Investors Like Technology Disruptors on ASX:  ALU and APX

  • May 06, 2020 AEST
  • Team Kalkine
Investors Like Technology Disruptors on ASX:  ALU and APX

Technology stocks are amongst the popular stocks that investors prefer to keep in their portfolio. In fact, in the current market uncertainty when economies and businesses across the globe are combating the corona storm, number of technology companies have emerged as a winner.

Machine learning, artificial intelligence, cybersecurity, cloud computing, and drone technology are few of the technologies that come to our minds when we talk about the future of the tech industry.

Here in this article, we are discussing two high-performing ASX-listed technology stocks that have given a glimmer of hope.

Disclaimer- Please note that the below should be regarded as presentation of facts, not recommendation.

Altium Limited (ASX: ALU)

Altium Limited (ASX: ALU) is engaged in the development as well as sales of computer software that are used in electronic product design process. The company, based in San Diego, California, started its journey in 1985 as the first provider of PCB design tools, and over the time it has evolved as a market leader.

PCB or Printed Circuit Board acts as the building block for various modern electronic devices. PCB could be a single layer board that is used in the garage door, or it could be a multi-layered board used in super computers and servers.

Varied Product Range:

  • Altium Designer
  • Altium Subscription
  • TASKING
  • Altium DXP
  • Developer
  • Altium 365 Viewer
  • Altium Concord Pro
  • Altium 365
  • Nexus
  • Octopart
  • CircuitMaker
  • Circuit Studio

 

Targeted Industry Segments:

Engineers across various industry segments use Altium’s electronic design tools.  

 

industry segments

 

Altium’s Presence:

Altium has a global presence, and its main operation centres are located in San Diego in the United States, Munich in Germany, Sydney in Australia and Shanghai in China. Its R&D centres are located in San Diego, Amersfoort, Kiev and Shanghai. Altium has its sales and support centres in San Diego, Munich, Shanghai, Boston and Moscow.

Strong Operational and Market Position for Altium During COVID-19:

As per a market release dated 8 April 2020, Altium confirmed to be operationally as well as commercially well placed during COVID-19. The company expects the electronic design software to be fairly robust to withstand the current and unfolding market situations.

 

ceo comments

 

At the same time, the company stated that its position in the future would depend on the duration and how COVID-19 evolves, in addition to the fast-growing broader business, industry, economic as well as social impacts that may arise.

Moreover, the company has withdrawn its earnings guidance for FY2020.

Strong First Half Performance:

For 1H FY2020, the six-month period ended 31 December 2019, Altium reported a 19% increase in its new Altium Designer seats. The company’s subscriber base went up by 16% to 46,693. It also registered a 27% growth in its revenue in China.

NEXUS attained US$7 million in revenue while TASKING delivered revenue growth of 15%.

 

key financial measures

 

Possible factors owing to which investors prefer ALU:

  • Bright future: Rising demand for electronic products and IoT likely to boost demand for ALU’s software.
  • IoT is an emerging technology and is expected to drive the technology sector in coming years.

 

Stock Performance: Altium shares have delivered a one-month return of 17.17%. On 6 May 2020 (AEST 12:55 PM), ALU stock was trading upward by 0.486% from its previous close to $35.180. ALU has a market cap of $4.59 billion and has ~ 130.97 million outstanding shares.

Appen Limited (ASX: APX)

Appen Limited (ASX: APX) provides its clients with reliable training data that helps them to roll out world-class Artificial Intelligence systems. Training data is a labelled data that trains Artificial Intelligence (AI) or machine learning (ML) algorithms towards making an appropriate decision. The success of any Artificial Intelligence system depends on the quality of the training data.

Training data is not only limited to labelling and collecting data, but it also requires human intelligence to form as well as interpret reliable training data. The company is able to provide its training data via its platform that gathers & labels sensor data, video, speech, images, text, and audio. This aids in building, training and improving the most innovative systems based on AI.

Appen has more than 20 years of experience working with leading global technology companies and has delivered over 6,000 machine learning projects.

Industry Presence:

Appen has presence across various industries.  

  • Technology
  • Automotive
  • Financial Services
  • Government
  • Health Care
  • Retail

 

Possible factors that make Appen a hit among investors:

  • As highlighted above, development & maintenance of AI depends on huge volumes of high-quality training data. On this front, Appen has a leading position in the high growth market owing to its global crowd, advanced technology along with ongoing investments in engineering and machine learning (ML).
  • Artificial Intelligence is an emerging technology, expected to have a bright future in the coming decade.
  • Over the past five years, Appen has delivered continuous strong growth in revenue, underlying EBITDA, underlying EBITDA margin, underlying net project after tax and basic underlying earnings per share.

 

Appen Well Positioned to Weather COVID-19:

Through a market release dated 15 April 2020, Appen provided an update on its operations, performance as well actions undertaken in response to coronavirus.

The company highlighted its commitment towards the health and safety of its global workforce, mentioning that most of its staff is working from home, except the skeleton staff in secure facilities plus staff in China. During the period, customer delivery and support was not impacted.

Maintaining a healthy balance sheet, APX has cash resources of more than $100 million. Moreover, the company maintains a position that aids APX in weathering the corona storm and responding to opportunities.

Appen’s Performance in FY2019:

For FY2019 ended 31 December 2019, Appen reported an increase of 47% in its total revenue to $536 million.

  • Underlying EBITDA grew by 42% to $101 million while statutory EBITDA went up by 29%.
  • Underlying NPAT improved by 32% to $64.7 million and statutory NPAT remained flat when compared with the prior corresponding period.
  • Organic revenue grew by 37% to $498.1 million and underlying EBITDA grew by 51% to $107.3 million.

 

 

Stock Performance: Appen shares have delivered a YTD return of 19.88%. In the last one month, the performance of the shares has improved, delivering a return of 25.13%. On 6 May 2020 (AEST 01:13 PM), the stock was trading at $27.570, up by 3.686% from its previous close. APX has a market cap of $3.23 billion and ~ 121.65 million outstanding shares.

 


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