The post coronavirus rally came to a halt last week as the S&P/ASX 200 (ASX: XJO) fell 2.5%, finishing the week at 5,847.8. The shortened trading week started positively, following the US market higher on Tuesday. But gains were erased later in the week as the US Federal Reserve Chair warned economic recovery could take significant time.
The coronavirus pandemic took the US from the lowest unemployment rate in 50 years to the highest in 90 years over just 2 months. In Australia, the unemployment rate hit 6.2% last month, above the 5.9% jobless peak during the Global Financial Crisis.
Fears of a second wave of infections both at home and in the United States caused investors to take a bearish stance. Travel shares were hit hard with Webjet Limited (ASX: WEB) shares falling 12%, Flight Centre Travel Group Ltd (ASX: FLT) shares down 7.1%, and Corporate Travel Management Ltd (ASX: CTD) shares down 4.4%.
Bank shares were also in the firing line following their strong May rally, with all 4 major banks losing ground. Investors retreated to safe haven in gold shares which recorded modest gains. Below we’ll take a look at the 5 best performing ASX shares with the top share price gains last week.
Shares in IPH rose 6.6% to $7.61, making it one of the best performing ASX shares for the week. This followed the announcement that subsidiary AJ Park would acquire New Zealand intellectual property firm, Baldwins.
IPH’s services include the protection, commercialization, enforcement, and management of intellectual property. IPH was the first intellectual property firm to list on the ASX in 2014. The share price has more than tripled since the IPO and it’s become the leading IP services firm in the Asia Pacific region.
The Baldwins acquisition will give the merged businesses greater depth. IPH will focus on quality rather than quantity when it comes to acquisitions. The acquisition should add around $2 million to annual EBITDA, positively impacting enterprise value.
TPG Telecom shares rose 3.9% last week to finish the week at $8.20. The company announced a special dividend, expected to be between 49 cents and 52 cents per share. Although, this is subject to its proposed merger proceeding.
TPG plans to merge with Vodafone via a scheme of arrangement. Its shareholders are due to vote on the scheme on 24 June. The merger will combine complementary network infrastructure and is expected to generate cost and capital expenditure synergies.
Vodafone CEO Inaki Berroeta said:
“Through its increased strength and scale, the merger is expected to deliver stronger returns to shareholders than either business could achieve on a standalone basis.”
Under the scheme, Vodafone will acquire 100% of TPG shares. Following completion, Vodafone shareholders will own 50.1% of the merged group and TPG shareholders 49.9%. If TPG shareholders vote for the scheme it will become effective on 29 June.
Mineral Resources Limited (ASX: MIN)
Also among the best performing ASX shares last week were Mineral Resources. Shares in the company rose 3.8% to close the week at $20.44. The company shared no news to prompt the price increase, but it may benefit from the strong rise in iron ore prices.
Mineral Resources provides mining services to clients throughout Western Australia and the Northern Territory. It operates mining sites in the Pilbara and Goldfields regions and ships product through Utah Point and Esperance. Its iron ore assets comprise known deposits and prospective targets across the Pilbara and Yilgarn regions.
In the quarter containing March, Mineral Resources produced 3.4 million wet metric tonnes of iron ore, a 28% increase over the prior corresponding period. The mining services business performed strongly with second-half mining services EBITDA expected to be similar to the first half ($172 million).
Coca-Cola Amatil Ltd (ASX: CCL)
Coca-Cola Amatil shares gained 3.7% last week to finish the week at $9.14. Nonetheless, shares remain well down from their February peak of over $13. The beverage company’s peak trading times of Easter, ANZAC Day, and Ramadan were adversely impacted by the April lockdown measures. The April volume of beverages sold was down 33%.
Widespread outlet closures and restricted trading impacted margins and immediate consumption channels, with volume transitioning to lower margin channels. The adverse impact on earnings and cash flow has been partially mitigated by tightened cost management and reduced capital expenditure.
Trade improved marginally in May thanks to easing in restrictions with volumes in the first 3 weeks down 26% on the prior corresponding period. Coca-Cola gained market share across Australia, Indonesia, and New Zealand over the lockdown period.
Managing Director Alison Watkins said:
“We are confident that our strong balance sheet, ample liquidity, robust cash flows, and solid credit ratings place us in a strong position financially and operationally to trade through this period and emerge a stronger and better business.”
Newcrest Mining Limited (ASX: NCM)
Newcrest Mining shares rose 3.6% last week to reach $30.09 on Friday. The gold miner benefitted from the flight to safe-haven assets in the latter part of the week. Newcrest released an exploration update last week revealing strong drilling results at the Havieron and Red Chris Projects.
CEO Sandeep Biswas said,
“We are excited by the drilling results at Havieron and Red Chris. At Havieron we have returned our best drill result to date and with the step out drilling result we see real potential to further expand this orebody. Getting underground is now the priority and we continue to progress the work to commence decline development by the end of this calendar year or early 2021.”
Newcrest recently completed its $200 million share purchase plan following a $1 billion institutional placement in April. Newcrest will use these funds to ensure the strength of its balance sheet and fund future growth options. The company’s FY20 guidance has not been impacted by COVID-19, likely part of the reason why it was among the best performing ASX shares last week. The company expects to produce 2,100 – 2,200koz of gold along with 140 – 145kt of copper during the financial year.
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Motley Fool contributor Kate O’Brien has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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