After some hard times, Rakon has posted its first annual net profit in four years. Photo / Natalie Slade
After some hard times, Rakon has posted its first annual net profit in four years. Photo / Natalie Slade
Opinion by
Could Chevron New Zealand's offloading of its NZ Refining shares be a sign of things to come?
The operator of the Caltex service station chain sold its 11.4 per cent stake in the Marsden Point refinery owner through a block trade run by Deutsche Craigs that wrapped up yesterday.
Byall accounts the shares were eagerly snapped up by institutions and retail investors.
That deal followed the Tauranga Energy Consumer Trust's sale of 20 million Trustpower shares for about $155 million last month.
A source told Stock Takes that a few more potential block trades were in the works, although it was too early to start naming names.
With many stocks trading at high multiples, some large shareholders might be thinking it's an opportune time to sell.
Then again, meagre interest rates make a good argument for staying invested in equities.
Craigs profit down Craigs Investment Partners has posted a solid annual result but a lift in operating expenses stopped the brokerage from turning another record profit.
Revenue rose 2.6 per cent to $111.9 million in the 12 months to December 31 from $109.1 million a year earlier, according to financial statements which were lodged with the Companies Office.
But profit fell to $15.2 million from 2013's record $17.8 million as operating expenses lifted 6.5 per cent, or $5.6 million, to $91.2 million.
The biggest cost increase was in employee benefits, which rose by $3 million on the previous year to $63.9 million.
The top-line result was driven by a 12 per cent jump in fees to $61.5 million, while brokerage revenue fell to $37.3 million from $40.3 million a year earlier.
More than $6 billion in new capital was listed in 2014 through 12 initial public offerings.
Craigs was involved in a number of those IPOs including the listings of Orion Health, Scales Corporation and Genesis Energy.
The company is 49.9 per cent owned by Germany's Deutsche Bank. Key managers, including chairman Neil Craig, are shareholders in CIP Holdings, which owns the rest of the firm.
Line in the sand The Financial Markets Authority made a real example of Pacific Edge this week.
The bladder cancer test developer copped a public warning from the regulator over breaches of its continuous disclosure obligations and will pay $500,000 in compensation to investors who sold shares during a delay between the signing of agreements and stock exchange announcements.
That is a hefty sum for a small, loss-making business, which is likely to have agreed to the payment to avoid even costlier court action.
Stock Takes hears the company is a bit miffed about its treatment, but they obviously slipped up.
Pacific Edge shares spiked by more than 200 per cent following the announcements in October 2013.
Investors who sold shares and missed out on those gains would be, quite rightfully, annoyed.
It's unlikely that Pacific Edge is the sole offender in this area, however.
Hopefully the FMA will take a similarly tough line with other companies that transgress.
The timing was particularly unfortunate for Pacific Edge, with the public telling-off coming just before a $35 million capital raising announced yesterday in conjunction with its full-year result.
The company's net loss rose to $10.6 million from $9.4 million a year earlier.
Pacific Edge shares closed down 6c yesterday at 66c.
That is well below the $1.74 record close they hit early last year.
Road to recovery
Brent Robinson
It's always interesting to read articles published in the glory days of former market darlings.
Stock Takes stumbled upon one this week, written about Rakon in May 2007, a year after the technology company's IPO in which shares were sold at $1.60 each.
Its first full-year result had just been delivered and euphoria about the firm's outlook was pushing the company's stock price higher and higher.
It reached an all-time closing high of $5.67 on May 24, 2007, giving the business a market capitalisation north of $700 million.
While not on the same scale as Finland's Nokia, Rakon - whose shares were "gleaming like the quartz crystals it produces" - had similar prospects, the article said.
Both companies have since fallen on hard times.
Still, shareholders finally had something to celebrate last week when Rakon posted its first annual net profit in four years, since the 2011 financial year. Its bottom line was $3.2 million in the black, compared with an $83.8 million loss a year earlier that resulted from a painful restructuring, which included exiting a Chinese factory it had set up to supply the smart wireless market.
Chairman Bryan Mogridge followed through on his promise to shareholders at last year's annual meeting that the company would return to profit.
Where to from here? Rakon is unlikely to become the business investors were envisaging back in the heady days of 2007.
The margin-sapping commoditisation of the components it supplied for consumer technology such as smartphones and tablet computers dealt a heavy blow to those dreams.
But chief executive Brent Robinson made some encouraging comments last week about margin improvements the company was enjoying from focusing on the telecommunications, space and defence sectors.
With a period of costly restructuring completed, the firm could have a future as a relatively small, but profitable, niche manufacturer. In terms of the company's share price, however, the jury appears to be out.
Rakon shares closed up 10 per cent at 38c following last week's result but have since lost ground, closing up 1c last night at 36c, giving the company a market value of $68.77 million.
That's still 100 per cent above the all-time closing low of 18c they reached in June 2013.
