NZX listed Technology stocks Mount up strong amid COVID-19; SCT, SKO, GTK

  • May 07, 2020 04:06 PM NZST
  • Team Kalkine
NZX listed Technology stocks Mount up strong amid COVID-19; SCT, SKO, GTK

Years of unwaveringly intensifying gains were brought to a halt at the end of February, with an alarming plummet brought about by the realisation that coronavirus pandemic was going to knock out almost every economy in the world. Looking at the slowdown in the economy worldwide, what happened to the stock market? The graphs that tracked every individual stock performance flashed like they had been banged with a mallet.

The current market trouble wherein the economies are battling COVID-19, technology sector has been in the spotlight as it drives transformation in all the sectors with new technologies such as Artificial Intelligence, cyber security, cloud computing, etc, which undoubtedly makes the technology stocks attractive in the investor’s portfolio.

Considering New Zealand as a diverse global investor base and any news in the current course of time stimulating a sweet spot in the market brings a glimmer of hope and will boost the morale of the country in terms of economic recovery one such can be seen as follows-

Microsoft to unveil its first data centre in New Zealand

On 6th May 2020, Microsoft Corporation (NASDAQ:MSFT) announced plans to expand its data centre trail with the launch in New Zealand region. This new data centre region will be an extension to its footprint in over 60 other regions testifying the fact that it will enable digital transformation stimulating growth.

This new addition of Microsoft will have its Customers access to Microsoft’s cloud services, including of Microsoft Azure, Microsoft 365, Dynamics 365 and Power Platform, Built-In Trust and Security.

Did you read; How New Zealand Equity Markets Performed on 5th May 2020?

On 6 May 2020, MSFT last traded at USD182.54, up by 0.98% from its last close.

Moving forth, let’s have a look at the three NZX-listed technology stocks which gave a glimmer of hope to the investors during the pandemic:

Scott Technology Limited (NZX:SCT)

SCT is a company specialising in design, manufacture and services automation along with robotic production lines, and processes for various industries in New Zealand and across the globe.

The fast-spreading coronavirus has trembled the corporate world in New Zealand, with a rising number of companies suspending their financial outlooks, same announcement was published by SCT on 20th April 2020 advising its six months interim results at the end of 29th February 2020 will be released by the end of May 2020.

Few key highlights were published from SCT’s measures undertaken to mitigate the impact of COVID-19 and support its staff and businesses through this challenging period which are as follows:

  • All discretionary expenditure was ceased, and capital investment has been put on hold;
  • Some of the team members of the Company are working remotely so that the business continues amid the current crisis induced by coronavirus;
  • SCT has sufficient debt facilities and a supportive banking layout, and majority shareholder, JBS Australia;
  • Revenue is expected to recover post lockdown along with commencement of work;
  • SCT’s FY20 earnings is projected to be materially impacted.

As on 7th May 2020, SCT dividend yield was noted at 4.35% and stock was trading at NZD1.84, at the time of writing.

Serko Limited (NZX:SKO)

SKO is a New Zealand based company with global presence in Australia, China, U.S. specialising in travel and expense technology solution using Zeno, the intelligent technology travel management application using predictive workflows.

In response to outbreak of COVID-19, a lot of countries have imposed numerous restrictions in terms of travel, which has dug a big hole in the travel and tourism sector the most like no other event in several years.

SKO has published its market update recently and highlighted strong cash position prompting stiff cash management which are as follows:

  • Cash at the end of 31 March 2020 was positioned at $42 million;
  • Initiatives taken to reduce cash are moving in the right direction targeting an average cash burn rate of $2 million per month until the end of FY 2021;
  • In the absence of credit facilities, the Company does not seek a need to secure any debt funding;
  • Implementation of a cost reduction program that removed non-essential expenses, Serko had cut down operating expenses for cost of sales and hosting, in the ratio of decreased consumer activity and low transaction volumes.

As on 7th May 2020, SKO was trading at NZD 2.4, increasing 1.69%, at the time of writing. SKO’s market cap stands at NZ$211.44 million.

Gentrack Group Limited (NZX:GTK)

GTK is a New Zealand based company offering crucial software for related services, combining platforms who have in depth market understanding to aid utilities and airports reduce service expenditures to name a few.

A market update was published on 17th March 2020, wherein John Clifford, Executive Chairman, GTK highlighted that the Company had a strong balance sheet, with zero next debt and contractually recurring revenue that would help in sustaining the business at this time of crisis.

Further, the Company withdrew its FY20 earnings guidance due to various factors including to; increase in uncertainty in the current period; and potential impact on the ongoing amid COVID-19 pandemic. Further, as notified in March, the Company appointed James Spence as the CFO, who began his tenure from 1 April.

As on 7th May 2020, GTK’s dividend yield was noted at 5.44% and stock was trading at NZD 1.47, increasing by 1.38%, at the time of writing.

 

 


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