Smite City Market in top league

Press, 20 December 1986, Page 29

Smite City Market in top league

One of the best performers in the New Zealand market place in the last few years has undoubtedly been Smiths City Market Group, Ltd, Christchurch-based retailer and builders’ supplies merchant. And not only in the market place. On the sharemarket the group’s performance would put it in the top ten, and Smiths City Market has a fine record of rewarding its shareholders. This week the company reported a record result, with unaudited tax-paid profit for the six months ended October 31 at $4,182,402 more than double the previous corresponding figure of $1,783,734. Turnover almost doubled from $55.4 million to $lO9 million — an increase of 97 per cent.

This clearly showed an improved relationship between profit and sales. In fact, the earnings rate

on the sales dollar rose from 3.2 c to 3.8 c. It was therefore not just the expanded base after the mergers with Irvin and Stern, and Coles (Nelson) Ltd that provided the higher profit. The group now has four manufacturing companies and no fewer than 64 retail outlets, and the programme of expansion in the North Island is continuing with vigour, and very pleasing profitability,” the directors said, in their report. The 1:10 rights issue of ordinary 20c shares is at 120 c a share and will yield almost $13.5 million — more than $ll million of it to the share premium account. On the basis of the last sale

price the value of the rights would be around 64c, the shares adjusting ex rights to 183.5 c.

Earnings per 20c share is around 7.2 c, or 36 per cent. The earnings yield on the market price of the shares is 3.8 per cent and the price-earnings ratio is 26.4.

For the last period that I have figures available a list of company shares gross returns showed that Smiths City Market was the eighth best performer among all New Zealand listed companies with the shares displaying a compound growth of 86 per cent a year. In the latest year the share price doubled, and there is obviously still some growth left.