The top performing Western Australian companies over the three years to June are a diverse collection of biotechs, miners, manufacturers, retailers and tech stocks.
A surprising aspect is that several of these companies, including Kresta, Ausdrill and Cash Converters International, have had ‘near death’ experiences but have bounced back as a result of either patient restructuring or changing investment fashions.
While the best-performing stocks have reasonably similar three-year total shareholder returns (TSR), their 12-month returns are extremely varied.
Dragon Mining (up 392.4 per cent), Anvil Mining (up 246.2 per cent) and Cash Converters International (up 194.9 per cent) have delivered stunning 12-month returns, while others such as Aspen Group and Ausdrill have been flat.
This variability extends to the top three companies.
Top of the list is tissue engineering company Clinical Cell Culture, whose three-year returns have been boosted by a stellar performance over the past 12 months (up 168.4 per cent).
C3 is followed by blinds and curtain maker Kresta Holdings, which achieved relatively modest returns last year (up 33.0 per cent) but still ranks highly on a three-year time frame.
Third on the list is animal pharmaceutical developer Chemeq, which ranked highly over a three-year-time frame despite having a 12-month TSR of minus 24.7 per cent.
If the calculations were done this week, Chemeq would tumble down the rankings, since its share price has fallen from $4.81 on June 30 to about $3.40 presently.
C3 says it is on the verge of first commercial sales in Europe of its CellSpray product, which came to prominence in 2002 when C3 director Dr Fiona Wood used it at Royal Perth Hospital to treat victims of the Bali bombings.
CellSpray uses cultured skin cells from the patient for use in the treatment of major burns and scars.
C3’s second major product is ReCell, a device that enables the collection of healthy skin cells for immediate application to damaged skin, such as small burns and scars.
The company is currently in the process of raising $11.3 million from investors to support the expansion of its European operations and development of its planned US operations.
“We are now at the point with product development where strong commercial sales in those markets are achievable in the short term with this financial backing,” C3 chief executive Troels Jordansen said.
The planned launch of CellSpray later this year is due to be followed by the launch of ReCell in the first half of 2005, and the company aims to be in a cash-positive position by late 2005.
This would make the culmination of a 12-year journey that started in 1993 with the foundation of the WA skin culture unit at Princess Margaret Hospital.
C3 was established in 1999 to commercialise skin culture technologies. It listed on the Australian Stock Exchange in 2002 via a backdoor listing through ECAT Development Capital.
C3 has appointed contract manufacturers in Europe and the US, and recently passed a major milestone when its European manufacturer obtained the appropriate regulatory approval.
This strategy contrasts with Chemeq’s decision to build its own drug manufacturing plant at Rockingham. The recently completed Chemeq facility took much longer to build than originally expected and experienced large cost blowouts.
The company has been punished by investors as a result.
Chemeq also disappointed the market by belatedly disclosing that its single sales order, in South Africa, had lapsed on June 30.
The valuation of Chemeq always had a large ‘blue sky’ element based on confidence its unique drug, which is marketed as a replacement for antibiotics in pigs and chickens, would rapidly penetrate a global market said to be worth $9 billion.
The onus is now on Chemeq to smoothly ramp up production at Rockingham and secure firm sales to justify its much diminished market capitalisation.
Life has been very different for Kresta, which has been a quiet achiever over the past five years.
Under the guidance of managing director Tass Zorbas, Kresta has become a consistently profitable manufacturer and retailer of blinds, curtains, window coverings and home security equipment.
Mr Zorbas took over a business that had suffered a decade of instability during the late 1980s and 1990s.
The company returned to profit in 2002 and posted an increased net profit of $8.6 million in 2003.
The past 12 months has been a period of rapid growth, with the number of Kresta, Vista and Bargain Home Warehouse retail stores in Australia and New Zealand increasing by 13 to 54.
The company recently advised the ASX that the cost of opening the new stores meant that earnings (before interest and tax) would be about the same in 2004 as in the previous year.
“The company has undergone substantial growth over the past 12 months and the directors are confident that the investment in new stores will deliver increased market share in 2004-05 and that EBIT will grow accordingly,” the company said in a statement to the ASX.
3-YEAR RETURNS
- Clinical Cell Culture: 144.2%
- Kresta: 134%
- Chemeq: 129.1%
- Aspen Group: 122.1%
- Ausdrill: 121.5%
- Anvil Mining: 120.5%
- iiNet: 113.6%
- Cash Converters: 112.4%
- Dragon Mining: 110.4%
- Arc Energy: 105.5%
