- Investors are scanning blue chip stocks which are better cushioned against market volatility due to their strong capitalisation.
- The economic recovery in Australia is catalysed by the booming property market and rising consumer confidence amidst low inflationary environment.
- Several ASX-listed blue chip stocks are witnessing encouraging potential since the start of 2021.
COVID-19 pandemic opened pandora’s box for most of the sectors, testing the resilience of several companies listed on ASX. While investors found themselves in doldrums, many fell back on the strategy of cherry-picking blue chip stocks to ensure portfolio stability.
The new year 2021 is expected to be the year of hope. The bright spots have already started to appear in terms of improving economic scenario, rising consumer confidence, and soaring property prices in Australia. Meanwhile, the mass rollout of the vaccine can press the fast-forward button for the financial reboot. However, the effectiveness of the inoculation programs is yet to be seen that would set the stage for an accelerated pace of recovery.
Amid the optimistic scenario which continues to be surrounded by uncertainty, let us look at some ASX listed blue chip stocks grabbing the investors’ attention.
Global resource company, BHP Limited has posted the EBITDA margin of 59%, record dividends and strong growth in earnings per share in today’s half yearly results. Besides, the group reported 17% uptick in Profit from operations to US$9.8 billion, with underlying EBITDA of US$14.7 billion. The full year unit cost guidance remained unchanged for its major assets.
The Board has determined to pay an interim dividend of US$1.01 per share, equivalent to an 85% payout ratio on an underlying basis. While the Company’s FY21 guidance for petroleum production remains unchanged, it expects the iron ore production to increase to up to 255 Mt.
The first half-year net profit of Telstra Corporation slipped by 2.2% on account of customers’ migration to the National Broadband Network (NBN) and COVID-19 pandemic. Meanwhile, the telecom company saw its total income down by 10.4%. Furthermore, the decline in mobile and tablet sales due to COVID-19 induced impact is also to be blamed for the company’s fallen revenue.
The company announced an interim dividend of 8c per share, intending to provide the total dividend of 16c during FY21.
The owner of many well-known and diversified brands, Wesfarmers Limited appears to be sitting on the sweet spot with the economy gradually gearing up while customers increase their retail spending. During the second half of FY20, the Group saw significant growth in demand in Officeworks, Catch and Bunnings, thereby delivering a strong performance in the COVID-19 settings.
Australia’s financial service company, Macquarie Group witnessed improved trading conditions in the December 2020 quarter. Macquarie Asset Management (~47%) showed maximum net profit contribution in FY2,1 followed by Commodities and Global Market (~38%), with an increased combined contribution on pcp. Meanwhile, the company’s markets-facing businesses contributed 30% in FY21 net profit.
Multinational metals and mining Company, Rio Tinto reported a 2% increase in the bauxite production during latest fourth quarter release, backed by expanding Guinea-based CBG mine and the steady performance delivered by the Pacific mines.
Post the quarter-end; the company has signed a new electricity agreement with Meridian Energy in the context of Aluminum production.
COVID-19 pandemic and travel restrictions have declined traffic across all Transurban Group markets, leading to ~18% decline in average daily traffic and proportionally decreasing toll revenue during the first half of FY21.
The Company’s Chief Executive Officer Scott Charlton indicated that business performance is expected to remain sensitive to the Government responses.
ASX-listed petroleum explorer and producer, Woodside Petroleum saw its production decline by 2% in the December quarter against the previous quarter. However, the higher oil and gas price drove the Q4 2020 revenue to rise 32% compared to the third quarter.
It has already set the stage for further advancements with production licenses received for the Scarborough development and additional gas processing agreements and completion of Cairn Sangomar acquisition.
Australian stock transfer company Computershare witnessed the headwinds of the pandemic, with management revenue decreasing by 3.2%. While margin income dwindled over 52% during the first half of FY21. The Company CEO, Stuart Irving, indicated that record low-interest rates had affected the margin income.
The company anticipates EBIT to rise by ~14% for FY21 over the previous year and the margin income revenue to be ~$105 million.
Real Estate Investment Trust, DEXUS Property Group reported strong investment demand for quality assets, thereby resulting in NPAT of ~$443 million during the six months ended 31 December 2020. Net revaluation gains for the first half of 2020 were however lower than those recognised in the pcp.
DEXUS overall performance was encouraged by relatively strong rent collection and increased leasing activity.
Australia’s biggest bank, Commonwealth Australia Limited, appears to be leveraging the fast-paced economy to emerge from the aftermath of the COVID-19 pandemic.
The Interim Dividend of $1.5 was announced for the first fiscal half, which was up by 53% from the preceding six-month period. Significantly, the housing sector boom has catalysed the banking space on the back of increased mortgage loans. Although for H1 FY21, the company reported a decline in profit by around 21% compared to 1H20.
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