 15c by the end of March, before getting back to 24c on June 25.

There were three newcomers to the highest performers' list since March. They were telecommunications company Team Talk (listed in May), Just Water and children's clothing retailer Pumpkin Patch, both listed this month.

The water services provider had a spectacular debut. It could have reached at least a short-term plateau until either people see more potential or until it issues a report.

The other seven companies in the highest performers were the same as those that were top in the three months ended March, although in a different order and with a slowdown in their rates of appreciation.

A slowdown was understandable, particularly for Mooring Systems and New Zealand Exchange (NZX). Mooring Systems has moved between $1.35 and $4.25 in the past year and a breather was in order.

NZX shares were issued at $3.60 last June, had a $4.10 low after listing and a high of $9.75. The company should still be doing well from an operational viewpoint, given the constant flow of new listings, particularly on the alternative market, and the consequent number of trades.

Results of a six-month review of the alternative market (NZAX) were released in early June.

The exchange said the review highlighted four key factors.

"First, the NZAX market is showing its value as a low-cost, efficient means for companies to raise capital for growth and expansion.

"Second, companies that have used the NZAX market to raise capital from the public have experienced significant increases in the number of shares traded.

"Third, companies that have listed on the NZAX market have, on average, realised an increase in market value. Finally, the list of NZAX sponsors accredited to bring companies to NZX's markets continues to grow."

It was understandable that the 10 lowest performers' list for the six months ended June was similar to the list compiled at the end of the first quarter.

It is difficult for companies that have been downgraded, rightly or wrongly, on the market to make a recovery in only three months, although GDC Communications did so from a relatively low base.

The table has six companies the same as those appearing three months ago: Genesis Research Development Corporation, Wellington Drive Technologies, Software of Excellence, Abano Healthcare Group, Allied Farmers and Air New Zealand.

Briscoe Group, The New Zealand Wine Company, The Warehouse Group and VTL were newcomers, although there was not much in it when the second half of the 10 were considered.

A better measure of the market's health since March was the cut-off point. It was Pacific Retail's 16.7% decline since December when the March 31 figures were drawn up, a level which was not reached last week until number seven.

The performance of companies overall was better than three months ago.

Performance lists for the six months confirmed the oft-made point that it can be misleading but understandable to refer to the "market's" performance in any given period.

A sharemarket is a global grouping of constituent companies, some of which have a disproportionate influence on benchmarks such as indices. It was significant in that context that leaders were conspicuous by their absence from the March and June lists of highest and lowest performers.

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