The ASX share market went through plenty of pain last year. But, some of the hardest-hit names could be the ones that rebound the strongest.
I think it makes sense that ASX shares related to property and ASX tech shares would be impacted by higher interest rates, as it hurts the valuations of ASX growth shares and could impact demand for housing.
However, with confidence now improving about the situation, I think the long-term outlook for the below two ASX shares is very positive, so I'd use this period to jump on these names.
Brickworks Limited (ASX: BKW)
Brickworks is a market leader when it comes to building products in Australia. It sells bricks and paving, roofing, cement, masonry and stone, and specialised building systems. The business is also a brick market leader in the north east of the US.
Plus, excitingly, the business has signed an agreement with Brickability – a "market-leading building products distributor" in the UK. The ten-year supply agreement includes a minimum purchase quantity of 10 million bricks per year, and it expects to build on this over time.
Brickworks recently said that its net property trust assets are expected to exceed $2.2 billion at the end of the FY23 first half. The industrial joint venture trust recently completed an independent revaluation process, resulting in a profit of around $112 million to the ASX share. I think that its future plans for more industrial properties on the land are very promising.
It's benefiting from strong customer rental demand, with "significant" rental growth across its new developments and lease renewals. The property rental growth is outstripping the effect of capitalisation rate expansion because of higher interest rates.
Brickworks is also benefiting from the long-term dividend and asset growth of the investment house Washington H. Soul Pattinson and Co. Ltd (ASX: SOL), which Brickworks owns a large chunk of.
Bailador Technology Investments Ltd (ASX: BTI)
Bailador is a business that describes itself as a growth capital fund that's focused on the IT sector. It aims to provide exposure to a portfolio of IT companies with global addressable markets. Bailador invests in "private technology companies at the expansion stage."
There are a few different characteristics that Bailador typically looks for when investing in technology companies which include: being run by the founders, having been operating for between two to six years, having a "proven business model with attractive unit economics", international revenue generation, a huge market opportunity and the ability to generate repeat revenue.
The Bailador share price has fallen around 20% since the end of August 2022, despite the ASX share having a large amount of cash on the balance sheet as it searches for opportunities.
At the end of December, it had a pre-tax net tangible asset (NTA) value of $1.74. That suggests the Bailador share price is at a 26% discount to this value. It could also pay a grossed-up dividend yield of more than 7.5% at the current values.
I think small technology companies have a very promising future.
