Why did Baby Bunting, Harvey Norman and Adacel Technologies shares move north today?

Summary

  • Although the market closed in the red zone, a few companies managed to surge on ASX, supported by their result announcements.
  • Baby Bunting Group Limited noted an 11.8% growth in total sales at A$405.2 million and declared a fully franked dividend of 6.4 cents per share.
  • HSC Technology Group Ltd recently entered a reseller agreement Harvey Norman Commercial Division NSW for its HSC Care and HSC Home solutions.
  • Adacel Technologies reported a 4% drop in revenue but its NPAT surged by 234.7%. For FY2021, the Company expects its profit before tax between A$6.3 million and A$6.8 million.

Despite the current uncertainty in the market, many ASX-listed companies managed to surge on ASX. By the market closure on 17 August 2020, most of the indices closed in the red zone. A drop of 0.81% was seen on the benchmark index, S&P/ASX 200, which settled at 6,076.4.

The earnings season indicates how companies have performed over a period. The financial results can have a significant impact on the share price movement with a better-than-expected result likely to see the stock zoom.

DO READ: August 2020 Earnings Season Set to Rock the Investors’ Watchlist

In this article, we would look at three such companies which noted a surge in their share price today. Let us shed some light on their recent developments which helped the shares to rise on ASX.

Baby Bunting Group Limited (ASX:BBN)

Australia's largest specialty retailer of baby goods, Baby Bunting Group Limited reported growth of 5.542% in its share price by the end of day’s trade and settled at A$4.380. The shares have reached near its 52 weeks high price. The Company has a market cap of A$529.39 million and ~127.56 million outstanding shares.

On 14 August 2020, Baby Bunting Group released its FY2020 results for the year ended 30 June 2020.

  • Total sales were up by 11.8% to A$405.2 million as compared to the previous corresponding period.
  • Comparable store sales growth was 4.9%.
  • Online growth which includes click and collect grew over 39%.
  • Gross margin rose 120 basis points to 36.2%.
  • Pro forma EBITDA soared 24.1% to A$33.7 million and pro forma NPAT by 34.1% to A$19.3 million.
  • BBN declared a dividend (fully franked) of 6.4 cents per share.

ALSO READ: Investors like Growth Stocks; Praemium and Baby Bunting on FY20 Earnings Report Card

Executing on its strategy for the future:

During the year, Baby Bunting opened three new stores Westfield Doncaster in Victoria, Wetherill Park and Casula in New South Wales. At present, Australia has 56 Baby Bunting stores.

In FY2020, the Company updated its store network plan. It is now looking to continue to grow its network of stores to over 100 stores. Further, Baby Bunting expects to open four to eight new stores each year. Apart from that BBN’s destination format stores, regional stores and the shopping centre formats, the Company is also considering alternative store formats.

In executing the long-term network plan, Baby Bunting would select locations that fulfil its rigorous return on investment hurdles.

Progress on transformation projects:

  • New brand implementation across the business.
  • Development of a new loyalty program which is expected to start in FY2021.
  • The development of Baby on Board services business plus ancillary services into car seat hire & with a strategy to grow into other product types.
  • As a part of supply chain strategy, the Company intends to move to a new purpose-built DC in Dandenong South to present facility which would open in 2H FY2021.

DO READ: Earnings Report: Stocks that Passed the Litmus Test and those that Didn’t

Harvey Norman Holdings Limited (ASX:HVN)

Harvey Norman Holdings Limited’s principal activities include integrated retail, franchise, property, and digital enterprise.

Harvey Norman Holdings shares have zoomed up by over 49% in the last three months, and by the end of the day’s trade, the shares settled at A$4.220, up 2.927% from the previous close. HVN has a market cap of A$5.11 billion and ~1.25 billion outstanding shares.

Partnership with HSC Technology Group Ltd:

On 03 August 2020, HSC Technology Group Ltd (ASX:HSC) signed a reseller agreement with Harvey Norman Commercial Division NSW for its HSC Care and HSC Home solutions. The partnership is for three years with an option to expand for another two years.

As per the agreement, the solutions made by HSC Technology Group is widely accessible to Harvey Norman’s commercial clients which comprise of builders, developers, architects, and plumbers. There is also a possibility to expand HSC’s National Disability sector presence through existing Harvey Norman agreements.

The agreement allows Harvey Norman Commercial Division NSW to distribute the HSC Care & HSC Home solutions via its trade-only market. The deal formalises the framework of the arrangements with Harvey Norman Commercial Division NSW & at this stage does not represent any order to supply.

Do Read: Share Prices and Value versus Growth

Adacel Technologies Limited (ASX:ADA)

Adacel Technologies Limited is the developer of advanced simulation and control systems for aviation and defence.

Adacel Technologies shares have soared significantly by nearly 36% on ASX in the last three months. After the release of Adacel’s FY2020 results, the shares skyrocketed on the ASX, and by the end of the trading session on 17 August 2020, the ADA share price stood at A$0.720, up 30.909% from its previous close. Adacel Technologies’ market cap was A$42.04 million and there were around 76.44 million outstanding shares.

Despite the impact of COVID-19, the Company delivered impressive financial results.

  • Revenue from continuing operations declined by 4% to A$39.714 million.
  • Profit before tax for the period went up by 212.5% to A$2.19 million.
  • Profit attributable to owners surged 234.7% to A$3.634 million.

Business Segment Reporting:

  • ADA’s System segment reported a fall in the revenue from A$13.401 million in FY2019 to A$9.743 million in FY2020.
  • Although there was a drop in System segment revenue, Services segment revenue grew from A$27.956 million in FY2019 to A$29.971 million in FY2020.

Outlook:

For FY2021, Adacel Technologies expects a profit before tax in the range A$6.3 million - A$6.8 million. Barring payment of future undeclared dividends, ADA is predicting cash of ~A$10 million at 30 June 2021.

Bottomline:

The recent results and the encouraging future outlook presented by the three companies Baby Bunting, Harvey Norman and Adacel Technologies, seems to have laid a positive impression on the market players. The optimism, in turn, has led to a surge in the respective share prices on the ASX.

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