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The downside risks have increased worldwide due to various geopolitical developments, with the most prominent being the trade conflict between the United States and China. The dispute between the two largest economies is causing a disruptive effect on international trade flows. As per the Reserve Bank of Australia (RBA), there has not been any growth in international trade over the past one year, particularly due to the USâChina disputes.
Other geopolitical developments like the problems in Hong Kong, the Brexit issue, the tensions between Japan and South Korea and the developments in the Middle East have also shaken the global economy. More broadly, the geopolitical concerns are forming a substantial uncertainty about the future.
Amidst severe economic fluctuations across the world economy that has heightened the risk the global slowdown, investors are more likely to adopt a diversification strategy to prevent their hard-earned money in the equity markets. Diversification enables the investor to earn the highest return with the least risk because different stocks (no correlation) react differently to the same economic event.
Every investor wants to increase the likelihood of their investment success. For achieving this objective and minimize the risk, a rational investor generally creates a portfolio of stocks related to different sectors. Considering this, let us discuss two diverse stocks listed on the ASX - LiveTiles Limited (ASX: LVT) and City Chic Collective Limited (ASX:CCX). Both these stocks have generated substantial returns during the last five years.
Let us take a look at each one of these stocks in some detail below:
LiveTiles Limited
New York-headquartered global software company, LiveTiles Limited (ASX: LVT) has operations in multiple cities, including San Francisco, Seattle, Sydney, Tri-Cities (Washington State), London, Chicago, Geelong, Los Angeles, North Carolina, Rochester, Sligo, Amsterdam, Melbourne, Brisbane, and Hobart. The company offers intelligent workplace software for the government, education and commercial markets. The company is a prize laureate Microsoft Partner.
The companyâs products comprise LiveTiles Design, LiveTiles Mosaic, LiveTiles for SAP Software, LiveTiles Bots, LiveTiles Intelligence, LiveTiles MX, Hyperfish, LiveTiles Intelligent Workplace and Wizdom.
Recent Update
The company has recently informed about the appointment of Dana Rasmussen as the non-executive Director of the company, following the resignation of former Chair of LiveTiles Board, Cassandra Kelly. Dana is presently the SVP Head of People at Honor and an accomplished People executive based in San Francisco. He has held several senior executive roles previously, at Banana Republic, Yahoo, Flywheel Sports and L Brands.
The company has also begun an external search for another non-executive director, that will take its number of directors to six. After the appointment of an additional non-executive director, the total number of directors in the companyâs board will comprise of two co-founder executive directors and four non-executive directors.
The companyâs Chief Executive Officer and co-founder, Karl Redenbach believes that Danaâs experience in senior roles is a huge asset for LiveTiles and his appointment will add further to the companyâs mix of skills.
LiveTilesâ Performance in FY19
The company has recently released its consolidated financial statements for the 12 months ended 30th June 2019. During the period, the company delivered a good performance on the operational and financial front. Let us take an insight into the companyâs annual report below:
Operational Performance
- Acquisition of Wizdom A/S: During the period, the company finalised the acquisition of a leading âplug and playâ, Wizdom A/S. The acquisition is likely to allow the company to deliver new capabilities regarding new content publishing within the framework of its intelligent workplace platform. The company acquired Wizdom for a cash payment of $9 million and 49.7 million LiveTiles shares.
- Strategic Alliance Partnerships: The company initiated and commenced partnerships with many companies during the year, including Testfire Labs, StarMind, Nucleus Cyber, Search365, Zegami and UIPath.
- Product Innovation: The company deployed version 5 of its Page Designer product in late June 2019, with deeper integration to Modern SharePoint.
The company observed an increase in its customer numbers from 536 customers as at 30 June 2018 to 919 paying customers as at 30 June 2019. On eliminating the effect of Wizdom acquisition, the companyâs paying customers rose by 140 relative to the last year.
Financial Performance
The company reported a rise of 167 per cent in its Annualised Recurring Revenue (ARR) during the period, to $40.1 million. On eliminating the effect of Wizdom acquisition, the companyâs organic ARR grew significantly by 114 per cent during the year.
