Stocks to Watch: AusNet Services, Eclipx Group, Link Administration Holdings and Pact Group Holdings

At the time of writing on 13th November 2019 (AEST 1: 45 PM), the benchmark index i.e. S&P/ASX200 is trading at 6,718 with a decline of 35 points or 0.5% from the previous closing. In the below article we would be discussing about some of the stocks, which have contributed towards the movement of the index in the trading session of 13th November 2019.

AusNet Services Limited

AusNet Services Limited (ASX: AST) is engaged in electricity transmission and distribution of gas. The market capitalisation of the company stood at A$6.88 billion as on 13th November 2019.

Rise of 2.5% in Revenues for 1H FY 20

Recently, the company through a release informed the market its results for the half year ended 30th September 2019 (1H FY20), wherein, it outlined the following:

  • The company stated that financial performance for the 1H FY 20, while marginally down half-on-half, was consistent with anticipations, noting there are several one-off and pass-through items that have impacted the results.
  • The company reported EBITDA amounting to A$625.8 million in 1H FY20 as compared to A$631.6 million in 1H FY19. The decline in EBITDA is because of higher vegetation management costs and higher transmission use of system (TUOS) costs.
  • However, the company reported revenues, which amounted to A$1,020.7 million, reflecting a rise of A$24.9 million or 2.5% in accordance with regulatory determinations and operating costs which were restrained through the continued delivery of efficiency initiatives.
  • The rise of A$24.9 million is primarily due to increase of $17.0 million in transmission easement tax revenue, which is a pass-through of higher expense and revenue amounting to $11.1 million from sale of inventory to Downer as part of the transferring of its electricity distribution field workforce and scheduling function, which was sold at book value and resulted in an offsetting increase in operating costs.
  • For the half-year ended 30 September 2019, it declared an interim dividend of 5.1 cents per share, franked 50%, reflecting a rise of 5% from the corresponding prior-year period.

The stock of AST closed at $1.880, with a rise of 0.804% as on 13th November 2019. AST has delivered returns of 5.07% and 1.63% during the last three months and six months, respectively.

Eclipx Group Limited

Eclipx Group Limited (ASX: ECX) is involved in providing corporate and consumer asset backed finance, complete fleet management services, online auctioneering and associated services and medium-term vehicle rentals to the market of ANZ.

A Walk through on FY19 Results

For the full year ended 30th September 2019, the company announced its results for the period in combination with an update on simplification plan:

  • ECX stated that e core fleet and novated business reported a solid performance in FY19, against a challenging backdrop. However, the company experienced a disappointment from non-core businesses.
  • In 2H FY19, the group declared numerous non-cash impairments and write offs, amounting to $344.2 million (pre-tax). These were related to losses from the sale of non-core businesses, impairments on the carrying values of non-core businesses, which are yet to be sold as well as impairments of certain software. The company delivered a statutory loss after tax of $341.5 million.
  • When it comes to simplification plan of the company, it successfully disposed of three of its five non-core businesses, such as GraysOnline, AreYouSelling and Commercial Equipment Finance Australia, since announcement of plan on 31st May 2019.
  • It was mentioned in the release that the relativities between core and non-core performance underpins the objectives behind the Simplification Plan, which is progressing well.

The stock of ECX closed at $1.680 per share, with a decline of 7.945% as on 13th November 2019. ECX has delivered returns of 18.09% and 89.07% during the last three months and six months, respectively.

Link Administration Holdings Limited

Link Administration Holdings Limited (ASX: LNK) is in provisioning of technology-enabled administration, securities registration and asset services, for listed and unlisted corporate entities, as well as pension and superannuation funds globally.

Entry into UK Pension Market
  • The company through a release dated 13th November 2019 announced that it has a strategic global partnership and minority investment in a leading UK workplace pension provider, Smart Pension.
  • It added that this partnership provided the company with a strong and immediate entry into the growing UK retirement market as well as builds on Link Group’s business presence in the UK.
  • This partnership is a logical expansion of the company’s UK activities considering LNK’s expertise in supporting large scale pensions administration as well as global clients.
  • In another update, the company announced that it has bought back 1,000,595 shares at the consideration of A$5,566,749.15 pursuant to its daily share buyback program, till 8th November 2019.

The stock of LNK closed at $5.740 per share, with a decline of 1.205% as on 13th November 2019. LNK has delivered returns of 22.06% and -24.15% during the last three months and six months, respectively.

 

Pact Group Holdings Ltd

Pact Group Holdings Ltd (ASX: PGH) is in the business of manufacturing of rigid plastics packaging, metals packaging and related products.

Chairman’s Address to Shareholders
  • Recently, the Chairman of PGH has addressed shareholders on 2019 Annual General Meeting and stated that FY19 has proved as challenging year for the company, where earnings of pact impacted by higher raw material and energy costs as well as weaker demand conditions in some sectors.
  • Against these backdrops, PGH reported a growth of 10% in revenue and made improvements on many fronts.
  • During FY19, PGH secured long term customer agreements in its pooling and reuse businesses which would be delivering growth in FY20 and beyond.
  • It implemented a new operating model and changed the Group’s reporting segments in order to align with its three key product portfolios such as (1) Packaging and Sustainability, (2) Materials Handling and Pooling and (3) Contract Manufacturing Services. The following picture provides an overview of the company’s 2020 events calendar:

The stock of PGH closed at $2.570 per share, with a rise of 1.984% as on 13th November 2019. PGH has delivered returns of -10.64% and -1.56% during the last three months and six months, respectively.


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