- The pandemic market crash has led to plummeting share prices of blue chip companies like Westpac Banking, National Australia Bank & Technology One Limited.
- As a measure to uplift digital experience, Westpac Bank has been deploying new technology across its branches for enhanced speed, improved employee, and customer experience
- National Australia Bank has been issuing subordinates notes in past few months and declared dividend amid COVID-19
- Technology One Limited experienced increase in revenue and net profit in its H1 FY20
Blue chip companies have recently been trading significantly lower than a year before. Despite bearish sentiment in the market, blue chip companies demonstrate strong operational stability backed by strong cash position and recurring dividend payout and are often deemed an investor favorite. Let us cast an eye on three blue chip stocks that have been ASX’s favourite, at least till the market crashed.
Westpac Banking Corporation (ASX:WBC)
Westpac shares have delivered 9.59% in last three months. YTD returns have been in the negative territory and stand at – 26.29 % as on 14 July 2020. On 15 July 2020, WBC quoted $ 17.98, up 0.84 % relative to its last close.
The company recently appointed Michael Rowland as Chief Financial Officer (CFO), subject to regulatory approval. Mr Rowland was previously associated with KPMG, ANZ and ING Australia. The company is appreciative and relying on his contribution towards making Westpac stronger, based on his experience in disciplined financial management, business restructuring, delivering sustainable productivity and revenue programs.
Besides this, to enable faster internet speed, reduced IT costs, improved technology capabilities and high levels of security, Westpac plans to roll out a new technology – Software Defined Wide Area Networks (SD-WAN), across Australian branches. As part of an infrastructure transformation program, the new technology deployment is expected to enable efficiencies whilst improving employee and customer experience.
The Bank has also extended free online technology education sessions in Victoria for those impacted by COVID-19 stage three restrictions, for additional weeks of school holidays. Online classes would be offered in collaboration with STEM partner Code Camp, to enable development of technology skills among children and prepare them for a career in technology.
National Australia Bank Limited (ASX:NAB)
National Australia Bank shares have delivered 9.43% in last three months. YTD returns have been in the negative territory and stand at – 26.33 % as on 14 July 2020. On 15 July 2020, NAB quoted $18.18, up 0.44% relative to its last close.
Recently, the bank announced a distribution rate of 3.5367% per annum valued at $0.8914 per share for NAB Capital Notes 2 due for payment on 7 October 2020. The distribution is for the period (from and including 7 July 2020 to 7 October 2020 but not including 7 October).
On 30 June 2020, NAB announced issue of $215 million worth subordinated notes with a maturity date of 30 June 2040, pursuant to its US$100 billion global medium-term note programme. Earlier, on 9 June 2020, NAB had issued $205 million subordinated notes, maturing on 9 June 2035, pursuant to the US$100 billion global medium-term note programme.
In May, NAB closed a $1.25 SPP at issue price of $14.5 per share. Proceeds from this and reduced interim dividend of $ 0.30 will help the bank to operate amid a weak economy.
In April, the Bank completed a fully underwritten institutional placement of $3 billion by issuing ~ 212 million new fully paid ordinary shares at $14.15 per share to domestic and offshore institutional investors. Shares issued under the Placement were likely to have equal rank to existing shares but would not be entitled for 2020 interim dividend. NAB also communicated that eligible shareholders will get a chance to take part in SPP for ~ $30k of new NAB shares.
Technology One Limited (ASX:TNE)
Technology One shares have delivered 0.36% in last three months. YTD returns stand at 1.82 % as on 14 July 2020. On 15 July 2020, TNE quoted $8.47, up 0.83% relative to its last close.
TNE deems itself to be Australia’s largest enterprise SaaS provider and has offices in six nations. The company is renowned for its global SaaS ERP solution.
On 13 July 2020, the Company retorted to enquiries put forward based on GMT Research’s claims pertaining to its audited results. TNE was astonished that GMT Research published a report based on limited information, by spending merely half an hour with the Company. Moreover, GMT did not confirm the accuracy of the report with TNE. TNE affirmed that claims made by GMT are “false and misleading”. The Company claims its Audit Accounts to be genuine and stands 100% behind audited accounts.
TNE is likely to refer the matter to ASIC (Australian Securities and Investment Commission) while being dedicated towards its guidance.
On 19 May 2020, the Company reported its 1H F20 results for the period ending 31 March 2020 with NPAT growing 6% to $ 25.9 million backed by strong demand for its Global SaaS ERP Solution. Revenue grew by 7% to $138.3 million over pcp. An organic growth of 33% was noted in the SaaS annual recurring revenue (ARR) that reached $110.2 million. SaaS fees witnesses a rise of 36% to reach $51.053 million over pcp. The company generated cash flow of $9.9 million during 1H20, an increase of over 100% over pcp.
TNE’s FY20 outlook
- The Company anticipates robust growth in its SaaS ARR to continue and to be up over 30%.
- TNE estimated a profit growth in the range of 8% to 12% for FY20.
- The Company intends to keep doubling its size in every 4 to 5 years with profit margin to increase to 35%, driven by economies of scale from their single instance global SaaS ERP solution.
- In FY2024, the company expects its Total Annual Recurring Revenues to rise by more than $500 million
TNE also declared a dividend of 3.47 cents per share (60% franked), a 10% increase over pcp.
(Note: All currency in AUD, unless otherwise specified)