Stocks under Discussion: CIM, COH, ANO, MSB

Stocks under Discussion: CIM, COH, ANO, MSB

As the Australian economy begins walking on the path to recovery with the government charting out a 3-step reopening plan, an air of uncertainty persists and is inevitable. However, the country has done significantly well in its efforts to curb the spread of the coronavirus, which is reflected in the market performance.

On 11 May 2020, the benchmark index, S&P/ASX 200, ended the day 1.30% higher at 5461.2 points. The day turned out to be a good one for the investors with all the sector indices closing in the green. The index has had a decent start to the quarter with a 7.57% return as on 11 May.

There were some significant announcements made by the specific companies listed on the ASX. Let us look at some of the stocks that are making the news for today. These stocks also witnessed significant growth in their respective share price during the day’s trade.

CIMIC Reports NPAT of $166 million

Engineering-led construction, mining, services, and public-private partnerships leader, CIMIC Group Limited (ASX:CIM) has reported its performance for the quarter ended 31 March 2020 with an NPAT of $166 million and revenue of $3.3 billion, compared to $3.4 billion in 1Q FY19.

While prioritising the health and safety of its people, CIMIC has kept its projects moving and working constructively to better support the economy during these highly unprecedented times, including:

  • Operating and maintaining heavy, automated, and light rail networks and infrastructure in Sydney, Melbourne, Canberra, and Perth.
  • Continued operation of major mine sites across Australia and globally.

During the quarter, the Company announced several important projects and expects around $90 billion of tenders relevant to CIMIC to be bid and/or awarded for the rest of the year. CIMIC also anticipates around $400 billion of projects to arrive in the market in 2021 and beyond.

Despite the short-term impacts from the dynamic COVID-19 situation, the outlook across the Group’s core markets remains positive, and CIMIC looks forward to providing 2020 profit guidance once there is clear visibility to the impact of COVID-19 on the business.

While generating cash, and taking a rigorous approach to tendering, project delivery and risk management, CIMIC believes that the business has sustained a strong balance sheet through disciplined focus.

Significant Decline in Sales Revenue for Cochlear

A global leader in implantable hearing solutions, Cochlear Limited (ASX:COH) has confirmed the impact of the COVID-19 pandemic on trading since there was a material decline in surgeries across significant markets as expected. There has been an expected deferral of surgeries across Western Europe and the US as COVID-19 responses take precedence within hospitals.

Numerically,

  • Around 60% decline in sales revenue across the business in April as compared to April 2019.
  • Almost 80% fall in Cochlear implant unit sales across developed markets, as most elective surgeries were deferred in Western Europe and the US.
  • Roughly 30% decline in the sale of Cochlear’s Services business in April, which represents around 30% of the ‘business-as-usual’ revenue.

Moreover, ENT surgeons, as well as personal protective equipment in several countries, were diverted to help treat COVID-19 patients.

The $1.1 billion capital raising and $225 million increase in debt facilities have bolstered COH’s liquidity position while the business remains cash flow negative, with expectations of the same to continue in the coming months.

Related: Cochlear's at-home Testing Tool Remote Check obtains Expedited FDA Clearance

The commencement of implant surgeries in some major developed markets, including the US, Germany and Australia are a sign of hope for the Company, and it looks forward to progressing the delayed surgeries once hospitals resume normal operations. However, COH believes that the speed of recovery is still unclear but expects a gradual recovery.

ANO Expects NPBT to Grow by 2.5 Times

Australia's leading zinc oxide powder manufacturer, Advance NanoTek Limited (ASX:ANO) expects its net profit before tax for FY20 to be around $8.4 million, which is 2.5 times more than the profit before tax during FY19 based on the projected turnover of $18 million.

The estimated turnover reflects a 46% increase as compared to FY19 and is based on the condition of no additional unfavourable market conditions or postponements in any further sales orders.

Moreover, the Company is continuously in discussion with its distributor in the US and has found that sunscreen manufacturing has resumed. ANO anticipates sales volumes to return to normal, although at smaller volumes, at the current stage in the US.

For December 2019 Update: Advance Nanotek Reports Stellar Jump in Profit Before Tax

Also, to draw benefit from the expected recovery in market conditions, the Company has set up stockpiles in a central US logistics facility.

With the amendments to the current contractual arrangements, the Company is now looking forward to:

  • Expansion of its aluminium oxide business into fresh markets.
  • Improve supply to its existing key customer by raising capacity.
  • Improving quality and ensuring stock availability at an EU based contract logistics facility.

Moreover, ANO shall also be permitted for maintenance of pricing into the likely future or offering possible volume rebates where needed through these developments. Although the upbeat impact on sales from these changes cannot be determined for some months. However, sales for FY20 for the aluminium oxide product is anticipated to be $2 million.

Mesoblast Securities in Trading Halt

A global leader in developing innovative allogeneic cellular medicines, Mesoblast Limited (ASX:MSB) has requested its securities to be placed in a trading halt on ASX, pending it releasing an announcement.

Moreover, the securities are scheduled to begin normal trading on Wednesday, 13 May 2020 or when the official statement is let out to the market.

The Company has recently declared the dosing of its first patients in the 300-patient placebo-controlled, randomised Phase 2/3 trial in the US for Mesoblast’s remestemcel-L. The medicine is being investigated in COVID-19 infected patients that have ARDS (moderate to severe) and are on ventilator support.

Related: Mesoblast Commences Enrollment for Phase 2/3 Trial of Remestemcel-L for COVID-19 Treatment

With a strong and extensive global intellectual property (IP) portfolio, MSB has protection extending through to at least 2040 in all major markets and the same is expected to offer substantial commercial advantages to the Company through the development of its product candidates for these conditions.

Stock Information

Source: ASX

 


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