Daily ShareChat: NZX

By Jenny Ruth

Wednesday 13th May 2009

Stock exchange operator NZX continues to show operational resilience despite a challenging macro environment, said ABN Amro Craigs analyst Daniel Reynolds after NZX announced its results late last month.

NZX reported a 39.7% rise in first quarter net profit to $3 million.

"Management's outlook commentary was positive and relayed a high degree of confidence in NZX's business model," Reynolds says.

"Management identified continued recapitalisation of corporate balance sheets, slowing data terminal attrition and gathering trading volume momentum as potential earnings catalysts for the remainder of 2009."

Despite management's positive commentary, "we remain cautious and expect a challenging macro environment will eventually take its toll," Reynolds says.

NZX is buying electricity market M-co for $13.1 million and plans to finance it and other recent acquisitions with a $20.55 million one-for-five rights issue at $4 per share and a debt facility from ASB Bank. NZX shares closed on Tuesday at $8.00.

"Expected to be earnings-per-share accretive, NZX indicates the acquisition offers clear synergies with a focus on the establishment of a liquid hedge market for New Zealand electricity," Reynolds says

Last week, NZX said it plans to buy 50.1% of NSX, an Australia-based market for small to medium sized enterprises, for $A11.8 million ($NZ15 million).

BROKER CALL: ABN Amro Craigs rates NZX (NZX: NZX ) as HOLD.

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