AUS
NZ
UK
CA
USA
IND
In this article, we will discuss five stocks within the ASX universe. Despite the massive selloffs seen in the last month, three stocks out of these five remain in positive territory.
While the selloff may have created attractive buying opportunities, investors must consider the near-term ramifications of the potential disruptions that could be faced by the businesses in the wake of a pandemic like a coronavirus outbreak. A pandemic has the propensity to jeopardise supply-side fundamentals and potential spillovers to demand-side fundamentals in the events of stalling economic activity.
Magellan Financial Group Limited (ASX:MFG)
Large-cap growth business, Magellan Financial Group Limited is an asset manager based in Sydney, Australia. In light of the coronavirus risks, its stock has corrected a lot, thereby giving up the upward trend noticed over the past three months.
Recently, Magellan had released information about its asset under management for February 2020. At the end of February, the asset manager had $100.65 billion as against $104.31 billion at the end of last month.
Source: MFG HY Presentation
During the month, the company had net inflows of $453 million, comprising of $60 million from retail investors and $393 million from institutional clients (both net inflows).
In the half-year ended 31 December 2019, the company posted statutory revenue of $364.18 million and adjusted revenue of $337.06 million. Its total expenses increased to $112.27 million, owing to IPOs of fund and DRPs.
Magellan posted a net profit after tax of $195.67 million up from $173.52 million in the prior period.
On 06 March 2020, MFG last traded at $52.900, a decline of 7.517% compared to the previous close.
Treasury Wine Estates Limited (ASX:TWE)
Shares of Treasury Wine Estates have been hovering around 52-week low level, and the stock has crashed 37.74% in the year to date period. Since the start of the year, the company has disclosed the detrimental consequences faced by its business.
In its latest announcement to the exchange, the company provided updates on earning expectation for the current financial year, which was impacted by the coronavirus outbreak.
It was said that the total impact was yet to be determined, but the new information pointed to a suppressed consumption in discretionary spending in China through February. The company expects that consumption is likely to remain subdued in March as well.
Consequently, it is believed that the FY20 guidance of reported EBITS growth in the range of 5% to 10% would not be met.
In China, the company’s staff had not returned to work premises, and the same situation was experienced by the company’s partnership network, which includes wholesalers, retailers, and logistics providers.
The company noted that coronavirus had the propensity to impact consumption in other markets as well, but it expects that it would pose a material threat to its projections.
If coronavirus repercussions were to be muted in FY20, it does not expect FY21 plans to face similar consequences.
On 06 March 2020, TWE last traded at $10.000, a decline of 0.794% compared to the previous close.
GPT Group (ASX:GPT)
GPT Group was up by 4.94% over the YTD period. In February, the real estate business disclosed results for the year ended 31 December 2019. Due to lower valuation gains on property assets, the group’s net profit was down by 39.4% as against the previous corresponding period.
During the year, it acquired 1/4th stake in Darling Park 1&2 and Cockle Bay Wharf, Sydney, which was funded through a capital raising activities that took $867 million from the market. Also, GPT expects to fund other development projects through this funding.
Source: GPT Annual Presentation
The company’s funds from operations increased 6.8% to reach $613.7 million, translating into an FFO per security growth of 2.6%, post the impact of capital raising. GPT delivered distribution of 26.48 cents – an increase of 4% over the pcp. The group had a gearing of 22.1% with a weighted average cost of debt of 3.6%.
GPT has guidance of 3.5% growth in FFO per security and distribution per security growth of 3.5%.
On 06 March 2020, GPT last traded at $5.900, a decline of 0.84% compared to the previous close.
Coles Group Limited (ASX:COL)
Despite coronavirus headwinds, Coles Group was up 5.59% on a year to date basis. It appears that the market realises the defensive proposition offered by the staples business like Coles.
In February, the company disclosed results for the half-year ended 05 January 2020. Excluding sales from fuel and hotels, the company delivered revenue growth of 3.3% to report sales of $18.84 billion as against $18.23 billion in the pcp.
Ex-AASB 16, the company recorded an EBIT of $725 million for the period as against $722 million in the pcp. Likewise, its net profit after tax for the period was $498 million compared to $489 million in the pcp.
Coles is undertaking a review of its liquor business under the guidance of Darren Blackhurst who joined the company in January 2020. It expects that earnings from the liquor business are likely to remain under pressure.
The company noted that gross operating capex was consistent with the projections in the range of $700 million to $900 million, and it had experienced delays in acquiring equipment from China due to coronavirus.
On 06 March 2020, COL last traded at $15.700, a decline of 1.009% compared to the previous close.
Costa Group Holdings Limited (ASX:CGC)
Shares of Costa Group Holdings Limited were up 20.72% on a year to date basis. Costa Group has underperformed the broader markets by a margin in the double-digits over the past year.
In February, the company released results for the year ended 29 December 2019. Costa’s statutory net loss after tax was $33.8 million, owing to non-cash items related to the mushroom category and acquisition of African Blue.
In the second half of the year, the company had some visibility on the impact of the multi-year drought and weather conditions on tomato and berry crop. And, its intensive focus on external water sourcing for tomato crop aided the maintenance of crops.
Source: CGC HY Presentation
At Guyra and Corindi, the weather conditions had translated into heavy rainfalls in January, which continued in February, thereby adding to the water capacity in these regions. The company is moving with replanting schedule for raspberries and blackberry program.
Concerning the outlook, Costa noted that the business fundamentals remained steady over the initial period of the new year. As a result of improvement in pricing levels for mushroom and berries, it expects favourable ramification for the Far North QLD berry season.
Assuming no disruption due to coronavirus and anticipated improvement in conditions for Citrus, the company expects the balance of the portfolio to perform in the with previous guidance for CY2020.
On 06 March 2020, CGC last traded at $2.970, a decline of 1.98% compared to the previous close.
