Raymond Jang, Author at The Motley Fool Australia

Even with today's falls, the Paladin Energy share price is still up 31% in 3 weeks. Here's why

Raymond Jang — Wed, 14 Sep 2022 07:17:29 +0000

The Paladin Energy Ltd (ASX: PDN) share price is down 5.29% in today's trade after the broad ASX market sell-off. But it's still up 31.6% in the past three weeks.

At market close on Wednesday, Paladin shares finished trading at 89.5 cents per share.

Despite the fall in the market sentiment, there appears to be optimism in the Paladin share price. Here's why.

United States inflation data spooks investors

It was all roses for Paladin shares in the last three weeks until today. Overnight, inflation data came in at higher than original forecasts, causing a wave of pessimism across Wall Street.

This is why the S&P/ASX 200 Index (ASX: XJO) is down 2.58% today.

Economists expected a 0.1% fall in the US consumer price index, mainly due to a decline in oil prices. However, it was the other way around as consumer prices in the US jumped 0.1% in August.

The worst-performing sectors today included real estate and technology, which fell by 4.17% and 3.15% respectively. However, the energy sector fared better, dropping 2.24% today.

Macquarie bullish on Paladin shares

As covered by my colleague Zach Bristow, investment bank Macquarie raised its estimates on the Paladin share price.

Further, Macquarie reinitiated its buy call. This is supported by bullish forecasts of uranium prices rising another 17% to 21% on top of initial forecasts.

The analysts' forecast is premised on recent news that Japan ordered the development of new nuclear reactors.

In the last year, the Paladin share price has dipped 5.8%, but has clawed its way back with a 20% jump in the past month.

The ASX 200 is down 8% in the past year and continues to record falls with a 3% decline in the last month.

The market capitalisation of Paladin is around $2.81 billion.

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Motley Fool contributor Raymond Jang has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Pointsbet share price closes lower after a tough day on the ASX

Raymond Jang — Wed, 14 Sep 2022 06:23:57 +0000

The Pointsbet Holdings Ltd (ASX: PBH) share price suffered the same sting as the rest of the ASX, falling by as much as 7% during Wednesday's session.

It finished 3.07% lower at $2.21 a share. Meantime, the S&P/ASX 200 Index (ASX: XJO) closed down 2.58% after a major sell-off across Wall Street overnight.

So what has triggered the weakness in the Pointsbet share price along with the rest of the ASX?

Pessimism grows on the back of rising inflation

Overnight reports of higher-than-expected inflation data wreaked havoc on US markets overnight, which flowed onto the ASX today.

The US consumer price index (CPI) increased 8.3% over the year to August compared to 8.5% across the year to July. Stripping out volatile food and energy prices, CPI rose 6.3% across the year to August and 5.9% in July.

Overall, these figures exceeded expectations, fueling pessimism about the future economic outlook.

As a result, ASX sectors like real estate and technology were hit hardest today, shedding 4.16% and 3.15% respectively on Wednesday.

As for the sector that Pointsbet belongs to, the S&P/ASX 200 Consumer Discretionary Index (ASX: XDJ) also closed 3.13% lower today.

The biggest concern for Pointsbet is the potential long-term impact of a rising interest rate environment. This will likely lead to a reduction in discretionary income available for sports betting.

Such pessimism comes at a time when the PointsBet share price was gaining a bit of momentum after opening its 12th sportsbook operation in the US.

Pointsbet has managed to grow revenue rapidly but is struggling to clamp down on operating expenses as its net loss ballooned in FY22.

The biggest drag on its bottom line was the surge in employee expenditure. Given rising inflationary costs, this doesn't bode well for the company.

In the last year, the Pointsbet share price has sunk 78%, falling almost 40% in the past month.

In contrast, the ASX 200 has dropped just over 8% across the last year and is down 3% in the past month.

Pointsbet's current market capitalisation is around $669 million.

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Motley Fool contributor Raymond Jang has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Pointsbet Holdings Ltd. The Motley Fool Australia has recommended Pointsbet Holdings Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

While the Qantas share price is stalling, Rex is surging 5%. What's happening?

Raymond Jang — Wed, 14 Sep 2022 05:58:06 +0000

It seems like the Qantas Airways Limited (ASX: QNA) share price has taken a back seat and allowed the Regional Express Holdings Ltd (ASX: REX) share price to take the front.

The Qantas share price is down 1.51% to $5.23 per share while the Rex share price is up 5.32% in late afternoon trading.

Let's take a look at what's happening with airline shares today.

Fund manager Perennial and broker Macquarie are both bullish about Qantas' future prospects, as covered by my colleague Cathryn Goh.

Both parties expressed their optimism for Qantas' outlook, believing demand for travel will continue to rise as people shift spending away from personal consumption to leisure activities.

These experts present the bull case but some sections of the market have noted the airline's dubious decision to engage in a $400 million share buyback.

There have also been grave concerns about the lack of staff causing major constraints to Qantas' ability to meet demand.

As reported by Reuters, rival Virgin Australia is also experiencing staffing issues, noting its high staff illness rates were hampering capacity, forcing it to lift fares for domestic flights.

Qantas has come under fire recently for the rise in flight delays and cancellations. The problems have been attributed to a shortage of airport workers and high staff illness levels.

Rex leads the way

But where Qantas and Virgin have stumbled, Rex has taken a more proactive approach to address the labour shortage.

Today, the regional airline announced it has signed new industrial agreements with two key sections of its workforce.

Rex noted there was overwhelming staff support, with 75% of flight attendants and 92% of engineers voting in favour of the enterprise agreements.

The new enterprise agreements will be valid for three years for flight attendants and four years for engineers and include pay rises for both groups.

Perhaps Qantas may need to take a leaf out of Rex's playbook and tackle the labour issue.

The Qantas share price could be under the pump after some negative headlines concerning CEO Alan Joyce receiving almost $80 million since 2012 and a $287,000 pay bump.

In the last year, the Qantas share price has fallen 3.5% but has managed to gain 12% in the past month.

By comparison, the S&P/ASX 200 Index (ASX: XJO) is down 8% in the past year and is 3% lower in the last month.

Qantas has a market capitalisation of $9.88 billion.

Qantas shares are currently trading at a price-to-earnings (P/E) multiple of around eight times.

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Guess which ASX 200 share is holding firm amid today's carnage

Raymond Jang — Wed, 14 Sep 2022 03:14:51 +0000

The Computershare Ltd (ASX: CPU) share price has managed to avoid the wreckage across the ASX so far today.

At the time of writing, the Computershare share price is up slightly at $24.51 per share.

The ASX tech share provides investor services, plan services, communication services, business services, shareholder relationship management services and technology services.

