Global markets were mixed overnight as US stocks slipped following a Reuters report the US-China trade deal could be delayed until December. Short term sentiment continues to be driven by trade related newsflow.
Stock in Focus: Pushpay (PPH:NZX / PPH:ASX)
Shares in Pushpay jumped yesterday after announcing what we saw as a solid first half of 2020 result.
Pushpay increased its total revenue for the six months ended 30 September 2019 by US$13.4 million when compared to the prior comparable period, from US$44.0 million to US$57.4 million, an increase of 30%, which is a slight slowdown. PPH operating leverage continues to improve, as gross margin over the period improved 8% compared to the prior comparable period, from 57% to 65%. Full year guidnace was unchanged, with management expecting to hit the top end of the range for the full year. it is also pleasing to see continued investment into app/product development, improving look and feel, services and customer engagement. PPH are also already under way in building its own CRM for churches, albeit highlight the fragmentation of the market as a challenge.
PPH said they are actively looking for acquisition opportunities as its war chest starts to fill with the business now generating positive operating cash flows. Acquisitions can help PPH achieve scale faster than organic growth alone.
We currently have a BUY rating on PPH.
Australia & New Zealand Market Movers
The Australian market was lower on Wednesday (-0.55%) with technology stocks among the worst performers on the market, as investors maintained a risk-averse stance. The major resource stocks led the market gains on Wednesday as metal and oil prices rose on the back of the positive trade sentiment.
Medibank Private shares slid after the health insurer reported it had been caught $21 million short after claims in the 2019 financial year increased at a greater rate than originally reported. Boral shares fell after warning profits from its North American and Australian operations in the September quarter had fallen below the same period last year because of softer housing markets.
The New Zealand market sold off yesterday (-0.76%) led lower by A2 Milk shares. There was also profit taking across defensive dividend paying stocks, while Fisher & Paykel shares hit fresh heights.
A2 continues to come under pressure on news that domestic Chinese infant formula company Junlebao, controlled by the Hebei provincial government, has gained State Administration for Market Regulation – SAMR – registration for its infant formula, which also contains only the A2 protein, and will be allowed for sale in offline retail channels, such as mother and baby specialty supermarkets. A2 is already competing against other foreign brands produced by Mead Johnson, Danone and Nestle, with the new Chinese competitor adding to competitive backdrop at the margins.
3 Things Markets Will be Watching this Week
- US earnings season for the 3rd quarter continues this week.
- The Reserve Bank of Australia makes an interest rate decision on Tuesday.
- A string of China data points are set to be released at the start of the week.
Have a Great Day,