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ASX 200 drops 0.7%, Zip rises 27.5%

ASX 200
Credit: Cimexus

The S&P/ASX 200 Index (ASX: XJO) fell by 0.73% today to 6,116 points.

There was one star performer on the ASX today:

Zip Co Ltd (ASX: Z1P)

The Zip share price rose by 27.5% today after making an announcement.

The buy now, buy later (BNPL) business said that it has marked the launch of Zip Business by partnering with eBay Australia to offer 40,000 Australian small and medium-sized businesses the ability to access working capital via the eBay marketplace.

Merchants can use the money to purchase inventory, cover short-term expenses like marketing campaigns and manage their cashflows via access to flexible lines credit. Zip said it’s bringing the Spotcap brand into the Zip business stable.

Zip explained Zip Business will be leveraging the credit experience in the Spotcap business and combine it with Zip’s risk decisioning and real-time onboarding to scale the BNPL offering.

The company also announced it has agreed a $100 million debt funding facility with US outfit Victory Park Capital Advisors.

The chief operating officer and co-founder of Zip, Peter Gray, said: “Zip is extremely excited to formally launch its Zip Business platform to create a suite of products for the small business community, a segment that has been underserved by the traditional lenders in recent years. This comes at a time when Australia’s small businesses are confronting the extreme challenge of COVID-19, which has created enormous pressure on cashflow and ongoing business investment.”

Cleanaway Waste Management Ltd (ASX: CWY)

Investors wasted no time in buying Cleanaway shares after it reported its result. The Cleanaway share price rose 8.5% today, it was the best performer in the ASX 200.

The company reported that net revenue fell by 0.4% to $2.1 billion. However, on an underlying basis, the business reported a solid set of profit numbers.

Underlying earnings before interest, tax, depreciation and amortisation (EBITDA) went up 2.5% to $473 million and the EBITDA margin improved by 60 basis points to 22.5%.

Underlying earnings before interest and tax (EBIT) grew by 4.6% to $251.9 million with the EBIT margin also improving by 60 basis points to 12%.

Net profit, on an underlying basis, grew by 8.7% to $152.9 million. However, statutory profit dropped by 6.6% to $112.6 million. Free cashflow improved by 11.5% to $230.1 million.

Cleanaway’s final dividend was 2.1 cents per share – an increase of 10.5%, that brought total FY20 dividends up 15.5% to 4.1 cents.

Management boasted that the company demonstrated defensive characteristics of revenue streams during COVID-19. The company has finished integrating the Toxfree and the SKM businesses.

In FY21 trading conditions have been mixed with COVID-19 impacts more pronounced in Victoria. The ASX 200 company said that enterprise performance in July 2020 has been in line with the FY20 average monthly performance. Cost management will continue to play a part. Cleanaway couldn’t give FY21 guidance due to the variable trading conditions.

Whitehaven Coal Ltd (ASX: WHC)

The Whitehaven share price was the worst performer within the ASX 200. The Whitehaven share price fell 18% today.

In the FY20 result Whitehaven reported that revenue dropped 31% to $1.7 billion.

Underlying EBITDA plunged 71% to $306 million and underlying net profit collapsed 95% to $30 million. Operating cash flow declined 84% to $146.4 million. The FY20 dividend was cut by 97% to 1.5 cents per share.

Unit costs per tonne increased by 12% to $75. Net debt jumped from $161.6 million in FY19 to $787.5 million in FY20.

A large decline in coal prices was blamed for the difficult result as well as labour shortages and dust events at its largest mine. Plus, there was the scheduled eight-week Narrabri mine longwall move. 

However, the company is still confident about the continuing demand for high quality coal in a more carbon conscious world. Management thinks high quality coal will play a major role as part of the global economic recovery.

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Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of ZIPCOLTD FPO. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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