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Consistency the key for the South Island Index

16 April 2014

Consistency the key for the South Island Index

South Island firms continue to reach new heights

The first quarter of the 2014 calendar year kicked off on a positive note with the Deloitte South Island Index continuing its run of successive positive quarters to seven.

The 25th edition of the Deloitte South Island Index, for the quarter to 31 March 2014, saw the index grow by $699.8 million (6.4%) in terms of market capitalisation, pushing the value of the index to yet another new record high.

Scott McClay, a corporate finance partner in Deloitte’s Christchurch office, says that growth for the quarter came across the board, with seven of the eight sectors in the index posting positive quarters.

“This consistent growth for the Mainland’s listed companies sets an encouraging tone for the year ahead and is underpinned by the performance of some of the largest companies on the index. The five largest companies, all with market capitalisation greater than $500 million, collectively grew 9.0% during the quarter to 31 March,” says Mr McClay.

The Index’s 6.4% quarterly growth placed it well ahead of international benchmark indices and not far behind the NZX 50 for the quarter to 31 March 2014. During this period the NZX 50 recorded its highest quarterly growth rate in a year (8.5%), while the two overseas indices tracked performed poorly with the ASX All Ords growing only 0.9% and the Dow Jones losing ground slightly, decreasing 0.7%.

“The South Island Index remains far ahead of all benchmark indices during the year to 31 March 2014 growing $3.89 billion in market capitalisation, or a stellar 50.5% over the twelve month period. In comparison, the NZX 50 grew 16.2%, the Dow Jones grew 12.9% and the ASX All Ords grew 8.5% over the last year,” says Mr McClay.

“This growth was achieved despite the global profit taking in technology stocks which flowed through to the New Zealand market at the back end of the quarter.”

The Index’s top performer for the quarter, in terms of the dollar value of their market capitalisation, was Ryman Healthcare. Ryman Healthcare continued its impressive growth in share price, as it recorded its eleventh successive quarterly increase in market capitalisation, growing by $450.0 million (11.5%) during the quarter to 31 March 2014.

“Ryman shows no signs of slowing down, having upped the ante on its build rate announcing plans to build an additional 850 units and beds per annum by 2017 to meet increasing demand,” says Mr McClay.

Both Meridian Energy and EBOS Group also showed strong growth during the quarter to 31 March 2014, growing their market capitalisation by $150.2 million (11.5%) and $81.2 million (5.7%) respectively.

The biggest decline for the quarter to 31 March 2014 came from Bathurst Resources, which lost more than half of its value as it dropped $101.0 million (58.6%) in market capitalisation. The decline follows recent cost cutting measures and the lowest price for coking coal in about nine years. Synlait Milk and Scott Technology also saw declines, losing $35.1 million (6.1%) and $16.6 million (21.1%) in market capitalisation respectively over the quarter.

Seven of the eight industry sectors in the Deloitte South Island Index posted positive movements in the quarter to 31 March 2014. The Property sector was the leading performer, experiencing its tenth consecutive quarter of growth with a $450 million (11.2%) increase in market capitalisation.

Only the Primary sector did not display positive growth, experiencing a decline in market capitalisation of 2.8% over the quarter to 31 March 2014. Four of the eight companies in the sector declined over the quarter, with Wool Equities experiencing the biggest decline of the index in terms of percentage (74.1%).

To see the full Deloitte South Island Index quarterly report, go to www.deloitte.com/nz/southislandindex.

About the Deloitte South Island Index
The Deloitte South Island Index measures movements in market capitalisation, tracking the performance of 33 listed companies with a registered office and/or a substantial portion of their operations in the South Island.

About Deloitte in New Zealand
Deloitte New Zealand brings together more than 1000 specialist professionals providing audit, tax, technology and systems, strategy and performance improvement, risk management, corporate finance, business recovery, forensic and accounting services. Our people are based in Auckland, Hamilton, Rotorua, Wellington, Christchurch and Dunedin, serving clients that range from New Zealand’s largest companies and public sector organisations to smaller businesses with ambition to grow.

Deloitte provides audit, tax, consulting and financial advisory services to public and private clients spanning multiple industries. With a globally connected network of member firms in more than 150 countries, Deloitte brings world-class capabilities and high-quality service to clients, delivering the insights they need to address their most complex business challenges. Deloitte has in the region of 200,000 professionals, all committed to becoming the standard of excellence.

For more information about Deloitte in New Zealand, go to our website www.deloitte.co.nz.

About Deloitte
Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee, and its network of member firms, each of which is a legally separate and independent entity. Please see www.deloitte.com/nz/about for a detailed description of the legal structure of Deloitte Touche Tohmatsu and its member firms.

ENDS

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