Three Diversified Stocks with Earnings Update- MAD, KSC, VAH

In order to have a well-diversified portfolio, investors need to keep a close watch on the recent updates of different types of stocks. We have screened few stocks which have released their earnings update today. Let’s take a quick look at these stocks and their results.

Mader Group Limited (ASX: MAD)

Australia’s leading independent maintenance labour service provider, Mader Group Limited has released its half year financial results for the six months ended 31 December 2019. For the period, the company reported revenue of $132.7 million up by 20.2% increase from $110.4 million in 1H19. Further, the company reported adjusted net profit after tax (NPAT) of $8.7 million, representing a 9.3% increase from $7.9 million in 1H19. The company has declared a fully franked dividend of 1.5 cents per share payable on 17 March 2020.

The results are showing solid revenue growth in Western Australia and Eastern Australia. The company also witnessed strong growth in USA and expects it to continue in 2H20. The company has reaffirmed its FY 2020 IPO Prospectus forecast and expects 2H20 NPAT to be around $10.6 million, driven by the revenues of $23.5m in January 2020, record recruitment, strong macro trends and ongoing unfilled demand from Australia and USA.

Overall, the company’s revenues and EBITDA are ahead of expectations at the time of preparing the FY20 prospectus forecast. As a result of the reduced relative contribution from International, margins have been modestly impacted and tax expense increased, with adjusted NPAT for 1H20 ($8.7 million) lower than expected at the time of the IPO ($9.0 million).

Following the successful IPO in October 2019, the company has been able to continue to capitalise on its position as a leading global provider of quality tradespeople for the maintenance of mobile mining equipment.

Going forward, the company expects strong demand for services to continue in the near term while there is continued scaling of ancillary and premium reactive services. Mader continues to grow its presence in Queensland and New South Wales, demonstrating the company’s transition to a nationally recognised provider of skilled mobile equipment maintenance tradespeople. Further, the company intends to focus on margin improvement in areas of high brand awareness.

At market close on 26 February 2020, MAD stock was trading at $1.060, down by 2.752% intraday, with a market cap of ~$218 million. It is to be noted that the stock is trading close to its 52 weeks low price of $1.010.

K&S Corporation Limited (ASX: KSC)

Leading provider of transport and logistics solutions, K&S Corporation Limited has reported a statutory profit before tax of $4.2 million for the half year ended 31 December 2019, down by 69.7% on pcp. Operating revenue for the period was $422.6 million, 9.3% lower than the prior corresponding period.

Over the period, the company continued to implement its cost reduction strategies across the business, and there was also a steady improvement within K&S Energy and Chemtrans businesses, offset by higher costs in our rail division, which continues to be negatively impacted by the increased rail network costs, and the bulk division.

The company’s specialised aviation refuelling business, Aero Refuellers, performed well in the first half of FY2020; we continue to target growth opportunities. The company has also maintained a strong focus on the balance sheet through careful management of its capital expenditure program. The company has declared a franked Interim Dividend of 2.0 cents per share, payable on 3rd April 2020.

Going forward, the company expects its performance in the second half of FY2020 to be better than the prior corresponding period and is of the view that its business is well positioned for growth as economic conditions improve.

At market close on 26 February 2020, KSC’s stock was trading at a price of $1.5, down by 3.846% intraday, with a market cap of $198.56 million.

Virgin Australia Holdings Limited (ASX: VAH)

Airline company, Virgin Australia Holdings Limited has reported a record 1H20 revenue of $3,116.3 million and 2.5 per cent RASK growth in 1H FY20. Over the period, the company earned underlying profit before tax of $14.5 million taking in higher fuel, enterprise agreements, airport and depreciation costs. Following the release of the results, the company witnessed an increase of 4.167% during day’s trade.

In line with its focus on improving profitability and cashflow, the company announced further fleet simplification with the exit of seven aircraft which will cease flying by October 2020.

Over the period, the Group remained focused on cashflow improvement with no new aircraft deliveries planned until July 2021 due to the recent Boeing 737 MAX deferral and no significant debt maturities prior to October 2021.

The company has warned that it expects weakened demand across international and domestic markets due to coronavirus and there has been an increase in cancellations and reduction in forward bookings, largely for leisure destinations and Tigerair routes. The coronavirus situation is currently expected to negatively impact Group earnings by $50-75 million in 2H20 as a result of which the company expects revenue to remain flat for FY20 on the prior corresponding period.

In the past six months, VAH stock has declined by 26.15% on ASX. At market close on 26 February 2020, VAH stock was trading at $0.125 with a market cap of $1.01 billion.


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