The 2 ASX shares in this article have been beaten up over the past year. One is Altium Limited (ASX:ALU) Are they turnaround ideas?
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There are some ASX shares that soared in 2020. Other ones have been beaten up over the past 12 months.
Here are two businesses that have fallen by around 20% over the past year:
Altium Limited (ASX: ALU)
The Altium share price has dropped by around 21% over the past 12 months.
The electronic PCB software business implemented temporarily lower prices at the end of FY20 and longer payment terms to ensure that its client base and market share would keep rising.
The ASX share’s management has a plan for the tech company to become the global leader of its industry during this decade. When it reaches market leadership that is likely to mean that the company will be making around US$500 million of revenue.
However, Altium recently gave a trading update for the six months to 31 December 2020 that included continuing COVID-19 effects on its business and clients.
Altium said that its total first half revenue was down 3% to US$89.6 million because of COVID-19 conditions in the US and Europe, as well as challenging economic conditions in China for licence compliance activities.
The company said that the Americas underperformed with a decline of 10% in revenue for the half as the unprecedented levels of COVID-19 negatively impacted the sales performance.
NEXUS recorded a decline in growth of 14% for the half due to the timing of deals with a significant pipeline in the second half.
Altium said China underperformed with a decline of 15% in revenue for the half as licence compliance activities have become more challenging at the low end of the market due to uncertain economic conditions after COVID-19 in China.
However, Altium did share some positives. It said that board and systems revenue was stronger in the second quarter relative to the first quarter. The first quarter revenue was down 11% year on year, but improved to be flat year on year in the second quarter. This was notwithstanding the significant restructuring undertaken in Altium’s sales organisation to enable the company’s pivot to the cloud.
Electronic manufacturing has rebounded with Octopart benefiting from this recovery and achieving 19% revenue growth for the half. Management said this was a positive leading indicator for PCB design growth that should drive Altium Designer sales in the second half.
There was also strong growth in term-based licences over the first half, up 166%.
At the current Altium share price, it’s valued at 38X FY23’s estimated earnings according to Commsec.
APA Group (ASX: APA)
The APA share price has fallen by 17% over the last 12 months
This ASX share owns a large network of 15,000km of natural gas pipelines around Australia with a presence in every mainland state and the Northern Territory. It also owns or has interests in gas storage facilities, gas-fired power stations and renewable energy generation (wind and solar farms). APA owns, or manages and operates, a portfolio of assets and delivers half the nation’s natural gas usage.
The Morrison Government has indicated that gas could play an important part in the recovery from the COVID-19 recession.
APA recently announced that it would be building a new pipeline in Western Australia that would link up with its existing pipeline in the state. The infrastructure ASX share believes that building this pipeline could cause some local resource companies to ask for a connection for cheap energy.
Once completed, the project will unlock more operating cashflow for APA, enabling it to pay a higher distribution. The business has grown its distribution for shareholders every year for a decade and a half.
It currently offers investors a distribution yield of 5.3%.
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Tristan Harrison owns shares of Altium. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Altium. The Motley Fool Australia owns shares of APA Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
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