Computershare remains stoic in the face of tech sell-off

Computershare is holding its ground on a tumultuous day on the ASX as the S&P/ASX 200 Index (ASX: XJO) is down 2.45%.

The tech sector is suffering second-worst on the ASX, plummeting 3.2% at the time of writing. High growth and unprofitable companies continue to bear most of the brunt.

The major reason for today's market turmoil is the report of higher-than-expected inflation in the United States. Consumer prices in the US, released overnight Australian time, rose by 0.1% in August.

The core consumer price index, which does not account for volatile food and energy prices, increased more than expected, rising to 6.3% over the year to August. This is up from 5.9% in July.

The current state of Computershare

Computershare's recent annual results, covered by my colleague Zach Bristow, may point to some potential reasons for its resilience.

Computershare recorded positive results across nearly every aspect of its business. Revenue went up by 12% in FY22 and net profit after tax (NPAT) rose 20.5% compared to FY21.

The company also provided a forecast of earnings per share (EPS) growth of 55% for FY23, despite ongoing inflationary pressures as witnessed today.

Whilst Computershare did perform quite well in FY22, investors should note there is a significant amount of long-term debt on its balance sheet. Long-term borrowings was $1.84 billion as of FY22.

In the last year, the Computershare price has been immune from the tech sell-off, rising by 48% and jumping 11% in the past six months.

The S&P/ASX 200 Index (ASX: XJO) is down 8% in the past year and dropped by 5% in the last six months.

Computershare has a market capitalisation of around $14.75 billion.

The price-to-earnings multiple is hovering around 44x.

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Buy, hold, sell: Northern Star Resources, Computershare, Sunrise Energy shares

The Arafura Resources share price is down 7% this morning

Raymond Jang — Wed, 14 Sep 2022 01:56:09 +0000

The Arafura Resources Limited (ASX: ARU) share price is fighting back after plunging in early trade this morning.

Shares in the rare earth minerals explorer were down by as much as 7% this morning. At the time of writing, they have clawed back to 36.5 cents each, 2.67% lower than yesterday's closing price.

Let's find out why the Arafura Resources share price is in the red.

Why are Arafura Resources shares dropping?

There are a number of factors driving the weakness in the Arafura Resources share price today.

The ASX market is suffering from a brutal sell-off across Wall Street overnight after worse-than-expected news on inflation.

At the time of writing, the S&P/ASX 200 Index (ASX: XJO) has plunged 2.72%. A heavy fog of pessimism has overcome the markets as the US consumer price index (CPI) came in at higher levels than forecast. The core CPI, which excludes volatile food and energy prices, rose 0.6% in August.

Arafura Resources operates in the materials sector, which is also down 2.23% at the time of writing.

The rare earth minerals explorer is still in the exploration stage, so the current macroeconomic events don't directly affect its top line. However, it does increase overall operational costs for the business.

The main rare earth minerals that Arafura Resources is attempting to extract include neodymium and praseodymium products. These form part NdFeB magnets, which help make everyday items like wind turbines, robots, and electrical vehicles become smaller, lighter, mobile, and more affordable.

The acceleration in the shift towards renewable energy resources could help it fend off negative macroeconomic factors.

In the last year, Arafura Resources shares rose by 135% and momentum remains strong with a jump of 30% in the past month.

This compares to the ASX 200's 8.4% loss in the past year and almost 4% drop over the last month.

The market capitalisation of Arafura Resources is around $629 million.

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Why are these 8 ASX rare earths companies rated a buy?

Why is the Woodside share price faring better than the ASX 200 today?

Raymond Jang — Wed, 14 Sep 2022 01:45:14 +0000

The Woodside Energy Group Ltd (ASX: WDS) share price is in the red in early trading today, but it's outperforming the S&P/ASX 200 Index (ASX: XJO).

Despite the ASX suffering a meltdown this morning, the Woodside share price along with the energy sector is faring better than the broader ASX 200 index. The Woodside share price is down 1.89% while the energy sector has fallen 2.04%, compared to the current 2.61% downturn across the ASX 200.

This halts Woodside's strong momentum this year after recording sound results for the half-year FY22.

Let's find out what's triggering the fall in Woodside shares today.

US inflation exceeds initial expectations

The United States consumer price index (CPI) rose 0.1% from July and the Bureau of Labor Statistics' monthly cost of living survey revealed prices were 8.3% higher last month compared to August last year. This was still lower than the increases of 8.5% in July and 9.1% in June.

Despite the slight slowdown in the rise of prices, it was enough to trigger a significant sell-off on Wall Street, which suffered its worst drop since June 2020.

Gas prices continued their downward trend, recording 13 weeks of consistent drops. This helped soften the overall surge in the CPI as petrol prices fell 10.6% in August. However, food costs jumped 11.4% and electricity prices surged 15.8% compared to a year ago.

The continual fall in gas prices does not bode well for the Woodside share price as this will eat into its margins. However, the Organisation of Petroleum Exporting Countries expects demand for oil to top the pre-pandemic level in 2023.

So, Woodside could potentially make up for the price drops with a higher volume of exports.

In the last year, the Woodside share price has climbed by 56% but this has slowed in the last six months, increasing by just 2%. In contrast, the ASX 200 has declined 6% across the last year and fallen by 2% in the past six months.

The current market capitalisation of Woodside is around $62.9 billion.

Woodside shares are currently trading at a price-to-earnings (P/E) multiple of around seven times.

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The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

How do IGO shares compare to Mineral Resources following earnings season?

Raymond Jang — Thu, 01 Sep 2022 07:33:54 +0000

IGO Ltd (ASX: IGO) shares closed 3.2% lower today at $13.01 apiece. This comes two days after the company released its FY22 results.

Also posting its earnings this week was ASX mining peer Mineral Resources Limited (ASX: MIN). Its share price also finished in the red today, down 1.84% to $62.79.

But how do these two ASX mineral explorer shares compare? Let's take a look.

IGO FY22 results recap

IGO released a sound set of financial results for FY22, as covered by my colleague Brendon Lau. Revenue rose 34% to $903 million but net profit after tax (NPAT) dropped 40% to $331 million.

The drop in NPAT was due to a tax charge on the sale of the company's Tropicana asset.

Despite the fall in IGO's bottom line, it still declared a fully franked dividend of 5 cents per share.

IGO appears to be in a reasonably steady financial position with a cash balance of $367 million and new debt facilities of $900 million.

Current liabilities for FY22 was in the order of $440 million. So, it would seem IGO needs to rely on debt to stay on top of its short-term liabilities because IGO is not free cash flow positive.

