- Blue chip companies are fundamentally strong business and generally provide a safe investment option, with stable earnings history, growth prospects, and lower degree of volatility.
- National Australia Bank has raised $1.25 billion under SPP and $3 billion in institutional placement, aiding the bank in managing through a range of possible scenarios related to the pandemic.
- Afterpay, trading at all-time high levels on ASX, has raised $650 million through institutional placement with $150 million to be raised under share purchase plan, partly to expand its business in the international market.
Blue-chip companies usually provide a safe long-term investment opportunity, owing to their operational stability and lower degree of volatility, with such stocks boasting of huge market cap and robust balance sheet. Moreover, amid the current scenario, BNPL players seem to be riding high, backed by customer preference for digital payments and easy buying solutions.
Let’s cast an eye on few companies in the related space that have been buzzing on the Australian stock market.
National Australia Bank Limited (ASX:NAB)
On 10 July 2020, NAB stock closed the day’s trading at $17.860. The stock dripped by almost 28% in six months, while in the last three months, the stock delivered a positive return of 7.98%.
Recently, the bank announced that distribution rate for NAB Capital Notes 2 for the distribution period commencing on and including 7 July 2020 to (not including) 7 October 2020 is 3.5367% per annum, valued at $0.8914 per share. The distribution is due for payment on 7 October 2020.
The Company also announced the issue of subordinated notes worth $215 million on 30 June 2020, pursuant to its US$100 billion global medium-term note programme. The notes have a maturity date of 30 June 2040.
Earlier, on 9 June 2020, NAB issued subordinated notes worth $205 million, with maturity date of 9 June 2035, pursuant to its US$100 billion global medium-term note programme.
Must Read: Is Financial Sector Worth Your Finances
During June 2020, the bank appointed Andrew Irvine with nearly 25-year experience in financial services as Group Executive Business and Private Banking. He is expected to start at the bank on 1 September 2020. According to NAB CEO Ross McEwan, Mr Irvine being an experienced banker and talented leader will play a pivotal role focussed on the bank’s strategic pillars of delivering for customers and colleagues.
On 27 May, NAB announced the results of its share purchase plan, raising $1.25 billion, a significant increase from its previous target of A$500 million, backed by strong support from eligible shareholders.
The bank, which also completed an institutional placement worth $3 billion in April 2020, expected the proceeds raised from institutional placement and share purchase plan to assist NAB in managing through a range of possible scenarios related to the pandemic.
Related: How are the Big 4 Banks Placed?
Commonwealth Bank of Australia (ASX:CBA)
Shares of CBA dropped by almost 14% in six months with a low price recorded at $54.26 on 23 March. As on 10 July, the share price was noted at $70.630, almost up by 12% in last three months. Owing to easing lockdown restrictions, there has been a slight increase in spending momentum, as reflected by CommBank credit and debit card spend data. For the week ended 5 June 2020, spending was reported to be 5% higher on a year-on-year basis, and when compared with 3% in the week ended 29 May.
CBA boasts of a solid balance sheet with a good capital position, despite COVID-19 impacts, and has continued to pay dividend unlike many other banks. A history of dividend pay-out demonstrates stability in the operations.
On 12 June, CBA announced Simon Moutter as an independent, Non-Executive Director, to be effective from 1 September 2020. He holds a deep understanding of business strategy, technology and process effectiveness.
During late-May 2020, CBA issued subordinated notes of $210 million, pursuant to its US$ 70 billion Euro Medium Term Note Programme.
Woodside Petroleum Limited (ASX:WPL)
Stock of Woodside Petroleum, an Australian natural gas producer, fell by more than 41% in the last six months, primarily owing to falling oil demand. Its stock last traded at a price of $21.140 on 10 July 2020.
On 30 April 2020, WPL, in its Annual General Meeting, highlighted that in 2019, underlying net profit after tax was $1.063 billion while reporting net profit after tax was $343 million that reflect an impairment of the Kitman LNG asset. The company also highlighted its business strength with an operating cash flow from the business being $3.3 billion.
WPL announced a final dividend of US 55 cents per share, representing a pay-out ratio of 80% of the underlying profit.
The company, which highlighted to have strong approach towards capital management, had more than $4 billion in cash and liquidity of over $7 billion at end-March. The business had been ensuring continuous provision of natural gas, crucial to the energy supply of Western Australia and its global customers, through the adoption of an operating model.
Moreover, in the first quarter of 2020, the company delivered production of 24.2MMboe, up 12% from the same period a year ago. Revenue for the period was impacted by reduced trading activity and lower realised prices, partly owing to the pandemic.
Afterpay Limited (ASX:APT)
Stock of buy now pay later company, Afterpay, closed the day’s trade at $72.310 on 10 July 2020, up by more than 2500% since its inception and by 154.61% in three months. The robust performance can be primarily attributed to growing traction for its business in the key markets of Australia and New Zealand and exceptional growth from new markets, the US and the UK.
For FY 2020, the company’s active customer count reached 9.9 million, serviced by 55.4k active merchants. Active customer base jumped by 116% on a year-on-year basis, with the US recording 5.6 million and the UK recording 1 million active customers by the end of FY2020. Collaboration with eBay Australia is also fetching the company increasing number of customers.
Interesting Read: Is Retail Landscape changing for good?
On 7 July 2020, the company announced underlying sales of $11.1 billion for FY20, an increase of 112% from FY19. Growth in revenues was backed by increased revenue by 52% from its key markets, Australia and New Zealand. US experienced an uptick of 330% in its business, owing to increase in e-commerce spending by US citizens.
Online sales climbed by 46% in FY20, while in-store volumes increased by 81%. The June quarter 2020 represented Afterpay’s highest quarterly performance with underlying sales recorded at $3.8 billion, a 127% increase over the June quarter in 2019.
The company is also seeking to raise ~$800 million in capital, to invest in existing regions, expedite expansion into new markets, fortify balance sheet, and create the flexibility and capacity to execute on potential M&A opportunities. The company has already raised $650 million through an institutional placement with a $150 million share purchase plan to follow the placement.
Also, Afterpay co-founders, Anthony Eisen and Nicholas Molnar sold 2.05 million shares each, representing 10% of their respective shareholding in the company.