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South Island firms continue upward trajectory

Deloitte South Island Index reaches a new high with 7.7% gain in the quarter to 31 December 2012

South Island listed companies have continued to perform well posting a gain of 7.7%, according to the latest Deloitte South Island Index.

The 20th edition of the Deloitte South Island Index, for the quarter to 31 December 2012, saw the Index gain $405 million or 7.7% in market capitalisation, continuing the momentum from the third calendar quarter. The latest quarter’s results see the Index up $1.2 billion (27.4%) during the year to 31 December 2012 with total market capitalisation now standing at $5.68 billion, the highest point since its inception in 2007.

Paul Munro, a corporate finance partner in Deloitte’s Christchurch office, says that the majority of the Index’s year to date increase in market capitalisation is attributable to the share price growth of Ryman Healthcare, which has increased by approximately $920 million (68%) in the year to 31 December 2012.

The Deloitte South Island Index’s 7.7% growth outperformed all benchmark indices during the December quarter, with the NZX 50 up 6.1%, the ASX All Ords up 5.9% and the Dow Jones down 2.5%.  The Index’s year to 31 December 2012 increase of 27.4% also leads the way with the NZX 50 up 24.2%, the ASX All Ords up 13.5% and the Dow Jones up 7.3% for the calendar year.

“Although the overall movement of the Index this quarter was positive, a third of the companies included in the Index experienced declines in market capitalisation which highlights that growth is not across the board,” says Mr Munro. 

“That said, over half the companies listed on the Deloitte South Island Index experienced upward movements in market capitalisation this quarter – and if the momentum from the second half of 2012 continues, as many predict, the Index may be set to break more records in 2013.”

Once again, the Index’s top performer for the quarter was Ryman Healthcare, gaining $225 million in market capitalisation or 11%.  Ryman has declared its intention to be the largest company by market capitalisation and Managing Director Simon Challies has reported that the company has been attracting interest from investment funds in Australia and elsewhere.

Pacific Edge Biotechnology had a strong quarter, gaining $68.2 million (82.9%) in market capitalisation after launching its first commercial product for the detection of bladder cancer.  PGG Wrightson Limited was another strong performer gaining $67.9 million (25.7%) in market capitalisation, moving into 5th position on the Deloitte South Island Index, swapping places with Skellerup Holdings Limited.  

The biggest decline in the quarter came from Silver Fern Farms, which lost $20.1 million in market capitalisation, a decline of 23.6%, following the release of its 2012 results reporting an operating loss after tax of $31 million.

Six of the eight industry sectors posted positive movements in the quarter to 31 December 2012 led by Biotechnology for the second straight quarter, which was the standout performer in percentage terms, gaining 81.4% ($75.6 million) and ending the year on a new record high since the inception of the Index.

The Retail sector also had another strong quarter gaining 13.5% ($52.4 million) on the back of the continued share price growth of Kathmandu Holdings.  The Property and Manufacturing and Distribution sectors achieved growth of 10.6% and 1.2% respectively, both reaching their highest monthly closing values since the Index began.

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

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