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Looking at the current scenario with the global markets in a turmoil due to the severe impact of COVID-19, it can be said that the Australian equity market is facing a lot of heat and volatility. Several investors have lost significant amounts of wealth from their respective portfolios. However, every investor has a different approach to investing. While some like to go with the trend, others prefer going in the opposite direction.
There is a strategy in the stock market which suggests that one should buy on the dip and sell on high, as buying on dip creates more opportunities for compounding. The approach seems to fit perfectly in the current scenario.
In the below article, we will be looking at three ASX-listed companies, with their recent financial stories, that are bucking the downside trend of the Australian market and generating positive returns in the last few days.
Mayne Pharma Group Limited (ASX:MYX)
Mayne Pharma Group Limited is a developer, manufacturer and marketer of branded and generic pharmaceutical products.
Competition in Key Generic Products led to Disappointing Financials: Mayne recently updated the market with the results for 1H FY20 which were impacted by competition in its key generic products:
- For the first half of the financial year 2020, reported revenues and reported EBITDA stood at $227.2 million and $34.6 million, reflecting a fall of 17% and 47%, respectively.
- Despite the fall in overall financials, MYX managed to report positive operating cash flow of $46.2 million with stable cash conversion for the period.
- In order to right size the organisation further as well as optimise global infrastructure, the company reported a substantial spend base reduction amounting to $20 million.
- Moreover, it has filed three generic products with the US FDA, which include prospective first-to-market women’s health product.
Key Financials (Source: Company’s Report)
Generic Product Pipeline
- During FY19, Mayne streamlined development of generic drug and discarded nonviable projects. The company was also focused towards the portfolio selection on opportunities which align with core therapeutic categories.
- Licensing of numerous topical products from Encube Ethicals Pvt Ltd and Teligent Inc has cemented MYX’s network of external development partners.
Stock Performance:
The stock of MYX was trading at $0.285 on 16 March 2020 (at 03:41 PM AEDT), indicating a decline of 6.557% against its previous closing price. The market capitalisation of Mayne stood at $512.12 million, and the total outstanding shares stood at 1.68 billion. The stock has generated a return of 12.96% in the last five days.
Fortescue Metals Group Limited (ASX:FMG)
Fortescue Metals Group Limited is involved in the mining and processing of iron for the export purpose from its deposits within the Pilbara region of Western Australia.
Consistently Generating Stronger Margins: FMG recently announced its 1H FY20 results with record shipments of 88.6 mt and another six months of impressive margins.
- Record production as well as shipments throughout the operations in 1H FY20 has helped the company deliver revenue amounting to US$6.5 billion with US$80/dmt as the average realised price.
- FMG has continued the practice of generating healthier margins during the period, which was fueled by its industry-leading cost position and product strategy. As a result, the company stated a net profit after tax (NPAT) of US$2.5 billion with a robust rise of 281%.
- Five-year dividend history of FMG makes it a preference for investors. Moreover, the company declared fully franked interim dividend of $0.76 per share during 1H FY20, which reflects a dividend policy ratio of 50% to 80% of the NPAT.
- The company is making investments in energy transmission infrastructure and solar-gas hybrid generation of ~US$700 million in order to optimise current assets as well as to deliver low-cost power to the Iron Bridge project.
Focus for Next Phase of Growth
- On the outlook front, the focus of the company revolves around its disciplined management of capital in combination with a flexible balance sheet, which will place FMG in the next phase of growth as well as the delivery of improved returns to shareholders.
- For FY20, the company is expecting shipments to be at the upper side of the range 170mt – 175mt. It would report depreciation and amortisation of US$7.70/wmt.
Stock Performance:
The stock of FMG was trading at $9.770 on 16 March 2020 (at 03:41 PM AEDT), indicating a decline of 1.611% against its previous closing price. The market capitalisation of FMG stood at $30.57 billion, and the total outstanding shares stood at 3.08 billion. The stock has generated a return of 15.73% in the last five days. FMG has an annual dividend yield of 10.07% and a P/E ratio of 4.290x.
IDP Education Limited (ASX:IEL)
Education service provider IDP Education Limited is mainly involved in the placement of international students into educational institutions in Australia, the UK, the US, Canada, New Zealand and Ireland.
- IDP reported a rise of 25% and 49% in total revenue and earnings before interest and tax, which amounted to $379 million and $86.9 million for 1H FY20, respectively.
- The strong growth in revenue throughout all business lines together with improvement in margins has helped the company drive a rise of 42% in NPATA.
- The global platform of the company is surpassing its expectations in terms of pipeline growth as well as conversion.
- Student placement business of IDP witnessed a rise of 30% volume growth, which was helped by higher conversions in the sales cycle. Also, IDP’s multi-destination markets have delivered volume growth of 52%.
As per the key personnel of IEL, the company is focused towards extending its digital transformation program as well as new capabilities for improving the IELTS customer experience. The company is currently facing some disruption in its business because of the impact of Coronavirus (COVID-19).
Stock Performance:
The stock of IEL was trading at $17.190 on 16 March 2020 (at 03:41 PM AEDT), indicating a decline of 1.611% against its previous closing price. The market capitalisation of IDP Education stood at $4.69 billion, and the total outstanding shares stood at 254.44 million. The stock has generated a return of 10.90% in the last five days. IEL has an annual dividend yield of 1.3% and a P/E ratio of 56.020x.
