Last week ended on a low note with the S&P/ASX 200 (ASX: XJO) falling 5% on Friday. Fear of missing out gave way to caution as investors questioned the impact of COVID-19 on profits.
Economic indicators show the global economy shrinking at an alarming pace, with US GDP declining 4.8% in the March quarter. US unemployment claims have passed 30 million since shutdowns began. In Australia it is estimated close to a million people have lost jobs since the start of the pandemic.
Companies, too, are beginning to feel the pain. Last week Australia and New Zealand Banking Group Ltd (ASX: ANZ) saw profits drop 51% as a result of provisions for losses associated with COVID-19. National Australia Bank Limited (ASX: NAB) slashed its interim dividend by more than 60% as cash earnings took a dive.
The share market rallied hard in April on hopes advanced economies would reopen quickly. The April performance was the best month on record since 1988. But on 1 May things took a turn – the fall in the S&P/ASX 200 on Friday erased more than half of April’s 8.8% gains. We take a look at the 5 ASX shares that gained the most last week.
Corporate Travel Management Limited (ASX: CTD)
The Corporate Travel Management share price ended the week up 38.4% at $12.57. Corporate Travel Management was an early victim of the coronavirus pandemic and saw shares fall nearly 80% from a January high of $22.15 to a low of $4.70 in March.
Investors are moving back into Corporate Travel Management as low coronavirus infection rates indicate a potential easing of domestic travel restrictions. Prior to the pandemic more than half of Corporate Travel Management’s total transaction value was domestic in nature.
Corporate Travel Management is one of the few companies in its sector who have not tapped shareholders for capital support during the pandemic. In March the company outlined its strong liquidity position and stated it had no need to raise equity.
In the current environment, Corporate Travel Management benefits from its lack of retail footprint, with a high proportion of the cost base variable. The company has undertaken a round of cost reductions of at least $10 million per month effective from the end of March.
AP Eagers Limited (ASX: APE)
AP Eagers shares gained 31.7% last week and finished the week at $4.65. Before Friday’s 9.53% fall in the share price, AP Eagers’ shares were trading at $5.16.
On Thursday morning the company announced its landlords had agreed to waive or defer 50% of its lease commitments over the next three months. AP Eagers dealerships have remained operational throughout the pandemic, but have suffered from a lack of foot traffic.
The company has undertaken a wave of cost cutting in response to the economic shock caused by the coronavirus pandemic. Approximately 1,200 roles have been let go, reducing employee costs by around $6 million per month. Non-executive directors will forego director fees and senior executives have agreed to a 50% reduction in remuneration packages.
AP Eagers is actively reviewing and optimising its dealership portfolio. Engagement continues with landlords. To date, a combination of waivers and deferrals of over 50% of the company’s lease commitments over the next three months has been agreed upon.
Operational initiatives have been implemented to preserve liquidity including a review of all marketing and advertising and a freeze on non-essential capital expenditure. AP Eagers has $270 million of cash and undrawn corporate debt facilities available. A further $122 million in OEM working capital facilities brings available liquidity to $392 million.
Ooh!Media Limited (ASX: OML)
The Ooh!Media share price closed last week up 29.2% at 99.5 cents. Ooh!Media was hit hard in the market downturn. The outdoor advertising company saw its shares fall from above $3 early this year to below 60 cents in March.
At the end of March Ooh!Media launched a $167 million equity raising to shore up its liquidity. Proceeds of the raise were used to repay debt. Cost control measures were introduced identifying $20 million – $30 million in savings.
Last week, Ooh!Media shares spiked on speculation it could be a takeover target. Rival list media company HT&E Ltd (ASX: HT1) took a 4.2% stake in Ooh!Media in April. HT&E is in a stronger financial position than many in the media sector with $111 million in cash and $250 million in undrawn debt as at 31 December.
Ooh!Media said the acquisition of its shares by other media companies underlined the value of its assets. Ooh!Media told the ASX it had not corresponded with HT&E and regarded its share purchase as “totally opportunistic”.
Nearmap Ltd (ASX: NEA)
The Nearmap share price was up 24.9% last week to $1.48. The company has seen shares rise since its recent positive update. In the update, Nearmap confirmed it was on track to achieve its guidance for FY20 and unveiled cost cutting measures.
Nearmap says it has not seen a material impact on current trading conditions due to coronavirus. Nonetheless, cost management initiatives have been deployed to preserve cash and maintain a strong balance sheet. Proposed measures equate to an approximate 30% saving in operating and capital costs.
Employee remuneration has been reduced by 20% for six months effective 1 May. Permanent headcount is being reduced by the equivalent of 10% of the Company’s cost base. Nearmap will continue to invest in growth initiatives such as the commercialisation of Artificial Intelligence and roof geometry content.
Nearmap intends to be cash flow break even by the end of FY20. Its cost management initiatives will allow the company to maintain capital flexibility and strengthen the balance sheet.
IOOF Holdings Limited (ASX: IFL)
IOOF shares closed last week up 22.9% at $4.18. The IOOF share price surged more than 14% on Thursday after it revealed its funds under management, advice, and administration (FUMA) increased more than 30% in the three months to March.
FUMA grew to $195.6 billion at 31 March, an increase of 34.2% or $49.8 billion compared to 31 December 2019. The total was boosted by IOOF’s acquisition of ANZ’s pensions and investments business in January which added $77 billion to FUMA.
Market values of assets were impacted by the coronavirus pandemic which caused a $26 billion or 11.7% reduction in total asset values. This is lower than generally observed reductions in equity markets, with the S&P/ASX 200 falling 24% over the same period.
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Motley Fool contributor Kate O'Brien has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Corporate Travel Management Limited and Nearmap Ltd. The Motley Fool Australia has recommended oOh!Media Ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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