Year 2019 - ASX Trends, Board Changes and New Listings

The year 2019 is nearly about to complete, and we see that from 2 January 2019 till 19 December 2019, S&P/ASX 200 has given a return of 21.34%. Australian stock market is divided into eleven sectors, twenty-four industry groups, sixty-eight industries & one hundred and fifty-seven sub-industries.

Organisations listed on ASX are classified based on their business activities based on the Global Industry Classification Standard (GICS). Most of the established market across the globe use GICS. Thus, it becomes easy for investors to evaluate the Australian sectors’/industries’ performance with respect to other nations.

The eleven GICS sectors have a benchmark index which keeps track of the performance of the businesses listed on ASX belonging to that particular sector.

Let’s check the YTD performance of these 11 sectors in 2019.

From the above table, one can conclude that sectors like Consumer Discretionary, Health Care, Information Technology, Communication Services have given a better YTD return as compared to other sectors. These sectors have surpassed their benchmark indices in 2019.

Let’s quickly take a look at four ASX listed companies which were in the limelight during the period.

WiseTech Global Limited (ASX: WTC)

WiseTech Global Limited (ASX: WTC), the provider of the software solutions to the logistics industry globally, delivered a strong result in FY2019 which ended on 30 June 2019. Let’s take a quick look at its FY2019 results.

Total revenue grew by 57% to $348.3 million, operating profit by +37% to $80.2 million, net profit by +33% to $54.1 million, EPS by +27% to $17.7 cents and dividend per share by +18% to 1.95 cents as compared to the previous corresponding period.

Free cash flow increased from $43.5 million in FY18 to $76.7 million in FY19.

However, the company came into limelight when it was being alleged for inflating profit by 178% in the last three years, and the impact of its poor acquisitions by J Capital Research. J Capital Research is an investment advisor to private funds.

Post the release of the report by J Capital and followed by the response by the company, the shares of the company declined significantly. The shares that were trading at $33.4 on 16 October 2019 dropped down till $24.280 on 18 December 2019. On 19 December 2019, the WTC shares closed at $24.750, up 1.936% from its previous close. WTC has a market cap of $7.73 billion and ~ 318.19 million outstanding shares.

Board Changes:

On 18 October 2019, WTC announced the resignation of Non-Executive Director Christine Holman.

Rural Funds Group (ASX: RFF)

As per the report released by ASIC on 13 December 2019, ~ 4.81% of the total shares of Rural Funds Group (ASX:RFF) were shorted.

Rural Funds Group also caught investors’ attention during August 2019 when its shares crashed more than 42% after the short seller published a research note targeting the company’s networth. Short-seller Bonitas Research stated that its equity is worthless, and the company has been reporting profit since 2017 based on debatable changes to the fair value. Rural Funds Management Limited engaged E&Y to examine the issues raised and also to evaluate the authenticity of RFF's rejection of every claim made in the research document.

However, on 7 August 2019, Rural Funds Management Limited, as responsible entity for the Rural Funds Group rejected the claims made by the short seller Bonitas.

The company was again being attacked by Bucephalus Research Partnership Limited who accused the company of inflating the group’s financial position.

On 19 December 2019, the shares of RFF closed at $1.880, up 1.622% from its previous close. RFF has a market cap of $621.34 million and ~ 335.86 million outstanding shares.

Afterpay Limited (ASX:APT)

Afterpay Limited (ASX:APT), the technology-driven payment provider remain under limelight from 13 June 2019 till 25 November 2019. The company came into the picture when it’s subsidiary Afterpay Pty Limited received a notice from AUSTRAC on 12 June 2019 evening for the appointment of an external auditor to conduct an audit in respect of its AML/CFT compliance.

The entire audit process was conducted by the external auditor Mr Neil Jeans, who was amongst the three candidates chosen by APT and details were provided to AUSTRAC.

The final report of the audit was released on 25 November 2019 in which the auditor proved that the company’s current program is in line with the AML/CTF Act and that APT is a low-risk business with respect to its chances of being utilized for money laundering or terrorist financing activities.

The report also provided a recommendation to APT with respect to its ongoing compliance.

The company’s stock, post receiving the notice, dropped significantly. The shares that traded at $25.64 on 12 June 2019 dropped to $20.27 by 17 June 2019. There were also changes at the leadership level.

• The position of CEO and Managing Director was taken up by Co-Founder, Anthony Eisen.
• Elana Rubin, who was the independent Non-Executive Director, took the post of Interim Chair until the appointment of a new independent Chairperson.
• Co-Founder, Nick Molnar continued to concentrate on providing value to the clients as well as merchant partners through the growth as well as the development of the Afterpay global platform. He became the global Chief Revenue Officer and reported to Anthony.
• David Hancock took the position of Group Head.
• Frerk-Malte was appointed as Global COO.

A look at IPOs in December 2019

Till November 2019, 35 new companies got listed on ASX, and 67 got delisted. In December 2019, below are some of the companies which got listed on ASX.

Upcoming IPO’s in December 2019

Disclaimer

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