On cash flow, IGO recorded operating cash flow of $357.1 million, which is down from $446.1 million in FY21.

The IGO share price climbed 3.79% on the back of these results on Tuesday, and gained another 2.21% yesterday.

How do IGO shares stack up against Mineral Resources?

The FY22 results for Mineral Resources weren't as good as IGO as revenue fell 8% to $1.02 billion and NPAT declined 72% to $351 million.

My colleague Monica O'Shea covered the results and noted that the fully franked final dividend dropped 42.8% from $1.75 per share in FY21 to $1 per share in FY22.

Net cash from operating activities fell from $1.3 billion in FY21 to $279.8 million in FY22. The big drop was primarily due to an increase in working capital relating to the restart of Wodgina, the ramp-up of Mt Marion production and the conversion of the company's spodumene concentrate into lithium hydroxide.

I find it interesting that IGO managed to record higher operating cash flow with less revenue. However, it appears the rise in operational expenditure may have been higher than historical levels for Mineral Resources.

Similar to IGO, Mineral Resources is not free cash flow positive.

IGO possesses much more short-term debt at $913.6 million and there is nearly $3 billion in long-term debt sitting on the balance sheet.

Mineral Resources does hold $2.4 billion in cash though.

From a financial strength perspective, it seems like IGO is in a slightly better position.

The Minerals Resources share price fell 1.74% on Monday when the results were announced, but climbed 6.2% the following day. However, it gave up most of those gains on Wednesday, losing 5.87%.

The IGO share price has risen by 35% in the past year and is 20% higher in the last month. As for the Mineral Resources share price, it has jumped 18% in the last year and has gone up 18% in the past month.

IGO has a market capitalisation of around $9.85 billion. The Mineral Resources market cap is sitting at $11.89 billion.

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How do A2 Milk shares stack up against Bubs post-earnings season?

Raymond Jang — Thu, 01 Sep 2022 07:09:33 +0000

The A2 Milk Company Ltd (ASX: A2M) share price has risen by 16% since the baby formula company released its FY22 results on 29 August.

The a2 milk share price has outperformed the Bubs Australia Ltd (ASX: BUB) share price in the past five days. But the big question is whether a2 milk shares can continue the momentum over the long run.

Let's put these two infant formula companies toe-to-toe.

FY22 results recap

A2 milk recorded strong results in FY22 as covered by my colleague, James. Revenue grew 19.8% to NZ$1.4 billion and net profit after tax (NPAT) went up 42.3% to NZ$114.7 million.

Earnings from A2 milk's core geographies of Australia and New Zealand actually fell from NZ$558.3 million in FY21 to NZ$530.5 million in FY22. This is a bit concerning given these are a2 milk's local markets.

However, sales in China and other Asian countries produced a major uplift, surging from NZ$583.4 million in FY21 to NZ$726.5 million in FY22. It seems the 36.3% increase in marketing to drive brand awareness paid off.

Operating cash flow improved from NZ$89.4 million in FY21 to NZ$203.8 million in FY22.

However, investors should bear in mind that the stronger performance in FY22 was largely due to the 75% acquisition of Mataura Valley Milk. This resulted in a cash outflow of NZ$213.7 million.

Despite a2 milk being in negative free cash flow territory, broker Bell Potter upgraded a2 milk shares to a buy rating. The price target is up by a third to $6.35.

Analysts at Bell Potter believe a2 milk is capable of producing strong earnings growth to FY26.

A2 milk versus Bubs

Despite recording a record result in FY22, the Bubs share price didn't move all that much. Revenue grew 123% to $104.2 million in FY22 and the net loss was improved from $74.7 million in FY21 to $11.4 million in FY22.

The significant rise in sales was due to a material supply deal in the United States. The biggest reason for the shortage in supply of baby formula was the closure of Abbott Nutrition's factory in Michigan.

The US Food and Drug Administration (FDA) closed the largest producer in the country due to the discovery of bacterial infections.

Abbott Nutrition's factory site has been suspended since February but it restarted production in early June under FDA's watchful eye.

This development is important because it could ultimately mean reduced reliance on overseas infant formula producers like Bubs.

A2 milk is still yet to benefit from the situation in the US as it awaits FDA approval. However, a2 milk is in a much stronger financial position with NZ$887.3 million in cash whereas Bubs holds $16.3 million and is still not yet profitable.

The a2 milk share price has fallen by 1.4% in the past year. But it has rallied strongly in the past month, rising by 16%. It closed Thursday's session at $5.70, up 2.7% for the day.

In contrast, the Bubs share price has experienced strong growth of 38% in the past year. But it's down 2.6% in the past month. Bubs finished the session today at 56 cents, down 0.9% for the day.

The market capitalisation of a2 milk is around NZ$4.73 billion.

The market capitalisation of Bubs is around $418 million.

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The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended A2 Milk and BUBS AUST FPO. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Guess which ASX share is booming on 1600% revenue growth

Raymond Jang — Thu, 01 Sep 2022 04:02:30 +0000

The iCandy Interactive Ltd (ASX: ICI) share price is flying 19.74% higher today to 9.1 cents after the company posted its results for the first half of FY22.

The ASX-listed freemium mobile games developer's shares are currently trading for 9.1 cents each after closing on Wednesday at 7.6 cents.

Let's check if the iCandy result is as sweet as it sounds.

What did iCandy report in 1H FY22?

Here is a snapshot of the key highlights for 1H FY22, which are sending the iCandy share price through the roof today.

Revenue skyrocketed 1,600% from $0.93 million in 1H FY21 to $15.69 million in 1H FY22
Earnings before interest, taxation, depreciation and amortisation (EBITDA) jumped to a record $4.41 million — the first time it has achieved profitability
Net loss reversed from $1.19 million in 1H FY21 to a net profit after tax (NPAT) of $0.23 million in 1H FY22
Current cash balance of $28.3 million

The astronomical jump in revenue was due to iCandy's new subsidiary, Lemon Sky Studios. This game and animation studio is known for developing games such as Call of Duty Infinite Warfare, Need for Speed Hot Pursuit, Spider-Man and Marvel's Avengers.

Lemon Sky Studios has assisted iCandy with developing three non-fungible token (NFT) Generative Art projects, as well as nine NFT/Metaverse gaming projects.

ICandy paid $44.5 million comprised of cash and shares for this acquisition.

Prior to this, iCandy also acquired 51% of Storms, a Southeast Asian-based game developer.

ICandy's ultimate goal is to become the leading integrated metaverse gaming platform globally.

Due to the acquisitions, iCandy's employee expenditures lifted from $0.3 million in 1H FY21 to $3.05 million in 1H FY22. This was the biggest uptick in operational expenses.

