It's April 2021 already, and there are some compelling ASX share investment opportunities to look at.
No-one knows what the share market is going to do next, but it is normally a good idea to just find the best investment opportunities you can.
Some businesses may be expensive, but these two look like they could be interesting ideas:
Reject Shop Ltd (ASX: TRS)
Reject Shop is actually rated as a buy by a few different brokers, including Ord Minnett which has a price target of $10.34.
The discount ASX retail share is currently going through a transformation process where it's cutting costs. The cost of doing business (CODB) margin improved by approximately 230 basis points to 34.9% in the half-year result, with the improvement being driven by around $8 million of savings in store expenses and $2.4 million in admin expenses.
Store labour costs reduced to 13.6% of sales, compared to 14.9% in the prior corresponding period, through lower inventory and simplification and standardisation of in-store processes. The company said that aside from store occupancy costs (which increased slightly due to CPI), other store costs and marketing spend were well controlled and were lower than the prior corresponding period.
There was a high level of growth at certain profit lines. Earnings before interest, tax, depreciation and amortisation (EBITDA) rose 20.8% to $31.1 million with the EBITDA margin increasing by 1.3 percentage points to 7.2%. Earnings before interest and tax (EBIT) jumped 44.9% to $23.3 million and the EBIT margin improved by 1.7 percentage points to 5.4%.
Reject Shop's management is still looking to reduce costs further and after that has been done it will start to expand its store network again and grow its online offering.
According to Ord Minnett, the Reject Shop share price is valued at 15x FY22's estimated earnings.
Betashares Asia Technology Tigers ETF (ASX: ASIA)
This is a high-flying exchange-traded fund (ETF) which is focused on the technology sector of Asia (excluding Japanese companies).
It only owns 50 names, so it's a fairly concentrated portfolio when you look at the biggest names of Taiwan Semiconductor Manufacturing, Samsung Electronics, Tencent and Meituan – all of these account for more than 9% of the portfolio.
There are also other names that make up a noticeable part of the portfolio (of more than 2.5), including JD.com, Pinduoduo, Infosys and Baidu.
Since the COVID-19 crash, the Asian technology sector has risen strongly. At 26 February 2021, the ETF had still returned 69.6% over the prior 12 months even after a decline from the middle of February. Since inception in September 2018, the ETF has returned an average of 36.5% per annum.
Those quoted returns include the annual management fee of 0.67% per annum.
Will the growth keep coming? Past performance is not a sure indictor of future performance. But, BetaShares says regarding the prospects of Asian tech:
Due to its younger, tech-savvy population, Asia is surpassing the West in terms of technological adoption and the sector is anticipated to remain a growth sector.
