Daily ShareChat: NZX

By Jenny Ruth

Thursday 15th October 2009

Stock exchange operator NZX's $7.7 million purchase of Melbourne-based grain exchange operator Clear Group should increase earnings per share (EPS) by 2% in calendar 2011, says Craigs Investment Partners analyst Daniel Reynolds.

But in the near-term it will be "short-term pain for long-term gain" and will dilute earnings - by about 6% this year and about 8% in 2010.

The Clear Group extends NZX's suite of agricultural assets and provides it with a scalable spot commodities trading platform, Reynolds says.

"While the transaction is not significant in terms of capital outlay, it provides a clear strategic fit with NZX's expansion into agricultural markets and commodities trading," he says.

Reynolds is now forecasting 2009 EPS of 43 cents, down from 44.3 cents previously, 2010 EPS of 42.7 cents, from 46.7 cents, and 2011 EPS of 52.1 cents, from 51.3 cents. That will put normalised net profit at $11.8 million this year, up from $10.2 million in 2008, at $13 million in 2010 and at $15.9 million in 2011.

While he raised his valuation and target price by 14 cents to $8.14 per share, "NZX appears fairly valued and, in our view, lacks the catalysts necessary for a sustained share price re-rating."

BROKER CALL: Craigs Investment Partners rate NZX as hold.

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