Operating cash flow went up from negative $1.06 million in 1H FY21 to $3.86 million in 1H FY22. However, iCandy spent $21.3 million in cash on acquisitions for 1H FY22.

What else happened in 1H FY22?

In March, iCandy announced its NFT project with Froyo Games and is expected to be finished in the last quarter of FY22.

ICandy is still developing its signature metaverse game Metal Genesis and hopes a playable demo will be ready by the last quarter of FY22.

Metal Genesis is an armoured robo-suit war machine-themed and player-vs-player metaverse virtual world game being developed by Lemon Sky Studios.

Management confident about outlook

ICandy management advised it has a pipeline of three years for work. Management plans to lift the company headcount by 20% by the end of the year.

Outside of game development, iCandy is seeing demand for animation development services from global streaming and content providers.

Management said it expects the recent revenue trend to continue.

In the last year, the iCandy share price has risen by 53% but has dropped 8% in the past month. In contrast, the S&P/ASX 200 Index (ASX: XJO) is down 9% in the last year and 2% in the last month.

The market capitalisation of iCandy is around $113 million.

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What's the outlook for the Flight Centre share price in September?

Raymond Jang — Thu, 01 Sep 2022 00:48:16 +0000

The Flight Centre Travel Group Ltd (ASX: FLT) share price outperformed the S&P/ASX 200 Index (ASX: XJO) yesterday, but can it keep up this momentum for the rest of September?

Wednesday's 3.17% gain may have had something to do with broker Goldman Sachs recently commenting on the Flight Centre share price, as covered by my colleague, James Mickleboro.

In addition, fellow ASX travel share Webjet Limited (ASX: WEB) yesterday disclosed a positive trading update, which suggests the battered travel industry is bouncing back.

Let's take a closer look at what brokers had to say about Flight Centre.

Brokers' thoughts on Flight Centre

Based on a note from Goldman Sachs, the broker was quite surprised by the strong recovery in Flight Centre's earnings in Australia and New Zealand.

However, the broker expected more growth in America, which was impacted by a more unfavourable mix of flights.

Goldman Sachs held onto its neutral rating with a reduced price target of $19.60. That implies a potential upside of almost 15%.

In a further possible boost for the Flight Centre share price, it appears Goldman Sachs considers the travel industry as a whole is heading in the right direction.

According to a note out of the investment bank from this morning, it believes the Webjet share price can continue its upward trajectory after keeping its buy rating at a reduced price target of $6.80. That suggests a potential upside of 23% over the next 12 months.

Webjet also flagged in its trading update that it expects earnings in FY24 to exceed levels seen pre-pandemic. It anticipates broader travel market activity is expected to return to 2019 levels.

Another broker, Morgans, was also positive on Flight Centre. It holds a lower price target at $18.25, supported by a hold rating. This broker believes the Flight Centre share price is fair given the risks the travel agency is facing.

It was also announced yesterday that substantial shareholder JP Morgan Chase increased its shareholding of Flight Centre. So, this may also have contributed to the uptick in the Flight Centre share price.

Additionally, the travel agency's shares gained 3.52% on Tuesday amid rumours the company is considering the acquisition of US travel management company Altour International.

At the time of writing, Flight Centre shares are down 1.12% to $17.70.

In the last year, it has risen by almost 4% and is up 3% in the past month. The ASX 200 has fallen by 9% in the last year and is down around 2% in the last month.

The overall sentiment towards the Flight Centre share price appears to be becoming more positive. However, a lot of this optimism is being held back with measured caution, given how quickly things can change.

Travel agencies are more exposed to external factors than the average business, making it more difficult to forecast future earnings. But they can be sound cyclical plays when optimism hits rock bottom — it's a matter of assessing when the bottom is, though.

Flight Centre has a market capitalisation of around $3.58 billion.

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Motley Fool contributor Raymond Jang has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Goldman Sachs. The Motley Fool Australia has recommended Flight Centre Travel Group Limited and Webjet Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

3 ASX All Ords shares beaten up on results

Raymond Jang — Wed, 31 Aug 2022 07:43:02 +0000

The All Ordinaries Index (ASX: XAO) closed 0.06% lower today as the ASX reporting season wraps up for another year.

The following ASX All Ords shares spent a day in the red as well, after releasing FY22 and half-yearly results today. However, a late rally saw two of the companies return to base. Let's take a look.

Healthia Ltd (ASX: HLA)

The Healthia share price dropped 4% today after the ASX-listed healthcare company brought in some subdued results for FY22.

The top line did quite well with revenue growth of 44.4% to $202.8 million, but Healthia recorded a net loss of $3.3 million.

Healthia attributes the loss to flooding events across Southeast Queensland and New South Wales, staff absenteeism and cancellations stemming from COVID-19. On top of this, there were one-off non-recurring acquisition, integration and restructuring costs.

Across the year, Healthia deployed $111.3 million in capital towards acquiring 95 new businesses. This includes the 63 Back In Motion physiotherapy clinics, enabling Healthia to become one of the largest health providers in Australia and New Zealand.

However, these acquisitions stretched Healthia's balance sheet. It increased borrowing to around $77 million and managed to negotiate an extension of its finance facility from $70 million to $100 million.

Management advised that it expected to record underlying earnings before interest, taxation, depreciation and amortisation of more than $40 million in FY23.

Healthia also plans to spend at least $20 million on acquisitions in FY23.

The company's current market capitalisation is around $231 million.

Family Zone Cyber Safety Ltd (ASX: FZO)

The Family Zone share price spent all day in the red on the back of a poor set of financial results for FY22 before returning to its previous closing price of 40 cents apiece in the final moments of trading. The company is focused on developing a cyber safety and parental control platform.

Revenue increased 399% from $8.96 million in FY21 to $44.73 million in FY22, but this couldn't curtail the hefty jump in its net loss. Family Zone recorded a 243% increase in its net loss from $21.98 million in FY21 to $75.38 million in FY22.

The significant change in results is due to the company's acquisition of Smoothwall and Cipafilter during the year.

Family Zone currently holds $32.75 million in cash and $0.2 million in long-term borrowings.

Operating cash outflow jumped from negative $15.48 million in FY21 to negative $37.32 million in FY22.

Family Zone's market capitalisation is around $352.23 million.

Audio Pixels Holdings Ltd (ASX: AKP)

The Audio Pixels share price fell by as much as 3% today on the back of soft results for HY22. However, shares in the ASX All Ords company also rallied back to their previous closing price of $14.47 in the final moments of trading.

