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The coronavirus outbreak and the recent bushfires in Australia are two of the most common topics discussed during the current earnings session in Australia. Most of the Australian companies have provided an update with regards to the impact of both of these events on their operations. While some companies have downgraded their guidance to reflect the impact of these events, some have been saved from both of these.
Australian accommodation provider, Aspen Group is one such company which is expecting no major impact from these events has reiterated its earlier guidance. On the hand, Lindsay Australia, a transport company, has categorically stated that the bushfire event did not have a material impact on its Transport division. Interestingly, both these companies have come up with their half-year results today. Let’s discuss in detail what these companies have to say about their recent results.
Aspen Group (ASX: APZ)
Australia’s leading accommodation provider, Aspen Group does not expect the recent bushfires in Australia and the coronavirus outbreak in China to have any lasting negative impacts on the company. This is surely a relief for the stakeholders who were waiting for the company to provide an update on the impact of both of these events on the company’s operations.
Although the company has admitted that major bush fire events along the south coast of NSW have negatively impacted profits at its Barlings Beach and Tween Waters properties by at least $500,000 in late December and January, it seeks to recover these losses through its insurances. With regards the impact of coronavirus, the company has stated that the vast majority of its customer base is domestic and only part of its business is short stay.
For now, the company has not changed its underlying earnings and distribution guidance for FY20 which is at 6.75-7.00 cents and 6.00 cents per security, respectively.
Aspen has some or the entire range of its accommodation products and services at each of its properties. Aspen currently has 13 properties valued at approximately $160 million and manages 3 major residential / retirement projects and earns fees for this service.
For the half year ending 31 December 2019, the company reported the following results:
- Operating profit after tax increased 55% to $3.66 million or 3.80 cents per security
- Statutory net profit after tax increased 319% to $2.29 million;
- Property net operating income increased 11% to $6.36 million, with all of the properties performing around or above 1H FY19, except Darwin Freespirit Resort which has been negatively impacted by heavy rate discounting in its market
- Development profit was $0.41 million from the sale of four houses at Four Lanterns at higher than budgeted margins
- Net corporate overheads decreased 15% to $2.42 million, with a significant reduction in the use of external consultants and Aspen earning project management fees from the Mill Hill Capital funds
- Net finance expense increased 60% to $0.71 million, due to increased debt
- Ordinary distribution increased 20% to $2.65 million or 2.75 cents per security, payable on 28 February 2020.
Over the period, the company increased capital improvement activity across the portfolio. For instance, the redevelopment and expansion of Tomago has commenced; the first stage of apartments at Lindfield have been refurbished and are being leased at materially higher rents; new hi-tech cabins are being installed at Highway One; new entertainment facilities are under construction at Darwin Freespirit Resort; and labour and energy saving initiatives have been completed or are underway at all properties.
Going forward, the company intends to seek opportunities to grow the business and portfolio on a profitable basis in the residential, retirement and short stay sectors.
On the stock performance front, APZ stock has provided a return of 20.86% in the last one year to its shareholders. At market close on 21 February 2020, APZ stock was trading at a price of $1.170, up by 3.54% intraday, with a market cap of $108.84 million. Notably, the stock is trading near to its 52 weeks high price of $1.240.
Lindsay Australia Limited (ASX:LAU)
Integrated transport, logistics and rural supply company Lindsay Australia Limited has successfully leveraged its ability to mitigate weather and seasonality through the diversification of its product and location offering to produce a strong set of results for the 6 months to 31 December 2019.
Lindsay Australia incorporates the key divisions of Lindsay Transport (including Lindsay Fresh) and Lindsay Rural which are focused on servicing customers across several industries including fresh produce, horticulture, food processing, food services and logistics. The company’s customers’ needs continue to evolve, and it’s a testament to the Group’s longevity that it continues to deliver new and innovative solutions to meet these changing requirements.
For the half-year period, the company reported a 7.2% increase in net profit after tax and 8% increase in underlying EBITDA, as compared to pcp. Over the period, the company’s revenue increased by 6.3% to $216.0 million as strategic diversification mitigated softer road freight volumes in some regions. The company’s expansion into refrigerated rail containers along with growth from capital cities, helped Lindsay Transport revenue to grow by 7.1% over the period, while Lindsay Rural revenue grew 5.0%.
Rail expansion remained paramount during the first half with 50 additional refrigerated rail containers commencing operations. At the end of 1H20 the Group was operating 126 owned refrigerated rail containers supported by a further 43 on temporary hire to cover seasonal peak periods.
“Our expansion into refrigerated rail continues to drive both revenue and bottom line contribution for the transport division while providing freight solution optionality to our customers” said Lindsay Australia CEO, Kim Lindsay while commenting on the half-year results.
Further, the company has assured its stakeholders, by stating that the recent bushfires did not have a material impact on the division, however, additional costs were incurred due to the re-routing of some journeys.
For the period, the company has declared an interim fully franked dividend of 1.0 cent per share, payable on 9 April 2020.
LAU stock is trading at 0.365, up by 2.817% intraday, with a market capitalisation of $106.06 million. The stock is trading at a PE multiple of 11.830x with an annual dividend yield of 5.92%.
