Cyanotech gets
new life, surges
370% in 2003

The Kona nutritional company
ran away from the pack to
take first in the local index

If you want to ponder the difference a day can make, just ask shareholders of Cyanotech Corp., who have watched the stock rebound nearly fourfold since releasing third-quarter earnings in late October.


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That financial report marked a turnaround in the company's stock fortunes and resulted in Cyanotech ending up as the best performer last year in the Bloomberg Honolulu Star-Bulletin local stock index with a gain of 370 percent.

The Kona company, which makes nutritional and feed products from microalgae, struggled for most of 2003 to keep its stock price up and by September was facing a delisting from the Nasdaq SmallCap Market for failing to comply with the $1 minimum bid price-listing requirement.

But the stock's trading volume doubled after it released earnings on Oct. 30 that showed improved sales and a quarterly loss of just $10,000.

By Halloween, the stock's trading volume had risen to 480,776 shares, up from 20,200 the previous day and more than nine times the average daily volume for the year.

News that Spirulina, one of the microalgae products Cyanotech cultivates, has gotten the Food and Drug Administration's approval for use in health food products also has helped keep the stock price healthy. The stock price rose 291.7 percent from 48 cents on Oct. 30 to $1.88 at yesterday's market close.

The stock may have turned the corner and is progressing toward the black, said stock analyst Richard Dole, chief executive officer of Dole Capital LLC.

"It appears that the company is a survivor and it may have passed the start-up phase and be entering into a growth phase," Dole said. "The question is will they survive? It takes years for biotech companies to get established."

Overall, it was a solid year for the index as Maui Land & Pineapple Co., CB Bancshares Inc., Barnwell Industries Inc., Hawaiian Holdings Inc., Bank of Hawaii Corp. and Alexander and Baldwin Inc. posted gains of more than 30 percent. Ten of the 11 stocks in the index ended in the black and seven hit 52-week highs.

The Bloomberg HSB index rose 40.6 percent, the Nasdaq composite index jumped 50 percent, the Standard & Poor's 500 gained 26.4 percent and the Dow Jones industrial average climbed 25.3 percent.

Hawaii currently has one of the strongest economies in the nation and most local stocks benefited from it albeit for different reasons, Dole said.

"Many of them are doing better because of the Hawaii economy," Dole said. "It had been one of the worst economies and now is one of the best because of the emphasis on construction and real estate."

Maui Land & Pineapple held onto the No. 2 index spot it occupied during the first six months of the year. The company, which posted its worst financial performance in nine years during 2002, found operational success was as good as gold -- Hawaiian Gold, extra sweet pineapple, that is.

MLP, whose stock hit a 52-week high of $35.75 on Dec. 17 and was up 118.3 percent for the year, is just beginning to see positive returns on its decision to expand its fresh crop of Hawaiian Gold, extra sweet pineapple in 1998. Profit margins for fresh pineapple are higher than for canned, said Paul Meyer, executive vice president of finance for MLP. During the first half of the year, the company also benefited from a strong real estate market that was attracting lots of interest in single-family and resort homes on Maui.

MLP was busy during the year as the company shuffled its management and sold Queen Kaahumanu Center and Napili Plaza, which made up the brunt of its commercial property division.

CB Bancshares continued to draw on the historical success of rival Central Pacific Financial Corp. to chalk up the third-best return of Hawaii companies. CB Bancshares' stock, which received a boost of more than 50 percent in mid-April when Central Pacific Bank's parent said it was making an unsolicited merger offer, posted an impressive 62 percent return for the year.

Central Pacific, meanwhile, posted a 9.7 percent return as the uncertainty of the merger weighed on its stock. Last year, Central Pacific's stock was the top performer, but it's barely budged since that time.

Barnwell Industries declared its first dividend in two years and the stock rose to a 13-year-high, posting a 57.5 percent return. Last year was a good year for the company, whose net earnings grew from the previous year due to increases in oil and natural gas prices.

The stock price for Hawaiian Holdings, the parent company of bankrupt Hawaiian Airlines, is flying surprisingly high considering the company filed for Chapter 11 bankruptcy reorganization on March 21.

Shareholders are still buying the stock, even though Josh Gotbaum, trustee of the bankrupt airline, has indicated it could be canceled and new shares issued to debt holders. Hawaiian's stock had a 46.6 percent gain to place fifth among Hawaiian companies in the index.

Bank of Hawaii hit an all-time high Dec. 29 as it reached $42.84 to end the year with a 38.9 percent return. The company finished a three-year streamlining plan under Chief Executive Officer Mike O'Neill in which it turned itself into a more efficient operation. The company agreed to sell its corporate trust business to Bank of New York Co. The outsourcing of the bank's information services to Milwaukee-based Metavante Corp. also will save the bank an estimated $17 million annually.

Alexander & Baldwin, which hit a 52-week high of $34.60 on Dec. 15, remained very active in the real estate market, purchasing the Napili Plaza in August. Matson Navigation Co., a primary subsidiary of Alexander & Baldwin, also showed improved results for the year as the economy improved and it recovered from last year's dockworkers lockout. Overall, the company fared well, coming up from a 1.2 percent gain in the first six months of 2003 to finish the year with a 30.9 percent return.

ML Macadamia Orchards LP slashed its dividend in September in response to uncertainty over the price that exclusive nut purchaser Moana Loa Macadamia Nut Corp. would pay for 2003 deliveries. However, the company finished the year out with a 10.6 percent return and officials have said that they expect nut prices to continue to rebound and the company's harvest to improve. Despite posting a slight loss last quarter, the company will pay shareholders a three-cent dividend in February.

Hawaiian Electric Industries Inc., which also owns American Savings Bank, hit a 52-week high Dec. 29 to $47.83 to finish the year up 7.7 percent. The stock also may have benefited from Bush's dividend tax cuts in May as the shares, which offer a 5.2 percent annual yield, gained 14.3 percent on a total return basis. An improved economy also resulted in improved earnings for the utility company. And the company's retirement benefit plan information forecasts a much better financial picture as well.

Among the two lowest-priced Hawaii stocks, Mera Pharmaceuticals Inc. fell 55.4 percent while Ceatech USA Inc. was dropped from the index after being delisted from Nasdaq's Over-the-Counter Bulletin Board for failing to meet SEC filing requirements. The stock now trades on the Pink Sheets at 7 cents.


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