The top 10 Brisbane listed companies list has seldom changed as much as in 2021.
Not only has Domino's Pizza Enterprises (ASX: DMP) sliced its way to the runner-up spot - rising from seventh over the past three years alongside a tripling of its value since then - but battery and lithium boom-connected businesses Novonix (ASX: NVX) and Orocobre (ASX: ORE) have surged 23 and 12 spots respectively since 2020, the latter due to a merger with Galaxy Resources.
Global plumbing fittings group Reliance Worldwide Corporation (ASX: RWC) shifted from the Melbourne list after relocating its headquarters to Brisbane, the city where it all began for the company. Reliance has added around $5 billion to the combined market value of Brisbane’s listed companies.
Meanwhile, a turbulent and uncertain tourism sector have pushed Flight Centre (ASX: FLT) and The Star Entertainment (ASX: SGR) out of the top 10 for now, as well as car dealership group Eagers Automotive (ASX: APE) even though its market capitalisation has risen by more than 8 per cent over the past year.
Overall, the upper end of this list represents more than half its value. Below you will find the river city's dominant listed players, including TechnologyOne which has now held the 10th spot for three years running.
1. Suncorp (SUN)
2020 rank: 1
Market Cap: $13.44b
FY21 revenue: $14.18b
FY21 profit: $1.05b
CEO: Steve Johnston
CEO salary: $4.24m
Suncorp has seen a healthy increase in its market capitalisation over the past year, making it the clear leader of the pack in the Brisbane Top Companies list.
However, rumours of a potential separation of Suncorp’s banking and insurance businesses began swirling around the company in 2021. The split has been mooted for some time and any move along those lines could take Suncorp from the top spot.
Suncorp’s share market performance over the past year has been buoyed by a solid full-year profit of $1.03 billion, up 13 per cent. The result was driven by a strong performance from the insurance division, while the banking arm benefitted from higher demand for home loans.
The reality for investors though is that Suncorp as a combined banking and insurance operation is lagging the earnings multiple of its peers in the insurance sector.
With a price-earnings ratio of about 13, Suncorp is well behind the pure insurance play of QBE Insurance (ASX: QBE) at more than 26 and Insurance Australia Group (ASX: IAG) at 15.5.
Suncorp CEO Steve Johnston has been reluctant to make comment on a potential split which is being driven by some larger shareholders.
In the meantime, Suncorp has made strides over the past year in its plans to simplify the business.
In July, the group announced the sale of its 50 per cent stake in RACT Insurance to the Royal Automobile Club of Tasmania for $83.75 million. The company, which has owned the business since 2004, says it prefers to service the Tasmanian market through its fully owned brands.
Earlier this year, Suncorp also sold its Australian wealth business, Suncorp Portfolio Services, to LGIAsuper for $45 million.
Meanwhile, the fallout from pandemic lockdowns still casts a shadow of uncertainty across the group’s insurance arm.
Suncorp, like many of Australia’s major insurers, is waiting on the outcome of legal action by business owners in relation to claims for business losses due to COVID-19. An appeal is currently being heard after the Federal Court recently ruled in favour of insurers in a number of cases.
Suncorp may have to adjust provisions already made for these claims pending the result of the appeal.
This year, Suncorp’s banking division stepped into the buy-now-pay-later sector through a partnership with Visa in the PayLater platform, which aims to capture market share by offering merchants lower fees for the service than BNPL competitors.
2. Domino’s Pizza Enterprises (DMP)
2020 rank: 3
Market Cap: $11.26b
FY21 revenue: $2.19b
FY21 profit: $193.14m
CEO: Don Meij
CEO salary: $3.16m
The growth story for Domino’s Pizza Enterprises (ASX: DMP) made the stock a market darling for investors for a significant part of 2021, although sentiment turned sharply negative in recent months.
Since hitting a high of $167.15 in September, Domino’s shares pulled back more than 25 per cent at one stage in early November. Had the company held its most recent high, Domino’s would have been a hot contender for top spot on this list.
The reason for the share price fall stems from a weaker performance in some of the company’s international markets, especially Japan, tempering shareholder expectations for growth.
After delivering network sales growth of 14.6 per cent in FY21, Domino’s revealed network sales so far in FY22 are up just 8 per cent. After benefitting from the take-away boom from lockdowns globally, the group is finding an uneven sales performance across its operations as consumer behaviour readjusts on a region-by-region basis.