Revenue went up from $58.3 million in HY21 to $78.6 million in HY22. Audio Pixels' net loss also went in the right direction, improving from $1.6 million to $0.68 million. However, when you account for foreign exchange differences, net loss rose from $2.66 million in HY21 to $2.98 million in HY22.

Operating cash outflow improved slightly from $2.64 million in HY21 to $2.50 million in HY22.

It appears Audio Pixels needs to raise more capital or rely on more debt given it holds $0.59 million in current assets and $1.40 million in current trade payables.

Audio Pixels relied heavily on unsecured borrowings of $2.39 million in HY22.

The current market capitalisation of Audio Pixels is around $415 million.

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Motley Fool contributor Raymond Jang has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended HEALTHIA FPO. The Motley Fool Australia has recommended HEALTHIA FPO. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Why did this ASX 200 healthcare share rocket 16% today?

Raymond Jang — Wed, 31 Aug 2022 06:38:19 +0000

The Clinuvel Pharmaceuticals Limited (ASX: CUV) share price gained 16% today after the company released a strong set of results for FY22.

Shares in the ASX-biotech company went into overdrive today, finishing 16.19% higher at $20.17 a share after hitting an intraday high of $20.43 each.

Let's see what all the fuss was about.

What did Clinuvel report for FY22?

Here is a brief snapshot of the key highlights from the company's FY22 results.

Revenue jumped 37% to $65.7 million
Profit before income tax rose 33% to $34.3 million
Net profit after tax (NPAT) went backwards by 16% to $20.9 million
A fully franked final dividend of 4 cents per share was declared

Clinuvel develops drugs for the treatment of genetic and vascular disorders and makes most of its revenue in Europe and the USA. Its core product is SCENESSE, a drug for erythropoietic protoporphyria, an inherited condition that causes acute and painful sensitivity to light.

SCENESSE was the primary revenue driver with its sales increasing 40.8% to $60 million, in particular in the US.

The significant increase in income tax from $0.98 million in FY21 to $13.4 million in FY22 was the main reason for the decline in net profit after tax, the company said.

Personnel-related costs, share-based payments, and materials expenses also contributed to the fall in the bottom line. Share-based payments rose from $2.6 million in FY21 to $6.1 million in FY22.

Operating cash flows jumped from $19.2 million in FY21 to $39.9 million in FY22. After deducting payments for property and plant and equipment, free cash flow improved from $18.4 million in FY21 to $39.4 million in FY22.

The record date for determining entitlements for the final dividend is 7 September. It is due to be paid on 21 September.

What else happened in FY22?

In March, the Clinuvel share price shot up on the back of a positive update on a stroke treatment pilot study, as covered by my colleague James Mickleboro.

The study revealed that Clinuvel's drug had no adverse side effects in stroke patients by day eight over a 42-day study period.

In May, Clinuvel then recorded positive results by the end of the trial where Clinuvel's drug afamelanotide was deemed safe in treating mild to moderate arterial ischaemic stroke.

Such results demonstrate the potential optionality of Clinuvel's treatments, the company said.

What did management say?

Clinuvel's chief financial officer Darren Keamy said:

CLINUVEL's commercial operations are scaling up to meet treatment demand worldwide, while the Group is pursuing R&D projects which aim to add value over the long-term. Our FY2022 results show a fundamentally strong business to date, allowing us to invest for future growth. Improved cash inflows this year have further bolstered the Company's cash reserves enabling us to continue the implementation of a growth strategy in the face of difficult economic headwinds. The strong cash position has also allowed the Board to declare an increase in dividend this year, most of all recognising the loyalty and patience of long-term shareholders. We remain focused to translate our technology to the benefit of patients and specialised populations, particularly those at highest risk of light-induced damage and skin cancer.

Given Clinuvel currently has $121.5 million in cash with no long-term debt, I can see why Keamy is optimistic about the company's future outlook.

What's next for Clinuvel?

Management is planning to reinvest a large chunk of its capital into new development. In FY22, Clinuvel reinvested more than 49% of its revenue in R&D, new specialised staff, and production.

The biopharmaceutical company has committed to spending $175 million over the five years to 30 June 2025 to execute its growth and expansion plans. Management says is on track based on prior expenditure levels in FY21 and FY22.

Broker Jefferies upgraded its Clinuvel share price target from $31.40 per share to $36.90 per share, maintaining a 'buy' rating. Jefferies sees big market potential for its erythropoietic protoporphyria drug because it believes there are no competitors. However, it also sees increased competition over the medium term.

The Clinuvel share price has suffered a similar fate as many other ASX growth stocks. The company's shares fell by 47% across the last year but have recorded a 10% rise in just the past week.

Meantime, the S&P/ASX 200 Index (ASX: XJO) has been more steady with a fall of 7% over the past year and a drop of 0.16% in the last month.

Clinuvel has a current market capitalisation of around $995 million.

Its current price-to-earnings multiple is around 42.78 times.

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Why is the Qantas share price beating the ASX 200 on Wednesday?

Raymond Jang — Wed, 31 Aug 2022 04:18:24 +0000

The Qantas Airways Limited (ASX: QAN) share price is outpacing the ASX 200 today, but what's causing this superiority?

Qantas shares are currently trading hands at $5.34 apiece, up 0.95% on yesterday's closing price, while the S&P/ASX 200 Index (ASX: XJO) is down 0.2% at the time of writing.

Since releasing its FY22 results last Thursday, the Qantas share price has risen almost 10% and continues to gather pace.

Today's momentum may have been propelled by updates provided by Flight Centre Travel Group Ltd (ASX: FLT) and Webjet Ltd (ASX: WEB).

Webjet announces strong growth in bookings

As reported by my colleague Mitchell Lawler, Webjet disclosed plenty of positive results for the first half of FY23.

Webjet advised today that bookings are currently tracking at 95% of pre-pandemic levels and all three of its business segments are profitable for the FY23 trading year to date. This bodes well for Qantas as the upward trend of travel bookings means more flights.

Webjet management also flagged that tourism is returning to Australia and New Zealand, which is another great sign for Qantas.

Interestingly, the Webjet share price is 9% higher at the time of writing while the Flight Centre share price is up 3% today.

Flight centre responds to media speculation

Yesterday, Flight Centre addressed rumours of possible merger and acquisition activity, as covered by my colleague Brooke Cooper.

The Australian reported that US travel management giant Altour could be a takeover target for Flight Centre. Altour recorded more than $3 billion in sales in 2019 before the pandemic hit.

In response to the rumours, Flight Centre is keeping details close to its chest, advising it will not respond to any media speculation.

Management, however, did advise they would consider acquisition opportunities to support organic growth.

Despite recording a massive loss of $1.9 billion in FY22, the Qantas share price has managed to rise by 10% since the figure was revealed.

