Post-COVID winners: The ASX players looking for more growth in 2021

A key theme for investors in 2021 is how to assess which of the post-COVID industry changes were temporary, and which are permanent.

From ecommerce and cybersecurity, to fintech, online gaming, telehealth and changing population demographics — multiple sectors underwent structural shifts.

As a result, some big investment gains have been locked in already. But as the dust settles, can ASX small caps benefit from the permanent trends?

For example, speaking about the post-COVID ecommerce boom last year, tech expert Tim Knapton told Stockhead that those growth rates aren’t going to revert to pre-COVID levels.

“I like ecommerce a lot because currently around 20 per cent of shopping globally is done online,” Knapton said.

“But if you look feasibly at what could be done, it could be more like 80 per cent. So there’s still a long way to go.”

It’s a view shared Kin Wai Lau, chairman of games development company iCandy Interactive (ASX:ICI) who’s now gauging how to capitalise on post-COVID gaming trends.

“I spend a lot of time analysing it and I think ultimately the pandemic response has accelerated digital behaviour of consumers by a good five years,” he said.

Gaming was an obvious candidate for growth in the immediate fallout from COVID-19, given the mobility restrictions. But Lau said it also prompted a shift in strategy in terms of games development.

“We’ve created an environment where there’s more incentive to play as a group rather than as a single player,” he said.

“It’s important to think about human connectivity. Along with graphics and gameplay, people want to play with their friends. And globally those types of behaviour are very obvious. So the social element of gaming has gone up by far as well.”

While BNPL led the pack in pandemic bull market of 2020, a number of ASX players are looking to capitalise on new trends across B2B payments, lending and investing.

For Credit Intelligence (ASX:CI1) executive chairman Jimmie Wong, that means executing on a multi-channel strategy across sectors.

Speaking with Stockhead, Wong said CI1’s focus areas include the B2B lending market in Australia, following its acquisition of YOZO — an SME-focused BNPL platform developed at the University of Technology, Sydney (UTS).

While business lending in Australia is on the rise, Wong said CI1 is also poised to benefit from its counter-cyclical debt restructuring business in its other core market of Hong Kong.

“We have a long history in Hong Kong, with good revenues in that market,” he said.

And as the economy tries to recover from the pandemic, “we expect corporate bankruptcies in Hong Kong to be at least 30pc higher”.

“It’s a difficult situation but the COVID-19 problem is good for CI1, because in a sense we are a business that can handle that problem.”

On the fintech lending side, Wong said the sector is seeing strong growth across the Asia-Pacific region.

“There’s a lot of companies in this space and some of them have good leverage. IPOs are happening in many countries. This is the future, but the one who can win the market must have an advantage in the tech and strong marketing channels,” he said.

“That’s not an easy job. But with the development of our tech platform at UTS and our AI capabilities, it’s an area where I think we have a big advantage over other competitors.”

Elsewhere, one of the best performing tech sectors in 2020 was cybersecurity, as investors responded to the surge in activity amid the mass shift to remote-work solutions due to the pandemic.

And investors are on the lookout for further regulatory developments in the space, with possible changes to Australia’s Privacy Act following an increase in the number of cybersecurity breaches.

The listed cybersecurity sector had a number of big winners last year, with gains led by Tesserent (ASX:TNT) which rose by more than 600 per cent and has held its gains into the new year.

And in assessing the 2021 outlook for post-COVID tailwinds, Stockhead also caught up last week with Dr Chris Richards, CEO of animal health care company Apiam (ASX:AHX) which is positioning for growth with its regional vet network.

“If I look at the three main things from a post-COVID point of view, the first one for us is increased pet ownership.

“The second one is population dynamics, which is this vast shift in the number of people moving from the city to regional areas.”

“And the third one is around changes to workplace practices in the vet industry. That’s something where, post-COVID, we’ve definitely changed the way we operate our vet clinics.”

Richards said a good example of that was through telehealth, which is seeing increased uptake across the industry.

“For example, we’ve got an animal behaviourist doing telemedicine calls across our network with clients to deal with separation anxiety that pets are having, now people are going back to work,” he said.

“So that’s a service we’re launching that across our business and there’s no reason why that can’t continue across the entire industry.”

At Stockhead we tell it like it is. While Credit Intelligence, Apiam and iCandy Interactive are Stockhead advertisers, they did not sponsor this article.