The stocks normally rise on the basis of some news impact, but those reaching new highs usually depict the underlying strength. Two such blue chip stocks are
Qantas Airways Limited (ASX: QAN)
Qantas Group's latest market update reveals positive first-half trading trends for both Qantas and Jetstar, with stable demand across their services. Jetstar Domestic is experiencing higher-than-expected revenue due to strong travel interest, while Qantas Domestic sees improvements in load factors, as well as "reasonable" corporate travel demand. The airline anticipates a 3-5% rise in domestic revenue per available seat kilometer (RASK) but expects a decline of 7-10% in international RASK due to market capacity adjustments. Qantas Loyalty is tracking well - especially since the launch of Classic Plus Flight Rewards - and we expect that to drive an underlying increase in earnings before interest and tax for the year.
Qantas is thereby investing in enhancing the fleet and upgrading its operations to benefit the customer experience. They are set to receive their fifth Airbus A220, with plans for 20 new passenger aircraft this financial year. These modern planes will not only provide a more comfortable flying experience but also reduce carbon emissions significantly. The investment in new aircraft supports Qantas' focus on sustainable tourism and operational efficiency, particularly in markets like Tasmania, where nearly all flights will soon be on new A220s.
The company is also committed to its workforce, announcing a $28 million thank-you payment to approximately 27,000 employees. Qantas aims to further strengthen its team by hiring an additional 2,000 staff and enhancing training programs, including new ground facilities and scholarships to encourage diversity in aviation careers. The service level should be enhanced through leadership training and rebuilt with customers by remembering the commitment of frontline employees during the hardest times.
In terms of environmental challenges, Qantas is investing in sustainable aviation fuel initiatives and is working with the government and industry to boost local supply. Climate change is identified as a long-term concern, so they are pushing towards ambitious sustainability targets. Despite market fluctuations, Qantas maintains a strong business foundation, with stable performance across its brands and growing confidence in its long-term strategy, including the promising results from their non-stop flights from Perth to Europe.
Technology One (ASX: TNE)
Technology One reported robust half-year results for H1 FY24, achieving Annual Recurring Revenue (ARR) growth of 21% and profit growth of 17%, demonstrating the effectiveness of its SaaS transition strategy. As one of the few global companies to successfully transition from on-premises software to a SaaS model, Technology One’s ERP solution now serves nearly all its clients on a SaaS platform. This shift has strengthened customer relationships, as evidenced by its strong Net Revenue Retention (NRR) rate of 117%, with customers consistently adopting additional products and modules within the SaaS ERP ecosystem. Technology One remains on target to surpass its ARR milestone of $500 million by FY25, an ambition it accelerated in its FY23 results update. The company's global SaaS ERP platform offers a comprehensive, mission-critical solution tailored for large enterprises, enabling operations on any device, anytime, and anywhere. This approach has resonated strongly with clients seeking greater flexibility, innovation, and simplified technological management. Technology One’s strategy of “Power of One”—offering a single vendor solution with a unified user experience—differentiates it within the ERP market, where best-in-class NRR is between 115% and 120%.
Growth in the first half was organic, marked by strategic wins in Australia and New Zealand, especially within the public sector. Notable clients include Newcastle City Council and New Plymouth District Council, while the Education sector saw strong momentum with TAFE WA and Solent University Southampton. This client acquisition strategy has bolstered ARR, supporting the company’s goal to achieve an NRR target of 115% for the full year, which underscores Technology One’s strategy, solidifying customer loyalty and long-term contracts.
The UK market continues to emerge as a vital growth driver, with ARR from new UK sales up 40% YoY in H1 FY24, emphasizing the successful implementation of its “SaaS Plus” strategy. SaaS Plus offers an advanced value proposition, focusing on expedited deployment timeframes that have garnered positive market response. With an accelerating sales pipeline and strong market momentum, the UK is set to play a pivotal role in Technology One’s international expansion strategy. As demand rises, the company remains committed to a talent-driven approach, investing in skill acquisition and new growth initiatives, including SaaS Plus, Digital Experience Platform (DXP), App Builder, and further UK business expansion.
Looking ahead, Technology One projects FY24 net profit before tax growth between 12% and 16%, driven by ongoing SaaS adoption, product innovation, and strong customer retention. The company anticipates steady growth opportunities over the coming years, with clear visibility into its pipeline, particularly in SaaS Plus and UK operations. With a firm strategic focus and consistent execution, Technology One remains positioned for substantial long-term value creation for its shareholders.
(Source: Company’s Report)
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