NZX forecasts profit rise as growth initiatives pay off

By Jenny Ruth

Aug. 13 (BusinessDesk) - Stock exchange operator NZX’s first-half net profit jumped 46 percent but only because losses from since sold businesses dragged down the previous first-half result, although it is predicting a better full-year result.

Operating earnings from continuing operations rose 4.3 percent and NZX says it is gaining traction with a number of growth initiatives.

These include a 73.5 percent rise to $7.7 billion in capital raised across NZX’s equity, debt and funds markets in the six months and a 15.1 percent increase in the number of trades on NZX, although the value of those trades fell 9.7 percent to $18.4 billion and led to a 17.3 percent fall in secondary market revenue.

Net profit for the six months ended June rose to $6.4 million from $4.4 million in the same period last year, which included $2.5 million in losses from the sold businesses. Excluding those losses, the net result was down 7.2 percent.

NZX will pay a 3 cents per share first-half dividend, the same as last year, and the dividend reinvestment plan will apply, offering a 1 percent discount. The record date is Aug. 30 and the payment date Sept. 13.

Directors are guiding for full-year operating earnings of $28-31 million, subject to market outcomes, particularly the number of initial public offerings, secondary capital raisings and equity and derivatives trading volumes.

Operating earnings in calendar 2019 from continuing operations were $27.3 million.

Shares of Napier Port will begin trading on NZX later this month after a $234 million capital raising.

It was the second IPO this year after a more than two-year drought since the May 2017 listing of Oceania Healthcare.

NZX says “the company is aware of other potential listings,” although that has long been the stock exchange operator’s plaintive refrain.

New listings on NZX in 2018 numbered just two, neither of them IPOs – QEX Logistics’ compliance listing and PaySauce’s backdoor listing through the shell of Energy Mad.

And 2017 wasn’t much better with Oceania Healthcare’s $200 million float in May that year and TIL Logistics Group’s backdoor listing in December

NZX’s total revenue fell 1.2 percent to $32.9 million in the latest half year.

It says changes made in October last year to its trading and pricing structure to facilitate increased trading automation should deliver growth over time but that, and periodic re-weightings of NZX-listed stocks in large global indices, contributed to the fall in revenue in the latest first half.

On the positive side, on-market trading reached a record 61.1 percent of total market value traded in the month of June.

The company’s data and insights revenue rose 13.9 percent to $6.3 million with royalties from terminals rising 5.6 percent and subscription and licence revenue growing 22.9 percent.

Dairy derivatives trading volume rose 27.5 percent, making it the fastest growing dairy derivatives globally.

A new extended-hours trading session aimed at capturing additional volume from Asia and Europe led to more than 50 percent of trades now taking place in that session.

NZX’s funds under management, including Smartshares Exchange-Traded Funds, SuperLife Superannuation and KiwiSaver funds, grew 19.4 percent to $3.5 billion with member numbers up 10.1 percent. Net cash inflows rose 8.1 percent to $174.4 million.

Operating revenue from funds management net of fund expenses rose 17.7 percent, resulting in a 27.4 percent rise in operating earnings.

NZX says its wealth technologies business continues to focus on winning new customers and that funds under administration rose 86.4 percent to $2.1 percent.

(BusinessDesk)

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