Star Performers of 2019 – TLS, GMG, FMG, NCM

The below-mentioned stocks have been performing very well in the current year. So far in 2019, these stocks have provided great returns to their shareholders, demonstrating a greater level of investor confidence. In addition, these stocks have also seen a strong operational performance in 2019. Let’s take a quick look at these stocks. 

Telstra Corporation Limited (ASX: TLS)

The stock of Australia’s telecommunication giant, Telstra Corporation Limited (ASX: TLS) has performed very well in 2019, rising by 31.73% in the last six months as on 18th July 2019. During the first half of FY19, the company continued to progress on its T22 strategy and produced results, which were in line with the expectations. Due to the roll out of nbn, Telstra’s total income, EBITDA and NPAT all were down on pcp.

On a reported basis, the total income of the company was down by 4.1%, EBITDA was down by 16.4% and NPAT was down by 27.4% on pcp. During the half year period, the demand for telco products and services was strong. The company’s T22 strategy is allowing it to reap the benefits of future opportunities, building on the investments in digitization and networks.

For the half year period, the Board declared a total fully franked interim dividend of 8 cents per share, consistent with the company’s dividend policy to pay a fully franked ordinary dividend of between 70% to 90% of the underlying earnings.

The company recently announced that it is expecting to make a non-cash impairment and write-down of the value of its legacy IT assets by around $500 million and along with that is expanding guidance on its restructuring costs by ~$200 million.

In April 2019, the company announced the appointment of an industry veteran Ms Vicki Brady as a CFO and Head of Strategy, which has been a significant addition to the company’s leadership team. Vicki Brady is an experienced veteran with a Master’s degree from Stanford University Graduate School of Business and a Bachelor of Commerce from the Australia National University.

The company via ‘Change of Director’s Interest Notice’ (notice) recently announced that its Director, Roy H Chestnutt had acquired 43,000 ordinary shares of the company for a total value of $138,629.23. In March also, the company published a Director’s Interest Notice, reporting that Nora Scheinkestel has acquired 7,875 ordinary shares of the company on 4th March 2019 for a total consideration of $24,959.70.

TLS’s stock has an annual dividend yield of 3.28% and a PE ratio of 14.600x. At market close on 19th July 2019, the stock was trading at $3.840 with a market capitalization of 45.31 billion and a daily volume of ~15,869,239. Its 52 weeks high price is $3.910 and 52 weeks low price is $2.665 with an average volume of 27,436,303.

Goodman Group (ASX: GMG)

Australia’s integrated property organisation, Goodman Group (ASX: GMG) has been expanding its land bank globally in key urban locations in anticipation of high-quality opportunities for its customers in the future and to extend the scale of developments and the pipeline in the medium to long term. GMG has gained the confidence to start more projects on a speculative basis due to the high demand and lack of supply in most of the markets.

In the March quarter, the company delivered a strong operating performance.

Key Highlights for the nine months to 31 March 2019 include:

  • $44.1 billion of total assets under management
  • 3% like-for-like NPI growth in the company’s managed Partnerships
  • $3.7 billion of development work in progress (WIP)
  • 98% occupancy across the Group and Partnerships
  • $2.4 billion of development commencements with 83% undertaken in Partnerships
  • Reaffirm forecast FY19 operating earnings per security of 51.1 cents, up 9.5% on last year.

The company is strategically focused on infill markets, where it has seen strongest demand.

Development WIP (Source: Company Reports)

The company expects its portfolio to continue to perform strongly. GMG’s FY19 operating earnings per security is expected to be 51.1 cents, which is 9.5% higher than FY18.

For the six months ended 30th June 2019, the company has declared a dividend of $0.15, with an ex-date of 27th June 2019, the record date of 28th June 2019 and payment date of 9th September 2019.

