Could these 2 COVID-hit ASX shares be worth investing in? Those businesses are Audinate Group Ltd (ASX:AD8) and EML Payments Ltd (ASX:EML).
The post Are these 2 COVID-hit ASX shares worth buying? appeared first on Motley Fool Australia. –
There are some ASX shares that have been hit hard by COVID-19.
Whilst some have recovered from that initial decline, like Bapcor Ltd (ASX: BAP) and Adairs Ltd (ASX: ADH), there are others that are still lower than the pre-COVID-19 share price. Are they worth buying?
Here are two examples:
Audinate Group Ltd (ASX: AD8)
The Audinate share price is still down 15% from where it was in mid-January 2020.
Audinate offers the Dante system. Audinate says that Dante replaces point-to-point audio and video connections with easy-to-use, scalable, flexible networking. Dante is used by hundreds of manufacturers in thousands of professional products.
The Motley Fool Share Adviser service recently shared its thoughts after the ASX share decided to do a capital raising: “Audinate has not had the greatest time recently. Given that a lot of its customers are linked to large public gatherings — the exact type of thing governments are trying to avoid during the pandemic — there was bound to be a negative hit. However, our recommendation on this company was always one formed through a long-term view. Audinate’s Dante protocol remains the undisputed leader in the digital A/V market with more than 8x the adoption of its nearest competitor. With Audinate expecting to use the bulk of the capital it raises to invest into manufacturing and research & development, it appears that Audinate is preparing to squash its peers once and for all.”
The ASX share recently released a trading update as part of its AGM. It said that there has been a steady improvement in trading conditions since May. It said that there’s good momentum in corporate conferencing and higher education, but there are challenging conditions in live sound and large events. The sales backlog is/was similar to the pre-COVID-19 level. It generated US$5.2 million of revenue and AU$0.3 million of earnings before interest, tax, depreciation and amortisation (EBITDA) in the first quarter of FY21.
Is the Audinate share price a buy? The Motley Fool Share Adviser service still rates it as a buy and at the time of the capital raising said: “We continue to see a big future for Audinate”.
EML Payments Ltd (ASX: EML)
The EML Payments share price is still down 38% from the level it was at in February 2020.
EML is a business used to be largely focused on processing the payments made from gift cards in shopping centres. This is a high-margin business, but it has been affected by COVID-19 with closed shopping centres.
A few months ago the Motley Fool Extreme Opportunities service explained that there were some positives for the ASX share, despite the COVID-19 impacts:
“For the first time in the company’s history, the General Purpose Reloadable (GPR) segment now accounts for over 56% of revenue and is a source of more repeat transactions. With the completed acquisition of Prepaid Financial Services in Ireland, we think EML is rapidly becoming a diversified payments ‘platform’ with banking-as-a-service technology that could set the company up to be a key enabler for many fintech companies around the world.”
It was also pointed out that EML’s ControlPay platform is gaining traction with buy now, pay later companies like Zip Co Ltd (ASX: Z1P) which allows Zip customers to shop anywhere, rather than being limited to just merchants that have signed up to Zip.
The ASX share is also launching new services with new partners.
The company recently gave a trading update for the first quarter of FY21. It said that first quarter revenue was $40.6 million, up 75% over the prior corresponding period and it was 20% higher than the fourth quarter of FY20. It also said that its EBITDA of $10 million was up 215% compared to the prior corresponding period and up 69% compared to the fourth quarter of FY20.
The Motley Fool Extreme Opportunities still rates the EML Payments share price as a buy.
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Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends EML Payments. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of AUDINATEGL FPO and ZIPCOLTD FPO. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends ADAIRS FPO. The Motley Fool Australia owns shares of and has recommended Bapcor. The Motley Fool Australia has recommended ADAIRS FPO, AUDINATEGL FPO, and EML Payments. 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.