The health of equity market is sensitive to the macro-economic events, which creates a disturbance in the operations of nations as well as organisations. Stock markets also gets affected by these events, which create unbearable volatility in the market. When it comes to stocks, small cap and mid-cap are the ones, who faces fire of forest and witnesses a vigorous fall in their price. However, good fundamental helps a company to survive in such circumstances.
Blue-chip companies have stable businesses with decent liquidity that gives immunity to the organisation, in order to battle the disturbing events of the markets such as COVID-19, which has been currently creating fear in whole world.
In the below article, we will look at six blue-chip companies: BHP, CSL, COL, REA, TLS, TCL
BHP Group Limited
BHP Group Limited (ASX: BHP) is a resource giant of Australia, which is engaged in the production, processing and exploration of minerals. The Company is also into exploration, production and refining of hydrocarbons.
Strong Balance Sheet Supports Future Growth
During 1H FY20, BHP reported strong set of results for the period ended 31 December last year, which was grounded through robust operational performance. The Company outlined the following:
- Underlying EBITDA for the period witnessed the growth of 15% to US$12 billion, and its return on capital employed stood at 19%. BHP reported underlying attributable profit amounting to US$5.2 billion reflecting a stable operating performance.
- The company closed the half -year with strong balance sheet remains comprising net debt amounting to US$12.8 billion at 31 December 2019. BHP’s net operating cash flows stood at US$7.4 billion, which indicates strong iron ore prices, as well as a solid operating performance during the period.
The company is optimistic about the underlying fundamentals of its commodities even through the near-term uncertainties caused by the coronavirus outbreak, trade policy and geopolitics.
The stock of BHP closed the day’s trading session at $31.38 per share on 17th April 2020, indicating a rise of 1.916% against its previous closing price. During the span of three months and six months, the stock of BHP has provided shareholders the returns of -23.27% and -14.57%, respectively.
CSL Limited (ASX: CSL) is engaged in the activities like advancement, production and marketing of pharma and diagnostic items etc. The Company possesses strong capital position with available liquidity amounting to around $1.1 billion.
Due to COVID-19, CSL anticipates various initiatives in plasma collections to be impacted. However, it is actively pursuing COVID-19 response, which is consistent with core R&D and manufacturing capabilities. CSL also anticipates modest delays in capital projects as well as clinical trials. The Company reiterated its profit guidance for FY20, which stands in the range of around $2,110 million to $2,170 million on constant currency basis.
The stock of CSL closed the day’s trading session at $329.300 per share on 17th April 2020, indicating a rise of 1.367% against its previous closing price. During the span of three months and six months, the stock of CSL has provided shareholders the returns of 8.87% and 30.50%, respectively.
Coles Group Limited
Coles Group Limited (ASX: COL) is into the retailing of goods like fresh food, grocery items, domestic goods, liquor, fuel and services related to finance via stores and online channels.
Recently, the Company noted that Wesfarmers Limited has sold 5.2% of the issued share capital of Coles. Resultantly, the relationship Deed agreed between Coles and Wesfarmers at the time of the demerger would be terminated and Wesfarmers would no longer have the right to nominate a director to the Coles Board as its interest have fell below 10%.
For the 1H FY20, COL reported a rise of 3.3% in sales revenue along with growth in all segments. During Q2 FY20, Supermarkets comparable sales growth stood at 3.6%, which proved as 49th consecutive quarter of sales growth. Due to strong property disposal demand, earnings before interest and tax experienced a rise of 0.4%.
The stock of COL closed the day’s trading session at $16.430 per share on 17th April 2020, indicating a rise of 0.244% against its previous closing price. During the span of three months and six months, the stock of COL has provided shareholders the returns of 3.28% and 6.43%, respectively.
REA Group Limited
Australia based entity, REA Group Limited (ASX: REA) offers property and property-associated services both via online, as well as mobile apps throughout the Australian and Asian regions.
As of now, REA is evaluating the potential impact of COVID-19 on the financial performance of FY20. Hence, considering the exceptional circumstances and the uncertainty surrounding the economic environment, it has retracted its outlook statement provided previously.
REA delivered its 1H FY20 results in challenging market conditions and hence, it reported revenue amounting to $440.3 million, reflecting a fall of 6%. During the period, the Company has gained strong cost management and efficiencies with the help of organisational realignment, which resulted in a 4% reduction in total operating expenses.
Moreover, REA has paid fully franked interim dividend amounting to 55.0 cents per share on 24th March 2020, as announced in its half-year results release.
The stock of REA closed the day’s trading session at $83.140 per share on 17th April 2020, indicating a rise of 1.713% against its previous closing price. During the span of three months and six months, the stock of REA has provided shareholders the returns of -28.34% and -26.68%, respectively.
Telstra Corporation Limited
Telstra Corporation Limited (ASX: TLS) is engaged in the provisioning of telecommunications and information services, which largely include mobiles, internet and pay television.
In order to support the economy, TLS has taken a range of measures for COVID-19, which include putting on hold any further job reductions. The Company is planning to recruit additional 1,000 temporary contractors in Australia to help manage call centre volumes.
On the outlook front, TLS would continue to focus on its productivity program for reducing underlying fixed costs by $2.5 billion annually by the end of FY22 period.
The stock of TLS closed the day’s trading session at $3.160 per share on 17th April 2020, indicating a rise of 0.317% against its previous closing price. During the span of three months and six months, the stock of TLS has provided shareholders the returns of -18.13% and -12.01%, respectively.
Transurban Group (ASX: TCL) is the owner, operator and developer of electronic toll roads and smart transport systems.
Rating Revised from Various Agencies: The Company through a release announced that Fitch Ratings has affirmed ‘A-’ rating for Transurban Finance Company Pty Limited and Moody’s Investors Service has affirmed the rating for Transurban Finance Company Pty Limited (TFC) at ‘Baa1’ and S&P Global Ratings (S&P) has affirmed the rating for TFC at ‘BBB+’. S&P also revised their rating outlook from ‘Stable’ to ‘Negative’, which reflects that TCL had managed its liquidity position in a decent way and has protected itself against possible liquidity challenges from COVID-19 pandemic.
The stock of TCL closed the day’s trading session at $13.18 per share on 17th April 2020, indicating a rise of 6.721% against its previous closing price. During the span of three months and six months, the stock of TCL has provided shareholders the returns of -20.99% and -17.06%, respectively.
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