Unlike many other ASX growth stocks, the Qantas share price has risen by 5% in the last year and is rallying almost 17% higher across the past month. In contrast, the S&P/ASX 200 Index (ASX: XJO) has fallen by 7% in the last year and declined by 0.03% in the past month.

It seems like generally positive news for online travel agencies has flowed onto Qantas, however, investors ought to be mindful that airline stocks tend to be cyclical.

Qantas' current market capitalisation is around $10.1 billion.

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Motley Fool contributor Raymond Jang has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Flight Centre Travel Group Limited and Webjet Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Nitro share price rockets 40% on takeover approach

Raymond Jang — Wed, 31 Aug 2022 02:56:01 +0000

The Nitro Software Ltd (ASX: NTO) share price shot out of the blocks this morning, catapulting by as much as 41%.

At the time of writing, Nitro shares are trading at $1.57 each, a 39% jump on yesterday's last price of $1.13 a share.

After the Nitro share price went into a trading halt yesterday, the ASX-listed software company reported an indicative takeover approach.

Let's find out what all the fuss is about and why the Nitro share price is skyrocketing today.

Key offer details

Potentia Capital Management Pty Ltd, together with its co-investor HarbourVest Partners, LLC (Potentia Consortium), submitted an unsolicited, conditional, and non-binding proposal to acquire 100% of Nitro at $1.58 cash per share.

The takeover offer is subject to a six-week due diligence period, access to transaction documents including third-party and regulatory consents, as well as Nitro board approval.

The Potentia Consortium currently holds 41.4 million shares in Nitro, representing 17% of total capital.

Nitro turns down the offer

Nitro has decided to decline the indicative offer based on a number of reasons.

Firstly, the recent volatility across the equity market where growth stocks have been particularly hit hard does not present a timely opportunity.

Secondly, the board deemed the offer inadequate given that Nitro is one of only two software companies in the world to provide a proven enterprise-grade [software as a service] SaaS PDF productivity and eSigning platform.

In relation to the $1.58 per share offer, Nitro advised this equates to a 61% discount to a 52-week high Nitro share price of $4.00 per share on 17 November 2021 and an 18% discount to the 12-month volume-weighted average price of $1.93 per share to 29 August 2022.

Management is still open to receiving further proposals that more appropriately compensate shareholders and reflect the underlying value of Nitro.

As mentioned previously, the Nitro share price has taken a battering in the last year, plummeting 53% but today's announcement has propelled a 41% jump in the last month.

In contrast, the S&P/ASX 200 Index (ASX: XJO) has declined by 7% in the last year, and is down 0.11% in the past month.

The company's market capitalisation has risen to around $381 million.

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Motley Fool contributor Raymond Jang has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Nitro Software Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Net loss doubles in FY22, so what's with the Imugene share price today?

Raymond Jang — Wed, 31 Aug 2022 02:25:43 +0000

The Imugene Limited (ASX: IMU) share price is on mute after the ASX-listed biotech company reported its results for FY22.

After a wobbly start this morning, the Imugene share price has now stalled at yesterday's closing price of 24 cents despite a significant jump in the company's net loss for FY22.

Imugene is a clinical-stage immuno-oncology company developing new treatments that seek to activate the immune system of cancer patients to identify and eradicate tumours.

Let's take a look at the Imugene results for FY22.

What did Imugene report for FY22?

As mentioned, Imugene is still at a clinical stage, so it's yet to produce any revenue. Imugene currently receives income from Australian government incentives, which increased from $7.2 million in FY21 to $12.6 million in FY22.

Research and development (R&D) expenses more than doubled from $15.4 million in FY21 to $36.6 million in FY22. General and administrative expenses also lifted, from $10.3 million in FY21 to $14 million in FY22.

Overall, Imugene recorded a net loss of $37.9 million in FY22 compared to a net loss of $18.5 million in FY21.

The current cash balance stands at $99.9 million, so there is ample capital for Imugene to continue with its clinical trials.

What else happened in FY22?

Earlier this month, Imugene provided a positive update as the first patient from the third cohort of the Checkvacc Phase 1 clinical trial had been dosed. The Imugene share price shot up 11% on this news.

Since the update, Checkvacc has progressed to dosing for cohort 3 in triple-negative breast cancer patients. Management plans to disclose the results of these studies later.

Imugene also completed phase 2 in HER-2/Neu overexpressing advanced gastric cancer.

The biotech company also presented new PD1-Vaxx data from non-small cell lung cancer patients at the IASLC 2022 World Conference on Lung Cancer in Vienna, Austria. This data shows early positive signs as the company progresses towards a phase 1b combination study.

What did management say?

Commenting on the FY22 results, Imugene executive chair Paul Hopper said:

As our deep pipeline has continued to advance and strengthen, it provides a wide range of possibilities and opportunities for Imugene moving forward. Financially, the company remains in an enviable position with a long cash runway that allows us to continue our clinical programs unimpeded.
This was reinforced by the $90 million placement conducted early in the financial year alongside a further $5 million raise via a Share Purchase Plan. Both received overwhelming support and we thank those investors that participated.

It appears management is confident in its current financial position, and now it's a matter of delivering the results. Patience is required in these types of businesses because it could take years for a commercial solution to develop.

What's next for Imugene?

The plan is for PD1-Vaxx to be tested in combination with atezolizumab (Tecentriq) in patients with non-small cell lung cancer. Imugene locked in a second clinical supply agreement with Roche. The testing will be completed at sites in Australia and the United States.

As for Imugene's latest technology onCARlytics, the company advised of collaborations with two US-based partners, Celularity and Eureka Therapeutics. This partnership involves investigating the combination of Imugene's CD19 oncolytic virus technology with T cell therapies being developed by each partner.

The Imugene share price has suffered a big fall of 43% in the last 12 months but is looking to make amends with a 4% jump over the last month. The S&P/ASX 200 Index (ASX: XJO) has fallen 7% in the past year and is down 0.3% in the past month.

Imugene has a market capitalisation of around $1.4 billion.

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Mesoblast share price lifts 5% despite hefty loss

Raymond Jang — Wed, 31 Aug 2022 00:49:22 +0000

The Mesoblast Limited (ASX: MSB) share price is trading higher on Wednesday morning after the ASX-listed biotech company reported its FY22 results.

Mesoblast shares opened at 80 cents each this morning. They're currently at trading at 82.75 cents a share, 5.41% higher than yesterday's closing price of 78.5 cents a share.

Let's take a look at the Mesoblast FY22 results.

What did Mesoblast report?

