3 Stars for these 3 Stocks – PPH, NEA, HVN

  • Jun 14, 2020 AEST
  • Team Kalkine
3 Stars for these 3 Stocks – PPH, NEA, HVN

Summary

  • COVID-19 has turned the eye of investors toward firms that are able to fulfil the demand of consumers in various spaces during the lockdown.
  • Pushpay’s revenue surged 32% during its full year results, and the firm has been quite prominent in improving donations for NPOs that are helping coronavirus affected regions.
  • Recently, NEA notified on the launch of Nearmap AI to be commercially accessible through a self-service export and offline channels in Australian and the US regions from 1 June.
  • Harvey Norman reported a significant rise in sales from January to May end (2020). However, its sales have been affected overseas due to COVID-19.

Diversification is a management approach that merges different investments in a single portfolio. The idea behind an investor’s diversified portfolio is to invest in various sector stocks and obtain good returns by reducing the risk of market volatility.

In last few months, since the outbreak of coronavirus, global economy has been hit hard and is still grappling with it. In times like this, diversification of portfolio can be a prudent step towards safeguarding one’s investment wherein, one can expect balanced gain from it.

Let’s have a look at how are the 3 ASX listed stocks faring, during the challenging times of coronavirus when most of the people are staying at their respective homes.

Pushpay Holdings Limited

Pushpay Holdings Limited (ASX:PPH) provides donor and finance tools, custom community app to NPO, faith sector and education providers in the US, Canada, Australia and New Zealand.

On 6 May, PPH released annual results for the period closed 31 March 2020. Some of the highlights from the same are as follows:

  • Total revenue rose by USD 31.4 million to USD 129.8 million, an increase of 32%.
  • PPH’s operating revenue increased by 33% from USD 95.9 million to USD 127.5 million, total operating expenses rose by 5%.
  • Total operating expenses grew by 13% from 65% to 52% as a percentage of operating revenue.
  • Also, the Company’s operating revenue rose by 28% to USD 123.1 million compared to pcp excluding the purchase of the ownership stakes in Church Community Builder and related costs and effects, total operating expenses for the same fell by USD 5.2 million, a fall of 8%.
  • Gross margin rose from 60% to 65% while EBITDAF rose 1,506% to USD 25.1 million from USD 1.6 million.
  • Operating cash flow improved 953% from negative operating cash flows USD 2.8 million to positive operating cash flows USD 23.5 million,

Operating leverage was propelled by robust growth in operating revenue, enhanced margins, and efficient cost administration. The Group expects significant operating leverage to accrue because of the persistent growth in operating revenue, low growth in total operating expenses, best-in-class software tools and scalable processes.

PPH also finalised the acquisition of Church Community Builder for a total cash value standing at USD 87.5 million in December 2019. They started a combined product donation in April 2020.

On the outlook front, since PPH observed a shift to digital platform in response to COVID-19 crisis, it anticipates the rise in the same space providing as a proportion of full results from the pandemic, to offset any possible fallout in totality giving to the US faith sector.

It also continues to evaluate additional acquisitions along with balance of expanding operating margin and further strong revenue growth to gain market share in the medium-term to maximise shareholder value. It intends to aim for over 50% of the medium and large church segments and attain EBITDAF between USD 48 million and USD 52 million for 31 March 2021.

Shares of Pushpay last traded at $6.8, decreasing by 1.02% from its last close, on 12 June 2020.

Nearmap Limited

Australia based Nearmap Limited (ASX:NEAis a firm functioning in the space of aerial imagery and location data.

In February this year, NEA announced 1H20 outcomes for the period ending 31 December 2019. During the period, Group’s ACV stood at AUD 96.6 million. As per NEA’s update on 28 May, the Group reported that its Annualised Contract Value (ACV) is indicating persistent growth exceeding AUD 102 million.

Some of the Company’s critical metrics and highlights from 1H20 results are as follows:

  • Revenue increased by 31% to AUD 46.3 million with 61% rise in operating cost base for 1H20 compared to pcp.
  • Productivity levels remain the same as employees work from home.
  • Narrowing of guidance to AUD 103 million -107 million based on its current trading.
  • Launch of Nearmap AI in Australia and NZ with availability through self-service exports and offline channels.
  • NEA is on track to deliver cashflow breakeven target by June end 2020 and anticipates a cash balance between AUD 32-35 million at the end of 2020.

Nearmap has taken steps to reduce its cost base by reducing compensation, deferral of short-term incentive bonus, and other cost reductions without impacting investment in the Company’s growth initiatives at the time of coronavirus.

ALSO READ: Guide to Portfolio Strategies and Investment Avenues to Wade Through COVID-19 Crisis

As per its latest business update in April, NEA has performed well and is persistent towards portfolio growth, month on month across its key industry segments. Sales activity has remained robust for the Group in the period of COVID-19, and 12-month rolling churn is now below 10%. Nearmap remains confident in its long-term growth aspirations with fundamental of the business remaining intact.

NEA has invested heavily in its core technology and customer proposition to bring differentiated and high-value content types to its growing customer base. The launch of Nearmap AI to be commercially accessible through a self-service export and offline channels in Australian and the US regions by 1 June, is another significant milestone achieved by the Company after rolling out 3D and roof geometry. 

The shares of NEA last traded at $2.1 on 12 June, falling by 4.11% compared to its previous close. 

Harvey Norman Holdings Limited

Harvey Norman Holdings Limited (ASX:HVN) is a multi-national retailer of furniture, computers, consumer electricals and communication.

HVN’s total sales proceeds from its stores in New Zealand, Slovenia, Croatia, Ireland, Northern Ireland totalled $4.07 billion for 6 months period ended 31 December 2019.

For H120, NPAT and non-controlling interests for the half-year period was noted at $213.5 million from $222.77 million in the previous corresponding period.

As per a retail trading update released on 10 June, HVN reported a rise in sales by 17.5% from January beginning to May end, as consumers spent more in building houses. This is a substantial rise as compared to an increase in sales of just 0.1% in 1H20.

The firm had earlier cut salaries of its executives to reduce costs and pulled out dividend amid COVID-19. However, sales in overseas trade have plunged down because of closure of its stores amid COVID-19.

HVN’s 2 stores closed briefly in Tasmania region (Australia). However, stores in Ireland, Croatia, NZ, Malaysia and Slovenia remained shut for longer periods.

The Company restored a part of its earlier cut dividend and has now declared a special dividend of 6 cents/ share to be paid on 29 June, (half of the original 12 cents dividend was announced at HVN’s 6-month results).

Shares of HVN traded at $3.54 on 12 June, moving down by 4.07% from its last close.

 


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