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.