The benchmark index S&P/ASX 200 was trading downward by 0.25% or 16.5 points to 6,713.5 on 10th December 2019 (AEST 12:52 PM). In the below article, we have discussed ASX listed stocks operating in the energy, industrials, financials and health care sectors. Companies in discussion are Worley Limited, McMillan Shakespeare Limited, AUB Group Limited and Estia Health Limited, which have recently updated the market with significant announcements.
Let us zoom our lens on these company updates.
Worley Limited (ASX: WOR) provides professional services to its customers in order to help them meet the changing needs related to energy, chemicals and resources.
New Joint Venture Agreement
WOR, through a release dated 9th December 2019, announced to have entered into a joint venture (JV) agreement with the Atomic Energy Development Agency of the Republic of Uzbekistan, also known as Uzatom. The agency is advancing an initiative targeted towards the construction of a nuclear power plant in the country. The plant with two reactor units would have a total capacity of 2.4 gigawatts.
- The joint venture, named as Uzatom Worley Engineering LLC, would form the engineering and project management organisation of Uzatom;
- The JV would provide engineering services for nuclear power facilities as well as nuclear infrastructure in Uzbekistan;
- Some of the services to be offered to Uzatom and other customers are expert evaluation, project management and consulting.
Agreement for Secunda Synfuels Facility
On the same day, the company updated the market with another significant announcement. Under an agreement from Sasol South Africa (Pty) Ltd as one of the engineering contractor partners, Worley would provide services to the Secunda Synfuels facility.
- Under the terms of five-year agreement, the company would be providing services for engineering, procurement as well as construction from front?end to project completion for the capital projects portfolio of Sasol;
- The deal would form the foundation of further growth of Worley in southern Africa and beyond, according to WOR CEO Andrew Wood.
The stock of Worley Limited was trading at a price of $15.030 each share on 10th December 2019 (AEST 12:55 PM). The company has a market capitalisation of $7.82 billion as on 10th December 2019. The total outstanding shares of the company stood at 520.36 million, while its fifty-two-week low and high is $10.720 and $16.450, respectively. The stock of Worley Limited has generated total returns of 15.97% and 8.21% in the time period of three months and six months, respectively.
McMillan Shakespeare Limited
McMillan Shakespeare Limited (ASX: MMS) is in the business of salary packaging, asset management, vehicle finance, insurance and warranty. On 9th December 2019, the company announced that Mitsubishi UFJ Financial Group, Inc. became a substantial holder in MMS with a voting power of 5.00%.
Trading Update for FY20
McMillan Shakespeare, on the same day, also released a financial year 2020 (FY20) trading performance update, under which the company unveiled that it is experiencing more challenging market conditions in Australia, New Zealand and the United Kingdom (UK) than anticipated. MMS is expecting these conditions as well as adverse impact on business and consumer confidence to persist for at least in the remaining period of FY20.
Additional highlights from the update are as follows:
- MMS continues to grow its customer base in Group Remuneration Services, in salary packaging as well as novated leasing.
- A flat market and a rise in customer inertia are impacting profitability of Asset Management business in Australia.
- Volumes in the aggregation business stood lower because of the softer car market and changes to the company’s funding panel are impacting on margins in the Retail Financial Services business.
- Plan Partners is boosting its customer base and profitability in line with anticipations.
- For FY20, the company is anticipating underlying net profit after tax in the range of $83-$87 million.
McMillan Shakespeare is scheduled to announce 1H FY20 financial results on 19th February 2020.
The stock of MMS was trading at $13.370 per share on 10th December 2019 (AEST 01:14 PM), up 0.678% from its previous closing price. The company has a market capitalisation of $1.03 billion as on 10th December 2019. The total outstanding shares of the company stood at 77.38 million, while the stock has generated total returns of -17.21% and -3.98% in the time period of three months and six months, respectively.
AUB Group Limited
Equity based insurance broker network, AUB Group Limited (ASX: AUB) serves over 550k clients and more than 1mn policies across over six hundred locations.
Agreement Termination to Acquire Coverforce
- Recently, the company updated the market regarding the termination of conditional agreement with Pemba Capital Partners, under which the former was to acquire the latter’s interest in Coverforce.
- The conditional sale agreement was conditional upon, delivery of due diligence materials to the company as agreed between AUB and Pemba Capital. The delivery of due diligence materials to the company has not occurred as well as the company has not waived its right to due diligence.
- The agreement has been terminated as a result of inabilities of the parties to reach agreement on an amended date for delivery of due diligence materials.
In another update, the company announced that Robin Jane Low, one of AUB directors, made a change to holdings in AUB by acquiring 2,060 ordinary shares in consideration of $12.1630 on 18th November 2019. Post change, the director holds 17,535 ordinary shares.
The company has a market capitalisation of $849.4 million as on 10th December 2019, with the stock of AUB trading at $11.350 per share on 10th December 2019 (AEST 01:28 PM), reflecting a decline of 1.39% as compared to its previous closing price. The total outstanding shares of the company stood at 73.8 million, while its fifty-two-week low and high is $10.150 and $13.940, respectively. The stock of AUB has generated total returns of 3.97 per cent and 2.58 per cent in the last three months and six months, respectively.
Estia Health Limited
Update on Occupancy and Trading
- At 30th November 2019, spot occupancy witnessed a decline of 0.6% from the spot rate at 16th August 2019 to 93.5% across its portfolio of the 5,944 operational beds. The company is currently not expecting that the dynamics as well as sentiment would improve materially in the short-term.
- It was also mentioned that the revenue rates have been impacted by the decrease in the Maximum Permissible Interest Rate and competitive pressures.
- The company is expecting full year FY20 EBITDA on Mature Homes within the range of $78 million to $82 million on a pre-AASB16 "like for like" basis, which is subject to no material change from occupancy as well as revenue rates, observed at the end of November during the remainder of the financial year.
The stock of EHE was trading at $2.400 per share on 10th December 2019 (AEST 03:25 PM), reflecting a decline of 2.834% as compared to its previous closing price, with total outstanding shares of 261.09 million. The stock of EHE has generated total returns of -4.26 per cent and -8.86 per cent in the last three months and six months, respectively.