Daily ShareChat: NZX

By Jenny Ruth

Friday 15th January 2010

Recent acquisitions will be a drag on NZX's profitability in the short term, leading him to review his forecasts, says Guy Hallwright, an analyst at Forsyth Barr.

He has cut his calendar 2009 and 2010 earnings forecasts by between 15% and 20% but says this is offset by the longer-term value of the new businesses which means he has raised his valuation of the shares from $2.28 to $2.37.

Hallwright says his valuation is conservative on the ultimate value of NZX's new agriculture and energy information and trading businesses and the Markit environmental registry business and he believes there should be further upside over time.

An upside valuation, assuming its Australian AXE exchange, still on hold awaiting a licence, begins operating in mid-2010 and that NZX receives the maximum Markit shares, would be about $2.70 a share, he says.

However, "our feeling is that the share price has probably run far enough for now." Hallwright says there was a record volume of listings of both equity and debt in 2009 as companies moved to replace bank debt.

"NZX expects fourth quarter listing revenues to exceed the third quarter which was easily the strongest quarter since the start of our quarterly revenue breakdowns in 2004."

However, data terminals continued to decline with stabilisation likely but not yet apparent. Terminals are down about 33% from their peak, Hallwright says.

BROKER CALL: Forsyth Barr rate NZX as accumulate (reduced from buy).

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