OXR is the best performing stock - 90% return. This will create...

OXR is the best performing stock - 90% return. This will create interest in OXR from overseas intitutions and investors. OXR is set to past $3.00 this week. ....

Glory days are here
Bruce Brammall

April 11, 2006
This article from : AAP
A WINDFALL of $438 billion has been dealt to Australia's shareholders in the five years to 2005, as local companies thrash their global peers.

Returns to shareholders were a stunning 12.6 per cent compound for the period – better by far than all other major developed countries and beaten only by India in the Asia Pacific region.

A report by the Boston Consulting Group measuring total shareholder returns (TSR) found Australian companies had got the mix right when it came to fundamental value improvements, managing investor expectations and distributing dividends.

Australia's TSR – measured as share price movement plus dividends – over the five-year period compared with 0.5 per cent for the United States, 1.2 per cent for Britain and 6.3 per cent for Japan.

Other big economies that Australia beat over the five years included Germany (-3.4 per cent) and France (-1.2 per cent).

BCG said Australian shareholders' $438 billion windfall was made up of $298 billion in market capitalisation improvements and $140 billion handed back in dividends.

That was the equivalent of $22,000 for every Australian.

The survey measured the top 100 companies in Australia that have a five-year period to compare.

But as it only goes to December 31, 2005, the survey's results do not include Australia's stellar start to 2006.

The ASX/100 index has risen a further 9.68 per cent rise since January 1 and has already handed out tens of billions of dollars more in dividends.

"The remarkable performance of Australian companies continues," BCG's report said. "High TSR levels have been helped by the recent resources boom and the fact that Australian companies were less exposed when the dot-com bubble burst."

Australia's returns were also achieved on much lower volatility. The best-performing stock with a five-year history was base metals producer Oxiana, which had annual TSR of 90 per cent.

It was followed by property group Macquarie Goodman (86 per cent), retailer Metcash (72 per cent) and Queensland wagering group UNiTAB (48 per cent).

Other major movers included resources giants BHP Billiton (24.1 per cent) and Rio Tinto (22.1 per cent).

Of the banks, St George (22.1 per cent) led ANZ (17.1 per cent), Westpac (16.6 per cent), Commonwealth Bank (12.4 per cent) and National Australia Bank (7.5 per cent).

There were only four companies who had negative compound growth over the period.

They were AMP (-9.2 per cent), Telstra (-5 per cent), Harvey Norman (-3.8 per cent) and Computershare (-3.4 per cent). Lend Lease came in at 0 per cent.

BCG vice president David Pitman said Australia had some favourable conditions, including low interest rates, strong economic conditions, productivity gains, favourable exchange rates and commodity prices improvements.

"Notwithstanding these ... our analysis suggests that Australian managers have done a superb job of improving profitability and asset productivity, while at the same time maintaining growth," Mr Pitman said.

"Moreover, they have been able to do this while keeping market expectations in check.

"This in turn makes it more likely that they can meet or exceed these expectations in the future."

Mr Pitman warned continued TSR growth at this levels was probably unsustainable without new technologies or new domestic or offshore growth opportunities arising.

BCG's report praised Australia's franking credits system, claiming it had added probably $7 billion in value for shareholders, while buybacks had returned about $29 billion.

The report said Australian executives management of expectations had been impressive.

Most of the increases had come from improving "fundamental value", BCG said. Over the period, fundamental value increased 12 per cent in Australia as compared with 7 per cent for companies globally.

The "expectation premium" in Australia had risen 4 percentage points to only 18 per cent despite local success.

Over the same period, which took in parts of the dot-com deflation, the global average expectation premium reduced from around 50 per cent to 20 per cent.

The sectors driving Australia's overall top TSR performance were surprising.

The best performing was industrial/materials, followed by telco/utilities and resources.

The worst was healthcare, followed closely by real estate/infrastructure and media/entertainment