Investors often seek opportunities in stocks, which are turning around. These are the shares of companies, which have faced challenges in the past and after having overcome these, show potential for recovery and profitability. Two such ASX stocks are
Audinate Group Limited (ASX: AD8)
On 19 August 2024, Audinate Group Limited (ASX: AD8) reported its FY24 results, showcasing strong performance, with revenue soaring by 28.4% to $91.48 million, up from $69.7 million in FY23. The gross profit increased by 33.2%, reaching $44.5 million, and the gross margin improved to 74.3% from 72.1%. This growth was driven by a 32.6% rise in software sales and a 26.4% increase in chips, cards, and modules (CCM) sales. EBITDA surged 85% to A$20.4 million, while net profit before tax climbed to $12.1 million from just $1.4 million in the previous year. AD8 also recorded a positive operating cash flow of $25.6 million, marking a 105.6% increase, and a notable free cash flow of $6.9 million, reversing the negative cash flow seen in FY23. With $117.0 million in cash and term deposits and no debt, the company is well-capitalized for future growth.
The company holds a 9% share of the US$2 billion audio networking market. It is also expanding into the US$780 million video networking segment and the US$890 million pro-AV software services market.
With a substantial marketing database nearing 750,000 AV professionals and a 22% increase in unique website visitors to 1.5 million, the company is poised to capture additional market share. The growth in the number of OEMs developing their first Dante product, rising from 138 to 161, reflects increasing confidence in Audinate's technology and its relevance in the industry.
Dante technology continues to gain traction, achieving a remarkable 12 times market penetration compared to its nearest competitor based on product catalog size. The number of OEMs shipping Dante products has grown to 460, up from 400 in FY23, resulting in a total of 4,176 Dante-enabled products. This expanding ecosystem is vital for sustaining revenue streams and driving long-term success.
With the growing adoption of software-based Dante implementations, Audinate Group Limited anticipates further margin improvement, potentially driving the overall margin towards 80%.
Audinate's expanding product lineup, including the new Dante Pro S1 and Dante Director, is set to boost customer engagement and operational efficiency. The company's agility in responding to post-COVID-19 market changes is reflected in its reduced sales order backlog and shorter lead times. Coupled with the widespread adoption of Dante technology, Audinate is well-positioned to benefit from the AV industry's digital transformation. The company has a history of revenue growth driven by repeat orders, a strong financial position with significant cash reserves, and a broad intellectual property portfolio.
Lendlease Group (ASX: LLC)
Lendlease Group reported its FY24 results on August 19, 2024, showing an improvement in operating performance. The company maintained a solid liquidity position, with gearing at 21% and $2.2 billion in available liquidity. Lendlease also expects contracted and anticipated cash inflows of $2.4 billion in FY25. Notably, corporate costs were reduced by 13% to $140 million, driven by ongoing cost-saving initiatives.
Lendlease’s investment division underperformed in FY24, but the company delivered solid results in its development and construction segments. Looking ahead, management expects net losses and cash outflows in FY25 and FY26, with a recovery projected in FY27. Progress continues the sale of its UK construction business as part of its capital management efforts. During the year, Lendlease completed $8.2 billion in developments and commenced $1.9 billion in new projects. Significant headway has been made toward the target of recycling $2.8 billion of capital by FY25, with additional cost savings achieved through a more streamlined management structure. These initiatives are expected to support Core Operating Profit After Tax (OPAT) in the range of $275 million to $335 million for FY25.
Lendlease is focusing on strategic investments to strengthen its position as Australia's leading integrated real estate business, complemented by robust international investment management capabilities. Recently, the company secured significant projects, including the $1.3 billion Gurrowa Place at Queen Victoria Market and $0.5 billion luxury residential apartments at 1 Darling Point. To enhance efficiency and reduce risk, Lendlease is simplifying its operations, divesting from lower-return businesses, and recycling capital to invest more effectively in high-return Australian operations.
Source: Company’s Report
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