Corporate world is facing detrimental consequences at the backdrop of increasing uncertainty sparked by COVID-19 implications. Consequently, the Australian Government and businesses are taking all the required measures to prevent the transmission of coronavirus and to maintain the liquidity in an increasingly volatile and uncertain time.
In light of the ongoing ambiguity of duration and impact of the COVID-19 pandemic that has infected 334,981 people and claimed lives of more than 14,600 individuals, globally, as per the latest figures from the World Health Organization, many companies have announced earnings guidance withdrawal for the financial year 2020 and market updates pertaining to business operations.
Such updates highlight the downturn that the world is currently witnessing, in addition to the possibility of a further near-term impact on operations, as coronavirus outbreak-affected regions declare quarantine causing market disruptions.
Interesting Read: COVID-19 Driven Market Crash: Should You Buy or Sell Now?
On Tuesday, 24 March 2020, the Australian share market opened higher bouncing by more than 2%. At the end of trading session, the benchmark index S&P/ASX 200 was up more than 189 points or 4% to close at 4,735.7.
Let’s discuss some ASX-listed stocks with recent guidance withdrawals.
IVE Group Limited (ASX:IGL)
Australia’s leading holistic marketing company, IVE Group Limited (ASX:IGL) has announced withdrawal of the financial year 2020 EBITDA guidance and cancellation of interim dividend of 8.6 cents per share ($12.7 million) that was previously announced to the market on 26 February 2020.
The move has been attributed to the unprecedented uncertainty surrounding the ongoing impact and duration of the COVID-19 pandemic. The Company highlighted that all the forecast capital expenses worth $25-30 million on catalogue collation automation is on hold with only the necessary expenses to incur until there is greater certainty.
Taking these precautionary actions reflect IVE Group’s desire to maintain strong liquidity in an increasingly volatile and uncertain time.
It was further informed that IVE Group is well-positioned to deliver its services to customers with its duplicate operations & capacity, if required to ensure business continuity across key segments, along with a robust supply chain and existing inventory levels providing additional flexibility.
At the end of February 2020, IVE held $29 million cash on hand, while undrawn committed credit lines amounted to $18 million and net debt including the Salmat/Reach Media acquisition(s) on 1 January 2020 stood at $174.0 million. The net trade debtors surpass trade creditors & accruals by circa $30 million.
Link Administration Holdings Limited (ASX: LNK)
Technology solutions provider, Link Administration Holdings Limited (ASX: LNK) also provided update on the impact of COVID-19 pandemic on its business operations and actions. The Company has implemented its response plan to ensure safety and well-being of its employees, clients and other stakeholders and support operations across all business units amid COVID-19 in view of the severe and unprecedented challenges that COVID-19 and market volatility poses.
With about 80 per cent of revenue recurring in nature, its resilient and defensive earnings profile will underpin the operating cash flow during this time of market impulsiveness. However, market volatility has impacted Corporate Markets, Link Fund Solutions and some other businesses of LNK.
Owing to the unpredictable situation where the global policy response from governments seems to be escalating, revenue forecasting remains challenging. Given that, Link Group announced guidance withdrawal for the fiscal year 2020.
The Company’s liquidity position is appropriately capitalised with adequate undrawn and committed credit facilities with debt serviceability & leverage comfortably within existing bank covenants. Link Group continues to take additional actions to preserve cash while implementing a number of initiatives to reduce expenditure.
At the end of February 2020, the Company had cash in hand of $126 million with $773 million in net debt.
Cedar Woods Properties Limited (ASX: CWP)
Engaged in the investment of property and development activities in Australia, Cedar Woods Properties Limited (ASX: CWP) also provided a market update recently in light of the COVID-19 pandemic generated ambiguity.
The Company has taken proactive measures across the business to alleviate the impact of the pandemic against the long-term prospects of CWP and to safeguard its staff, customers & shareholders and guarantee the smooth running of its property developments.
Due to the uncertainty caused by COVID-19, Cedar Woods informed that it is unable to confirm earnings guidance, while developments are currently on track. Further, the Company reported a strong balance sheet, low gearing and more than $80 million in corporate finance facility headroom. The management has agreed to suspend the BSP (Bonus Share Plan) and DRP (Dividend Reinvestment Plan) for the interim dividend for the year ending 30 June 2020, to be paid on 24 April 2020.
A.P. Eagers Limited (ASX: APE)
Automotive retail group, A.P. Eagers Limited (ASX: APE) also announced, on 20 March 2020, reduction in the amount of fully franked final dividend (declared on 27 February 2020) from 22.5 cents per share to 11.25 cents per share amid the ongoing uncertainty due to COVID-19 pandemic. The dividend payment date and record date of 20 April 2020 and 1 April 2020, respectively, remains unchanged.
Considering the existing market disruptions, the Company has implemented below outlined changes to its remuneration arrangements for directors and senior executives.
- With immediate effect, non-executive directors to waive off their full board fees. Further review to be done when current market conditions are better understood.
- Martin Ward, Managing Director, to forego all short-term and long-term incentives and reduce his base salary, resulting in a 46% reduction in remuneration.
- No new equity incentive plans for 2020 by the Company’s senior executives.
Let us now have a look on the stock performance of these ASX-listed players, as on 24 March 2020.
- IVE Group Limited (ASX:IGL)- The stock of IGL zoomed by more than 11% to settle at $0.300 on 24 March 2020, with nearly 148.21 million outstanding shares. With a market capitalisation of almost $40.02 million, the stock had a 52-weeks high and low price of $2.560 and $0.285, respectively. The P/E ratio of IGL stock was noted at 1.6x, with an annual dividend yield of 60.37%.
- Link Administration Holdings Limited (ASX: LNK)- The stock of LNK closed the day’s trade at $2.880, inching upward by 6.667% from its last close. With its market capitalisation of about $1.43 billion and approximately 530.83 million outstanding shares, the stock had 52-weeks high and low price at approximately $7.870 and $2.70, respectively. The P/E ratio of LNK stock was noted at 8.970x, with an annual dividend yield of 7.04%.
- Cedar Woods Properties Limited (ASX: CWP)-The stock of CWP settled at $3.280, up by 9.333% from its previous close, with nearly 80.45 million outstanding shares. With a market capitalisation of almost $241.34 million, the stock had a 52-weeks high and low price of $8.660 and $2.950, respectively. The P/E ratio of CWP stock was noted at 8.570x, with an annual dividend yield of 8.67%.
- A.P. Eagers Limited (ASX: APE)-The stock of APE closed the day’s trade at $3.110, up 1.967% from its last close. With its market capitalisation of about $783.65 million, ~256.93 million outstanding shares and annual dividend yield of 8.28%, the stock had 52-weeks high and low price at approximately $14.49 and $2.940, respectively.
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