Paradigm shift for ASX Stocks - XRO, APT, TPW, CCX

Paradigm shift for ASX Stocks - XRO, APT, TPW, CCX

The infectious disease, COVID-19 has adversely impacted Australian economy. On this front, the government and corporations have taken various initiatives to safeguard the citizens and the workforce of the country. The government is acting in the national interest to assist households as well as businesses and simultaneously addressing the substantial economic outcomes of the coronavirus outbreak.

The government introduced stimulus package as well as JobKeeper Payment to provide support to the impacted businesses workers as well as the broader community. The impact of these initiatives was seen on the share price of the companies.

As on 14 March 2020 (03:00 PM AEST), the number of COVID-19 cases had reached 6,400 and death count had reached 61. The country has an impressive recovery rate with approximately 3,600 people recovering from this disease, much better than most of the big nations grappling with the pandemic.

In this article, we would be looking at four ASX-listed stocks, that have shown significant improvement in their share price and glance at their recent developments.

Xero Limited (ASX:XRO)

Initiatives during COVID-19 to Assist Small Businesses:

Xero Limited is the provider of accounting software to small businesses. During this period of crisis, many small businesses have been impacted severely. On that front, Xero has taken initiatives to support accountants and bookkeepers who would be able to assist their small business clients to keep on top of payroll and compliance needs.

On 08 April 2020, Xero announced the immediate availability of Xero HQ Payroll which was in pilot with a small group in the past few months. The Company opened the tool to all its accounting and bookkeeping partners who would be able to access the benefits instantly. These tools would help small businesses and their advisors during difficult economic times. Also, through this tool, the advisors would be able to understand the clients set up for Single Touch Payroll (STP) & the status of those filings. The STP data would be used by the Australian Taxation Office to collect data on employees who are qualified for the JobKeeper program. Thus, getting clients set up for STP will be vital in helping small businesses prepare for at the time when the legislation is passed.

Also, Xero’s cloud-based accounting software would enable accountants or bookkeepers to verify their clients’ finances via a single ledge remotely.

Integration of Hubdoc and Instafile:

On 18 March 2020, Xero announced a vital milestone integration of Hubdoc and Instafile within two years after the acquisition. The technologies are now available to customers directly within Xero.

Hubdoc was earlier offered to the customers as a separate add-on. Now, it is included in the business edition plans with smooth setup, single sign-on & access from within Xero. For the first time, the Company would be providing UK accountants with Xero Tax.

The integration of Hubdoc and Instafile would give more value to small business customers and advisors at a global level.

The real-time comprehensions and real-time data along with the compliance offered by Hubdoc & Xero Tax will assist future-proof accountants’ roles, letting them recommend more boldly and giving additional services as well as widen their expertise & customer base.

Stock Information:

XRO shares have generated a negative YTD return of 2.07%. On 23 March 2020, the shares reached at the lowest price at $58.75 since January 2020. However, in the last one month, the shares have generated a positive return of 9.38%. By the market closure on 14 April 2020, the shares improved by 1.216% from its previous close and settled at $79.050.

Afterpay Limited (ASX:APT)

On 14 April 2020, Afterpay Limited, the technology-driven payments Company has provided a business update for three months ended 31 March 2020 along with the details about its COVID-19 response plan.

Financial Highlights:

Afterpay reported a robust quarterly performance across its business with an increase in the underlying sales at $7.3 billion YTD. The number represents a growth of 105% as compared to the prior corresponding period. March 2020 was the third-largest underlying sales month on record. The group losses for March 2020 was ~1%, although there was an increased contribution from newer markets that are primarily higher loss markets early in the lifecycle.

The preventive adjustments by the Company to risk setting had a positive impact on the performance. APT confirmed that mature ANZ region was highly profitable with the underlying cash flow positive. Further, the Company also confirmed that its balance sheet and liquidity position remain strong.

Response to COVID-19:

Amidst the COVID-19 crisis, which has caused social & economic impacts, the Company feels that it is too early for them to estimate the broader economic effects. However, the Company has implemented the first phase of a Response Plan to handle the business via this evolving cycle. The Response plan includes various priorities across all facets of the business-like taking care of the people and also safeguarding the strong relation of APT with its customers and merchants.

The nature of APT’s service, business model, as well as robust capital position gives flexibility & several advantages in terms of responding to the present scenario.

Stock Information:

APT shares have driven a negative YTD return of 28.17%. On 23 March 2020, the shares reached at its lowest level since January 2020 at $8.010. Post that, there was an improvement in the share price. By the end of the trading session, the shares closed at $28.400, up 29.091% from its previous close.

Temple & Webster Group Ltd (ASX:TPW)

Temple & Webster Group Ltd is the top online retailer in Australia for homes with ~335,000 active customers, ~180,000 product listing, ~1.8 million website user and ~2.1 million email subscribers. Its core furniture & homewares category is a $13.9 billion-dollar market, with only 4% to 5% drifting online.

In 1H FY2020 (period ended 31 December 2019), the Company reported high growth in recurring revenue. The revenue grew up by 50% and active customers by 45%.

Stock Information:

In the last one year, the shares of TPW have delivered a return 101.26%. However, if you see the previous three months performance, the share price was quite volatile during the period. The shares in the last three months have delivered a return of 14.29%. From 11 February 2020, the share price continued to decline till 23 March 2020 and then it took a U-turn.

TPW shares have generated a YTD return of 21.21%. On 23 March 2020, the shares reached at its lowest level since January 2020 at $1.57. Post that, there was an improvement in the share price. By market closure, TPW shares improved by 6.25% from its previous close and stood at $3.40.

City Chic Collective Limited (ASX:CCX)

City Chic Collective Limited is an internationally-recognised brand committed to leading a world of curves announced to close its Australian stores during the last week of March 2020 as per the directives provided by the Australian Federal and State Governments around social distancing and limited activities around the homes.

The Company is an omni-channel retailer with 2/3rd of the sales online and three-time the range online vs stores would serve its loyal customers via a digital medium. The Company confirmed that it has a more variable cost structure than most of the traditional retailers.

During this period, the Company has taken below initiatives to minimise the impact of the closure of its store network that contributes 30% of the total sales:

  • Materially decreasing the inventory intake and reorganising store inventory via online mode.
  • Controlling non-essential capital expenses and driving additional working capital efficiencies.
  • Having a conversation with the landlords with respect to rents while the stores are shut.
  • Lessening of the cost related to the activity driven by stores.

Stock Information:

CCX shares have generated a negative YTD return of ~31%. By 23 March 2020, the shares reached at its lowest point since January 2020 at $0.80. Post that, the shares started moving in the upward direction. By market closure on 14 April 2020, the shares zoomed up by 13.889% and settled at $2.050.


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