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The whole world is grappling with the outbreak of COVID-19, which is showing no signs of slowing down, spreading fear among all and sundry. Amid such a scenario, the economy of the world is moving towards recession and the stock market has been declining on most of the days creating a spooky atmosphere.
On 23 March 2020, the Australian benchmark index S&P/ASX200 last traded at 4608.5 points, down by 208.1 points or 4.32% from its previous close.
Let us now graze through 2 ASX listed stocks PPH and FPH and find out the reasons behind why they are being looked at:
Pushpay Holdings Limited (ASX: PPH)
Not significantly affected by the outbreak of COVID-19 & raised the guidance for 2020 EBITDAF:
Pushpay Holdings Limited (ASX: PPH), and its subsidiaries, are in the designing and development of mobile payment application & solutions, and electronic payment & tools, which provides the user support or platform in making donations to charities and non-profit organisation in the US, Canada, Australia and New Zealand. The Company’s service is used by more than 7000 churches across the globe.
The Company gets the revenue through the subscription of the revenue offered. PPH stock rose 6.08% on March 20th, 2020 after the Company’s update on 18 March 2020 to the investors that PPH will not be significantly affected due to the effects of the outbreak of COVID-19. There are a lot of organisations that have closed physically but are functioning through digital transactions by the use of mobile first technology solutions. The church facilities may have been closed for some time due to COVID-19 pandemic, but they can provide services digitally.
Therefore, there is a rise in demand for the Company’s services as the congregation could continue to participate in making donations through the use of its mobile app. Further, the digital giving prevents in-person gatherings & small group meetings. The company’s employers can function through the work from home method for extended periods without harming the Company’s financial performance.
As a result, the Company has reaffirmed the fiscal 2020 guidance, and expects operating revenue to be in the range of US$121.0 million and US$124.0 million, gross margin to be more than 63%, and Total Processing Volume is expected to be in the range of US$4.8 billion and US$5.0 billion, as guided previously.
The Company has raised the guidance for 2020 EBITDAF & expects it to be range of between US$25.0 million and US$27.0 million compared to the previously guidance of the range US$23 million to US$25.0 million. This is after barring the acquired ownership stakes in Church Community Builder and related costs.
The Company posted the costs (transactions) of USD 2 mn and a one-time non-cash deferred revenue accounting adjustment on obtaining Church Community Builder by the close of the March this year and is projected to be up to USD 3.0 mn (dependent on audit). PPH projects the operating leverage to remain to accumulate to the company in the following fiscal year as well.
Additionally, the Company has recently acquired 100% of the ownership interests in Church Community Builder, LLC, which is US-based, leading provider of fully integrated church management system solutions to more than 4,000 churches, for a total cash consideration of US$87.5 million. The company will fund this acquisition through both cash on hand and debt facility of US$62.5 million.
1H FY 20 Financial Performance (Source: Company’s Report)
On 23 March 2020, PPH last traded at $2.940, declining by 6.369% from its previous closing price. Meanwhile, PPH stock has fallen 19.49% in three months as on March 20th, 2020 and last traded at a P/E multiple of 20.43x.
Fisher & Paykel Healthcare Corp Ltd (ASX: FPH)
Raised the guidance of fiscal 2020, Increased Demand of the Company’s Products & Increased Manufacturing Output due to COVID-19:
Fisher & Paykel Healthcare Corp Ltd (ASX: FPH), the leading company that is into the designing and manufacturing of products and systems that are used in the case of respiratory problems and for treating the problem of sleep apnea. The Company offers humidification, patient warming and neonatal care products, that also comprise of warming products and infant resuscitators.
The Company in its FY20 trading update released on 17 March 2020, mentioned that for FY 2020 period, it expects operating revenue to be about $1.24 billion and net profit after tax to be in the range of approximately $275 million to $280 million, compared to the previous guidance of 2020 operating revenue to be about $1.2 billion and net profit after tax to range between approximately $260 million and $270 million. The updated guidance is based on NZ:US exchange rate of about 61 cents and a NZ:EU exchange rate of about 55 cents for the rest of the fiscal year 2020 compared to the previous guidance based on a NZ:US exchange rate of 64 cents.
Moreover, there has been a rise in demand of the Company’s respiratory humidifiers and consumables from all across the world including Wuhan in China, as they are directly used for the treatment of patients that are affected by coronavirus. Therefore, FPH has increased its manufacturing output. Further, the Company is experiencing a rise in demand of the Homecare product group and the Company is getting benefit due to the weakening of the NZ dollar. FPH during this COVID-19 pandemic is getting the support of their suppliers and from government agencies globally.
On 23 March 2020, FPH last traded at $26.300, rising by 1.938% from its last close. Meanwhile, FPH stock has risen 21.13% in three months as on March 20th, 2020.
