Isle stocks lacked
‘momentum’
in 1999

Strong gains from CPB, Maui
Land & Pine and American Classic
Voyages were bright spots in an
otherwise dismal year

By Russ Lynch
Star-Bulletin

They may be solid, profitable businesses but some of Hawaii's leading public companies saw their shares dive this year, showing yet again that stock prices often have more to do with market trends than company performance.

"You had to be in certain kinds of industries" to make money in the market this year, said Ted Jung, senior vice president and head of the Honolulu office of Salomon Smith Barney. "You had to be in high-tech or the Internet, telecommunications, biotech. If you're not in these industries you could do wonders but you're pits in the market," he said.

"In an up market, nobody's paying attention to whether you're a good store. All they pay attention to is momentum, whatever that is. If I hear that word any more I'll get sick," Jung said.

Thirteen Hawaii-related issues ended 1999 with lower stock prices than a year ago, while nine were higher.

Hawaii's banks, with the notable exception of Central Pacific Bank parent CPB Inc., were down for the year, despite restructuring and cost cutting to position them for future profits.

At the close of trading today, shares of Bank of Hawaii parent Pacific Century Financial Corp., had plummeted 23.3 percent, despite a 32 percent profit increase through the first nine months of the year.

BancWest Inc., parent of First Hawaiian Bank, ended down 18.75 percent for the year, despite a 76 percent rise in nine-month profits.

CB Bancshares Inc., parent of City Bank, also also had a share-price dip, falling 4.8 percent through the year, and like the other Hawaii banks it also had a profit increase.

Just why CPB Inc. rose a healthy 66.9 percent while the other financials went down is equally hard to figure, analysts said. Banks across the country in general have been down in the market and Hawaii's just seemed to get hit by that trend, said local stock analyst Randy Havre of Honolulu Venture Capital.

Winners and losers Here's a look at the stock performance of Hawaiii-related companies in 1999.* Close Close Percent Company 12/31/99 12/31/98 change Alexender & Baldwin 22.8125 23.25 -1.88% American Classic Voyages 35.00 17.625 +98.58% Aquasearch .37 .20 +85% BancWest** 19.50 24.00 -18.75% Barnwell Industries 12.75 11.625 +9.68% CB Bancshares 29.4375 30.9375 -4.85% Castle & Cooke 12.6875 14.75 -13.98% Castle Group Inc. 2.00 1.6875 +18.52% Cheap Tickets 13.6875 15.00*** -8.75% CPB Inc. (Central Pacific) 28.50 17.50 +66.86% Controlled Environment 1.00 3.875 -74.19% Cyanotech 1.5625 1.0625 +47.06% Dole Food 16.25 30.00 -45.83% Hawaii Land .375 .125 +200% Hawaiian Air 2.125 3.25 -34.62% Hawaiian Elec. Ind. 28.875 40.25 -28.25% Hawaiian Natural Water .3125 4.00 -92.19% Hawaiian Vintage Choc. 1.50 2.125 -29.41% Maui Land & Pine 17.375 9.0625 +91.72% ML Macadamia Orchards 3.75 3.1875 +17.65% Pacific Century Financial 18.6875 24.375 -23.33% Schuler Homes 6.50 7.125 -8.8% * Does not include dividends ** Adjusted for two-for-one stock split *** Underwriters' price at initial offering March 19 Source: Bloomberg News

The lack of enthusiasm for some other local companies is puzzling, Havre said.

"Hawaiian Air really baffles me," he said.

Hawaiian Airlines Inc. did have a smaller profit -- $6.2 million in the first nine months of 1999 vs. $8 million in the year-earlier period -- but that was mostly explained by higher costs having to do with aggressive expansion. Hawaiian Air had about $35 million in the bank at the end of the third quarter, has ordered new aircraft, expanded its routes, and is doing solid business. The market apparently ignored all that, pulling the stock down 34.6 percent in 1999.

Hawaii's home builders are doing well again, at least those that have significant operations on the mainland where the economy is well ahead of Hawaii's. But again, their share prices don't reflect that.

Schuler Homes Inc. is down 8.8 percent for the year, despite a 116 percent rise in nine-months profits. Los Angeles-based Castle & Cooke Inc. saw its shares drop 14 percent percent this year even though it has sold out of its Hawaii inventory, has enjoyed strong sales on the mainland, and is planning to spend $100 million on new homes and infrastructure on Oahu next year.

Cheap Tickets Inc. ended the year down 8.75 percent from its March initial public offering price of $15. The stock had been as high as nearly $67 in July.

Paul Loo, probably the most bullish stock market observer in Hawaii, doesn't follow local stocks closely but he also noted how they seemed to be victims of trends rather than reality.

There is a global economy now, with corporate efficiency the watchword and technology in the lead, said Loo, senior vice president and head of the Hawaii branch of Morgan Stanley Dean Witter Corp.

"Hawaii in this whole process was really overlooked," he said.

Still, there were some positives among Hawaii's public companies this year.

Big Island biotech companies Cyanotech Corp. and Aquasearch Inc. were up strongly in the market, although analysts caution that when stocks are as low in price as those two companies' shares are, there easily can be big percentage swings.

Thanks to strong business at its round-the-islands cruise subsidiary American Hawaii Cruises and plans for its upcoming new ships in this market, Chicago-based American Classic Voyages Co. is also up strongly, with its shares nearly doubling this year.

Maui Land & Pineapple Inc. jumped in July when Steve Case, America Online Inc.'s Hawaii-born chairman, said he was buying 41 percent of the company for nearly $40 million. Its shares rose to a peak of $30.75, settled back some since, but were up 91.7 percent for the year.

Hawaii Land & Farming Inc., the former C. Brewer Homes, started out poorly but rallied after a group headed by Hawaii developer Stanford Carr announced in June an agreement to buy control. Carr has said he will offer 50 cents a share for the rest of the company, and the stock ended the year up 200 percent at 37.5 cents but still well under the 50-cent mark.

Carr has not yet formally made the offer to the minority shareholders.