A likely victory by the All Blacks against the Wallabies in rugby union this weekend will, sadly, give New Zealanders another reason to crow. Investors who follow NZ stocks also have reason to cheer: several that are dual-listed on ASX have starred this year.
Analysis of 45 Kiwi companies listed on NZX and ASX shows some stunning returns. The top 20 performers on a total return basis (assuming dividend reinvestment) delivered a 53 per cent median gain in the year to August 2016 in difficult market conditions,
The A2 Milk Company, Trade Me Group, Auckland International Airport, Chorus, Fisher & Paykel Healthcare Corporation, Gentrack Group and Vista Group International have rallied. Energy providers, Mighty River Power and Meridian Energy, have also posted good one-year returns.
More Kiwi companies are dual listing on ASX to access an Australian capital pool and investor base that is several times larger than that in New Zealand. The Australian Securities Exchange’s changes to listing requirements for NZ companies also has boosted demand.
ASX last year made it easier for NZ companies to dual list their securities on ASX with the introduction of a “NZ Foreign Exempt” listing category. It removed the ASX-compliant prospectus requirement and allowed NZ companies to comply with NZX Listing Rules rather than all ASX Listing Rules, saving time and money.
Extrapolating trends from a diverse group of NZ companies is always dangerous. But I suspect NZ companies, in aggregate, are getting a boost from dual listing on ASX because they are satisfying the market’s appetite for small and mid-cap growth stocks. Or in the case of large NZ companies, investor demand for new offerings in sectors outside banks and resources.
I have covered several smaller NZ stocks for The Bull in the past 18 months, notably Trade Me Group, Vista Group International and CBL Corporation, another good performer. 
Orion Health Group is another that has caught my attention recently. The New Zealand-based healthcare information technology company listed on ASX in November 2014, raising $111 million in an initial public offerings. Orion’s $5.11 issued shares now trade at $4.24, halving almost halved at one point. Orion’s early performance again reinforces my view that most IPOs are best bought a year or two after listing, when there is more trading history and better value emerges. 
Orion looks undervalued. Healthcare IT has a good long-term outlook. As an ageing population increases healthcare demand, hospital operators will have to find efficiency gains to offset rising costs. Better technology systems will help many hospitals move from silo structures to a more integrated approach where data sharing across departments improves healthcare delivery.
Orion’s main product, Rhapsody, integrates a complex web of information technology system that often exist in healthcare organisations. It allows different hospital departments to use one main technology stem and connect with other community stakeholders. 
Orion looks well positioned to benefit from the move towards electronic health records, within hospitals and outside them. The United States and other developed countries are pushing towards patient care models where individual healthcare is co-ordinated in a more integrated manner. Strong healthcare systems and data are the key.
The potential is healthcare providers across the system being able to access a patient’s common electronic health record, with permission, in a high security/privacy platform. That’s a lot smarter than different healthcare providers keeping different patient records and not integrating them.
The need to drive efficiency gains through better healthcare technology system is a tailwind for Orion. However, competition in this sector is intense and giant multinationals, such as GE Healthcare, have entrenched market positions in this field.
Orion makes the grade on valuation grounds. Macquarie Equities Research has an outperform recommendation and 12-month price target of $A5.21 ($NZ5.50). That suggests Orion is undervalued at the current A$4.22.
Macquarie says patient health records on Orion software will increase from just over 100 million to 410 million in the next decade and it expects the company’s earnings margins to expand from 19 per cent to 25 per cent in that period. 
Orion has delivered a 21 per cent total return over 12 months to August 2016 (assuming dividend reinvestment), Morningstar data shows. But it still trades well below the issue price and has disappointed investors since listing. 
That should change in the next few years as Orion expands its presence in healthcare software and capitalises on greater hospital investment in technology systems. 
As a $678-million company, Orion suits experienced long-term investors who are comfortable with small-cap stocks.
Chart 1: Orion Health Group1Source: The Bull 

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Tony Featherstone is a former managing editor of BRW and Shares magazines. The information in this article should not be considered personal advice. The article has been prepared without taking into account your objectives, financial situation or particular needs. Before acting on the information in this article you should consider the appropriateness of the information, with regard to your objectives, financial situation and needs. Do further research of your own or seek personal financial advice from a licensed adviser before making any financial or investment decisions based on this article. All prices and analysis at August 19, 2016.