The company informed that its total revenue and other income was $22.5 million for the 12 months to 30 June 2019, including subscription revenue of $16.5 million and accrued government grant income of $4 million.
The company recorded a loss after tax of $42.8 million for the year, including the non-cash expenses of $10.9 million. The companyâs cash balance as at the end of the financial year was $14.9 million relative to $17.8 million reported in the last financial year.
LiveTiles expects to deliver strong customer and revenue growth in the next financial year, propelled by the continued investment into its partners, products, sales and marketing channels.
Stock Performance
As at 2:55 PM AEST on 27th September 2019, LVT is trading at $0.365, with a fall of 1.36 per cent. The stockâs 52-week high and low value is at $0.610 and $0.275, respectively. The stock has delivered an enormous return of 146.67 per cent in the last five years, while a return of 8.82 per cent on a YTD basis.
City Chic Collective Limited
A leading multichannel retailer of Australia, City Chic Collective Limited (ASX:CCX), specialises in the plus-size womenâs apparel, footwear and accessories market. The companyâs customer-led approach appeals to fashion- forward and young women. The company has a strong following in New Zealand and Australia, with a fast-paced presence in Europe and North America.
The companyâs multichannel model includes two websites operating in the USA and Australasia; a network of 104 stores across Australia/New Zealand; a wholesale business with European partners and wholesale partnerships with major US retailers.
Recent Update
In an update on the ASX, the company informed that it has been nominated as the Stalking Horse Bidder for the acquisition of Avenue Stores, LLCâs e-commerce assets that will be sold via auction in early October. The acquisition of Avenueâs assets is likely to provide the company with an access to the considerable value segment of the plus-size market of the US.
The Stalking Horse offer for the acquisition is USD 10.0 million, and in case City Chic will become the successful acquirer, a combination of cash and debt will be used to fund the transaction.
City Chicâs FY19 Performance
The company announced its consolidated full-year financial results for the 52 weeks ended 30 June 2019 in August this year.
Operational Performance
Let us first take a look at the key operational achievements of the company in FY19:
- Opened 9 new stores and 3 conversions to larger format stores.
- Expansion of product offering with additional categories online (now 3x range online vs in stores).
- Continued push into the USA market with customer acquisition and new partners.
- Store refurbishment program to improve in-store customer experience.
- Launched 24-hour live chat to service customers globally.
- Acquisition of Hips & Curve.
- Organisational transformation following divestment.
- Migration to independent IT infrastructure ahead of schedule and within budget.
The company progressed across all channels and regions in FY19, with its online penetration standing at 44 per cent of the total sales in comparison to 36 per cent in FY18. According to the company, the growth in its most profitable channel, online is encouraging as the company gained a larger share of wallet and expanded its offering. The company achieved strong growth for its ANZ and US website, along with a global growth in active customer base.
Financial Performance
The company reported a rise of 12.6 per cent in its sales revenue to $148.4 million for the year, along with a comparable sales growth of 12.2 per cent.
The NPAT and the Underlying EBITDA of the company were recorded at $16.0 million and $24.9 million, respectively. The Underlying EBITDA margin of the company was 16.8 per cent relative to 15.1 per cent noted in last financial year.
The company recorded a strong balance sheet with net cash of $23.2 million.
Stock Performance
CCX is trading higher at $2.51, with a rise of 2.45 per cent relative to the last closed price (As at 2:55 PM AEST on 27th September 2019). The stockâs market capitalisation stands at $471 million, with about 334k shares in rotation. The stock has generated tremendous returns of 188.3 per cent in the last five years and 150.6 per cent on a YTD basis.
Disclaimer
This website is a service of Kalkine Media Pty. Ltd. A.C.N. 629 651 672. The website has been prepared for informational purposes only and is not intended to be used as a complete source of information on any particular company. Kalkine Media does not in any way endorse or recommend individuals, products or services that may be discussed on this site. Our publications are NOT a solicitation or recommendation to buy, sell or hold. We are neither licensed nor qualified to provide investment advice.
