3 ASX Large-Cap Shares with Sound Long Term Prospects: CSL, Afterpay and Woolworths

3 ASX Large-Cap Shares with Sound Long Term Prospects: CSL, Afterpay and Woolworths

Summary

  • Several businesses have remained resilient during the COVID-19 pandemic and have reported outstanding financial and operational performance.
  • Global biotech leader, CSL Limited had another strong year with growth in financials, despite the backdrop of various challenges.
  • Buy Now Pay Later (BNPL) company, Afterpay Limited has demonstrated substantial potential for growth in emerging markets.
  • Retail giant Woolworths Group Ltd has continued to make good progress and remains well-positioned to adapt to the dynamic environment.

The unprecedented times due to the COVID-19 pandemic have painted a mixed picture for businesses, especially the ones operating globally. The dislocation in the supply chain and the volatility in the markets led to failure of companies to achieve the desired guidance.

However, several large-cap companies on the ASX have reaped significant benefits amid such highly uncertain times. Here, we bring to you three ASX Large-Cap Shares that were resilient during the recent period and have sound long-term prospects.

CSL Limited (ASX:CSL)

Global biotech leader, CSL Limited, has been working at a fast pace to come up with solutions against the pandemic. Along with several other therapeutic programs, the Company has invested significant resources in the rapid development and large-scale manufacture of UQ-CSL V451.

The Company has shown resilience amid the highly volatile and uncertain times dominated by the COVID-19. CSL’s consistent efforts and recent progress notwithstanding the uncertain times have indicated robustness in its operations and overall business.

Financial Performance from 2014 to 2020 (Source: ASX Announcement 19 August 2020)

In FY2020, CSL delivered another strong year with reported net profit after tax of A$2,103 million, up 17% at a constant currency basis and revenue up 9% at a constant currency basis.

Despite the backdrop of complicated and unanticipated challenges put forward due to the COVID-19 pandemic, the Company reported exceptional results during the year.

CSL’s recent progress includes the agreements to manufacture COVID-19 vaccines and a supply agreement for UQ Vaccine with Commonwealth.

Under its Heads of Agreement (HoA) inked with the Australian Government, CSL shall supply 51 million doses of the COVID-19 vaccine candidate of University of Queensland. A separate Heads of Agreement has been signed with AstraZeneca for manufacturing the Oxford University candidate (AZD1222). These agreements are subject to the success of both the clinical trials.  

CSL emphasises on producing a safe and effective vaccine to establish the public’s confidence in the vaccine and still has numerous milestones to achieve. CSL is optimistic that they shall have a vaccine candidate by next year to back the rise of Australia as well as the world out of these ongoing crises.

However, CSL is unable to ascertain financial impact of vaccine development on the Company as it is too early due to the significant risk, effort, expense, and ambiguity related with the progress of these unique vaccines.

CSL Limited recently released a guidance update for FY2021. For details, click here.

CSL share price last quoted at A$299.000 on 16 October 2020, down by 0.662%.

GOOD READ: ASX-Listed CSL & Cochlear: Deploying money is not enough, Strategic policies are equally important

Afterpay Limited (ASX:APT)

Global Buy Now Pay Later (BNPL) player, Afterpay Limited is a technology-driven payments company that is leading innovation in retail by empowering leading retailers to offer a ‘buy now, receive now, pay later’ service. This unique service eliminates the need for the end-customers to move into a usual loan or pay any straightforward fees or interest to APT. The recent times dominated by COVID-19 have put forward an excellent opportunity for APT to grow its users across the globe due to a dramatic shift towards online buying.

For FY20 ended 30 June 2020, the Company reported outstanding performance with continued growth momentum throughout the year, including impressive growth in Underlying Sales ( +112%), Active Customers (+116%), Active Merchants (+72%), Total Income (+103%), and EBITDA (+73%).

Momentum Building Across APT (Source: ASX Announcement 27 August 2020)

APT’s jaw-dropping growth was driven by the rapid penetration in the US and UK markets that have altered the geographic profile of the business. Moreover, the shift away from traditional forms of credit and the significant shift to online spending has drastically benefitted APT’s primarily e-commerce service.

APT has witnessed phenomenal growth over the last couple of years and has a long way to go with significant potential for the product as well as geographical expansion. With changing buying behaviour of the customers across retail platforms, APT has been a net beneficiary from these. In coming times too, this shift shall be a significant driving force for APT.

INTERESTING READ: 3 Favourite ASX IT Stocks as Market Hits 3-Month Low – Afterpay, Xero, and Appen

The Company looks forward to accelerating investment for growth in the coming year with fresh markets tracking in line with ANZ blueprint, and other markets coming online in the next year. APT plans to deploy its resources towards:

  • Continued growth in people resources and optimising its platform.
  • Joining hands with its retail partners by providing for and follow on co-marketing opportunities
  • Combining the market-leadership in current markets
  • Accelerate expansion into fresh markets to benefit from early mover advantage.

APT share price last quoted at A$96.720, up by 1.810%, on 16 October 2020.

Woolworths Group Ltd (ASX:WOW)

Australia based retail giant and a reputed brand in the supermarket segment, Woolworths Group Ltd has a widespread business across Australia. The supermarket has gained strong online presence, especially during the pandemic.

The business has stayed resilient throughout various unfavourable events drought, bushfires, the White Island tragedy in New Zealand and unrest in Hong Kong across communities WOW operates in, like drought, bushfires, the turmoil in Hong Kong and the White Island misfortune in New Zealand.

Undoubtedly, the Company’s financial performance was materially impacted by the COVID-19, especially in H2 where EBIT growth was distorted due to the pandemic. However, the consistent efforts of the Company and its people have helped WOW grow into a resilient and agile business.

FY20 Group Highlights (Source: ASX Announcement 28 June 2020)

Moreover, WOW’s business has demonstrated its resilience during the year. The Company has made good progress on several fronts, which is reflected in the strong balance sheet as well as its resilient financial performance.

Even in such challenging situations, the Company declared a final dividend (fully franked) of 48 cps. Presently, the Company’s outlook for the year ahead remains uncertain amid the high ambiguity surrounding the COVID-19.

However, WOW is optimistic about its positioning to adapt to the uncertain environment that may arise in future with varying gravity.  

On 16 October 2020, the share price of WOW ended flat at A$39.200.

DO READ: Record Supermarket Sales Give Woolworths Confidence to Walk Out of A$4 billion

 

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.

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