Research Portal

Diversified with 3 Aussies


Stock Pick 

This week we touch base on the recent financials and some developments on 3 Australian companies trading at record highs to see what may be behind the positive sentiment of investors in these stocks.

These three stock picks from different industries have delivered great returns to their investors over the past few years to date: Employment services, pharmaceuticals and financial services.

Telix pharmaceutical (ASX: TLX)

The Telix share price has been tumbling from an all-time high of over AUD 6.00 to just AUD 5.00, which still sets the stock at its highest price range. This comes after the company announced in June 2021 that it would be issuing additional shares, which may have been dilutive to existing shareholders.

2021 Fiscal year (FY21) - The company’s activity in the FY21 report revealed that the Telix’s reserves dropped to AUD 61.42 Million in March 2021 vs AUD 77.95 Million which was held in December 2020. Operation expenditure increased to AUD 17.13 Million. The company has a cash runway of 5 quarters on operations. This is based on the utilization of underlying cash, exclusive on anticipated revenue from approved sales of products.

Outlook - Telix pharmaceutical is set to continue making progress to being a commercial-stage pharmaceutical company. With at least three objectives in place for FY21. These include the Commencement of the international multi-centre, completing the Company’s Phase III ZIRCON trial and lastly launching its prostate cancer PET imaging product, Illuccix.

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Seek Limited (ASX: SEK)

Since its listing, Seek Limited has seen a rise in its stock market value and currently trading at an all-time high.

Seek’s shareholder returns, outperformed the ASX 200 index by 1504.6% since 2005 (Apr 2005 – Feb 2021). Returns within the period were mainly driven by growth from the Australian and New Zealand business (ANZ) and Mergers & Acquisitions (M&A) as well as the product & tech evolution. This is despite the market value setback caused by the global pandemic, which wiped out almost all of the company’s two year gain and sent it back to a 2015 low.

FY21 - Trading at a record high during the First Half of the 2021 Fiscal Year (H1 FY21), Seek recorded revenue of AUD 819.1 million, reflecting a decline in growth of 6% vs the previous corresponding period (PCP). But the company has a track record of generating a strong cash flow and investing capital into opportunities that may contribute highly to the company’s growth.

Seek cash flow for H1 FY20 increased to AUD 258 Million (vs AUD 250 Million pcp). With capex slightly declining AUD 55.4 Million (vs AUD 56.7 Million pcp).

The groups market position remained strong through the intense competition, with variable recovery across the Asian and ANZ regions, with ANZ emerging the strongest amongst the markets.

Seek AP&A and Investment remains among the group's top priorities. Seek investment acts as an investor/business builder to emerging companies, while Seek AP&A focuses on growth opportunities while still having initial economical exposure to the Investments and Zhaopin.

Outlook - The group, according to its FY21 Investors presentation, is well-positioned for long-term value growth. Furthermore seeing significant opportunities for growth in Seek and Seek investments. With the trading momentum that continued into early calendar Year (CY20), Seeks expectations for FY21 have increased.

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Setting another record with double-digit growth in the closing subscribers in the first half of the 2021 fiscal year. Xero’s total subscribers for the second half of the 2021 fiscal year H2 FY21 amounted to a total of 2.74 Million, represented by a +20% year-on-year (YOY) growth.

FY21 - During the FY21 subscribers to drive cloud accounting in the ANZ market, made up of Australia and New Zealand. increased +20% to a total of 1.5 million (Australia 1.12 Million & New Zealand 446k). The ANZ market delivered revenue of NZD 514 million (Australia - NZD 384 Million, +20% YOY & New Zealand - NZD 130 Million, +12% YOY).

Acquisitions in FY21

The company continues to make progress in its acquisitions during FY21 and as per the earnings report these acquisitions include:

  • Waddle - “Invoice lending platform leveraging customers’ accounting data” - Completed on 1 October 2020.
  • Planday - “Workforce management platform for employers and employees” - Competed on 1 April 2021.
  • Tickstar - “E-invoicing technology providing connections to the Peppol global e-invoicing network” - Completed on 1 April 2021.
  • Xeros strategic priorities are mainly driving cloud accounting, growing small business platforms and build for global scale and innovation.

Outlook - As outlined in the FY21 Report, Xero will continue to focus on growing its global small business platform and maintain a preference for reinvesting cash generated, subject to investment criteria and market conditions, to drive long-term shareholder value. The acquisition of Planday is expected to contribute at least three percentage points of additional operations revenue growth in FY22.

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Sources – EasyResearch, Companies Investor portals, ASX announcements, Seek Limited, Telix Pharmaceutical. Xero Limited. 

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