This has thrown the company’s short-term forecasts into disarray, while the earnings outlook has been further disrupted by expectations of higher energy and food costs globally.
However, Domino’s is sticking to its ambitious high-volume model with an expansion strategy that has delivered strong earnings growth for the group year on year. In FY22, the company is planning to set a new record for store openings at a rate of one new store every day.
CEO Don Meij makes a point that Domino’s may have reaped the rewards of higher demand during the pandemic, but the growth of the business has been in the making over the past decade when the group began its aggressive push into international markets.
“Our growth in total sales, online sales, new store openings and profit were made possible because of a long-term strategy that laid a platform for our future – both online and in stores,” he told shareholders at the company’s AGM.
Domino's boosted its Asian presence in June with the $79 million acquisition of 157 Domino's stores in Taiwan from Formosa International Hotels Corporation's fully owned subsidiary PizzaVest Company.
The group has a long-term plan to more than double the scale of that operation, paving the way for an increase in the company's expected store count in Asia from 1,500 to 1,900 by 2032.
The group began FY22 with 2,974 stores globally - a figure it sees growing to 4,000 in calendar 2023, and 5,000 by 2026-27.
3. Aurizon Holdings (AZJ)
2020 rank: 2
Market Cap: $6.27b
FY21 revenue: $3.02b
FY21 profit: $606.7m
CEO: Andrew Harding
CEO salary: $4.94m
Expansion has been on the radar for rail network operator Aurizon Holdings (ASX: AJZ) for some time, leading to a $2.35 billion buyout deal for the One Rail Australia freight business announced in October.
The acquisition will boost Aurizon’s geographical reach into Central Australia, cementing Aurizon as the country’s largest rail-based transport business.
Aurizon’s growth been reflected in the company’s share price which has underperformed in 2021, dipping further following the announcement of the One Rail deal.
It is the future of coal and the company’s profile in this sector that weighs on its outlook. Sustainability concerns have been high on the agenda for investors in ASX companies in 2021.
Thermal and metallurgical coal transport revenue accounts for 68 per cent of Aurizon’s above-rail revenue, with the remainder from bulk goods transport. About half of the company’s earnings and assets belong to the below-rail network business, comprising the company’s regulated infrastructure such as port services in central Queensland.
Aurizon has committed to offloading One Rail’s Hunter Valley and Queensland coal haulage businesses once the buyout is approved, although that is related to competition concerns rather than any other consideration.
The One Rail acquisition gives Aurizon ownership of the Tarcoola-Darwin line, which has been described as one of Australia’s cheapest rail haulage systems that can undercut road haulage operators across this lucrative route.
Aurizon is looking at improved volumes from that operation which provides freight access for a number of mines other than coal, including lithium and copper.
Diversifying from its coal base has become a burning issue for Aurizon, with CEO Andrew Harding revealing in June that the company’s coal and network businesses can provide a foundation to support the growth ambition of its bulk freight business as it expands into new markets.
“These new markets provide a much larger potential profit pool which underpins our aspiration to more than double Bulk's current EBIT to $250 million over the next 10 years,” says Harding.
“This growth opportunity could result in the commodity mix changing within Aurizon and, consequently, if Aurizon is able to capitalise on these opportunities, revenue from thermal coal could be less than 20 per cent of the above-rail portfolio by 2030.”
4. Orocobre (ORE)
Metals & Mining
2020 rank: 16
Market Cap: $6.03b
FY21 revenue: US$84.76m
FY21 loss: US$89.47m
CEO: Martin Perez de Solay
CEO salary: US$1.19m
Australia’s lithium powerhouse Orocobre (ASX: ORE) is now an undisputed Top 10 Brisbane company following its $4 billion merger with Galaxy Resources this year – a figure that is now much larger thanks to a boom in all things related to the battery rush.
The company jumps from 16th position in 2020 as the merger brings together lithium assets in Western Australia, Argentina, Japan and Canada amid growing demand driven by the rush to bring electric vehicles to the market.
A year ago lithium was in oversupply putting a drag on prices. However, the global appetite has shifted dramatically since then with a renewed focus on renewables in the aftermath of the business disruption from COVID.
A number of players vying for market share led to volatility in the prices of the alkali metal at the end of last year, but the lithium spot price has shot about 250 per cent higher since then.
Demand is coming from the US and Europe as well as Asia in the race to net zero carbon emissions.
Orocobre is currently building a lithium hydroxide plant in Japan which is targeted for commissioning early next year. Galaxy has a number of brine extraction projects in the Americas.
