The share market lifted higher last week with the start of the new financial year, hitting a 3-week high. The technology sector drove gains, with Afterpay Ltd (ASX: APT) hitting new heights. The S&P/All Technology Index (ASX: XTX) gained 7.7% over the week, following the NASDAQ which gained close to 5%. The All Technology Index is now up more than 90% from its March low, while the ASX 200 is up a comparably meagre 33%.
Better than expected economic data is driving continued gains. The American labour market added 4.8 million new jobs in June, lowering the unemployment rate from May's 13.3% to 11.1%. This has renewed market optimism that the worst of the coronavirus crisis is behind us.
Here we take a look at last week's best performing ASX shares.
Afterpay Ltd (ASX: APT)
The Afterpay share price rose 18.4% last week to reach $67.50 a share. Afterpay has been one of the best performing ASX shares since the March correction, gaining 658% from its $8.90 low. Demand for Afterpay's buy now, pay later service has continued to grow throughout the pandemic, with the company reaching 1 million UK customers in June and 5 million US customers in May. The UK and US are key growth markets for Afterpay, which already boasts 3.2 million active customers in Australia and New Zealand.
Australian investors are not the only ones favouring Afterpay – in May, Chinese tech conglomerate Tencent Holdings Limited became a substantial holder. In the market announcement detailing the news, Anthony Eisen and Nick Molnar, co-founders of Afterpay, stated: "Tencent's investment provides us with the opportunity to learn from one of the world's most successful digital platform businesses."
The investment provides a valuable opportunity for Afterpay to collaborate with Tencent in areas such as technology and future payment options on Afterpay's platform.
Nearmap Ltd (ASX: NEA)
The Nearmap share price gained 17.5% last week to close the week at $2.49. Nearmap captures and manages aerial images of urban and regional areas in New Zealand, Australia, and the US. These images are then sold as a subscription service to businesses and governments. Images can be used by local governments to monitor tree coverage, by infrastructure companies to plan projects, and by insurance companies to assess claims.
Nearmap did not see a material impact on trading conditions as a result of the coronavirus crisis. Nonetheless, steps were taken to preserve cash and maximise future flexibility without the need for additional capital. Measures were implemented to save approximately 30% of operating and capital costs, with the intention for the company to be cash flow break even by the end of FY20.
In May Nearmap reported annualised contract value of over $102 million, with full year guidance of $103–$107 million. Sales activity levels have remained strong in the period following the onset of coronavirus and the company has continued to grow its portfolio month-on-month across key industry segments.
NextDC Ltd (ASX: NXT)
The NextDC share price climbed 14.6% last week to finish the week at $11.10. The data centre operator joined the S&P/ASX 100 Index (ASX: XTO) in the latest quarterly rebalance with its market capitalisation now above $5 billion. The share price was boosted on Wednesday when NextDC announced an increase in contracted commitments at its NSW data centre facilities. Contracted commitments increased by around 4MW to more than 36MW. In the announcement, CEO and Managing Director Craig Scroggie commented that "the demand for our data centre services continues to accelerate and exceed our expectations."
In May, NextDC announced contracted commitments at its Victorian data centre facilities had increased by approximately 6MW to more than 27MW. NextDC undertook a $672 million capital raising in April, with funding used to ensure momentum in the company's growth agenda. A new data centre is to be built in Sydney, with additional initiatives including adding capacity at existing data centres and new data centre site acquisitions.
Domain Holdings Australia Ltd (ASX: DHG)
The Domain share price rose 14.3% last week to close the week at $3.60, although there was no news out of the online real estate listings business. The company saw modest gains in revenue in the March quarter, with digital revenue up 3% and total revenue increasing 1%. In April, new residential listing volumes declined in the high 20% range as a result of COVID-19. Domain took action by agreeing covenant waivers with its banks and entering a new $80 million debt facility. The facility served to strengthen Domain's liquidity position while a voluntary program aiming to reduce staff costs by 20% was implemented.
Staff were given the option to receive a proportion of their salary over the 6 months from April in share rights or to reduce working hours. The plan was supported by employees with the majority opting to take a percentage of salary in rights. The housing market has felt the impact of coronavirus, with prices softening in June, however signs of recovery were also present with listings increasing. Investors may be gambling on Domain for a swift recovery in the housing market.
Collins Foods Ltd (ASX: CKF)
The Collins Foods share price climbed 13.1% last week to finish the week at $9.38. The price increase coincided with the release of its annual results, which showed strong earnings growth despite the impacts of COVID-19. Revenue increased 8.9% to $981.7 million and profits by 5.1% to $47.3 million. In Australia, same store sales growth was 3.5% over the full year and 2.3% in the second half despite the impacts of COVID-19.
Across Collins Foods' Australian network, 137 restaurants now offer delivery, a channel that continues to generate strong growth. Click and Collect and website traffic continue to increase. Combined with delivery and drive thru, this provides a contactless way for customers to access KFC during the pandemic. Nine new stores were opened during the year, with an additional 16 major remodels completed.
