THE MARKET Corporate activity sets new peak

Press, 10 August 1985, Page 22

THE MARKET Corporate activity sets new peak

By

ADRIAN BROKKING

The New Zealand sharemarket firmed this week under the impetus of corporate activity, and Barclays’ index of industrial shares reached an all-time high of 1763.37 points and closed yesterday at 1752.37 — a rise of 7.23 points on the week. On-market bids early in the week by mystery buyers for Cable Price Downer and Crown Corporation stimulated the market, aided by Australian demand for such shares as Goodman. On Wednesday afternoon it became evident that overseas interests were withdrawing from the market, which promptly began to ease, in spite of further market stands for Wilson and Horton, the Auckland newspaper publisher, and Williams Properties. Few shares of either company changed hands, and the prices moved considerably higher than the official bid prices. Market talk in Auckland speculates on three possible candidates for Wilson and Horton: Mr Rupert Murdoch, the Australian newspaper magnate, Dominion Breweries, and Robert Jones Investments. The shares closed yesterday at 750 c, 25c above the 725 c offered by the client of a Wellington sharebroker. The bid for Williams Property Holdings also failed to generate much enthusiasm — few shares were crossed although the price at one stage was 125 c and the shares closed at 122 c — 2c above the price offered by an Auckland broker on behalf of an unnamed client. The movements by Goodman typified this week’s market. It rose steadily early in the week, putting on 35c, possibly as a result of an article on the group’s Australian expansion in the Australian “Bulletin,” and yesterday lost 15c to 375 c as Australian buying dried up. Most market analysts appear to have come round to the realisation that the New Zealand sharemarket is no longer undervalued by international standards but has reached parity with markets overseas. Corporate activity is reducing the number of listed companies, but new ones are continually floated. The Owens group expects to be listed on Monday, and two new floats were announced

during the week. The Owens group has a stake in four listed public companies: Mogal Corporation, Ltd, 67 per cent, Wenrich Investments, Ltd, 45 per cent, Cromwell Corporation, 32 per cent, and Viko Holdings, 22 per cent. Wholly-owned subsidiaries are Seatrans New Zealand, Ltd, and Seatrans Australia Pty, Ltd; Trailways Transport; ASC-Flowers Transport; Hurley and Williams, Ltd; Seaport Operations, Ltd; Bridgeport Pty, Ltd (Sydney customs agency); Cooltainer Services; Owens Property Holdings. The group has majority interests in Alan Brown Energy Resources, 70 per cent (Waikato distributor of alternative fuels), Jardine Wrightson BOP, Ltd, 50 per cent (Bay of Plenty insurance and estate planner); Perspective Video, Ltd, 70 per cent; ASC-Flowers Customs, Ltd, 60 per cent. Minority shareholdings are in N.Z. Maritime Holdings, 42 per cent; Impact Television, Ltd, 33 per cent (a contender for the third television channel), Intersuisse, Ltd, 10 per cent (international merchant bank). During the latest financial year the group acquired a 42 per cent shareholding in Brugger Holdings, Ltd, and increased its shareholding in New Zealand Shipwright Services, Ltd, from 50 to 75 per cent. The price appears to be well-pitched, in spite of the huge premium: it equates the net asset backing of 150 c, and with earnings of around 20c a 10c share (from a group net profit of $5,299,000) the priceearnings ratio is about 7.5. The median for all listed shares last Friday was 9.0 and the mean average 12.1. The group’s beginnings date from 1953, when Mr R. A. Owens, a new arrival from England, formed Tauranga Canvas Company, with a capital of £7O. In 1958 Mr Owens gained the first New Zealand contract for loading logs from Mount Maunganui to Japan. Mount Storage Company from a small beginning in 1961 has grown to meet demand for the storage of cereals, dairy produce, newsprint, and woodpulp. Involvement with shipping broadened in 1968 with the formation of a ships agency company — initially to act for Mitsui OSK of Japan

and later as general agents. In 1971 the group initiated moves to take over the Union Steam Ship Company, and led a consortium of New Zealand export manufacturers in a take-over battle with an Australian group. In the end the Government approved a partnership between the competing interests, and today the group is the major New Zealand shareholder through its 42 per cent shareholding in New Zealand Maritime Holdings, Ltd. Ten years ago the group backed a developing transport operator, Mogal Corporation, Ltd, by taking a 25 per cent shareholding. Mogal is now listed, and the Owens group is the biggest shareholder. The group has 1750 employees, has expanded in New Zealand and Australia, and is controlled from Group Management offices in Auckland and Wellington. The company also has an office in Europe. Leyland Capital, Ltd, promoted by Leyland Investments, Ltd, is expected to be listed soon. The new company forms part of Leyland’s aim to promote a number of associate companies each with different investment objectives. The first objective of Leyland Capital is to take substantial equity interests in a number of listed and unlisted companies that require restructuring and/or show sound growth potential. Commercial Securities, Ltd, is sponsoring a new company, Technigroup Holdings, Ltd, which aims at acquiring and amalgamating medium-sized manufacturing, marketing, and investment companies that have reached growth limitations with their existing financial and management structures. The Commercial Securities group has already acquired half a dozen such companies, and will hold 51 per cent of the shares in Technigroup.