Orocobre’s prospects are aligned with an expected transformation of motor vehicle propulsion systems over the next decade with the company securing a supply deal with automotive battery cell producer Prime Planet Energy & Solutions, which is a joint venture between Toyota and Panasonic.
Although Orocobre is basking in a market cap surge, with the shares up almost 400 per cent in 12 months, the company’s annual loss blew out by more than 33 per cent to $89.47 million.
However, the miner remains confident in its outlook, citing higher lithium prices setting the group up to capitalise on the "best industry outlook we have seen".
Orocobre is also planning a name change to reflect what it says is the potential synergy and value that comes from combining the two companies. Shareholders will be asked to vote on the name change to ALLKEM Limited.
5. ALS (ALQ)
Commercial & Professional Services
2020 rank: 5
Market Cap: $5.84b
1H22 revenue (operates on a March full year): $1.03b
1H22 profit (operates on March full year): $74.1m
CEO: Raj Naran
CEO salary: $2.91m
ALS (ASX: ALQ) has built on its strengths over the past year, including growth through acquisitions, leading to a healthy annual increase in the company’s market capitalisation.
This globally diversified testing, inspection and certification provider is a big business with a low profile, although its origins date back to the 19th century when it was established as Campbell Brothers, a Brisbane corporate institution.
The ALS growth strategy has translated to an impressive lift in earnings and revenue, with the result was built on margin gains across two of its key business divisions - Life Sciences and Commodities.
ALS this year beefed up its Life Sciences division with two acquisitions as the company leveraged the strong growth potential it sees for this key component of the business. The focus for this division has been on lifting exposure to the food and pharmaceutical markets as they offer attractive margins.
In March, ALS snared Investiga, a pharmaceutical testing business specialising in the cosmetic and personal care market with operations in Brazil and the US. The business generates annual revenue of about $20 million and positions ALS to grow its market share in the US.
In July, ALS acquired a 49 per cent stake in NUVISAN, a privately owned pharmaceutical testing business in Germany and France with annual revenue of about $288 million. ALS sees the move as capitalising on a key growth sector that is driven by major pharmaceutical companies outsourcing drug development research.
The Commodities division has been the most lucrative for the group over the past year, particularly as mining activities picked up due to increased commodity prices.
The group’s Industrial division is facing ongoing challenges, especially in its asset care business where clients are delaying maintenance spending amid the disruptions of lockdowns in Australia.
ALS has seen a strong start to FY22 for its Life Sciences and Commodities businesses, leading to a 57.7 per cent lift in underlying net profit after tax in the first half of FY22. The group continues to focus on margin improvements through efficiency measures to drive profit growth.
6. NEXTDC (NXT)
Software & Services
2020 rank: 4
Market Cap: $5.41b
FY21 revenue: $246.06m
FY21 loss: $20.65m
CEO: Craig Scroggie
CEO salary: $3.14m
Profit-taking has seen shares in data centre provider NEXTDC (ASX: NXT) take a breather from the record highs they reached in September.
However, while investors in the Bevan Slattery-founded company may look on the overall flat performance of their shares this calendar-year performance with little enthusiasm, they would be encouraged by a strong underlying profit performance that came in higher than already upgraded expectations.
NEXTDC operates nine data centres in Brisbane, Sydney, Canberra, Melbourne and Perth with a focus on expanding its digital infrastructure platform to cater for a surge in demand for cloud services.
US-based technology research company Gartner forecasts worldwide public cloud spending will grow 23.1 per cent in 2021 to US$332.3 billion ($452 billion). Australia’s share of this spend is expected to hit $10.6 billion by the end of this year, up 18.4 per cent on last year.
To cater for expected growth, NEXTDC has embarked on a capital expansion program for its S4 data centre in Western Sydney and started construction on the M4 centre in Melbourne, adding to its existing facilities at Port Melbourne, Tullamarine and its new M3 hyperscale campus in West Footscray. The company has a further seven data centres in the planning pipeline.
NEXTDC’s existing data centres had a solid year of growth in FY21, achieving a 23 per cent increase in revenue to $246.1 million. Operating costs only increased 16 per cent over the period.
The pullback in NEXTDC’s share price since peaking at $14.10 in August is seen by some analysts as a response to a runaway valuation of the company which is much higher than the industry price-earnings average.
Despite this, NEXTDC remains a growth stock with forecast revenue from its data centres targeted to increase between 16 and 20 per cent in FY22.
