It’s Friday- that day of the week you ideally look forward to and make weekend plans to get away from the tedious chores of your week. But does it feel like a usual Friday today? Have you had a regular week? Reported to work? Visited the mall? Pub-hopped? We doubt!
We believe that your Government must have already directed you to stay in the confines of your homes for some time now, so that we win the battle. The battle which requires self-isolation, social distancing and quarantine measures. It is obvious that you know we are discussing the ongoing pandemic- COVID 19, the novel coronavirus, which has absolutely wreaked havoc on every aspect of lives.
Though the virus’ epicentre was Wuhan City of China, it has long surpassed the international section of your newspapers, creeping into almost every city of every country, all in a matter of a few weeks!
While medical science, governments and organisations have been puzzled about its occurrence and remedy, businesses have suffered, and stock markets have witnessed selloffs that will be remembered for a very long time.
However, there is good news from all across the world of late- medicines are being tested, treatments have ramped up, quarantine measures are being taken more seriously, governments are inculcating necessary regulations and proving stimulus packages, and consequently, stock markets are back in the game, though following the sinusoidal trend.
In this backdrop, we present you 6 attractive stocks, that should not be ignored, as the market thrives to regain its confidence amid investors.
Disclaimer- Please note that the below should be regarded as presentation of facts, not recommendation.
Let’s dive in-
Breville Group Limited (ASX:BRG) YTD Consistent Performance, Earnings Guidance Withdrawal
A company with a group of global subsidiaries that are market leading providers of small electrical appliances in the consumer products industry, BRG recently updated that its year-to-date performance remains consistent.
Moreover, the Company’s cash balance, working capital facilities, minimum fixed cost structure, and the relevance of BRG products to customers confined at home puts it in a strong position to continue supply to retail partners and support consumers amid COVID 19.
As at 26th March 2020-
- BRG’s consolidated cash balance amounted to $64 million.
- It has drawn $98 million on its committed $273 million working capital facility ($175 million available still)
- Besides this, BRG has committed a seasonal working facility of up to $112 million available during the peak season (August – January).
However, BRG has withdrawn its earnings guidance on the back of current difficult times.
Adairs Limited (ASX:ADH) Announces Store Closures While Online Channels Remain Operational
A retailer of home furnishings in Australia, ADH has a national footprint of stores across various formats and a flourishing online format as well. The Company had closed six stores in NZ whereas Mocka, a vertically integrated pure-play online home and living products designer and retailer, had closed operations in NZ on 24 March 2020.
More recently, ADH announced that it will temporarily close its Australian stores from close of trade on 29 March 2020, for an initial period of 4-6 weeks. Reopening will depend upon the health and safety assessment along with Government direction and advice.
However, ADH and Mocka will continue to meet their customers’ homeware needs, via their online channels in Australia. The Company has ensured the health and safety of teams working in this area of the business.
On the corporate end, currently, for ADH -
- Cash on hand stands at $36 million
- Net debt amounts to $48 million
- With access to further undrawn debt facilities of $12 million
Catapult Group International Ltd (ASX:CAT) Remains Confident & Focused in Crisis Hour
Leading the way in sports science research and innovation, CAT has released a business update, primarily covering the COVID-19 impact on the business. The Company implemented a work from home policy for staff two weeks ago while restricting travel to lessen the danger from coronavirus outbreak.
The Company anticipates Q4 FY20 new sales growth to be negatively impacted, owing to delays in purchasing decisions by some customers and temporary closures of many sporting bodies. However, CAT is of the view that it will not impact long-term sales trajectory, nor the value proposition offered to customers.
Moreover, the Company is well capitalised and has drawn down USD 5 million from an existing debt facility (current cash position of over $30 million). It remains committed to optimistic (free) cash flow by FY21. ~75% of the Company’s revenue is subscriptions-based, supported by long-term contracts and customer relationships. As an add on, the weak AUD is working in CAT’s favour.
Customers have continued to use and purchase its solutions, though timing on purchasing decisions might be impacted (supply chain has experienced some delays though without any meaningful disruption).
Chorus Limited (ASX:CNU) Reduces FY20 Gross Capex Guidance
New Zealand’s largest telecommunications infrastructure company, CNU has suspended non-essential field activity to support the Government objective of eliminating COVID-19 risks. Subsequently, certain planned capex will effectively be deferred for the duration of the month-long isolation period.
The Company has hence shunned its FY20 gross capex guidance from a prior range of $660 million to $700 million, to a new range of $610 million to $650 million. CNU has also decided to delay the annual CPI increase of wholesale fibre products until 1 October 2020 at least.
However, the FY20 EBITDA guidance remains unchanged. The Company affirmed that its fixed line network is in very good shape.
What remains operational is-
- Connecting premises to copper and fibre where customer has no existing fixed line broadband service or have essential business or educational requirements not met by an existing broadband service.
- Broadband provisioning work is also being undertaken (upgrade from ADSL to VDSL without technician visit)
- Network restoration activity
- Work with the broader telecommunications industry to support their delivery of essential connectivity
Afterpay Limited (ASX:APT) CEO & MD- “We have not seen a material impact on our business activity”
A technology-driven payments company, APT’s CEO & Managing Director Anthony Eisen addressed shareholders on 19 March 2020 and provided some insights of the current times when the world is facing significant challenges as a result of COVID-19.
- There has been volatility in APT’s share price over recent weeks and days
- The Company has a business model, balance sheet and customer base that delivers a level of protection to APT in times of economic uncertainty
- APT has not seen a material impact on its business activity and timing of instalment repayments or transaction losses to date
- A strong balance sheet and liquidity position aids APT to fund the operating expenditure and significantly expand business activities in the medium term
- The Company has a strong liquidity position of more than $672.1 million and cash of $402.5 million
- APT plans to release a business operating update following the end of the current March quarter
ResMed Inc. (ASX:RMD) - Dividend Distribution
Provider of comprehensive out-of-hospital software platforms, RMD has garnered investor interest lately for a dividend payment even when the market is highly volatile.
On 19 March 2020, RMD paid ordinary unfranked dividend of USD 0.039 per share, related to the quarter ended 31 December 2019.
Let us now graze over the stock performance of the discussed stocks after market close on 27 March 2020.
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