- With NZ economy opening up in a phased manner, stocks have started to regain strength
- The outbreak of coronavirus is likely to promote cashless and contactless payments, benefiting the companies operating in this space
New Zealand is winning the war against the COVID-19 strain with active cases plummeting steadily. With beaches, restaurants, retail businesses, shopping centers and cinemas opening up, New Zealand’s economy is set to improve post lockdown.
This has boosted the market outlook with S&P/NZX All Index and S&P/NZX50 showing recovery since 23rd March 2020.
Amid such optimistic state, it can be said that three stocks are catching attention of the market players. Let us dig deeper to see the driving forces behind.
Pushpay Holdings Limited (NZX: PPH)
PPH’s Stock Performance (Source: NZX)
The mobile payments app developer, Pushpay Holdings, closed at NZ$7.66 on May 29, 2020, a significant rise from NZ$2.56 as on March 17, 2020. The commendable jump was primarily driven by good annual performance.
The company recorded a 32% year-on-year (YoY) increase in its annual revenue with gross margin up from 60% to 65%. Number of customers also surged by 42% to reach 10,896 from 7,649. It also processed 25.9 million transactions
In its outlook, Pushpay expects strong revenue growth in future by targeting over 50% of the medium and large church segments and intends to continue its commitment to invest in innovation and improvement of its software solutions to serve customers better.
Apart from demonstrating a positive financial and strategic position, the company also emphasized on the opportunities that propelled a flow in business during the coronavirus pandemic.
In the annual result announcement, the company mentioned that lockdown across the world had actually prompted customers to utilize its mobile first technology solutions for communications with their congregations. The company also stated that there has been an increase in demand for PPH’s services.
Comvita Limited (NZX: CVT)
CVT’s Stock Performance (Source: NZX)
A global natural health company, Comvita, closed at NZ$3.400 on May 29, 2020, a significant rise from NZ$1.549 as on March 23rd, 2020. The company was categorized as an essential business. It was stated that there has been good trading throughout the markets. This is because the consumers are actively seeking out Comvita products.
In the release dated April 17, 2020, the company stated that this year’s honey harvest has witnessed an increase by over 60% on the YoY basis with over 95% of the extraction complete.
Moreover, quality of the crop (volume of the crop over UMF™ 10+) encountered an improvement by more than 150%.
Financially, the company is enjoying good cashflows and working capital control that has enabled it to reduce debt.
Smartpay Holdings Limited (NZX: SPY)
SPY’s Stock Performance (Source: NZX)
An EFTPOS Machines & Payment Solutions provider, Smartpay Holdings Limited (NZX: SPY) closed at NZ$0.520 on May 29, 2020, a significant rise from NZ$0.245 as on March 23rd, 2020. It can be said that the increase was primarily driven by the company’s ability to secure funding and strong financial results.
On 22nd May, Smartpay secured AU$13 million though placement led by institutional, sophisticated and professional investors. CCZ Statton Equities led the placement. The company intends to use the proceeds for business expansion across Australia and New Zealand and reduce debt. The Placement consisted 30,952,381 new fully-paid ordinary shares at an issue price of AU$0.42 per ordinary share. In addition to the placement, Smartpay is also planning a Share Purchase Plan (SPP) for existing shareholders to subscribe for new shares at the same price as the Placement and without brokerage.
On 19th May, the company announced that since April 20, Smartpay has seen merchant transactions go up in numbers with aggregate transactional revenue recovered to 75% of pre COVID levels. Since the primary revenue driver in the company’s NZ business is terminal rental, SPY’s NZ business has shown resilience through COVID-19 period.
Smartpay also reported a 34% increase in revenue to NZ$28.3 million for the FY 2020 from NZ$21.1 million of FY 2019.
In its outlook, the company said that it will expedite its efforts to grow new terminal numbers as both the Australian and NZ economies are opening up. The company believes that the COVID-19 outbreak will assist customers to choose cashless and contactless payments.
On April 20th, the company announced positive financial results for FY 2020 (ended March 31). The company stated that it witnessed robust growth in revenue as compared to the corresponding period last year, driven mainly by Australian terminal and acquiring volume growth.
SPY stated that business achieved 32% increase in quarterly revenue as compared to the same quarter of the last year (Q4 FY20 vs Q4 FY19) and a 1% decline on the prior quarter (i.e. Q4 FY 2020 vs Q3 FY 2020).