At least CEO Craig Scroggie took advantage of the strong price in September by selling 1.6 million shares in NEXTDC at an average of $13.56 each – netting him $21.7 million. Scroggie says most of the funds were used to repay an outstanding personal tax bill and bank bridging loans following recent personal property transactions.
7. Novonix (NVX)
Technology Hardware & Equipment
2020 rank: 30
Market Cap: $5.28b
FY21 revenue: $5.22m
FY21 loss: $18.07m
CEO: Chris Burns
CEO salary: $3.58m
Novonix (ASX: NVX) has smashed its way into Brisbane’s top 10 for the first time after a stellar run from the battery technology company’s shares in 2021.
The company was positioned at number 30 in last year’s list, with much of the growth in market cap emerging mid-year on the back of some serious players taking an interest in the group.
Founded as a graphite explorer and miner before expanding into the development of anode materials such as synthetic graphite for lithium-ion batteries, the company has marked 2021 as a year of transformation.
Novonix’s position in the lithium-ion battery sector this year attracted a significant shareholding from US energy giant Phillips 66 (NYSE: PSX) which bought a 16 per cent stake in the company after paying US$150 million ($104 million) for 77.96 million shares.
The move is part of Phillips 66’s low-carbon investment strategy and has scored the company representation on the Novonix board.
Novonix has operations in Brisbane, Canada and the US, largely centred on its anode materials business in Chattanooga, Tennessee. The company is increasing capacity following the acquisition of a new factory in Chattanooga, a facility that was once owned by General Electric, to produce 10,000 metric tonnes a year of synthetic graphite by 2023. The investment by Phillips 66 will help add a further 30,000 metric tonnes to annual output by 2025.
The group appeals to US investors because it offers the only fully domestic US supply chain of electric vehicle battery anode material, bypassing traditional China supply chains. The majority of the company’s revenue comes from the US.
While the company is headquartered in Brisbane, it is headed by Canada-based Chris Burns who co-founded Novonix Battery Technology Solutions in Canada in 2013. The ASX-listed Novonix emerged after the company, formerly named Graphitecorp, acquired the Canadian outfit in 2017, creating a vertically integrated group that has capitalised on the zero-carbon momentum driving the uptake of electric vehicles.
Novonix is currently traded on the ASX and Frankfurt Stock Exchange. This year it was added to the US over-the-counter platform OTCQX, and it is currently working towards a listing on the NASDAQ.
Novonix has secured a sales agreement with Samsung SDI and struck a memorandum of understanding with Sanyo. Tesla is also interested in a potential supply agreement with the company.
8. Bank of Queensland (BOQ)
2020 rank: 7
Market Cap: $4.98b
FY21 revenue: $1.25b
FY21 profit: $369.0m
CEO: George Frazis
CEO salary: $2.2m
Bank of Queensland (BOQ) took a big leap this year, bulking up the scale of its business with the $1.2 billion acquisition of ME Bank in July.
The merger with ME Bank makes BOQ the largest Queensland-based banking group, pulling it out from the shadow of Suncorp (ASX: SUN) for the first time. The deal also extends the group’s geographical reach in the key Victorian market where ME Bank, a digital bank, was founded.
BOQ now services 1.5 million customers supported by 163 branches nationally. ME Bank has no branches, but it brings to BOQ 580,000 customers, $18 billion in customer deposits and $25 billion in gross loans.
The merger has lifted BOQ’s total customer deposits to $56.4 billion and gross loans to $75.7 billion. In comparison, Suncorp has total customer deposits of $41.52 billion and gross loans of $57.5 billion.
The deal is another feather in the cap for CEO George Frazis who has managed to transform the BOQ business since his appointment in September 2019. It builds on the company’s strategy for its Virgin Money Australia digital bank which over the coming year will offer customers home loans and more deposit products in addition to those introduced in FY21.
BOQ’s transformation strategy, announced by Frazis in February 2020, will ultimately see the bank deliver a common, cloud-based retail platform for all of its brands, including ME Bank.
The integration of ME Bank, which accounted for two months of trading and appears to be tracking well for the group, plus a strong home lending market over the past year helped BOQ post a 221 per cent increase in net profit to $369 million in FY21.
The Frazis-led transformation strategy included the sale of BOQ’s interest in St Andrew’s Insurance, which was completed in October.
