NZX50 firms in mixed trade: Pushpay extends gain while Trustpower falls

The key New Zealand share index was mildly stronger. Photo / File

The key New Zealand share index was mildly stronger despite the number of its constituents falling matching those that gained. Pushpay Holdings extended its gains after reporting strong results and A2 Milk bounced back from Wednesday's sell-down.

On the negative side, Trustpower was among the biggest decliners after reporting a fall in first-half net profit and trimming its full-year guidance.

The benchmark S&P/NZX 50 Index rose 35.88 points, or 0.3 perc ent, to 10,795.06. Within the index, 21 stocks rose, 21 fell and eight were unchanged. Turnover was $134.5 million.

Pushpay shares rose 13 cents, or 4 per cent, to $3.42 after climbing 3.8 per cent yesterday when it reported a US$6.5m ($10.2m) net profit for the six months ended September, a turnaround from the previous first-half's US$4.4m net loss.

The digital church collection payment app maker started generating a positive operating cash flow over the past 12 months, and that stepped up to US$8.9m in the six months ended September 30 from about US$2m in the March period.

"That was a great result," says James Porteous, a broker at Craigs Investment Partners.

Craigs analyst Stephen Ridgewell said Pushpay is "demonstrating impressive operating leverage" and revised his 12-month target price to $4.75 from $4.25.

Ridgewell noted Pushpay is trading at a material discount to its ASX-listed peers and represents "compelling value."

Kiwi Property Group, unchanged at $1.57, was the heaviest traded stock. Almost 3.9 million shares changed hands, more than twice the average during the past three months.

Phone company Spark, often the most heavily traded stock, was second. About 3.6 million shares worth $16.1m changed hands, up on the average of 2.9 million. The stock gained 7 cents, or 1.6 per cent, to $4.45.

Index heavyweight A2 Milk bounced back after being sold down 3.6 per cent yesterday, gaining 2.2 per cent to $12.57 today.

"A lot of money in Australia has chased A2" but now the "hot" money is chasing other bets, Porteous says.

"We actually think it looks better – the new CEO (Jayne) Hrdlicka seems very good," he says.

A2 is relying less on the daigou – or greymarket trade in which buyers purchase A2's infant formula in Australia and New Zealand for sale in China – as it develops its own sales.

"In the long term, it's a more solid proposition," Porteous says.

Trustpower shares fell 26 cents, or 3.2 per cent, to $8.00 after reporting first-half net profit fell to $38.7m from $64.9m in the same six months last year after low hydro inflows and repair costs to a power station.

A number of stocks prized for their dividend yields remain under pressure from rising bond yields.

They included property securities such as units in Goodman Property Trust, down 1.2 per cent at $2.11, electricity generator and retailer Meridian Energy, down 1.3 per cent at $4.54, and fellow gentailer Mercury New Zealand, down 0.4 per cent at $4.77.

While 10-year swaps ended the day slightly lower at a bid price of 1.4550 per cent from 1.5025 per cent yesterday, they have risen from 1.2850 in late October.

"The yielders have all been flattening off in the last couple of weeks as interest rates have flattened out," Porteous says.

These yield stocks have enjoyed solid support as interest rates have declined this year with the Reserve Bank cutting its official cash rate from 1.75 per cent to 1 per cent so far.

Meridian shares, for example, are up nearly 45 per cent from a year ago and Mercury shares are up more than 38 per cent while the S&P/NZX 50 is up only 24 per cent over that period.