The below commentary is based mainly on director trades, our share selection criteria and monitoring stocks we own and on our watchlist.

 

The below commentary is not stock buy or sell recommendations. Sharp Investor owns ASX listed stocks: ACR, ARL, ALQ, CDX, CDXO, CGO, CYP, DHG, EVN, EXR, FBR, FID, FRI, GGG, GOR, IRI, MGX, MNY, OZL, PRO, SBM, SF1, SFL, SRG, SXE


Director Buying

There has been higher than normal director buying of stocks on-market throughout the current coronavirus crash. Monitoring this can help decide regarding which ASX shares we may want to add to or investigate further. The best ASX shares to buy may be ones you already own and know well. A lot of share selection metrics are distorted right now due to the market plunge so director buying  can provide valuable insights at present.

 

Integrated Research Limited (ASX: IRI) is a global provider of performance management software for critical IT infrastructure, payments and communications ecosystems. The company earns over 95% of its revenue outside Australia – mainly in USD, so stands to benefit from the weak AUD.

 

Two directors have bought since the crash and in addition to two others over the last six months:

OZ Minerals (ASX: OZL) is a gold and copper miner and that will benefit from a weak AUD and has seen directors taking advantage of the current depressed price.

 

Director trades over the last six months:

Date: 23 March 2020


Iron Ore

Iron ore miner Fortescue Metals (ASX: FMG) has seen directors buying in the last few weeks.

 

We own iron ore miner Mount Gibson Iron (ASX: MGX), which has also held up well.

Date: 23 March 2020


Money3

Money3 (ASX: MNY) is an automotive lender and personal loan provider that has been sold down hard as investors anticipate a possible increase in loan defaults and decrease in new loans. Fears are exacerbated as Money3 lends to borrowers that may be excluded from getting a loan with other lenders, such as the big banks.

 

Directors have been buying up shares in Money3 following a sharp decrease in the price . Any good news suggesting the economic outlook may be less severe than predicted would most likely see the share price rise. Given the current economic climate we will monitor for the time being.

 

An update on the 23rd of March shows a cash position of $46m and debt facilities of $40m. Debt facilities were recently drawn down to fund growth but do not mature until December 2022. MNY expects earnings for the nine months ending 31 March 2020 to be approximately $23 million, but has not provided FY20 guidance due to current uncertain economic conditions.

Date: 22 March 2020


Director Buying

Director buying during the crash for growing small cap wealth management firm Fiducian Group (ASX: FID):

Fiducian Group weathered the Royal Commission into misconduct in the Banking, Superannuation and Financial Services Industry, which concluded in February 2019, far better than larger wealth managers IOOF Holdings Limited (ASX: IFL) and AMP Limited (ASX: AMP).

Date: 21 March 2020


Southern Cross Electrical Engineering

Southern Cross Electrical Engineering Ltd (ASX: SXE) is an electrical, instrumentation, communication and maintenance services company.

 

SXE announced on the 9th of March 20, that its subsidiary Heyday signed a contract with CPB Contractors, which is part of Cimic Group to design and construct the electrical services associated with Sydney Metro’s Pitt Street Station integrated development.

The value for the contract is circa $40m. Sydney Metro is Australia’s biggest public transport project.

Recent projects won in 2019/20:

  • 06 Feb 20 – Resources – Contract to work on Rio Tinto’s refinery site on the Grove Peninsula. Valued at approximately $18 million.
  • 20 Dec 19 – Resources- Electrical and instrumental work at the Kemerton Lithium processing plant. Approximately value $65 million.
  • 13 Aug 19 – Multiple projects with aggregate value of $35 million in the commercial, data centre and energy sectors.
  • 17 Jun 19 – Multiple projects with an aggregate value of $25 million in the social and transport infrastructure sectors.
  • 20 May 19 – Multiple awards aggregating over $30m in the commercial, telecommunications and resources sectors.

Stats:

 


Director Buying

Mount Gibson Iron Limited (ASX: MGX) is an iron ore miner.

 

The below chart shows insider buys and sells by directors recently for MGX. Latest director buy of $520,052 worth of shares, was on the 26th of February for $0.6998. Buys are represented by green dots and red dots are sells.

 

 

 


Announcement

Ardea Resources Ltd (ASX: ARL) is a copper and gold explorer.

 

Drilling results announced on the 26/27th of February showed significant gold intercepts near the surface at both the Mulga Plum and Big Four Gold projects.

