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SA’s top companies forge ahead as economic growth weakens

Analysis

South Australia’s best companies forged ahead, albeit at a slower pace, as national economic growth weakened this year, according to the SA Business Index – InDaily’s annual review of the state’s top 100 companies.

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The total value of companies on the Index was $4.5 billion greater this year than last year’s top 100.

The increase in market capitalisation year on year was nine per cent – much slower than the 33 per cent surge between 2017 and 2018, but stronger than the growth among companies on the Australian All Ordinaries Index.

It comes amid a slowdown in national growth, with Australia’s GDP growing at just 0.5 per cent in the June quarter, and strong international headwinds – not least the US-China trade war and uncertainty around Brexit.

The Index, produced by Adelaide financial services firm Taylor Collison, is limited to South Australian entities with an Adelaide ownership register, South Australian-operated entities, or companies founded and majority-owned by South Australians.

The top three companies from last year’s Index defended their positions in 2019 with Santos, valued at $15.35 billion, once again leading the pack.

The state’s biggest company is close to a five-year share price peak following its acquisition of Quadrant.

Releasing its half-year report last month, the company reported underlying profit of $US411 million, up 89 per cent on the previous year, and net profit of $US388 million, up 273.1 per cent.

Capital management company Argo Investments, with a market cap of $5.84 billion, again claimed second place in the Index, and Beach Energy, which achieved 64 per cent revenue growth over the year, was third.

There was significant movement further down the list.

Both OzMinerals and convenience store empire Peregrine Corporation moved up a place in this year’s Index to come in at fourth and fifth respectively, leapfrogging cement and concrete company Adelaide Brighton, which slipped to sixth as it struggled with the slowdown in the national construction industry this year.

South Australian energy companies, which accounted for less than a quarter of market capitalisation value on the first SA Business Index (financial year 2016), consolidated their dominance this year.

They now make up 41.54 per cent of market cap value on the list.

Mining companies benefited from the low Australian dollar, increasing commodity prices, significant new investment and progress on cost-reduction.

Although they made up only a small proportion of the Index’s value, Adelaide’s top technology businesses had a particularly strong year: aerial imaging company Aerometrex conducted a $6 million pre-raise ahead of an initial public offering; National Crime Check, based in Norwood, attracting a foreign buyer; and Uniti Wireless launched a successful IPO.

Along with the top 100 companies on the 2019 SA Business Index – which you can find listed here (LINK) – three awards were presented in partnership with Taylor Collison, HLB Mann Judd Advisory and Accounting, People’s Choice Credit Union, the City of Adelaide and Statewide Super.

Rising Star award

Health informatics company Alcidion was presented with the 2019 SA Business Index Rising Star award, having surged from 80th place on last year’s list to 36th this year.

The company enjoyed a 299 per cent increase in revenue over the period and won its first major international contract in March this year.

Just this week, Alcidion announced a three-year contract to improve the data and analytics capabilities of private health services provider Healthscope.

The next two companies in the category by ranking were Strike Energy, valued at $357.91 million – which moved from 31st place to 26th this year – and Legend Corporation, with market capitalisation of $100 million – which jumped from 60th to 50th.

Best New Entrant award

 The Best New Entrant award was presented to Kayla Itsines and Tobi Pearce’s fitness company Sweat, which registered an estimated $100 million in revenue this year.

The company, which offers exercise programs and meal plans through a South Australian-developed app, debuts on the SA Business Index at number 16.

The next two companies in the category were Michell Group, valued at $300 million – which enters the Index in 27th place – and Uniti Wireless, valued at $190.42 million, which enters the Index in 35th place.

Revenue Growth award

Beach Energy was presented with the Revenue Growth award, having surged from revenues of $1.27 billion in 2018 to $2.08 billion this year.

Its share price has increased sharply over the past month, associated with higher oil prices.

Beach moved into new headquarters in the city from its long-term suburban location in Glenside and, since the Lattice acquisition in January 2018, has employed an additional 300 people across Australasia.

The next two companies in the category were MGM Wireless, which achieved revenues of $7.14 million in 2019 – up from $2.74 million in 2018 – and Escient, which made $16.17 million in 2019, up from $9.78 million in 2018.

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