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The stock market participants are known for using captivating words. One such captivating word is âSkyrocketâ. Anything increasing at a faster rate is called as skyrocketing. In the case of stocks, when the stock price rises and closes at a substantially higher price as compared to its last closing price, we say that the stock has skyrocketed.
There are many number of reasons for the stocks to skyrocket. However, the following three reasons could be attributed to be the most common reasons.
- A positive fundamental news announcement from the company
- Positive news flow from the peer company, leading to a positive sectorial tailwind
- An overall positive macro news flows, for example, reduction in interest rate, a favorable change in regulation, etc.
In this article, we would see two examples of ASX stocks that skyrocketed on ASX on 30 August 2019 and continuing their momentum on 2 September 2019 as well.
Experience Co Limited
Adventure tourism and leisure company, Experience Co Limited (ASX: EXP), on 30 August 2019 the company declared the FY2019, and the stock skyrocketed by ~23% on the announcement day and is trading at $0.265, further up by 10.417% (AEST: 3:39 PM) on 2 September 2019.
FY2019 Results:
On 30 August 2019 Experience Co Limited released its full-year result for the year ended 30 June 2019. The company reported a 19% growth in the revenue to $161.296 million as compared to the previous corresponding period. The company declared a NPAT of -$48.3 million as compared to $6.8 million in FY 18. This loss was on account of significant items; impairments of $62.2 million due to impairment of Adventure Experiences and $7.9 million in other one-off items.
The increase in the revenue was the outcome of the full-year contribution from FY18 acquisitions. However, there were challenges during the period, such as softer tourism trading conditions in the FNQ market, extended poor weather, which includes record rainfalls and slower than expected integration. The core skydiving business of the company did reasonably well in the regions of Australia and New Zealand. Overall, the year remained challenging for the company, and the results were below the guidance expectations.
Corporate Changes:
The period also saw a change in the Board and Management team. Bob East was appointed as the Chairman in October 2018. There were also changes in multiple management leadership positions effective from the second half of FY2019. Recently, the company appointed John OâSullivan as CEO, Owen Kemp as CFO and Ian Douglas as the GM Corporate Development in the first half of FY2019. The objective was to place the business in a position to execute the future strategies of the group.
Balance Sheet highlights and cash flow statement:
The net asset of the company declined from $180.392 million in FY2018 to $132.399 million in FY2019. The total shareholdersâ equity was $132.399. Borrowings for FY2019 stood tad lower at $31.33 million as against $32.230 million in FY2018
The net cash inflow from the operating activities of the company was $18.523 million. The net cash outflow from the investing activities was $14.315 million and $6.576 million in the financing activities. The net cash and cash equivalent by the end of FY2019 was reported at $4.803 million.
Outlook and Strategy:
The company has started working on the strategic review of its portfolio of assets and operations to scrutinise the options and initiatives that need to be taken to address the recent share price underperformance.
As on 2 September 2019, Experience Co Limitedâs market cap stood at A$133.39 million with approximately 555.81 million outstanding shares. EXP has an annual dividend yield of 4.17% and a PE ratio of 37.500x.
People Infrastructure Ltd
People Infrastructure Ltd (ASX: PPE) is a company from the industrials sector and is engaged in workforce management and staffing solutions. The shares of PPE skyrocketed by 8.333% on ASX on 30 August 2019, upon the release of the annual financial report. PPE shares continued the positive momentum and are trading at $3.480 up ~1% on ASX on 2 September 2019 (AEST: 3:49 PM).
FY2019 Results
On 30 August 2019, PPE released its FY2019 results for the year ended 30 June 2019. The company reported its statutory EBITDA for FY2019 at $19.2 million and normalised EBITDA of $17.8 million. The normalised EBITDA was 36.8% above FY2018 number. The normalised NPATA increased by 43.6% to $12.1 million as compared to previous corresponding period. Thus, NPATA per share also increased by 27.7% to 16.6 cents per share. The profit after tax increased by 89.83% to $9.704 million. The company declared a fully franked final dividend of 4.5 cents per share, 12.5% above its previous financial year.
The increase in the revenue and profit was the outcome of organic growth within the existing services as well as sectors under which the group functions. The other reason for the increased revenue was due to the growth in the demand for services that are being offered by the company along with the acquisitions which took place during the period.
Post the completion of FY2019; the company acquired further 13 shares in Project Partners Corporation Pty Ltd on 18 July 2019. With this acquisition, the total shareholding of the company increased to 63% and simultaneously gaining control over this entity.
Balance Sheet highlights and Cash Flow Statement:
The net asset of the company jumped from $42,944,633 in FY2018 to $68,115,208 in FY2019. The total shareholdersâ equity for FY2019 was at $68,115,208.
In FY2019, the receipt from the customer increased by ~ 22% to $303,721,758. As a result of which the net cash inflow increased during the period to $10,856,458. The net cash inflow through financing activities was $36,019,868, and net cash outflow from investing activities was $30,390,750. The net cash and cash equivalent by the end of FY2019 stood at $21,328,339.
Outlook:
People Infrastructure maintains a positive outlook with continued organic growth anticipated across the business. The company is also bullish about the recent acquisitions that have been completed and is bullish about the further upside from these acquisitions.
As on 2 September 2019, People Infrastructure Ltdâs market cap stood at A$249.79 million with approximately 72.4 million outstanding shares. PPE has a PE ratio of 25.590x.
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