ASX share reporting season is into the full swing of things. There were a number of interesting FY20 results this week.
Here are three of my favourite ASX share reports/updates of the week:
Class Ltd (ASX: CL1)
Class impressed the market with its result. I like seeing a business managing to turn around sentiment when it seemed as though Class' SMSF segment may have hit a ceiling.
In FY20 Class reported that operating revenue and other income increased by 15% to $44.1 million and annualised recurring revenue rose by 22% to $46.8 million.
Whilst the bottom line didn't grow, it was the acquisition and FY21 guidance that was particularly exciting.
In FY21 the ASX share is expecting revenue to grow by another 20% to $53 million with an underlying earnings before interest, tax, depreciation and amortisation (EBITDA) margin of more than 40%.
The Smartcorp acquisition seems like a great move, it's a software business which deals with documents and compliance and counts two of the big four accounting firms as clients. Between Smartcorp and NowInfinity, Class will have a 10% market share of that industry.
I think that Class has done well to pivot back to growth. It will have high EBITDA margins with strong recurring revenue.
The Class share price looks more interesting after it dropped back on Friday.
Magellan Financial Group Ltd (ASX: MFG)
Fund manager Magellan reported an impressive result considering all of the market turmoil that occurred in the second half of FY20.
Average funds under management (FUM) rose by 26% to $95.5 million. Net profit after tax (NPAT) rose by 5% and adjusted NPAT grew by 20%. Total dividends paid by Magellan for FY20 increased by 16% to 214.9 cents. It also finished with $925.4 million of net tangible assets at 30 June 2020.
I've been impressed how Magellan has managed to grow year after year since the GFC.
I also like that the ASX share is looking to continually innovate. It's working on a retirement income product for the Australian market. It just obtained a necessary private binding tax ruling from the ATO.
Magellan also revealed the proposed launch of a new series of products.
The new products will use Magellan's investment philosophy and research to offer investors lower cost, more diversified portfolios of high quality companies. The cost will be 0.5% per annum, which is cheaper than its other equity strategies.
Magellan also announced that it would launch a sustainable investment strategy which will include climate change risk considerations.
These new products should help Magellan grow its FUM further over the coming years.
The Magellan share price has risen strongly since March 2020. It's more than doubled since the COVID-19 bottom.
Premier Investments Limited (ASX: PMV)
The final update that I think was really impressive was Premier Investments – the retailer which owns brands like Peter Alexander, Smiggle, Just Jeans and Jay Jays.
It wasn't actually a complete report from the company, just quite a detailed trading update for the second half of FY20.
I was impressed by the ASX share due to its ability to grow profit despite what is happening with COVID-19.
Premier Retail said that whilst global sales were down 18% to $484.2 million, its online sales and earnings before interest and tax (EBIT) rose to deliver record earnings.
Premier Retail's online sales of $123.3 million was up 70% compared to the prior corresponding period and contributed 25.5% of its total sales. The ASX share was pleased to report that online sales deliver a significantly higher EBIT margin compared to the retail store network.
Full year FY20 online sales were up 48.8% to $220.4 million and contributed 18.1% of Premier Retail's total FY20 sales.
Premier Retail now expects FY20 second half EBIT to be up between 9.7% to 11.7% to $58.7 million to $59.7 million. FY20 EBIT is expected to grow by 10.5% to 11% to between $184.8 million to $185.8 million.
The Premier Retail share price has risen about 7.5% since the update. It has recovered strongly since March 2020 as well.
