5 Industrial stocks under discussion: Which one looks attractive?

  • Nov 21, 2019 AEDT
  • Team Kalkine
5 Industrial stocks under discussion: Which one looks attractive?

The industrial sector comprises of the companies that manufacture and sell machinery, equipment and supplies that are primarily used to manufacture goods, which are generally sold to consumers.

The industrial sector is divided into two parts: heavy industry and light industry. Generally, this sector processes raw materials into finished products.

Some examples of industries in the industrial sector are:

  • Chemical industry
  • Consumer electronics
  • Industrial equipment
  • Automobile industry
  • Steel production
  • Tobacco industry

Let’s look at five industrial stocks and their recent updates.

Qantas Airways Limited (ASX: QAN)

Qantas Airways Limited is engaged in the business of international and domestic air transportation services, the sale of worldwide and domestic holiday tours and associated support activities.

Highlights of AGM for FY19

The company reported underlying profit before tax of $1.3 billion for FY19, which was lower than the record result the company achieved in 2018 due to headwinds it faced during the year. Due to higher oil prices, the company’s fuel bill rose by more than $600 million, and the company also suffered a $154 million hit from lower Australian dollar on non-fuel expenses.

In FY19, the company returned $1 billion through dividends and buy-backs and in the month of August 2019, it announced a fully franked ordinary dividend of 13 cents per share. Also, the company announced a $400 million off-market buy-back for up to 80 million shares.

Stock Performance

The stock of QAN closed the day’s trading at $7.000 per share on 21st November 2019, down by 2.913% from its previous closing price. The company has a market capitalisation of $10.75 billion as on 21st November 2019 with an annual dividend yield of 3.47%. The total outstanding shares of the company stood at 1.49 billion. The stock has given a total return of 25.39% and 34.77% in the time period of 3 months and 6 months, respectively.

Aurizon Holdings Limited (ASX: AZJ)
Aurizon Holdings Limited is engaged in the business of:
  • Network: Provision of access to, and operation of, the Central Queensland Coal Network (CQCN);
  • Coal: Transport of coal from mines in Queensland and New South Wales to end customers and ports;
  • Bulk: Transport of bulk mineral commodities, agricultural products, mining and industrial inputs, and general freight throughout Queensland and Western Australia.
Appointment of new Non-Executive Directors

The company announced that Dr Sarah Ryan and Mr Lyell Strambi will join the company board as Non-Executive Directors with effect from 1 December 2019. Dr Sarah has about 30 years of international experience in the oil and gas industry.

Mr. Lyell is currently the Chief Executive Officer of Melbourne Airport and has extensive experience spanning more than 40 years in the aviation and transport infrastructure sectors both in Australia and overseas.

Stock Performance

The stock of AZJ closed the day’s trading at $5.650 per share on 21st November 2019, down by 0.877% from its previous closing price. The company has a market capitalisation of $11.19 billion as on 21st November 2019 with an annual dividend yield of 4.18%. The total outstanding shares of the company stood at 1.96 billion. The stock has given a total return of -4.52% and 11.33% in the time period of 3 months and 6 months, respectively.

CIMIC Group Limited (ASX: CIM)

CIMIC Group is an engineering-led construction, services, mining, public private partnership and services leader across the infrastructure, lifecycle of assets and resources projects.

CIMIC’s CPG Contractors Wins Contract to Upgrade M80 Ring Road

CPB Contractors has been selected to upgrade a northern section of Melbourne’s M80 Ring Road. Approximately $331 million of revenues is expected from this design and construct contract

This project has been funded by Australian and Victorian Governments and is aimed at reducing congestion, enhancing the safety of drivers and increasing capacity. The construction is planned to begin in early 2020 and be finished in early 2023.

Financial Performance (Source: Company’s Report)

Stock Performance

The stock of CIM closed the day’s trading at $32.990 per share on 21st November 2019, up by 0.457% from its previous closing price. The company has a market capitalisation of $10.63 billion as on 21st November 2019 with an annual dividend yield of 4.78%. The stock has given a total return of 3.76% and -29.56% in the time period of 3 months and 6 months, respectively.

Auckland International Airport Limited (ASX: AIA)

Auckland International Airport Limited is the third busiest international airport in Australasia as more than 75% of all international visitors to New Zealand arrive here. In the past 12 months, more than 20.5 million passengers have travelled through the airport’s terminals.

Traffic Update for September 2019

The total number of passengers in Auckland airport increased by 0.8% in September 2019 versus last year. The transit commuters up by 12.0%, international commuters were up by 1.0% and domestic commuters were down by 0.7%.

Key Highlights:

  • Air New Zealand announced that it will start three flights per week between Auckland and New York from 29 October 2020 adding approximately 86,000 seats on the route;
  • American Airlines has announced it will commence new non-stop flights between Auckland and Dallas-Fort Worth from October 2020;
  • It will also increase the frequency of flights between Auckland and Los Angeles from daily to twice daily in the summer peak season October 2020 to March 2021.

Traffic Update for September 2019Traffic Update (Source: Company’s Report)

New Appointments in The Company

Recently, Elizabeth Savage became part of the company’s Board as an independent non-executive director (IND) director, following a go ahead for her nomination during the AGM for FY 2019. Christine Spring was also appointed as an IND of the company, after approval at the AGM.

Stock Performance

The stock of AIA closed the day’s trading at $8.650 per share on 21st November 2019, up by 1.051% from its previous closing price. The company has a market capitalisation of $10.4 billion as on 21st November 2019 with an annual dividend yield of 2.46%. The stock has given a total return of -6.96% and 7.54% in the time period of 3 months and 6 months, respectively.

SEEK Limited (ASX: SEK)
SEEK Limited is engaged in the business of:
  • online matching of hirers and candidates with career opportunities and other related services;
  • investing in early stage businesses and technologies which are operating in the human capital management market;
  • distribution and provision of higher education courses.
Highlights of Annual Report

FY19 was a successful year for the company as it continued to deliver its purpose of helping people live more fulfilling and productive work lives and helping organisations succeed.

Although, the macro-economic conditions were challenging across its key markets, the company achieved strong financial results while continuing to invest across Asia Pacific & Americas and SEEK Investments, including its Early Stage Ventures.

The company’s key achievements during the year includes:

  • Significant progress towards its key strategic priorities;
  • Delivering strong revenue results as a result of strategic investment, despite subdued macro-economic conditions;
  • Making a positive social contribution beyond its day-to-day business activities.
Stock Performance

The stock of SEK closed the day’s trading at $21.840 per share on 21st November 2019, down by 3.704% from its previous closing price. The company has a market capitalisation of $7.98 billion as on 21st November 2019 with an annual dividend yield of 2.03%. The total outstanding shares of the company stood at 352.01 million. The stock has given a total return of 13.23% and 11.56% in the time period of 3 months and 6 months, respectively.

Conclusion

As per the table given above, Qantas Airways Limited is the least expensive available stock based on price to earnings multiple. And SEEK Limited is the most expensive stock amongst them all.


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