Clime Capital Ltd (ASX: CAM) is a listed investment company (LIC) that runs a portfolio that targets both large ASX shares and small ASX shares.
Some of the largest positions in Clime’s portfolio at the end of November 2020 were: APN Property Group Ltd. (ASX: APD), Austal Limited (ASX: ASB), City Chic Collective Ltd (ASX: CCX), Macquarie Telecom Group Ltd. (ASX: MAQ) and Nick Scali Limited (ASX: NCK).
Clime explained what happened with its portfolio about some of its November movements, and the current thinking behind each idea:
National Australia Bank Ltd (ASX: NAB)
The fund manager said that the approximately 25% return of NAB shares in November reflected both the earnings result and positive developments on the economic front.
The increasing certainty of effective vaccines in 2021 has improved the economic prospects according to the fund manager. This may mean that businesses and consumers are likely to be better placed to meet their debt obligations and consequently impairment charges for the major banks will be lower than earlier feared. This was confirmed in the earnings result, with a lower charge in the second half and commentary that portfolios are performing better than expected. The banks also did better than expected with capital adequacy, which is partly tied to loan performance.
Banks could emerge from COVID-19 with excess capital, though lack of credit growth and net interest margin pressure could be key challenges.
Mach7 Technologies Ltd (ASX: M7T)
This ASX share develops data management solutions for healthcare providers to own, access and share patient data.
Clime pointed out that Mach7 won a $5.3 million, 7-year contract with Trinity Health to provide its eUnity Enterprise Viewer software at multiple facilities within Trinity’s 92 hospitals across the US.
The fund manager believes Mach7 is well positioned to provide the full suite of software to Trinity. In the event the ASX share wins the remaining tenders, Clime believes it will be of significant financial and strategic value. Trinity is the fifth largest hospital system in the US and would represent Mach7’s first major reference site for its end-to-end medical imaging software solution.
Jumbo Interactive Ltd (ASX: JIN)
The lottery reseller was a strong performer in November after the announcement of a 10-year agreement signed with Lotterywest in WA to provide a white label version of its lottery management software as a service solution. Clime said that this deal, whilst important, will help Jumbo win other government contracts, particularly in the $22 billion US state government lottery market.
Jumbo also announced recently that the UK gambling commission had issued a remote gambling software license to enable Jumbo to help UK operators. Its SaaS offering could be a potential future growth driver.
RPMGlobal Holdings Ltd (ASX: RUL)
RPMGlobal describes itself as a leader in mining industry software, consulting and training. The ASX share’s mining software integrates the planning, design and scheduling, with maintenance and execution, and simulation and costings.
Clime said that its pipeline is growing due to its mining operations software. The near-term outlook has vastly improved on the positive vaccine news. RPMGlobal’s managing director Richard Matthews recently said his views are more upbeat than when the company released its annual report in late August.
Electro Optic Systems Hldg Ltd (ASX: EOS)
This ASX share offers remotely controlled weapon systems and ancillary products comprised of gimbal mounts, fire control systems and sensor units. It also has high capacity, secure and reliable terrestrial and space communications combining high availability microwave and free space optics technologies.
It was a strong performer in November giving further details about its new space communications division. But the 2020 year was a year of delays to offshore customers, delaying cash receipts.
EOS is aiming to launch its SpaceLink constellation by mid-2024 which is initially targeting defence and government customers. SpaceLink will initially provide an increase of 10 times of bandwidth compared to prevailing microwave-based technology. The increase will rise to 100 times after including EOS optical laser technology in later constellations.
However, the company recently withdrew its earnings before interest and tax guidance of $20 million to $30 million for 2020 financial year to 30 December 2020 because of delays to December deliveries due to air freight bottlenecks.