The Graincorp Ltd (ASX: GNC) share price was up as much as 10.9% today after the grain operator announced an after-tax half-year profit of $388 million. It marked a return to profitability for the company which recorded a net loss after tax of $59 million in H1FY19. 

The result reflects a significant repositioning of GrainCorp’s portfolio. During the half year ended 31 March, GrainCorp sold the Australian Bulk Liquid Terminals business and demerged United Malt Group Ltd (ASX: UMG). 

What does GrainCorp do?

GrainCorp is a food ingredients and agribusiness providing services to the grain industry. It is involved in storage and logistics, marketing and processing of grains and oilseeds. Activities are focused on 4 main grains – wheat, barley, canola, and sorghum. 

GrainCorp operates globally, managing grain pools and the import, export, and marketing of grain. It also processes and crushes oilseeds and provides edible oils. The malt business, which produced malt products and brewing inputs, was demerged in March 2020. 

Business performance 

In the half year ending 31 March 2020, each of GrainCorp’s business segments was up substantially on the prior corresponding period. The Agribusiness segment performed well, notwithstanding a third year of drought in Australia. 

Underlying earnings before interest, tax, depreciation and amortisation (EBITDA) was $183 million in the March half and underlying net profit after tax (NPAT) was $55 million. Both were a substantial improvement on the prior period.

While COVID-19 presents challenges, food and agriculture are considered an essential service. GrainCorp plays a role in supporting the food and grain supply chain. Market conditions have improved considerably, with widespread rainfall across eastern Australia providing hope for a larger crop later this year. GrainCorp is well progressed in harvest readiness, including recruitment and training of seasonal workers. 

The company revised its capital structure during the half year to ensure minimal core debt. At the end of March, GrainCorp had zero core net debt. Its 10% minority stake in United Malt was valued at $112 million, providing additional financial flexibility. 

Outlook

GrainCorp is planning for higher grain exports in 2H20 with expectations of a higher crop in FY21. Favourable soil conditions across large parts of eastern Australia has supported widespread planting for the FY21 crop. Oilseed crush margins are expected to remain favourable in the second half due to prevailing canola and meal values. 

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• ASX 200 down 0.9%: Xero posts strong growth & Australian economy loses 594,300 jobs
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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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As a big fan of buy and hold investing, I’ve been looking at how investments in many popular shares have fared if you’d bought in at their IPOs.

I recently looked at payments company Afterpay Ltd (ASX: APT) and biotech giant CSL Limited (ASX: CSL). If you’re interested in seeing how they’ve fared, you can read here and here.

Today I thought I would look at another market darling, electronic design software company Altium Limited (ASX: ALU).

While Altium might seem like it has appeared out of nowhere over the last few years, its IPO was actually a lot further back than you would imagine.

The Altium IPO.

On August 4 1999, Altium, then known as Protel Systems, completed its IPO and its shares were listed on the Australian Stock Exchange. The company raised $30 million at $2.00 per share, with the funds being used to assist in financing its growth strategies.

This means that if you invested $10,000 in Altium at its IPO, you would have ended up with 5,000 shares.

It hasn’t been a smooth ride for the company and its shareholders since the IPO to say the least. In fact, no doubt many early investors gave up on the company and sold off their shares after a series of missteps eventually led to its shares falling as low as 9 cents in 2011.

But those investors that were patient have certainly been rewarded. Thanks to the emergence of the Internet of Things (connected devices) and its award-winning printed circuit board design software, Altium’s shares have not looked back since hitting that low.

Prior to the coronavirus crash, the company’s shares were trading at an all-time high of $42.76. Whereas, today they are changing hands for $35.00. This means that those 5,000 shares you picked up at the IPO are now worth a cool $175,000.

But given its strong long term growth potential, I wouldn’t be selling these shares any time soon. As I mentioned earlier here, I think Altium’s shares could easily double in value again over the next decade.

More reading

• Double your money with these high quality ASX shares
• 3 top ASX 200 shares every investor should buy
• Top brokers name 3 ASX 200 shares to buy right now
• Is the Altium share price a buy?
• ASX 200 drops over 1% at the market close

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of CSL Ltd. The Motley Fool Australia owns shares of AFTERPAY T FPO and Altium. 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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The Australian tech sector is still relatively immature compared to the much larger US tech market. However, a broad range of interesting ASX tech shares is now emerging.

Here are 2 ASX tech shares that I think have strong long-term growth potential, and both of which have a fast-growing international focus.

Bravura Solutions Ltd (ASX: BVS)

Bravura is a locally-based fintech company that provides mission-critical enterprise software solutions to both the wealth management and funds administration industry.

The company has 2 operating segments: wealth management and funds administration. These divisions are supported by software solutions for a range of financial products such as superannuation, life insurance, investment products, and portfolio administration.

Bravura’s portfolio of offerings has been further diversified by 2 recent acquisitions in late 2019: financial planning services software provider Midwinter and software company FinoComp. Midwinter’s tools enable financial advisers to provide more comprehensive face-to-face consultations, while FinoComp adds further software functionality to Bravura’s extensive product range and provides more cross-selling opportunities.

Recurring revenue is high due to the long-term nature of Bravura’s client contracts. In 1H20, recurring revenue increased significantly by 17% to 78% of total revenue, as a growing number of new clients broadened their use of functionality. This high level of recurring revenue provides more predictable future earnings growth and cash flow expectations.

Bravura has also pleasingly not seen a material drop-off in demand during the coronavirus pandemic. The company recently confirmed that its earnings guidance for FY 2020 remains unchanged, expecting net profit after tax growth in the mid-teens excluding the benefits of the 2 recent acquisitions.

I believe Bravura is well-positioned to continue to achieve above-average market growth for a number of years to come, driven by its broadening product set and market-leading position.

Nearmap Ltd (ASX: NEA)

Nearmap is a fast-growing Australian aerial imagery and specialist location data company. It provides geospatial map technology for enterprise and government customers across Australia, New Zealand, the US, and Canada.

The company has seen a downward trend in its share price since mid-2019 due to a number of issues including the loss of a major contract. However, the company now appears to have essentially sorted those issues out and looks to be on track with its expansion plans.

According to a market update in late April, the company pleasingly revealed that its regular sales and activities hadn’t been significantly impacted by the coronavirus crisis.

Nearmap continues to deploy cost management initiatives in order to maintain a strong balance sheet and maximise flexibility without the need to raise additional capital. This includes a 30% reduction in operating and capital costs, and it has the goal of becoming cash flow breakeven by the end of FY 2020. Importantly, this cost reduction is not expected to impact its product expansion strategies.

With regard to its FY 2020 guidance, Nearmap appears to be still on track to obtain annualised contract value in the range of $102 million to $110 million in FY 2020.

More reading

• 30% off: 3 ASX 200 shares to buy on the cheap
• Got $3,000 to invest? Here are 2 fantastic ASX 200 shares to buy right now
• 5 top ASX shares to buy and hold for a decade
• These mid cap ASX shares could be long term market beaters
• How to build your first ASX share portfolio

Phil Harpur owns shares of Nearmap Ltd. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Bravura Solutions Ltd. The Motley Fool Australia owns shares of and has recommended Nearmap Ltd. The Motley Fool Australia has recommended Bravura Solutions Ltd. 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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