The 2004 Trudo WA Business News Total Shareholder Return survey has highlighted the strong recovery of the sharemarket. Mark Beyer, Jim Hawtin and Alison Birrane report.
The Australian share market has reached record highs in recent months and this strong performance is reflected in the results of the latest TSR survey.
Seventy per cent of Western Australia’s listed companies delivered a positive return to their shareholders in the year to June 30 2004.
In the previous financial year, only 30 per cent of WA’s listed companies achieved a positive return, and in 2002 only 43 per cent achieved a positive return.
The top performers in the latest survey included a range of small mining and exploration stocks, such as aspiring uranium miner Paladin Resources, the recently restructured Agincourt Resources, Legend Mining and GME Resources.
Among larger companies, the top performers in 2004 included nanotechnology developer pSivida, oil and gas company Hardman Resources, diamond miner Kimberley Diamond, plantation manager Great Southern and nickel miner Minara Resources (formerly Anaconda Nickel).
Casino and gaming company Burswood is going out on a high, helped by the takeover offer by Publishing and Broadcasting.
The takeover offer, along with an improvement in Burswood’s operating performance, combined to boost the company’s share price last year, enabling it to achieve a TSR of 78.7 per cent.
Looking beyond the latest 12-month results, the TSR survey provides a good insight into companies that have been consistent performers over an extended period of time.
Caravan and park home manufacturer Fleetwood is arguably the standout performer.
It has delivered improved results every year for the past decade and analysts expect the company to achieve further strong profit growth over the next two to three years. (See full report on page 16.)
Among the blue chip stocks, Wesfarmers continues to deliver impressive returns to its shareholders, with a compound TSR over the five years to June 2004 of 25.8 per cent.
The challenge facing Wesfarmers, and in particular managing director designate Richard Goyder, will be to sustain the earnings achievements of current managing director Michael Chaney.
Alinta has been another impressive blue chip performer, with a compound TSR of 32 per cent over the three years to June 2004. (Five-year performance data is not available.)
Hardman Resources and Great Southern have delivered impressive long-term returns, helped in large part by stellar share price growth in the latest year.
Nickel miner Jubilee Mines, Internet company iiNet, gold miner Equigold, Consolidated Minerals and industrial company Schaffer Corporation are other standout performers over the past few years.
WA’s largest listed company, Woodside Petroleum, has been unimpressive over the past few years, with a five-year TSR of just 14.1 per cent.
It bounced back in 2004 with a 39 per cent return, and with oil prices at record highs the outlook is positive.
Foodland has previously been one of WA’s top performers but it slipped in 2004, with a TSR of minus 4.2 per cent.
This reflects the competitive pressure being applied by its two big competitors, Coles Myer and Woolworths.
Nonetheless, Foodland still has a very solid five-year TSR of 21.2 per cent.
On the negative side of the equation, the worst performers last year included waste treatment company QED Occtech, which recently announced plans to split into two separate business, and Audax Resources.
Among larger stocks the worst performers included wine company Xanadu Wines (minus 48.4 per cent), automated ticketing company ERG (minus 32.5 per cent) and engineering company Clough (minus 23.8 per cent).
In all three cases, these companies have been through a major restructuring over the past year, with new management teams now seeking to turn around their performance. (See page 20.)
Another notable non-performer is pharmaceutical company Chemeq.
It had been one of the top stocks in the 2003 TSR survey but tumbled last year, with a TSR of minus 24.7 per cent, as the market lost patience over protracted delays in its commercialisation plans.