Solid Gains On ASX: What's Muted and What's Positively Disruptive

Amidst the turmoil created by the coronavirus outbreak, the stocks listed on the ASX have been highly volatile. While a big chunk of the stocks has been negatively impacted by the pandemic, some stocks have performed exceptionally well during the period, and some have remained muted.

As the number of cases of COVID-19 rose in the country in March 2020, the Australian government imposed travel bans, restricted social gathering and encouraged people to maintain social distancing. Because of this, the citizens opted for online mode for their daily needs as well as do work from their home.

The businesses which provided services via online mode were less impacted by the ones which could not. However, due to the various restrictions, the companies belonging to the industries such as aviation, entertainment, arts and recreation, and hospitality were negatively impacted.

In this article, we would be looking at a few stocks that performed quite well during the last month and a few that remained muted.

EML Payments Limited

BNPL player, EML Payments Limited (ASX:EML) reported a negative YTD return of 37.17%. However, in the past one month and last five days, the shares have delivered positive returns of 31.96% and 11.58%, respectively. EML shares closed at $3.070 on 06 May 2020, up 6.228% from its previous close. The Company has a market cap of $1.03 billion and ~354.83 million outstanding shares.

EML during COVID-19:

  • Recently, on 1 April 2020, EML payment announced the completion of the acquisition of Prepaid Financial Services (Ireland) Limited, which is a multi-award winning European provider of white-label payments & banking-as-a-service technology. With this acquisition, EML would become the largest global prepaid fintech enablers.
  • With an increase in the use of the contactless payment, EML and Mastercard enabled businesses as well as retailers to apply limit increases quickly & efficiently to support people everywhere and get benefit from the quickest, simplest as well as the cleanest way to make payment.

Codan Limited

Codan Limited (ASX:CDA) is engaged in the development of technology that helps in unravelling communications, safety, security & productivity challenges in the toughest conditions on earth.

CDA shares reported a negative YTD return of 10.97%. However, in the past one month and last five days, the shares have delivered positive returns of 17.79% and 3.02%, respectively. CDA shares closed at $6.680 on 06 May 2020, up 6.228% from its previous close. The Company has a market cap of $1.17 billion and ~179.99 million outstanding shares.

Codan during COVID-19:

  • Codan announced on 23 April 2020 that all its business were impacted due to COVID-19 pandemic to varying levels. Actions were taken by nations globally, especially industry lockdowns, which would continue to have an impact on its business. By March 2020 end, the Company noted a sharp increase in its sales. The profitability for the third quarter of FY2020 was in line with the record run rate for the 1H FY2020.
  • In April 2020 (till 23 April), the Company noted a reduction in sales across its entire business in the order of 20% due to the inability to fulfil the demand, especially in the gold market.
  • Cash generation continued to be robust, and the balance sheet is strengthened to ~ $70 million net cash after the payment of $13.5 million in the form of interim dividend.

TechnologyOne Limited

TechnologyOne Limited (ASX:TNE) is the largest enterprise SaaS Company in Australia and also amongst the top 200 ASX-listed. The Company has a physical presence in six countries.

TNE shares reported a YTD return of 16.85%. In the past one month and last five days, the shares have delivered positive returns of 19.60% and 5.01%, respectively. TNE shares closed at $9.880 on 06 May 2020, up 2.49% from its previous close. The Company has a market cap of $3.07 billion and ~318.67 million outstanding shares.

TechnologyOne During COVID-19:

TechnologyOne remained proactive when it comes to providing its solutions and services to its customers. The Company started taking steps to ensure continuity of service to its customers a week before the Australian government formally announced the lockdown in the nation.

During the period, the Company activated its Critical Incident Response Plan during February 2020 to monitor the situation and enact its business continuity plan as needed.

The Company's business is designed around a SaaS platform, enabling its staff and customers to work collaboratively 24 x 7 from any location across the globe. TNE provided SaaS solution from 3 zones.

Wesfarmers Limited

Headquartered in Western Australia, Wesfarmers Limited (ASX:WES) has developed as one of the largest listed companies in Australia. WES has diverse business operations which include:

  • Supermarkets
  • Liquor
  • Hotels and Convenience Stores
  • Home Improvement
  • Office Supplies
  • Department Stores

The industrial division business includes:

  • Chemicals
  • Energy and fertilisers,
  • Industrial and safety products
  • Coal

WES shares reported a negative YTD return of 10.59%. In the past one month and last five days, the shares have delivered positive returns of 0.98% and 1.17%, respectively. WES shares closed at $36.650 on 06 May 2020, down 1.08% from its previous close. The Company has a market cap of $42.01 billion and ~1.13 billion outstanding shares.

Wesfarmers During COVID-19:

On 28 April 2020, provided COVID-19 update on its retail trading as well as the actions being taken throughout the group to assist the team members & clients and further reinforce the balance sheet.

The group implemented various changes to safeguard the health & safety of team members and customers. These include store-based actions to help social distancing needs, the rollout of protecting screens at registers as well as improved levels of personal protective equipment for team representatives.

The adjustments have aided the continuity of business operations as well as linked benefits to the clients.

In recent weeks, the Company noted considerable progress in retail businesses in improving the digital offerings while answering to the significant rise in online sales.

Over the last two months, Bunnings and Officeworks noted significant demand growth as the customers and their families are spending more time working, learning as well as resting at home.

Balance Sheet Update:

WES took various measures to strengthen its balance sheet. Recently, the Company sold its 5.2% interest in Coles for pre-tax proceeds of ~$1,060 million. This sale was after the sale of 4.9% sales in Coles for pre-tax proceeds of $1,050 million on 18 February 2020.

It also increased its existing committed debt facilities by ~$2 billion to $5.3 billion.

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