Computershare Ltd., the world’s biggest share registrar, fell the most in more than seven years in Sydney trading after it said profit may drop as takeovers and initial public offerings decline.
The stock plunged 11 percent to A$8.94 as of the close on the Australian Securities Exchange, the biggest decline since Nov. 7, 2002, on a closing basis. Earnings per share in the year ending June 2011 may fall as much as 10 percent, the company said today in a statement of its annual earnings.
Computershare, which earns fees for processing share transactions, and rivals such as Bank of New York Mellon Corp., U.K.-based Equiniti and Melbourne-based Link Market Services Ltd. face a drop in financial transactions that generate revenue, Ivor Ries, an analyst at EL & C Bailieu Stockbroking Ltd., said.
“IPO issuance and M&A volume, relative to global market cap, is pretty close to the lowest level it’s been in 20 years,” Ries said today by phone from Melbourne. He said he expects Computershare stock to rebound because the company has a dominant position in the share registry and investor relations business. He has a “buy” rating on the company.
Computershare, which reports earnings in U.S. dollars, said management earnings per share, which adjusts for restructuring charges and other items, for this fiscal year will be 5 percent to 10 percent below the 57.8 cents reported today for the year ended June 30.
Net income was $124.9 million in the six months ended June 30, unchanged from the previous year. Second-half figures were calculated by subtracting first-half profit from the $294.8 million full-year net income the company announced today. The annual result missed the $326 million average of five analyst estimates compiled by Bloomberg.
“It is not clear when transactional activity will return to more typical levels,” Computershare Chief Executive Officer Stuart Crosby said in today’s statement.