One Stock Having Decent Growth Prospects For Long-term

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The impact of COVID-19 was felt on numerous sectors. However, there are some companies which are now anticipated to perform well moving forward. This company maintained impetus in 2020 on the global strategy to secure partnerships which provide complementary capabilities as well as strengths. This company has recently released decent results for the 12 months ended 31st December 2020. Notably, the stock of this company has increased by ~28.8% in the time span of previous 6 months. Also, in the time frame of past 9 months, this stock has increased by ~47.8%. 

NZX Limited

Summary

  • The NZX Board managed to declare the final dividend amounting to 3.1 cents per share (or cps), contributing to the FY 2020 dividend of 6.1 cps, fully imputed. Together with the appreciation in the NZX’s share price, the total shareholder return (or TSR) for the year to 31st December 2020 stood at 50.3%.
  • It was mentioned that the global volatility, a low interest rate environment as well as greater interest towards investing supported in pushing the trading volumes to the record levels.
  • The company is anticipating full-year 2021 operating earnings to be between $31.5 Mn- $35.5 Mn.

NZX Limited (NZX: NZX) is engaged in the business of operating New Zealand's equity, debt, funds, derivatives as well as energy markets. In order to help the growth of these markets, it offers trading, clearing, settlement, depository as well as data services for the customers. It needs to be noted that NZX also owns Smartshares, NZ’s only issuer of listed Exchange Traded Funds (or ETFs), and KiwiSaver provider SuperLife.

Results Announcement  

The company has recently released its results for the 12 months ended 31st December 2020. The company’s revenue from continuing operations stood at $78.426 million, which implies a rise of 12.8% on the YoY basis. During the same time period, the company’s net profit from continuing operations amounted to $17.586 million, reflecting an increase of 20.1% on the YoY basis. The company has stated that it is building an integrated business to help the growth of the NZ capital markets. The following image provides a broad overview of the company’s results:

Overview of Results (Source: Company Reports)

The company has stated that the existing economic environment has demonstrated the importance of the public markets. Notably, the access to capital happens to be in high demand to shore up balance sheets as well as for the purposes of growth. However, the public markets as well as the capital they offer have an important role when it comes to helping the rebuilding of the NZ economy along with creating greater prosperity. It was mentioned that net inflows are increasing and are anticipated to keep increasing. NZX footprint in the financial services market assists in driving market development as well as future revenue generation from technology services and funds management.

Declaration of a Final Dividend

NZX made an announcement that its operating earnings from the continuing activities amounted to $34.4 Mn for the financial year to 31st December 2020, reflecting a rise of 9.7 percent on FY 2019. The company stated that while 2020 presented several challenges for many sectors of the economy, the year has also offered the opportunity for NZ’s capital markets to offer capital funding for the businesses which are in need. Notably, the total market capitalisation of all the NZX listed securities throughout equity, fixed income as well as fund asset classes now surpasses $233 Bn and sits at 76.6 percent of the NZ’s GDP (or Gross Domestic Product).

Focus Towards Customers

It was mentioned that while NZX witnessed strong tail-wind during the year, the results in 2020 resulted from the strategic platform which was established over the span of previous 3 years. The price volatility because of coronavirus impacted new debt market issuance materially from the month of March to the month of July. However, the market came back strongly from the month of August through to December and there was an issuance of 12 new debt securities which totalled $2.7 billion. Of this, $825 Mn was in green bonds.

Notably, the listings from Radius Healthcare, Rua Bioscience, Harmoney, Auckland Real Estate and Rural Land Company in 2020 demonstrated the breadth of the businesses looking capital for the purposes of growth as well as the different pathways towards listing. NZX would continue to intensify the focus towards attracting new listings as well as supporting the companies which are currently listed in accessing the NZ’s equity, debt as well as funds markets.

Outlook

The company is anticipating full-year 2021 operating earnings to be between $31.5 Mn- $35.5 Mn. Notably, the guidance is subject to market outcomes, primarily with regards to market capitalisation, total capital garnered, secondary market value as well as derivatives volumes traded, funds under management and administration growth and technology costs. In addition, the guidance also assumes no significant adverse events, significant one-off expenses, major accounting adjustments, other unforeseeable situations, or future acquisitions or divestments.

On April 1, 2021, the stock ended the session at NZ$2.100 per share. It has a market capitalisation of ~587.137 million.  


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