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ASX 200 rebalance: Why these four stocks were welcomed to the index, and another four were dumped
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The ASX 200 quarterly rebalance for September saw four stocks added to the index, while another four were removed.
| Action | Code | Name | Price now $ | YTD Change |
|---|---|---|---|---|
| Added | LIC | Lifestyle Communities | 22.63 | +78% |
| Added | PNI | Pinnacle Investment | 16.44 | +127% |
| Added | SLK | Sealink Travel | 8.85 | +31% |
| Added | TYR | Tyro Payments | 3.75 | +11.6% |
| Removed | GEM | G8 Education | 1.00 | -16.7% |
| Removed | NWH | NRW Holdings | 1.85 | -37.5% |
| Removed | NXL | Nuix | 2.67 | -69% |
| Removed | WGX | Westgold Resources | 1.76 | -35% |
The Aussie benchmark index is rebalanced on the third Friday of each March, June, September, and December – and is based on the movement in market caps of each company.
Investment bank UBS says that being included or excluded is a big deal, since it dictates what big fund managers with mandates can or can not invest in.
The bank also says that stocks being included in the ASX 200 index have historically and subsequently outperformed those excluded.
The rebalance will take effect on Monday, September 20th.
Stocks added
Lifestyle Communities (ASX:LIC)
The retiree-focused real estate developer had an exceptional year, with profits more than doubling. The company reported a full year FY21 profit of $91.1m, compared to $42.8m in FY20.
The business’ focus remains on the Melbourne and Geelong’s growth corridors. Melbourne for example, has the strategic benefit of flat topography which increases site choice.
Lifestyle Communities has also committed to achieve net zero operational carbon emissions by no later than 2035.
Pinnacle Asset Management (ASX:PNI)
The investment firm delivered a net profit after tax (NPAT) of $67m, up 108% from $32.2 million in FY20.
This was underpinned by significant growth in both aggregate funds under management, and net inflows from outside of Australia during FY21.
The firm managed to increase its funds under management (FUM) to $89.4 billion, up by $18.9 billion or 27% from December 2020.
It’s anticipating further growth in FY22 on the back of the larger FUM asset base.
Sealink Travel (ASX:SLK)
The land and marine tourism and public transport service provider had a surprisingly good year in FY21.
Revenues increased by 88% to $1.17bn in FY21 compared to FY20, as it capitalised on the heightened domestic tourism demand.
Three bus contracts in Adelaide plus additional contracts in trams secured the company’s revenues for the year.
Looking ahead, Sealink says it will focus on its Marine & Tourism segment to leverage domestic tourism.
It also sees significant bus contract pipelines in Australia and internationally, including Sydney, Melbourne, Darwin and Singapore.
Tyro Payments (ASX:TYR)
The payments tech company has narrowed its loss and delivered $25.5 billion of transaction values in FY21, compared to the IPO forecast of $17.5 billion.
Tyro has also shrugged off major problems encountered in January, when its terminal systems were shut down for over a week due to connectivity issues.
Looking ahead, the company says challenges posed by COVID-19 will continue, however tailwinds for the company include the recent alliance with Bendigo Bank where the bank’s 18,000 merchants have been integrated with Tyro’s terminals.
Share prices today:
Stocks removed
G8 Education (ASX:GEM)
The childcare centre operator generated revenues of $421.5 million for FY21, which was 6% lower than its pre COVID-19 figures in 2019.
G8 has managed to divest away its non-performing assets during the year, with more to come this financial year.
Problems encountered during the year include irregularities in wage payments to employees.
An initial payment of around $17 million in back-pay has been made in July to employees, with a second payment due in the coming months.
NRW Holdings (ASX:NWH)
The mining and industrial services contractor increased its revenue by 11.5% to $2.3 billion, in line with guidance.
Staff retention was a major issue in FY21, with NRW saying the situation was beyond anything ever seen previously by the mining services sector.
Looking ahead however, NRW says it has a pipeline of contracts capable of being awarded in the next 12 months to the tune of $14.5 billion.
Nuix Limited (ASX:NXL)
The data forensics company had a troubled year, with two downgrades a swirl of scandals.
The company generated $176.1m in revenue for FY21, and made a loss of $1.6m vs a profit of $18.8m a year ago.
During the year, Nuix transitioned from module-based subscription contracts to consumption-based contracts.
Essentially, it’s moving from a revenue model where customers pay a fixed price to use as much as they want from the service, into a SaaS model where customers would pay based on usage.
Westgold Resources (ASX:WGX)
The company increased its profit from $34.6m in FY20, to $76.7m in FY21, and paid its maiden dividend.
Westgold’s success in FY21 was driven by higher prices realised for gold sales, with revenue increasing 16% from $492.3m to $571.2m despite ounces sold only rising by 4% from 235,196oz to 245,066oz.
These results have lent credence to the confused frustration of gold bugs who have seen gold companies like Westgold lose 30% of their value (WGX shares touched a high of $2.80 around this time last year) at a time of record profitability for their investments.
Share prices today:
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