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Summary
- Stock markets have been highly volatile ever since the pandemic came into picture; there has been market uncertainty due to new restrictions following the second wave in Australia.
- iCar Asia registered a 4 per cent growth in 1H revenue to AUD 6.26 million, despite lockdown impacts on 2Q20 revenue. ICQ has seen an excellent rebound in the business post the lockdown period in Southeast Asia.
- Cash Converters remained well positioned in the market with a strong balance sheet. FY20 online lending increased to 54.9 per cent of the total principal.
Ever since the beginning of COVID 19 pandemic, stock markets have been at the receiving end of the Great Virus Crisis (GVC). The prolonged crisis made the benchmark indexes go topsy-turvy.
There has been so much uncertainty around, with businesses adjusting themselves as per government guidelines and new norms. After the first wave was handled well by Australia, no one was expecting the second wave; however, it came as a shock for businesses trying to recover from impacts of the first wave itself.
On 28 August 2020, benchmark index S&P/ASX200 closed in red, declining by 0.86 per cent to settle the day at 6,073.8. S&P/ASX 200 Consumer Discretionary (Sector) also went down by 1.59 per cent while S&P/ASX 200 Financials (Sector) moved up by 0.2 per cent.
In this article, we are discussing two ASX-listed companies, ICQ and CCV from the consumer discretionary and financial sectors, which have released their performance report for 1H20 and FY20, respectively. Both these companies adapted quickly to the rapidly changing economic environment, catering their services to customers.
Let us discuss the performance report of these ASX-listed companies in detail.
iCar Asia Limited (ASX:ICQ)
Kuala Lumpur-headquartered firm, iCar Asia Limited (ASX:ICQ) owns the number 1 network of automotive portals in ASEAN. On a monthly basis, online properties of ICQ reach ~12 million car buyers and sellers in the region. Its operations are focused on both new and used car businesses in Malaysia, Indonesia and Thailand.
1H Revenue Up 4 Per cent Despite COVID Impacts in Q2
On 28 August, iCar Asia released its first half-year financial report for the period ended 30 June 2020.
Revenue: ICQ generated AUD 6.26 million in revenue in the first half of 2020, representing a 4 per cent increase from AUD 6.01 million posted during the corresponding prior period.
Operating expenses, excluding depreciation and amortisation increased by 7 per cent to AUD 10.3 million, compared with AUD 9.7 million in 1H19. Increase in operating expenses has been attributed to the inclusion of operating expenses of AUD 1.3 million of Carmudi in 1H20.
General business efficiency and cost management measures enabled the company to reduce core business expenses amid the challenging times.
EBITDA loss: ICQ incurred an EBITDA loss of AUD 4.09 million, owing to lower-than-expected revenue growth due to the pandemic-led disruptions and inclusion of Carmudi expenses. However, for the reported period, Malaysia and Thailand, the company's two biggest revenue markets, remained EBITDA and cashflow positive.
Financial position: The company reported AUD 2.2 million in cash and cash equivalents after recording its weakest ever quarterly net operating cash outflow in the second quarter of 2020. Additional funds are in the form of an undrawn debt facility of AUD 5.0 million.
Strong Recovery Post COVID-19 Lockdown Period
While 2Q revenue was impacted due to varying degrees of movement control and business closures in all the operating markets, July 2020 witnessed a robust recovery. July unaudited revenue grew by 40 per cent year-on-year.
In July 2020, new car sales as compared to the 2Q20 monthly average were:
- Malaysian new car sales up by 155 per cent,
- Thailand new car sales increased by 38 per cent
- Indonesian new car sales grew by 215 per cent
Stock Performance - On 28 August, ICQ traded flat at AUD 0.295, after achieving a day high of AUD 0.300. The company has a market capitalisation of AUD 127.03 million and its stock has delivered a return of around 64 per cent in the last one-year period.
Cash Converters International Limited (ASX: CCV)
Perth-based company, Cash Converters International Limited (ASX: CCV) is engaged in revenue generation through franchising, personal finance, vehicle finance and store operations.
CCV Well-Positioned, Digital Assets Outperformed in FY20
Cash Converters has released its FY20 financial report, highlighting outperformance of its digital assets. Moreover, the company expanded online lending presence and registered new sales records on WebShop.
FY20 key highlights included:
- Revenue stood at AUD 279.0 million, down 0.9 per cent year-on-year.
- Statutory net loss after tax was AUD 10.5 million
- Operating EBITDA stood at AUD 62.1 million, up 51.5 per cent, while operating NPAT grew by 63.2 per cent to AUD 19.6 million
- Online lending increased to 54.9 per cent of total principal, up from 50.5 per cent
- Corporate store retail sales increased by 16.5 per cent to AUD 88.0 million, with online retail sales of AUD 8.4 million, up 42.6 per cent, in-store retail sales of AUD 70.1 million, up 11.0 per cent, and scrap gold sales of AUD 8.4 million, up 49.0 per cent
- Cash & equivalents grew by 31.4 per cent to AUD 106.5 million
- Securitisation facility worth AUD 150.0 million renewed until December 2022 with undrawn amount of AUD 60.8 million and no other corporate debt
- Net tangible assets per share stood at AUD 0.289
Cash Converters remains focused on consolidating and leveraging its domestic store network, as well as rebuilding loan books and boosting digital asset awareness. Moreover, the company plans to capitalise on organic and adjacent growth opportunities emerging in the upcoming period.
On the same day, the company announced the appointment of Mr Jason Kulas as Non-Executive Director and Chairman, post Mr Stuart Grimshaw stepping down from the position. Mr Kulas, whose appointment is effective from 28 August 2020, has more than 25 years’ experience across the banking and financial sectors.
Stock Performance - CCV traded flat at AUD 0.210 on 28 August 2020, after achieving a day high of AUD 0.220. The company has a market capitalisation of AUD 129.45 million and its stock has delivered a return of more than 55 per cent in the last one-year period.
Good Read: Three Unique Investment Tips to Build Recession-Proof Portfolio in COVID-19 Crisis