Mesoblast reported the following key highlights for FY22:

Revenue jumped 37% from US$7.5 million in FY21 to US$10.2 million
Net loss after tax of US$91.3 million, an improvement on US$98.8 million for FY21
Cash balance of US$60.4 million

The lift in revenue came from an increase in royalties of US$2.7 million along with a US$1.2 million milestone payment from Takeda. This followed Takeda receiving approval to manufacture and market Alofisel in Japan for treatment of perianal fistulas in Crohn's Disease.

The amount of cash burned across operational expenses was reduced in FY22. Research and development expenses fell 38% to US$32.8 million due to the completion of clinical trial recruitment and data analysis for COVID-19 ARDS, CLBP, and CHF product candidates.

Mesoblast also achieved manufacturing efficiencies as costs went down from US$32.7 million in FY21 to US$30.8 million in FY22. A fall in employee compensation costs contributed to an improvement in management and administration expenses. They were down by 12%.

As of FY22, Mesoblast has US$17.3 million in finance cost which includes cash interest paid of US$6.1 million.

Earlier this month, the company also announced it had completed a $65 million capital raise.

Management enthused by the latest developments

Mesoblast is striving to be the global leader in developing regenerative medicine products.

In the latest quarter for the calendar year 2023, Mesoblast has resubmitted its BLA application for remestemcel-L in children with SR-aGVHD.

In relation to rexlemestrocel-L, Mesoblast plans to gain FDA clearance by the end of this year to commence an important study for potential marketing approval of this drug in managing chronic lower back pain due to degenerative disc disease.

The list of pipeline activities remains long as Mesoblast continues to make progress in taking the necessary steps to prove the validity and effectiveness of resmestemcel-L across steroid-refractory acute graft versus host disease, respiratory distress syndrome, and inflammatory bowel disease.

A number of clinical trials are being planned to test rexlemestrocel-L in addressing chronic heart failure and chronic low back pain associated with degenerative disc disease.

What did management say?

Commenting on the FY22 results, Mesoblast chief executive Dr Silviu Itescu said the following:

I am pleased to report that calendar year 2022 is shaping up to be a transformational year for the Company. We are working towards the planned resubmission of the Biologics License Application (BLA) this quarter for remestemcel-L in children with steroid-refractory acute graft versus host disease (SR-aGVHD) and believe we have addressed the issues that were raised in the Complete Response Letter from the United States Food and Drug Administration (US FDA). Specifically, we have validated our key potency assay which has been in place throughout the extensive development phase of remestemcel-L and which reflects the mechanism of action by which remestemcel-L treatment results in a remarkable survival benefit in the most severely compromised children with SR-aGVHD.
Our immunoselected next generation product, rexlemestrocel-L, is also at a pivotal stage in its development for patients with severe inflammation at high risk for death or other major adverse cardiac events (MACE) from chronic heart failure with reduced ejection fraction (HFrEF), and in patients with unremitting chronic low back pain from degenerative disc disease (CLBP). We have seen that rexlemestrocel-L improves left ventricular systolic function and subsequently reduces MACE events across high-risk HFrEF populations. Consequently, we plan to meet next quarter with FDA under our existing RMAT designation re a potential marketing approval pathway for rexlemestrocel-L in highrisk patients with HFrEF and inflammation.

In the past year, the Mesoblast share price has fallen by 51% and dropped 28% in the last six months. In contrast, the S&P/ASX 200 Index (ASX: XJO) has declined by 7% in the last twelve months and around 1% across the past six months.

Mesoblast has a current market capitalisation of around $597 million.

The challenging aspect of biotech companies like Mesoblast is the ability to determine the likelihood of success in clinical trials. The Mesoblast share price may be worth monitoring if regenerative medicine falls within your expertise.

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Why did the Woodside share price hit a 2-year high on Thursday?

Raymond Jang — Thu, 25 Aug 2022 06:27:28 +0000

The Woodside Energy Group Ltd (ASX: WDS) share price enjoyed another day in the green on Thursday.

At market close, Woodside shares were up 1.98% at $35.51 apiece. However, soon after market open, they reached $36.20 — a two-year high. In fact, in the last couple of years, the ASX oil share has risen by 75%.

Let's take a look at what might be pushing the Woodside share price higher.

What happened today?

According to Bloomberg, China's State Council outlined a 19-point policy stimulus package of 1 trillion yuan, or $210 billion.

This funding is focused on infrastructure spending as a way to drive economic growth following the dampening impact of COVID lockdowns and a property market downturn.

This presents a favourable tailwind for Woodside as greater infrastructure spending means more demand for steel and metals.

Woodside would be pleased to hear some positive news after the US and China reported weaker than expected economic data last week. China cut interest rates upon poor data on industrial output and retail sales, missing most analyst estimates as reported by Reuters.

Additionally, the price of Woodside's key commodity rose for a third straight session on Thursday, Trading Economics reports. West Texas Intermediate (WTI) crude oil futures rose above $95 per barrel, while Brent crude oil futures soared to $102 per barrel — the highest prices in three weeks.

Perhaps not coincidentally, the Woodside share price also rose for a third straight session today.

A quick recap of Woodside's most recent results

Last month, Woodside released its results for the three months ending 30 June, as my colleague Bernd Struben reported.

Q2 2022 saw the oil producer achieve revenue of $3.44 billion, up 44% from Q1 2022 and 159% from Q1 2021. Woodside also produced 33.8 million barrels of oil equivalent (MMboe), a 60% increase from the prior quarter and up 49% from Q2 2021.

Additionally, the company reported sales volume of 35.8 MMboe, up 51% from Q1 2022 and up 27% on Q1 2021.

These results were spearheaded by Woodside's merger with the petroleum business of BHP Group Ltd (ASX: BHP). This big event catapulted Woodside into a top 10 global independent energy producer by hydrocarbon production.

The Woodside share price has jumped 75% in the past year, 57% year to date, and 12% in the past month.

For comparison, the S&P/ASX 200 Index (ASX: XJO) is down 6% in the past 12 months and 7% so far this year, but is up by almost 4% in the last month.

Woodside has a market capitalisation of around $66.1 billion.

The company is currently trading at a price-to-earnings multiple of 11.94x. On a historical basis, this is on the lower end, so it could be that the poor economic outlook and macroeconomic activity are instilling pessimism in the market.

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Hipages share price sinks as 'perfect storm' hits profit

Raymond Jang — Thu, 25 Aug 2022 03:35:02 +0000

The Hipages Group Holdings Ltd (ASX: HPG) share price is falling today after the company released its results for the year ending 30 June (FY22).

Hipages shares were sinking by as much as 9% in early trading but have since partially recovered and are currently down 2.68% at $1.45 apiece.

