ASX-listed Popular Stocks amid COVID-19: AZJ, TLS, CWY, FNP, API, CAR

With COVID-19 creating a period of great global uncertainty and disruption, equity markets are also experiencing one of their worst phases in history. In March 2020, the Australian market witnessed massive sell-off; however, lately, there have been some improvement in investor sentiment, resulting in ASX indices ending in the green zone.

There are several companies listed on ASX that have decent fundamentals and strength to sustain the current scenario. Also, number of businesses are implementing measures to sail through the COVID-19 scenario.

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In this article, we are discussing few ASX-listed stocks that have recently made significant announcements to the market, concerning their business performance and measures to address COVID-19 impacts.

Higher Rail Volumes for Aurizon Holdings in March Quarter

Aurizon Holdings Limited (ASX: AZJ) is an integrated heavy haul freight railway operator and rail transporter of coal to ports from mines for export markets.

The Company recently notified the market with above rail volumes for the March 2020 quarter and outlined the following:

• Total above rail volumes for the quarter witnessed a rise of 2% year-on-year to 63.3 mt from 62mt, owing to increased volumes in bulk.
• Bulk volumes were 12% higher at 11.5mt, owing to stronger volumes for Iron Ore and Bulk East with Bulk West volumes flat.
• Coal volumes remained flat for the period at 51.8 mt with higher CQCN volumes offset by lower NSW/SEQ volumes.
• AZJ did not experience any material impact from COVID-19 in the quarter to its coal or bulk above rail volumes.
• The Company rolled out numerous preventative measures that include new workplace protocols for business critical and operational teams and work from home where possible for the remainder of staff, aimed towards mitigating any potential risk to its workforce.

For FY20, the Company expects coal volume in the range of 210 mt to 220 mt.

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At the close of trading session on 24^th April 2020, the stock of AZJ stood at $4.500 per share with a rise of 1.124% as compared to its previous closing price. The stock of AZJ has provided shareholders with returns of -17.73% and -23.86% during the span of three months and six months, respectively.

Telstra Corporation to Use $500 Million H2FY21 Capex in 2020

Telstra Corporation Limited (ASX: TLS) is a telecommunication entity, which is engaged in the provisioning of information and telecommunication services.

Recently, the Company announced to have brought forward capex of $500 million from 2H FY21 into calendar year 2020 in order to support economy in these unprecedented circumstances. TLS would be utilising this capex to increase capacity in its network and accelerate further the roll out of 5G among other key projects, directed towards supporting the digital enablement of its customers’ businesses and operations.

The credit rating agency S&P reaffirmed A- (stable) credit rating of the Company on 1^st April 2020 and Moody’s reiterated TLS’ A2 (stable) credit rating on 2^nd April 2020.

At the close of trading session on 24^th April 2020, the stock of TLS stood at $3.050 per share with a rise of 0.993% as compared to its previous closing price. The stock of TLS has delivered returns of -20.73% and -13.12% during the span of last three months and six months, respectively.

CWY Expects Strong Demand for Services; Suspends Earnings Guidance

Cleanaway Waste Management Limited (ASX: CWY) provides services related to total waste management and resource recovery.

CWY has not witnessed any material change in volumes for operating segments as of 24^th March 2020. Moreover, it is expecting to register strong demand for municipal collections, health, and related post-collections services. However, CWY has suspended its earnings guidance for FY20, owing to rising uncertainty in the market due to the impact of COVID-19, mainly across the SME segment.

The Company, which paid interim dividend of 2.0 cents per share to its shareholders on 3^rd April 2020, has a strong balance sheet as well as significant liquidity, with more than $357 million under existing banking facilities.

At the close of trading session on 24^th April 2020, the stock of CWY stood at $1.725 per share with a decline of 0.862% as compared to its previous closing price. The stock of CWY has provided shareholders with returns of -16.67% and -19.01% during the span of three months and six months, respectively.

Freedom Foods Reshaping Operational Footprint for Opportunities Ahead

Freedom Foods Group Limited (ASX: FNP) is involved in the sourcing, production, sale, marketing and distribution of plant and dairy beverages, in addition to specialty cereal and snacks.

The Company recently announced that its unique scale and diversification of activities, which include significant Australian-based food manufacturing capabilities, give an important hedge to assist in mitigating impacts from the current disruption due to the COVID-19 pandemic.

Freedom Foods is expecting opportunities with reduction in market uncertainties, considering rising demand and customer enquiry in key channels and markets, in addition to exposure to on trend categories including nutritional, dairy, and plant beverages. Consequently, the Company is working towards reshaping its operational footprint, ensuring a strong position for FNP to continue on a positive trajectory towards building a major global F&B (food and beverage) business in key markets and channels in China, China and SE Asia.

Meanwhile, FNP has restructured its syndicated and bi-lateral banking facilities along with its long-term banking partners HSBC and NAB to increase short-term liquidity limits by an amount of $100 million, as part of safeguarding sufficient balance sheet strength and financial flexibility to support the business during the period of macro-economic uncertainty. The Company has also decided to defer the payment of 1H FY20 dividend, owing to the uncertainty.

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At the close of trading session on 24^th April 2020, the stock of FNP stood at $4.440 per share with a rise of 3.738% as compared to its previous closing price. The stock of FNP has delivered returns of -14.78% and -20.71% during the span of three months and six months, respectively.

API First Half Performance In Line With Expectations

Australian Pharmaceutical Industries Limited (ASX: API) is engaged in the wholesale distribution of pharmaceutical products while catering to pharmacists with retail support services.

During 1H FY20 ended 29 February 2020, underlying earnings before interest and tax stood at $41.7 million, reflecting a decline of 6.1% year-on-year, while underlying NPAT declined by 1.9% to $26.3 million.

API improved its balance sheet with adjusted net debt down to $129.7 million, demonstrating a reduction of 50.5% on the pcp, with cash conversion days of 22.0, a reduction of 7.3 days on the pcp, on the back of a successful program to optimise inventory holdings.

The API Board retains its confidence in the long-term growth prospects of its assets; however, considers it difficult to give guidance for H2FY20, owing to ongoing volatility due to the COVID-19 pandemic.

At the close of trading session on 24^th April 2020, the stock of API stood at $1.055 per share with a rise of 4.975% as compared to its previous closing price. The stock of API has provided shareholders with returns of -19.16% and -28.23% during the span of three months and six months, respectively.

Carsales.Com Implements Cost-Saving Initiatives to Aid Business Performance

carsales.com Limited (ASX: CAR) provides services concerning the buying and selling of cars, bikes, boats and caravans throughout its network of sites.

Response to COVID-19

The Company recently notified the market with initiatives taken in response to COVID-19 and outlined the following:

• As part of capital management initiatives, the Company has reduced remuneration of the Board and Executive by 20% from 1 April 2020 to 30 June 2020.
• For the month of April 2020, CAR has waived all its fixed and variable advertising charges while for May 2020, it has provided a discount of 50%.
• Reduced other discretionary costs
• In view of uncertainty from COVID-19, the Company has suspended its guidance for financial year 2020.
• With a strong balance sheet and prudent gearing levels, CAR seems positioned well in the current COVID-19 scenario.

At the close of trading session on 24^th April 2020, the stock of CAR stood at $13 per with a rise of 1.562% as compared to its previous closing price. The stock of CAR has provided shareholders with returns of -26.26% and -13.28% during the span of three months and six months, respectively.

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