8 July 2014
South Island listed companies experience phenomenal annual growth in market cap
Deloitte South Island Index achieves 35.3% growth for year to 30 June 2014
South Island listed companies have achieved phenomenal growth in market capitalisation during the past year, according to the annual review of the Deloitte South Island Index presented today in Christchurch.
The Index, which tracks the quarterly performance of 32 listed companies with operations in the South Island, gained a remarkable $2.92 billion (35.3%) in the year ended 30 June 2014. This growth comes in spite of a modest decline of 3.0% in the most recent quarter to June 2014, the Index’s first quarterly decline in two years.
Half of the 32 companies in the Index grew during the past year and the 35.3% annual growth was more than double the growth of the nearest comparable index. The NZX 50 achieved a growth of 15.8%, the Dow Jones 12.9% and the ASX All Ords 12.7% during the year to 30 June 2014.
Scott McClay, a corporate finance partner at Deloitte’s Christchurch office, says the performance of the Deloitte South Island Index during the past 12 months is a reflection of consistently strong performances from industry leaders.
“Consistency among top companies has clearly been the key to the growth of the Deloitte South Island Index. Since September 2012, the Index has grown quite rapidly, largely through the continued success of top performers like Ryman Healthcare and EBOS Group,” says Mr McClay.
Unsurprisingly, once again Ryman Healthcare was the standout performer for the year with an impressive $1,090 million increase (34.2%) in market capitalisation on the back of its twelfth successive year of record underlying profits. EBOS Group was knocked down to the third ranked position on the Index by Meridian Energy even after gaining $871.4 million (138.5%) in market capitalisation, while Meridian Energy increased its market capitalisation since its listing in October 2013 by $300.8 million (24.0%) in the year to 30 June 2014.
Conversely, the company with the largest fall in market capitalisation was Bathurst Resources, dropping $43.7 million (48.1%) over the year to 30 June 2014 amidst the drastic actions taken after reassessing its operations in light of the weak price of coking coal. Both Scott Technology and Moa Group also had a disappointing 12 months, dropping $23.7 million (25.1%) and $21.2 million (61.8%) respectively in the year to 30 June 2014.
Perhaps the most positive story from the past 12 months is that every sector gained market capitalisation during the year to 30 June 2014. The star performer for the year on a percentage basis was the Manufacturing & Distribution sector producing a remarkable 93.7% growth rate on the back of EBOS Group’s share issuance to enable them to acquire Symbion.
Mr McClay says the outlook for the Deloitte South Island Index over the next year is mixed. After a sustained period of growth, the quarterly growth rate of the Index has reduced in each of the last three quarters, culminating in the modest decline recorded in the June 2014 quarter, making any further prediction particularly difficult.
“What is very heartening however is that growth has been spread across all the sectors tracked by the Index. While the Manufacturing & Distribution sector has led the way over the last 12 months, it has been ably supported by 53.1% growth in the Bio-technology sector, led by Pacific Edge and BLIS Technologies, and 37.2% growth in the Primary sector, led by Synlait Milk and PGG Wrightson. In addition to the breadth across sectors, it is pleasing to see growth across companies representing both the traditional and emerging faces of the South Island economy,” concludes Mr McClay.