Only 11 of Western Australia’s mid to large-cap companies suffered a fall in their market capitalisation over the past three years, according to a recent review.
Only 11 of Western Australia’s mid to large-cap companies suffered a fall in their market capitalisation over the past three years, according to a recent review.
The worst performers include some well-known names, such as automotive technology company Orbital, automated ticketing com-pany ERG, gold producer Croesus Mining, and biotech Chemeq.
The weak performance of these companies over the past three years partly reflects the heights to which they rose in earlier years.
Orbital, ERG and Chemeq at different times have been investor favourites, but all have failed to live up to expectations.
Orbital is quietly selling its direct injection fuel system to a handful of motor scooter and marine engine manufacturers around the world but the company has not done anything to excite investors.
In particular, there is no sign of the long hoped-for breakthrough into the automotive market.
Another poor performer, based on its shrinking market value over the past three years, is Schaffer Corporation.
Its leather business, which supplies automotive manufacturers, has been through a rough period, with the latest setback being the loss of BMW as a customer after 17 years.
The company has also reported difficult trading conditions for its UrbanStone building products business. But it hasn’t been all bad news for Schaffer shareholders, who have received a series of special dividends flowing from the sale of the company’s once-extensive property holdings.
ERG has long been considered a global leader in the market for automated ticketing systems for public transport.
It has won big contracts around the world but has failed to convert that success into reliable profits.
A major restructuring was completed in 2004, involving new shareholders, fresh capital raisings, a new board and new management.
However, that hasn’t changed the company’s financial performance.
It announced last month that the cost of completing its major projects had increased by about $15 million, and consequently it expects to report a net loss of between $10 million and $12 million for the year to June.
Croesus Mining has experienced a series of difficulties in recent years, with the latest setback being its decision to place its Davyhurst operation on care and maintenance due to rising costs.
Managing director Gerard Anderson, who joined the company in January, recently said Croesus was going through a transition year, which included extra investment in its Norseman operations to achieve better efficiency.
The saga at Chemeq has almost become a business soap opera over the past year. The one-time high-flying biotech stock came crashing to earth as the company reported a series of cost blowouts and delays at its Rockingham manufacturing facility.
Chemeq has also failed to deliver convincing progress on sales of its animal pharmaceutical product, which is promoted as an alternative to antibiotics in intensive pig and poultry farming.
Japanese investment group Mizuho bankrolled a rescue of the company early this year, which has given Chemeq another chance to prove itself but left shareholders with a heavily diluted stake.
Antares Energy (formerly Amity Oil) is another stock that enjoyed strong gains three to four years ago, after developing a gas field in Turkey, but over the past few years it has failed to deliver for shareholders.
