NZX confident after release of half-year results

The NZX talked up its funds management business as it reported improved half-year results this week.

The stock market operator said total revenue was up 8.8 per cent at $46.2 million and operating earnings increased 2.8 per cent to $17.4m, but net profit ultimately fell 3.2 per cent to $7.4m.

This was largely driven by cost pressures with operating expenses up 4.3 per cent, driven by technology and staffing costs.

In a note to clients, Craigs Investment Partners said the half-year result was “reasonably strong” considering it faced rising interest rates and trading volume falling by a fifth.

NZX chief executive Mark Peterson told analysts he had been watching the transaction closely as it had implications for the value of the Smartshares business.

Both Peterson and the company’s chief financial officer, Graham Law, said the multiple implied in the Kiwi Wealth transaction was not a surprise to NZX’s management.

Peterson said there were “bright opportunities” and more operating leverage to extract from the division in the future. The revenue growth in the past six months was driven by the funds management division, with revenue of $11.5m up from $8.9m in the first half of the prior year. Total value traded through the exchange was down 23% from the same period last year at $20.8 billion. This resulted in lower revenue for the markets division, although it was still above pre-covid levels. Smartshares’ funds under administration were up 28 per cent from June 2021 and are now just below $10b.