Investor confidence has been repaid as billions flow back into Fletcher Building's market capitalisation, buoyed by housing and construction in New Zealand, Australia and the United States.
Fletcher shares, which were hammered down to about $5 during the global financial crisis and haemorrhaged billions in market capitalisation, are now closing in on a five-year share price high as good news gathers momentum and underpins the surge in value.
Since late July's year-low of $5.77, Fletcher shares had steadily gained to pass through $9 last week and were yesterday trading around $9.20 - an almost 60% gain on July. Fletcher shares continued to rise during the day, finishing up 1.6% at $9.30.
Fletcher's shares had been plagued by the slow uptake of work in the Canterbury rebuilding effort, where it is the lead contractor, and also volatile and flagging construction data from Australia and the United States. Its shares had declined from $9.28 in April 2011. Yesterday's $9.20 price put its market capitalisation at more than $6.3 billion, Craigs Investment Partners broker Peter McIntyre said.
''Investor confidence has been repaid. It's a cyclical business, which its investors understand,'' Mr McIntyre said.
Evidence of that understanding was in March-April 2009, when its shares traded from $5.06 to $6.20 and it raised $605 million - an institutional placement of $505 million and $100 million from a shareholder placement.
''Fletcher's has a very supportive shareholder base, which was invaluable [for Fletcher's] at the time of the funding crisis,'' Mr McIntyre said.
Its forward order book remained ''in good order'', with well over $1 billion of work, he said.
The company told shareholders at its annual meeting in November its earnings growth for 2013 could be beyond 20%, from new home construction, but they were cautioned that any downturn in Australian work could prompt a downgrade of those expectations.
Mr McIntyre countered that, saying the Reserve Bank of Australia had slashed its interest-driving cash rate to 3% and the likelihood of another cut shortly could further buoy construction in Australia.
Operating earnings guidance, for the year to this June, was estimated at between $560 million and $610 million, an increase of between 12% and 22%, compared to the 2012 result.
