Cowsheds beat computers on the stock exchange

By ELLEN READ markets writer

Ag companies did well, tech companies did not; small companies did well, large companies did not.

That's the simple summary of the performance of listed companies in the NZSE's past financial year.

Excluding takeover target Montana, which headed the list of returns on listed stocks, and fellow takeover target PDL, which came in at number three, most of the top-ranked companies were involved in agriculture or ag-related business.

"These [top stocks] are all obviously agricultural or ag-related stocks, and that's a clear reflection of what's been happening in that sector, and that's obviously been recognised in the performance of those companies," said broker Forsyth Barr's managing director Neil Paviour-Smith.

Forsyth Barr's figures rank the 120 companies listed on the NZSE according to their total returns for the year to June 30, including dividends and taking share splits into account.

If agriculture dominates the top of the list, the bottom is dominated by technology or tech-related companies.

"These would probably a year or two prior to this year have been amongst the better performers. But you've seen the unwind of all of the value in those tech companies and that's reflected in just how many of those bottom performers are tech or tech-related companies," Mr Paviour-Smith said.

The figures also showed that smaller companies fared much better over the past year than their larger counterparts.

The NZSE40 Gross Index managed returns of just 6.4 per cent over the year while the NZSESCI Gross Index outclassed it with returns of 21.9 per cent.

"Yet another year where the big companies have let down the New Zealand market quite significantly and yet another year where the broader-based New Zealand share-market continues to perform really well," Mr Paviour-Smith said.

"Unfortunately, because of the focus on the NZSE40, 6 per cent doesn't look like a particularly good year and that news tends to overwhelm the rest of the market."

With the exception of Montana - which has been skewed by the takeover battle - the only top 40 company in the year's top 10 performing stocks is Sky City.

"I think particularly Sky City, Fisher and Paykel and Sanford stand out as being the best-performing large companies, excluding takeover activity," Mr Paviour-Smith said.

Sky City, which posted an 84.3 per cent return, is due to report its annual result on Tuesday.

Fisher and Paykel has soared as the company moves to separate its appliance and healthcare divisions and list 20 per cent of the healthcare company on the Nasdaq.

The disappointing performances had come from the likes of Telecom, Sky TV, Air New Zealand and Fletcher Forests, bigger stocks which had dragged the top 40 index down, he said.

"Unfortunately that tends to reinforce the view that the New Zealand market has been a really bad market.

"Well, it's really only the performance of half a dozen stocks which have affected the outcome of the NZSE40 number."

In fact, of the 120 companies listed on the Stock Exchange, over half have returned more than 10 per cent for the year.

The situation is highlighted by, on the one side, Telecom, which produced a negative 19.1 per cent return to shareholders in the year under study, and this week posted a $643 million year profit, compared with $783 million in the 2000 year.

Despite losing $38 million in its fourth quarter, mainly because of a big writedown in Australia, analysts said the Australian performance looked quite impressive.

However the company's share price had fallen from $7.65 on June 1, 2000 to $5.46 on June 1 this year, according to Stock Exchange figures.

The other side of the coin was demonstrated by Wrightson, which is seen as an indicator for the recovering rural economy, which has soared from 63c at the start of this year to a year high of $1.10.

The rural services company this week posted a net profit of $10.7 million, up 41 per cent for the year to June 30.