IT'S a V-shaped recovery for the Australian economy but how will the Gold Coast's top companies contribute? Listed players such as Billabong and miner CuDeco have been the riders of the storm. But as others go under, opportunities also abound for new companies to emerge.
There are just 18 publicly-listed companies left on the Gold Coast. There's talk of at least two more by the end of this calendar year.
They will replace the fallen City Pacific and CP1.
In the private sector, the manufacturers are leading the charge, taking the ball up where property players once dominated. A number of private companies in the manufacturing sector have demonstrated strong growth along the corridor between the Gold Coast and Brisbane. VIP Petfoods, OzKleen and Digga Australia are all strong exporters that have built their brands via smart acquisition strategies and savvy marketing.
Forecasters tell us the economy is on the threshold of a major cyclical upswing. Growth will presumably pick up speed over the next two years and build into a boom later this decade, driven by rolling investment cycles.
It's cyclical but cycles can take a long time to come back around.
According to industry analyst BIS Shrapnel, the economy has enough spare capacity and slack in the labour markets to cater for the initial phase of the upswing without exciting either demand or cost-side pressures.
But BIS Shrapnel's Long Term Forecasts, February 2010 Update, reports problems will occur in three-to-four years when all the major construction cycles synchronise and inflationary pressures re-emerge, leading to higher interest rates.
BIS Shrapnel was one of the few forecasters who, in the first six months of last year, predicted that Australia would not have a recession technically.
"But it's now time to look forward not backward. We're into a rebuild phase, rather than a rebound," says report author Richard Robinson.
"Two years is a long time in investment markets. I know the Global Financial Crisis (GFC) is still front of mind, but it won't take long before we forget.
"Remember the 'disastrous' sharemarket crash of October 1987, which was quickly followed by the property boom of 1989, which preceded the recession 'we had to have'? The build up this time will be slower, but it's the current caution in risk averse debt and equity markets that is setting us up for the stock and capacity shortages that will underwrite the next boom later this decade."
Commercial lawyer and partner at Hynes Lawyers Scott Standen, says the Gold Coast's tenacious and 'can do' attitude, will place it favourably in 'the V'.
"A lot of companies have taken a knock but bounced back and it's that resilience and entrepreneurial spirit that makes the Gold Coast what it is," says Standen.
Standen expects stronger IPO activity from Gold Coast companies by next year.
"There was a lot of hype in the second half of last year about a flood of IPOs, it hasn't eventuated, but we are seeing a number of people from the resources sector looking at listing by the end of the calendar year. We expect to see more listing activity to come out of this space on the Gold Coast this year," he says.
Standen predicts the clean-tech sector to improve after stumbling through a rocky 2009.
"PEH (Pacific Environment Limited) clearly struggled and it has shown that although it has good fundamentals, just acquiring businesses that operate in the same space is not a recipe for success. Clean tech will become appealing and there are far more winners than losers," he says.
As Billabong retains the No.1 Gold Coast listed spot after riding out a currency storm, Wayne McRae's copper miner CuDeco has made solid ground, progressing six places to the No.2 slot ahead of Village Roadshow.
"It will take some time for the higher profile companies to emerge, but smaller resource-based companies are expected to do well. Icon and CuDeco have both come back after some selling pressure in the last 12 months," says Standen.
"CuDeco will improve once an announcement has been made on estimates in its Rocklands project. Copper has solid macro economic factors in terms of demand.
"Billabong has come through a tough retail space with global and US currency pressure, but it has a strong brand and has diversified with acquisitions. It's no doubt that it's the premier Gold Coast company."
Public sector investment is now the strongest of the investment sectors, offsetting further declines in business investment over 2010, but activity is expected to peak this year.
Macquarie Private Wealth Equity research shows the 'proof of the pudding' for the Australian economy lies in the two stock market reporting seasons each year. Full year reporting is underway and company results have so far been encouraging.
Ninety-two companies have so far reported profit results, representing 44 per cent by number and 68 per cent by market cap of those that will report.
Macquarie's Dec H/Y '09 aggregate earnings reported for the market overall is now 4.7ppts above its pre-reporting season forecast with the FY10. Forecasts reflect the economic recovery and are increasingly V shaped with substantial upgrades seen so far this reporting season.
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