APRA Lifts Bank Pay-out Restrictions | Pushpay Sell-down

29 December 2020

Global markets rallied overnight (S&P 500 index +1.3%) as small-cap stocks continued to outperform, with investors taking comfort in the vaccine rollout and progress on stimulus talks. The Nasdaq index shows a decent gain as well, unperturbed by news of the EU publishing new draft legislation that would allow it to heavily fine or break up “Big Tech” if companies engaged in anti-competitive behaviour. The UK fell as London's pandemic restrictions tightened.

Pushpay (PPH:NZX / PPH:ASX)

PPH shares have emerged from a trading halt this morning down -8%. The stock was halted yesterday as PPH undertook a bookbuild for Chris Heaslip and Chris Fowler’s NZ$97.9 million share sell down, with 54.68 million shares (4.96% of the register) held by Mr Heaslip’s and Mr Fowler’s respective associated interests being sold, at the clearing price of NZ$1.79 per share.

The book was oversubscribed and subject to scaling. Settlement of the sale of the shares will occur on 18 December 2020. The bookbuild was well supported, attracting bids from 22 institutional investors across New Zealand, Australia, Canada and the US, as well as strong participation from retail investors.

While we remain BUY rated on PPH, our conviction is lower than earlier this year, as we would expect the remaining 15% stake held by the Huljich’s will likely come to market next year, creating an overhang on the share price.  Going forward, we see a greater focus on acquisitions with PPH indicating they will look to “buy” market share, especially as they look to have saturated the very large mega-church end of the church market. We continue to see the stock as a top-quality software as a service business which is not unreasonably priced relative to peers and hence remain Buy rated.


Australia & New Zealand Market Movers

The Australian market was lower on Tuesday (ASX 200 index -0.4%) as China’s ban on Australian coal rattled miners on the ASX and contributed to the market closing lower. Iron ore miners hope they avoid similar scrutiny and pulled back after a tremendous run over recent times.

The Australian regulator has removed the restriction for banks to cap shareholder dividend payouts at 50% of profits from the start of 2021. ANZ will hold its AGM on Wednesday with NAB to follow on Friday. However, APRA warned boards of directors to maintain "a prudent approach" and the onus will be on boards to carefully consider the sustainable rate for dividends, taking into account the outlook for profitability, capital and the economic environment.

The New Zealand market slipped yesterday (NZX 50 index -0.5%) as the local market caught up with souring economic sentiment triggered by the spread of covid-19 globally.

In stock news, Argosy Property Limited has announced it has settled its insurance claim with its insurers NZI and QBE in respect of earthquake damage at 7WQ relating to the Kaikoura earthquake, receiving $23.5 million plus GST as full and final settlement. The settlement process has been a long and tedious one for ARG over the past four years, and given the uncertainty that an arbitration process can entail, we view the announcement and 80% recovery rate as a positive one.

Air NZ, Jetstar and Virgin Australia have all started offering seats on flights from Australia to NZ on March 28th 2021 suggesting they view that as a likely date from which border restrictions between the two countries are likely to be open

3 Things Markets Will be Watching this Week

  1. ​​​​​​​​​​​​​COVID related news flow, including vaccines are likely to dominate headlines for another week.
  2. Highlights this week include interest rate decisions from the US Federal Reserve, Band of Japan and Bank of England.
  3. The latest employment data in Australia is due on Thursday along with housing starts. Closer to home, the latest NZ migration print is due along with Q3 GDP and business confidence.


The Australian regulator has removed the restriction for banks to cap shareholder dividend payouts at 50% of profits from the start of 2021.

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