On the stock performance front, GMG’s stock has provided a return of 29.40% in the past six months. At market close on 19th July 2019, the stock was trading at a price of $15.170 with a market capitalization of 27.46 billion and a daily volume of ~2,372,926. Its 52 weeks high price is $16.100 and 52 weeks low price is $9.520 with an average volume of 3,730,492. GMC’s stock has an annual dividend yield of 1.98% and a PE ratio of 18.420x.

Fortescue Metals Group Ltd (ASX: FMG)

Founded in 2003, Fortescue Metals Group Ltd (ASX: FMG) has established itself as a world-class mining company with the most efficient bulk port operation in Australia. The company recently started an Eliwana Mine and Rail Project, which is expected to enhance the company’s profitability and extend its mine life. This projects will help the company to deliver products at greater than 60% iron grade.

Recently, the company announced the completion of the fleet of tugs and towage infrastructure at its Herb Elliott Port, which will allow it to provide safe and reliable towage services for all Port Hedland users.

In the month of May 2019, the company announced the development of the Queens Valley mining area, which will help the company to maintain the production of the low-alumina Kings Fines product, in line with Fortescue’s strategy of optimising margin via enhanced product mix. It is expected that the capital expenditure for the Queens development will be around US$287 million.

During the 2019 March quarter, the company reported total shipments of 38.3 million tonnes (16% up pcp), which includes 3.8 million tonnes of West Pilbara Fines. The total ore mined during the March quarter was 48 million tonnes, which was 15% higher than the previous corresponding period.

March Quarter Production summary (Source: Company Reports)

On the stock performance front, FMG’s stock has provided excellent returns in the last few months, rising by 103.68% over the past six month period.

At market close on 19th July 2019, the stock was trading at a price of $8.700 with a market capitalization of 26.63 billion and a daily volume of ~ 12,960,166. Its 52 weeks high price is $9.550 and 52 weeks low price is $3.224 with an average volume of 15,391,748. NCM’s stock has an annual dividend yield of 3.58% and a PE ratio of 21.880x.

Newcrest Mining Limited (ASX: NCM)

One of the world’s largest gold mining companies, Newcrest Mining Limited (ASX: NCM) has outperformed major gold companies over the last five years, as depicted in the below graph.

Peer comparison (Source: Company Reports)

During the March quarter, the company reported gold production of 623koz. Newcrest’s All-In Sustaining Cost (AISC) for the March 2019 quarter amounted to $738/oz, which was 3% up on 2018 December quarter. Newcrest is one of the low-cost producers of gold, as depicted in the graph below.

AISC/oz for the most recently reported quarter (Source: Company)

Production guidance for the 12 months ended 30th June 2019 can be viewed in the below figure.

Production guidance for the 12 months ended 30 June 2019 (Source: Company Reports)

The company is currently in the process of acquiring 70% of the Red Chris mine from Imperial Metals for a total value of US$806.5 million, which is a huge upside opportunity for the company. It is expected that the acquisition will be completed before 15th August 2019.

On 30th April 2019, the company made an announcement on ASX, stating that it had received the final report from the ITRB with regards to its Cadia tailings facility. The report has provided a great deal of technical insight along with the recommendations. The report concluded that the dominant factor determining the location of the slump, which occurred in the southern wall of Cadia’s NTSF on 9th March 2018, was the existence of a low-density foundation layer in the vicinity of the slump.

The company recently released a notice of change of interests of substantial holder, outlining that its substantial holder Allan Gray Australia Pty Ltd now holds 59,664,649 ordinary shares of the company with a 7.76% voting power.

On the stock performance front, NCM’s stock has provided a return of 36.51% in the last six months. At market close on 19th July 2019, the stock was trading at a price of $33.150 with a market capitalization of 24.77 billion and a daily volume of ~ 3,089,972. Its 52 weeks high price is $33.330 and 52 weeks low price is $18.575 with an average volume of 2,696,129. NCM’s stock has an annual dividend yield of 0.79% and a PE ratio of 51.200x.


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