Announcement extract:

Ardea’s Managing Director, Andrew Penkethman, said: “Ardea is highly encouraged by these first-pass drill results from Big Four. The fact that all planned holes intersected significant gold mineralisation confirms the geological model. Mineralisation is still open at depth and a possible fault off-set structural repetition has been modeled along strike to the north and will now be tested to define the extent of this mineralised system.Ardea will continue to test the prospectivity of its large Eastern Goldfields land holding for gold and nickel sulphides, in parallel to de-risking the nickel-cobalt resources within the broader Kalgoorlie Nickel Project.”

 


Announcement

Finbar Group Limited (ASX: FRI) is an Western Australian apartment developer.

 

Finbar reported a net profit after tax of $6.64m for the first half of financial year 2020, which is an improvement on the same period last year of $4.75m (224% increase). The result was boosted largely by a return to net positive value of the Karratha and East Perth investment properties and the sale of completed stock and settlements at stage 1 of the Palmyra East project.

The company finished the reporting period with $31.2 m in cash and has paid back $12m in bank facilities.

 


Announcement

Southern Cross Electrical Engineering Ltd (ASX: SXE) is an electrical, instrumentation, communication and maintenance services company.

 

Half-year ending 31 Dec 19 results:

  • Record half year revenue of $230.3m up 27% on PCP
  • EBITDA of $10.9m up 21%
  • EBIT of $8.4m up 22% and
  • NPAT of $5.5m up 24% on PCP due to continuing growth in infrastructure and commercial activity.
  • Balance sheet remains strong with total cash of $53.3m
  • No debt
  • No interim dividend declared,as SXE is holding cash to pursue acquisitions
  • Historically an electrical contractor, but has a strategy to diversify into commercial,infrastructure, defense, telecommunications, industrial, energy and utilities

 


Results

Money3 Corporation Limited (ASX: MNY) – 1H FY20 Results

 

Money3 is involved in the provision of finance specialising in the delivery of secured automotive loans as well as secured and unsecured personal loans.

 

 

H1 FY20 results announcement- 17/2/2020:

 

For 1H FY20, Money3 reported strong growth against the prior corresponding period:

 

  • 55.0% increase in revenue to $62.7 million;
  • 36.9% increase in EBITDA to $30.5 million;
  • 56.4% increase in Normalised EBITDA to $30.5 million;
  • Statutory NPAT of $17.7 million, with $15.7 million from continuing operations;
  • 58.8% increase in loan originations to $138.3 million;
  • 44.9% in cash collection to $134.5 million;
  • 48.8% growth in gross loan book to $426.7 million; and
  • Declared a fully franked 5 cents interim dividend payable on 20 April 2020.

 

Mr Scott Baldwin, Managing Director of Money3, said: “With the transformation of Money3 into an automotive finance company, investors will be able to see the remarkable growth of the core business, which is originating in excess $1.0m per business day in auto loans. Over the last five years the automotive division has produced compound average growth of over 25% p.a. and, with the acquisition of Go Car Finance in New Zealand and expansion of products offered in the Australian business, we are confident of maintaining this growth trend into the future. Our business in New Zealand has had an outstanding growth in gross loan book over the first half of 2020, growing the loan book over 50% since acquisition. Pleasingly, the growth has been achieved while maintaining the cost base of the business by leveraging operations in Australia. We anticipate gross receivables in New Zealand will exceed $100 million in 2020.”

 

 


Multiple director buys

Service Stream Limited (ASX: SSM) – Director buying

 

Three different directors bought Service Stream shares after the share price fell follow the release of 1HFY20 results.

 

 

 

 

 


Finbar Group Limited (ASX: FRI) – ASX announcement

 

The share price of residential apartment developer, Finbar Group (ASX: FRI) has been moving up since announcing they received approval for the company’s Civic Heart development on the 4th of February.

The project will have two towers of 39 and 22 storeys each consisting mainly of residential apartments. There will also be 25 ground floor commercial tenancies.

The project has an estimated end value of $365 million and the company has already received 4,700 enquiries about it.

 

Managing director Darren Pateman commented:

“This news has come at a good time for our business and for the WA

economy. We have recently sold out of South Perth stock and are very keen to

bring this flagship project to a market which is showing very positive signs of both

sales rate and price recovery,”

 

Disclosure: I own

 


Decmil Group Limited (ASX: DCG) – Director buying

 

Decmil offers a diversified range of services to the resources and infrastructure industries throughout Australia and New Zealand.

Two directors have bought decent bundles of shares ($50k and $27k) and fund manager Thorney International bought more shares after the price plunged following trading updates. Nonetheless, I will leave this on the watch list for the time being and monitor. There is usually no rush to buy after big price declines.