- Amid COVID-19 pandemic, while industries such as real estate and industrials have been deeply impacted, technology sector gained traction, owing to the capabilities provided to businesses and households.
- Centuria Office REIT, which delivered distributions of 17.8 cpu for FY20 in line with guidance, has a strong balance sheet with A$131.0 million in undrawn debt capacity and 34.5% gearing.
- Well capitalised with cash balance of A$139.9 million, ELMO Software recorded a 25% increase in FY20 statutory revenue.
- NEXTDC, which earlier in March reiterated FY20 underlying EBITDA guidance of A$100-$105 million, raised a total of A$863 million.
- To support the business to grow and invest, SVW has A$616 million in cash and existing committed undrawn facilities, in addition to new A$430 million USPP.
COVID-19 pandemic has impacted different sectors differently based on their business nature. While real estate and industrial sectors have felt the burn of slumping economy, technology sector has gained traction, owing to the capabilities provided to businesses and households for a smooth run amid these challenging times when social distancing and lockdown has augmented the need to work remotely from home.
The impact has been felt in the share market also with strong stable companies becoming undervalued, as prices plummeted due to low investor confidence. For long-term investors, undervalued companies create an opportunity to obtain capital gain in the future.
On that backdrop, let us cast an eye over the performance of few ASX-listed stocks picked up from across industries.
Centuria Office REIT (ASX:COF)
Australia-based largest ASX-listed pure play office REIT, Centuria Office REIT provides investors an opportunity to park their funds in commercial properties.
The company’s Australian office market portfolio comprises 23 assets with government, listed and multinational tenants contributing 79% of the total portfolio income. 58% of the portfolio’s leases are set to expire at FY24 or beyond. Occupancy rate of the assets stood at 98.1% with average building age of 15.9 years by value at end-FY20.
COF recently announced its FY20 annual results for the period ended 30 June 2020 with distributions per unit of 17.8 cpu, in line with FY20 guidance.
Highlights from the FY20 results included:
- Funds from operations (FFO) recorded at ~A$85.4 million for FY20.
- Statutory net profit stood at A$23.1 million in FY20.
- Value of net tangible assets recorded at A$2.49 per unit.
- Rent collections fared at nearly 92% during the April-June 2020 period.
The company highlighted a strong balance sheet with A$131.0 million undrawn debt capacity and 34.5% gearing where gearing means total borrowings less cash divided by total assets less cash and goodwill.
COF Fund Manager Grant Nichols highlighted solid performance of the portfolio during the second half of FY20, despite COVID impacts. Backed by continued demand from investors for income producing investments amid the low-interest rate environment, outlook for high-quality office assets remains positive over the medium to long-term, Mr Nichols stated. For FY21, the company expects distribution of 16.5 cents per unit.
On 11 August 2020, COF closed the day’s trade at A$1.970, inching upward by 0.254% from its previous close. COF has a market capitalisation of A$1.01 billion and total outstanding shares of ~514.52 million.
ELMO Software Limited (ASX:ELO)
ELO operates as a cloud-based HR and payroll solutions provider across New Zealand, Australia, and Singapore.
The company recently announced its FY20 annual results for the period ended 30 June 2020 with robust uptick in statutory revenue, annualised recurring revenue (ARR), cash receipts and customer base.
Highlights from the FY20 results included:
- Annualised Recurring Revenue (ARR) recorded at A$55.1 million, increased by 9.7% on previous corresponding period, owing to organic growth experienced from new and existing customers.
- Statutory revenue was up by 25% over previous corresponding period to reach A$50.1 million. 97% of statutory revenue was subscription based and recurring in nature
- Cash receipts reached A$57.5 million, an increase of 27.6% on previous corresponding period
- Customer base also grew to 1,682, demonstrating an increase of 25.4% on previous corresponding period
- Cash balance of A$139.9 million showcased strength in balance sheet
The company announced FY21 guidance with Annualised Recurring Revenue of A$65-70 million, revenue of A$57-61 million and EBITDA of A$4-7 million.
On 11 August 2020, ELO closed the day’s trade at A$5.950, down by 1.49% from its previous close. ELO has a market capitalisation of A$517.38 million and total outstanding shares of ~ 85.66 million.
NEXTDC Limited (ASX:NXT)
NEXTDC Limited provides data centre solutions to businesses across Australia. In February, the company reported its half yearly results for the period ended 31 December 2019 with 13% growth experienced in data centre revenue, which hit A$95.4 million. Underlying EBITDA increased by 21% to reach A$50.9 million. Cash balance was reported at A$196.7 million as on 31 December 2019.
In March, NEXTDC reiterated its FY20 underlying EBITDA guidance in the range of A$100-$105 million.
Post positive half yearly results, the company raised a total of A$863 million with A$672 million raised through fully underwritten institutional placement and A$191 million through a share purchase plan.
On 11 August 2020, NXT closed the day’s trade at A$11.700, down by 2.092%. NXT has a market capitalisation of A$5.45 billion and total outstanding shares of ~455.91 million.
Seven Group Holdings Limited (ASX:SVW)
Seven Group Holdings Limited is a diversified operating company rendering services to the industrial, media and energy sectors.
In April 2020, Seven Group highlighted withdrawal of its FY20 market guidance because of the COVID-19 impact. MD & CEO Ryan Stokes notified that a limited impact of COVID-19 was felt on WesTrac as mining & construction activities remained operative, with YTD revenue moving up by 15% over previous comparable period. The Company highlighted its strong cash position with $803 million of undrawn facilities and cash of which $430 million is committed.
In February, the company had reported its half yearly results for the period ended 31 December 2019 with trading revenue up by 12% to reach A$2.3 billion, led by growth recorded across Industrial Services business. EBIT jumped by 7% to A$418 million, on the back of WesTrac performance. Working capital expenses led to decreased operating cash flow which was recorded at A$148 million.
The investor presentation released in June highlighted continuing strength in most underlying markets through the pandemic, major contract wins and increased parts opportunity leading to growing order book in WesTrac, and A$616 million in cash and existing committed undrawn facilities and A$430 million in USPP.
On 11 August 2020, SVW closed the day’s trade at A$17.450, moving upward by 0.751%. SVW has a market capitalisation of A$5.88 billion and total outstanding shares of ~339.36 million.
There is no investor left unperturbed with the ongoing trade conflicts between US-China and the devastating bushfire in Australia.
Are you wondering if the year 2020 might not have taken the right start? Dividend stocks could be the answer to that question.
As interest rates in Australia are already at record low levels, find out which dividend stocks are viewed as the most attractive investment opportunity in the current scenario in our report.