Provenco say publicity is behind price spike

Payment-technology company Provenco - responding to a regulator inquiry - says it has complied with stock exchange listing rules and a spike in its share price is because of good publicity.

The NZX asked Provenco if it was abiding by continous disclosure rules in light of a 7c a share rise between close of trading on April 24 and May 5 - equivalent to an 8.3 per cent jump to 90c a share over nine trading days.

In a letter to the company, NZX solicitor Damas Potoi also noted that "higher than usual volumes" had been traded during this period.

Provenco's share price was down 2c yesterday at 88c.

In a notice to the stock market yesterday Provenco chief financial officer Stewart McKenzie said the company was complying with the rules, adding that in recent weeks it had received favourable recommendations from several analysts.

Provenco chief executive David Ritchie said increased publicity rather than specific news lay behind the recommendations.

"You've got a couple of brokers, one sending out a report ... to their client base and another one being quoted in the paper."

Simon McArley, NZX acting head of regulation, said the exchange did not comment on specific investigations "to avoid speculation as to the outcome".

Market surveillance software, used in conjunction with other sources of information, generally raised 20 to 30 alerts a day, although few of these resulted in formal inquiries.

"In the time I've been here, which is six months, I can only remember us doing four or five," McArley said.

Last October the Securities Commission settled an insider-trading proceeding brought against Provenco, two directors and one former director.

Provenco agreed to pay $300,000 to the commission. Directors David Wolfenden and Nicholas Gordon agreed to pay $42,000 and $130,000, respectively, and former director Anthony Bradley $150,000.

Under the settlement no judgment was entered against Provenco, Wolfenden, Gordon or Bradley.

Adrian Vance, partner at broking firm Hamilton Hindin Greene, said trading in Provenco's stock had acquired a buying momentum.

"Quite often in these smaller cap stocks and price stocks the momentum can build on itself," Vance said.

Liquidity might also be a factor.

"When people are trying to buy some of these stocks where there isn't a huge amount of liquidity it can affect the price quite a bit."

The firm recommended Provenco as a good growth option and it was among its top five picks for the year.

A fair price for the shares would be between $1.10 and $1.20, Vance said.

"Their technology is held in quite high regard ... demonstrated by the contracts that they've won with the biggest petrol companies in India, China and Malaysia particularly."

Last month Provenco signed a deal with Mumbai-based Bharat Petroleum to provide payment terminals for 77 petrol stations throughout India's northern and western regions.