The S&P/ASX 200 Index (ASX: XJO) shares I'm going to cover in this article have been named by a fund manager called Contact Asset Management as businesses that could perform soundly during any uncertainty in 2023.
Contact's ex-50 fund targets "quality Australian companies" that aren't one of the 50 biggest businesses in Australia. It looks to invest in founder-led businesses and "tomorrow's leaders". At the end of March 2023, it owned 28 stocks, so the fund's managers have a fair amount of conviction with an average position size of more than 3%.
Here are the two ASX 200 shares that Contact picked out:
Kelsian Group Ltd (ASX: KLS)
Over the last year, the Kelsian share price has dropped over 20%. Kelsian describes itself as Australia's largest land and marine transport service provider and tourism operator, with established operations in London and Singapore.
The fund manager noted the recent acquisition of All Aboard America! Holdings, which it described as a US-based bus business providing "contract and charter coach passenger services." The cost of this was almost A$500 million for the ASX 200 share.
Contact said that the transaction "opens the door for significant growth in the US". It noted that All Aboard America! Holdings is the fourth largest motorcoach operator in the US with 1,069 vehicles.
The fund manager pointed out that the Kelsian Australian bus segment has around 3,000 buses. However, while the US market is large (over $30 billion according to Contact), it's a fragmented market.
Contact noted that the business has a "high degree of recurring revenue and solid earnings before interest, tax, depreciation and amortisation (EBITDA) margins of 25%." The fund manager also pointed out that the majority of the management team, including the founders, continue to remain with the business.
Charter Hall Group (ASX: CHC)
Over the past year, the Charter Hall share price has dropped 26%. Charter Hall is a property fund manager which manages a property portfolio spread across around 1,700 "high-quality properties, spanning everything from industrial properties, retail centres and premium office buildings".
The ASX 200 share also owns 50% of the listed shares fund manager Paradice Investment Management.
Group funds under management (FUM) is now $88 billion when adding the property FUM and shares FUM together.
Contact noted the recent negative sentiment about the commercial real estate sector after the recent bank issues in the US. The fund manager also pointed out the "air of negativity on the outlook for office building valuations."
The fund manager said:
We believe that Charter Hall will be better placed than peers, given its portfolio is higher-quality and its balance sheet is robust. Its revenue stream is more resilient than peers from the fees generated on funds management.
