Methven taps into strong demand

The market ran hot yesterday as tap and showerware firm Methven made its stock exchange debut.

The company's shares listed at $1.64 each - 21c higher than their $1.43 issue price.

After reaching $1.68, the stocks settled to close at $1.63. More than two million shares, worth $3.4 million, were traded.

"It's a good brand and it's got the capability to leverage off good quality product in New Zealand and now Australia," said Rob Mercer, head of research at Forsyth Barr.

"It's not going to be riskless - it's never easy competing in Australia but they've got all the elements that you'd expect to give them a reasonable chance of making a success of it."

Mercer likened the Methven listing to the recent Pumpkin Patch float as one investors saw as good and reliable quality.

The 118-year old Methven, which had a brief stock exchange foray in a different guise in the 1930s, - offered 25.3 million new and existing shares priced at $1.43 each - a total of $36.2 million.

Most of the money raised is going to existing investors wanting to reduce their company stakes after a management buyout about four years ago. Some also went to buy out a minority shareholding in subsidiary Methven Australia.

One million of the shares offered were reserved for registered plumbers. This pool was oversubscribed but received extra shares to minimise scaling back.

Founded in 1886 in Dunedin by George Methven, the company has more than 200 staff in Auckland, Dunedin and Melbourne.

The business started as an iron and brass foundry and started making taps and copper laundry vessels in 1906.

Methven also did its bit for the war effort, helping to manufacture munitions in 1939.

Its focus turned to making taps and valve products during the post-World War II building boom.

The Business Herald was told in October that it reported a bottomline profit for the year to March of $5 million on sales of $47.3 million.

The company's forecast for this financial year is for a bottomline profit of $6.2 million on sales of $52.8 million.

Methven is one of more than a dozen companies to float on the market this year.

It joins, among others, Mike Pero Mortgages, Pumpkin Patch, Just Water and Southern Travel Holdings.

Methven has the biggest share of the New Zealand tap and showerware market, and has been growing steadily in Australia since its present owners acquired the business in an AMP Capital-backed management buyout in 2001.

The Australian presence started that year with the introduction of domestic water control valves and grew with last year's acquisition of a showerware supply business, now trading as Methven Australia.

Methven Australia started selling taps in Australia this year, and about a third of the company's turnover is generated in Australia.

Running hot

* 118-year-old Methven is the latest firm to join the sharemarket.

* Its shares listed at a 15 per cent premium, reached $1.68 and closed at $1.63.

* Demand was strong on the first day of trading.

* Analysts see good potential.