9. Reliance Worldwide Corporation (RWC)
2020 rank: N/A
Market Cap: $4.85b
FY21 revenue: $1.34b
FY21 profit: $188.25m
CEO: Heath Sharp
CEO salary: $4.88m
It has been a Brisbane homecoming this year for Reliance Worldwide Corporation (ASX: RWC), the world's largest producer of push-to-connect plumbing fittings and water control valves, which joins the Brisbane Top Companies list for the first time.
The company has been a regular in the Melbourne Top Companies list. This year Reliance relocated its ASX-registered head office to Brisbane, the city where the company was founded, although its global headquarters remains in Atlanta, Georgia.
As the name suggests, Reliance Worldwide is a global business, so with a broad-based increase in home repair and renovations activity during the pandemic across its key markets, FY21 has panned out well for the group as it posted record sales and earnings.
Reliance Worldwide’s biggest market, the Americas, was the most active on that front with sales in the second half up 31 per cent. Asia Pacific, which includes Australia, was not far behind with growth of 27 per cent, and even Europe saw healthy growth at 25 per cent.
Business was so strong that CEO Heath Sharp says that the rush for its products "tested our capacity and our capability" at times.
So, it was no surprise that supply channels were top of mind as Reliance announced in June the $37 million acquisition of one of its suppliers, LCL, a privately owned Australian manufacturing and recycling business specialising in the production of high-quality brass rods. LCL’s main factory at Moorabbin in Melbourne is adjacent to Reliance’s brass forging operations.
Reliance is LCL’s primary customer, accounting for 90 per cent of the company’s revenue. Sharp says the acquisition provides Reliance with access to the supply of high-quality brass to support its future operations.
After settling this deal, Reliance Worldwide said it would continue to actively pursue acquisition opportunities, with Sharp focusing on expanding the group’s product portfolio to leverage across its existing distribution network.
The company followed through in October with the $325 million acquisition of US-based EZ-FLO International, Inc., a long-established manufacturer and distributor of plumbing supplies largely focused on the US market.
Reliance Worldwide is confident FY22 will shape up well for the group, despite ongoing concerns about COVID-19 disruptions. The company sees its markets underpinned by ongoing government stimulus measures.
On the back of a solid FY21, Sharp saw a healthy increase in his CEO remuneration to $4.88 million through the issue of shares and rights, up from $3.4 million in FY20.
10. TechnologyOne (TNE)
Software & Services
2020 rank: 10
Market Cap: $3.84b
FY21 revenue: $312.01m
FY21 profit: $72.69m
CEO: Edward Chung
CEO salary: $1.77m
After more than two decades as a listed company, TechnologyOne (ASX: TNE) made its first international acquisition this year, inspiring investors to push the group’s shares to record highs in October.
TechnologyOne bought Scientia Resource Management Limited, a UK software company that services higher education institutions, for £12 million ($21.9 million) in a deal that has yet to make a significant impact on the bottom line.
The news capped off a strong full-year profit performance for the software group, which was driven by growth in the group’s software as a service (SaaS) customer base.
There was also good news of sorts on the litigation front for the company after the Full Federal Court overturned a $5.2 million unfair dismissal judgement against it last year.
The damages had been awarded the former manager of TechnologyOne’s Victorian operations, Behnam Roohizadegan, who had alleged he was 'bullied, misled, and betrayed' by management.
The Federal Court appeal decision took some of the heat off TechnologyOne founder and chairman Adrian Di Marco with the decision lending greater weight to Di Marco’s explanation for Roohizadegan’s dismissal. The court last year issued a personal penalty against Di Marco, but the appeal accepted his explanation that the dismissal was the result of Roohizadegan no longer having the confidence of the board and his fellow executives.
However, after upholding the appeal, the Federal Court ordered a retrial of the matter leading to another round of court manouevres for the combatants. Roohizadegan has sought special leave to appeal the decision to the High Court, while TechnologyOne says it will ‘vigorously defend’ the application for leave.
Beyond the courtroom drama, TechnologyOne has a strong growth profile with plans to increase its recurring revenue to more than $500 million a year by FY26. This will be twice as much as the $257.5 million the company recorded in FY21.
TechnologyOne currently earns 86 per cent of revenue from recurring subscriptions for its could-based SaaS solutions. The company is driving growth through its key market sectors of local government, higher education, government and government-related businesses.
Technology One says it is well positioned to double in size every five years.
Market caps are based on the close of trade, 29 November 2021. This list was prepared with information provided by the ASX.
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