The S&P/ASX 200 Index (ASX: XJO) presented a challenging market in October, with the index wiping much of its monthly gains in the latter half of the month. Quarterly reporting season allowed many ASX 200 tech shares to continue their share price momentum following strong updates.
Here are the 3 best-performing ASX 200 tech shares in October.
1. Link Administration Holdings Ltd (ASX: LNK)
The Link share price increased 27% in October, driven by the non-binding indicative proposal the company received from Pacific Equity Partners. The offer would acquire 100% of the shares in Link Group at an indicative cash price of $5.20 per share.
The current view from Link is that the proposal materially undermines the company and is not in the best interests of the shareholders. The company views itself as possessing leading positions in the markets in which it operates in, making early progress in its transformation plan and an expected recovery in market-driven revenue as economic activity improves. While no hard decision has been made, there is no certainty that such a proposal will eventuate.
2. Dicker Data Ltd (ASX: DDR)
The Dicker Data share price soared 23% following a strong quarterly update for the quarter ended 30 September. The update outlined a 14.9% increase in total revenue, year-to-date (YTD), to $1,481.5 million and a 28.3% increase in net profit before tax YTD to $60.8 million. The company highlighted it had been experiencing over and above forecasted revenue growth rates in the first half of the year, off the back of a significant mobilisation to remote working solutions. It sees growth stabilising for the second half of the year to expected levels.
Looking ahead, the greatest opportunity for Dicker Data over the next quarter is supporting businesses with their return-to-work strategies and business continuity plans in a post-COVID-19 environment. It also commented it has experienced increased quoting activity and the resumption of larger infrastructure projects that were previously put on hold.
The company also points to the rollout of 5G connectivity as a "tremendous opportunity" with all its hardware and software vendors. Furthermore, the company also intends to develop and invest in a new distribution centre at Captain Cook Drive, Kurnell NSW. The new distribution centre represents an increase in capacity of almost 80%. The large-scale expansion will pave the way for substantial inventory growth and technology portfolio diversification to meet the emerging needs of the Australian market.
3. Hub24 Ltd (ASX: HUB)
The Hub24 share price has been relentless, with a 250% run since its March lows and a 28% increase in October. From a fundamental perspective, the company continues to go from strength to strength, with a strong quarterly update and strategic acquisitions announced in October.
The company posted a record September quarter, with $19 billion funds under administration (FUA), up 32% on the prior corresponding period. The company experienced strong inflows driven by new and existing licensee channels across self-licensed and boutique advisers, brokers and large national accounts. Even with its significant FUA, HUB24 only has a 2.1% market share in the investment and superannuation administration sector, so still has much room to grow.
On 28 October, the company announced three strategic transactions and a $60 million capital raising. These transactions included:
- The proposed acquisition of investment platform provider Xplore Wealth Ltd (ASX: XPL) for $60 million
- The acquisition of Ord Minnett's non-custody Portfolio Administration and Reporting Service for $10.5 million upfront cash consideration
- Proposed subscription for new shares in Easton Investment Ltd (ASX: EAS) of $14 million which will result in a shareholding of up to 40% of Easton.
