WA based national to take on big boys

A WA-based national chemical processing and manufacturing firm is out to mix it with the big boys.

Joyce Corporation Ltd is trying to raise its market capitalisation to at least $50 million to attract greater interest from managed funds and big brokerage houses.

Joyce finance director Tony Edwards said while the company continued to perform strongly and supply 15 per cent growth, its small cap status made big investors wary.

“Fund managers are typically less interested in small cap stocks,” Mr Edwards said.

“They are usually concerned about the liquidity of small cap companies. Yet small caps often give investors a better return.”

But even despite its small cap status, Joyce does have investors from the big fund management sector.

Mr Edwards said Joyce underwent rationalisation in the early 1990s, divesting itself of areas not linked to core competencies.

“We reviewed the position a couple of years ago and realised we had to have relevance in the financial market,” he said.

Currently Joyce has a market capitalisation of around $40 million, helped by its 1997 acquisition of rural herbicide supplier Davison Industries and canola oil and meal producer Davison Oils. The two companies are now run under the banner of Joyce Rural Pty Ltd.

Mr Edwards said Davison was an ideal acquisition because it fitted with Joyce’s core business of chemical processing.

“It also gave us economic sector spread,” he said. “We determined the sectors underpinning the Australian economy to be rural and resources.”

As yet Joyce has no interests in the resources sector but it is keeping its options open. Mr Edwards expects the company to reach the magical $50 million mark in about 12 months.

Ironically, the burgeoning chemical and manufacturing company is still remembered as a furniture producer.

Joyce started in 1886 as a manufacturer of calico bags which over time led into the making of mattress and furniture products.

In 1988, to broaden its base, it acquired the nation wide foam and manufacturing businesses of Cable Makers Australia. Mr Edwards said foam was the principle business Joyce wanted to buy into at that time.

Because the mattress market was difficult, Joyce divested that interest in 1990. It also left the general furniture business in 1996.

But it retains its healthcare furniture business which has long been a supplier to Australia’s healthcare industry and is, in fact, a market sector leader.

Currently the company’s shares are trading at around $2. It recorded an operating profit after tax for the half year ended December 31 of $1.47 million — an increase of 16 per cent on the corresponding half year period.

There was an increase in earnings per share for the half to 7.8 cents — up 15 per cent. It declared an increased interim dividend of 5 cents per share for the half year and will probably supply a fully franked dividend of 11 cents for the full year.


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