SI primary sector posts positive results

The primary sector provided some positive news in the Deloitte South Island Index, released on Friday.

The primary sector, the index’s largest sector in terms of participants, grew 12.6% in the three months ended September, driven by an "impressive" $86.8 million, or nearly 28%, increase in market capitalisation from PGG Wrightson.

Scott McClay, a corporate finance partner in Deloitte’s Christchurch office, said the overall solid performance of the index during the quarter could be largely attributed to the positive performance of the medium to large-sized companies.

South Island-listed firms collectively increased their market capitalisation by $1.1 billion (5.8%) in the quarter.

The index includes companies either based in the South Island, significant assets in the South Island or links through being founded in the south.

Apart from PGG Wrightson, Synlait Milk also contributed a large portion of the primary sector’s increase in market capitalisation, ending the quarter up $50.4 million, or 10.5%.

During the quarter, the company announced it intended raising $98 million as part of a $300 million expansion programme over the next three years.

Others featuring in the primary sector index were Scales Corporation and Dunedin meat processor Silver Fern Farms.

Chinese company Shanghai Maling recently received Overseas Investment Office approval to invest $261million into Silver Fern Farms in a 50/50 joint venture.

The new joint venture was due to complete on January 4, 2017, the first business day of the new financial year.

Mr McClay said the key elements to the quarter’s results, in terms of percentage growth, lay with the performances of the ten largest companies on the index, which collectively grew their market capitalisations by 5.7%.

The 10 smallest companies, on the other hand, dragged down the index by 6.6%.The top three companies on the index — Meridian Energy, Ryman Healthcare and EBOS Group — collectively grew their market capitalisation by a respectable $448.4 million (3.2%).

The Deloitte South Island Index’s 5.8% quarterly increase outpaced international benchmark indices with the S&P/NZX 50 Capital Index gaining 5.1%, the ASX All Ords growing 4.0% and the Dow Jones growing 2.1% during the quarter.

The index’ top performer for the quarter, in terms of the dollar value of their market capitalisation, was EBOS Group which grew by $388.1 million (15.7%).

The remaining top performers for the quarter included Heartland Bank (up $164.5 million or 29.3%), Ryman Healthcare (up $150 million or 3.2%), Kathmandu Holdings (up $100.7million or 32.7%) and PGG Wrightson (up $86.8 million or 27.7%).

The largest falls in market capitalisation for the quarter came from index heavyweight Meridian Energy, which fell $89.7 million (1.3%), followed by Pacific Edge, down $31.5million (15.2%), SLI Systems down $20.6million (39.8%) and SeaDragon down $9.4 million (23.0%) during the quarter to September 30, 2016.

Mr McClay said five of the seven sectors grew in the quarter.

Manufacturing and distribution was up 14.8%, other up 17.9%, primary up 12.6%, property up 3.1% and retail up 32%.

The other two sectors, energy and mining and biotechnology, experienced declines for the quarter, pulled down due to one significant company in each of the respective sectors, he said.