Let's get the measuring tape out and see what unfolded in FY22 for the ASX-listed tradies services platform.

What did Hipages report for FY22?

Revenue of $61.9 million, up 11% from $55.8 million in FY21
Operating expenses of $51.1 million, up 15% from $44.3 million in FY21
Earnings before interest, tax, depreciation, and amortisation (EBITDA) before significant items of $10.7 million, down 8% from $11.7 million in FY21
EBITDA margin of 17%, down from 21% in FY21
Net loss after tax of $0.91 million, compared to a profit of $1.2 million in FY21

Across Hipages' key operations, it recorded higher monthly recurring revenue of 5% to $5.5 million. The number of jobs processed on the Hipages platform also lifted 6% to 1.63 million. The average revenue per user surged 11% to $1,707 compared to $1,536 in FY21.

The jump in operating expenses was due to greater investment in headcount and marketing. Marketing expenditure went up from $16 million to $18.8 million, in particular building its brand through the sponsorship of The Block.

In terms of employees, Hipages invested in its tech team to support growth and strategic execution.

Despite the reversal in Hipages' bottom line, it managed to improve its operating cash flow slightly from $12.5 million in FY21 to $12.7 million in FY22.

Hipages, which only listed in November 2020, appears to be in a sound financial position with cash and funds on deposit of $13.2 million and no debt.

What else occurred in FY22?

Hipages rolled out its job management solution, which plays a crucial role in transitioning to a software-as-a-service model. Tradie subscribers can now use the platform to schedule and personalise documentation with self-service options.

The tradie marketplace business also acquired Builderscrack, a similar business based in New Zealand. This enabled Hipages to achieve its goal of becoming the leading tradie marketplace across the trans-Tasman.

In addition, the company acquired a 25% stake in Bricks & Agent, one of Australia's leading property management technology platforms.

Management commentary

Speaking on the results, Hipages co-founder and CEO Roby Sharon-Zipser said:

In FY22 we faced a perfect storm for a marketplace business, with supply constricted by our tradie customers being unable to work due to COVID restrictions, then facing an unprecedented backlog of jobs driven by strong consumer demand.
In this environment, the strength of our subscription model shone through, enabling us to deliver growth in revenues, subscription tradies and ARPU, while executing our strategy and consolidating our position as the #1 online tradie marketplace in both Australia and New Zealand.

What's ahead for Hipages?

Management expects H1 FY23 revenue growth to stay in line with H2 FY22 and then accelerate to the mid-teens in the second half of FY23.

The EBITDA margin for FY23 is expected to be ahead of FY22.

The company advises there is a clear path towards free cash flow after recording positive free cash flow in its most recent quarter for FY22.

Commenting on the outlook, Sharon-Zipser said:

Looking ahead, I am very excited about the future for hipages Group. The countercyclical nature of our model means that we are well positioned to benefit from economic uncertainty in the near-term, while the opportunity in our existing markets and new adjacencies is significant.
Our efficient operating model gives us the confidence to continue to invest with a clear pathway to ongoing positive free cash flow. We remain highly focused on executing our strategy and investing to build the foundations for long-term profitable growth.

The Hipages share price has copped a hammering alongside other ASX growth stocks over the last 12 months, dropping 52%. It has also fallen 62% this year to date. However, it has rallied in the past month, up 28%.

The S&P/ASX 200 Index (ASX: XJO) hasn't been as erratic, falling 6% in the past year and then climbing up 4% in the last month.

Hipages has a market capitalisation of around $195 million.

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Motley Fool contributor Raymond Jang has no position in any of the stocks mentioned.Â The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Hipages Group Holdings Ltd. The Motley Fool Australia has positions in and has recommended Hipages Group Holdings Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Eagers share price edges higher after 'robust first half'

Raymond Jang — Thu, 25 Aug 2022 02:30:16 +0000

The Eagers Automotive Ltd (ASX: APE) share price is bouncing back this afternoon after the company announced its results for the first half of 2022 on Thursday morning.

The Eagers share price is currently up 019% at $13.335. That comes after it fell as low as $12.74 earlier in the day, a fall of 4% on Wednesday's closing price.

Let's see what the ASX-listed automotive dealership company reported.

Here is a quick snapshot of the key results for 1H22:

Revenue of $4.2 billion, down 10.3% from $4.7 billion in 1H21
Net profit before tax fell 7.8%, from $267.4 million in 1H21 to $246.5 million
Net profit after tax (NPAT) fell 11.6%, from $202.3 million in 1H21 to $178.7 million
Earnings before interest, tax, depreciation, amortisation, and impairment (EBIDTAI) of $336.2 million, down 9.9% from $373.4 million in 1H21
Announced a record interim fully franked dividend of 22 cents per share (cps) for 1H22

Revenue was adversely impacted by the one-off divestment of the Daimler Trucks in 2021 and ongoing supply chain constraints on new vehicle deliveries. Supply chain issues have caused disruption to logistics and labour.

As a result, Eagers' bottom line also fell in line with revenue but to a lesser extent.

The company said demand for new vehicles continues to exceed supply as its order book is 32% greater on a like-for-like basis since December 2021.

Even though revenue fell and profit went down, operating cash flow rose from $204.2 million in 1H21 to $232.6 million.

A record ordinary fully-franked interim dividend of 22 cps was approved for payment on 23 September to shareholders who registered on 5 September. That's a 10% increase on the 20 cps in 1H21.

Eagers' dividend reinvestment plan will not operate in relation to the ordinary dividend.

What else happened in 1H22?

The automotive company continued to invest in scaling the independent pre-owned business easyauto123 to drive more revenue and volume growth across Australia and New Zealand.

Eagers rolled out new automotive retail formats like the AutoMall West located at Indooroopilly
Shopping Centre in west Brisbane, which opened in April.

The company continued to expand its network to include new vehicle energy manufacturers in the hybrid, electric and hydrogen space.

Eagers also announced plans to carry out an on-market share buyback of up to 10% of issued share capital. It said the buyback "reflects the Board's focus on active capital management and is testament to the Company's strong balance sheet and record available liquidity".

The company reported $842.8 million of available liquidity at 30 June 2022, which it said was "a record level". The liquidity position includes available cash and undrawn commitments under corporate debt facilities.

What did management say?

Commenting on the results, Eagers CEO Keith Thornton said:

The robust first half performance reflects the strength of our underlying business, disciplined management of our rebased cost profile and strong progress on strategic frowth initiatives, which have together enabled us to capitalise on favourable market dynamics.
Demand has materially exceeded supply during the first half and our key lead indicators, including new vehicle order bank, remain at record levels.
Our leading position in large addressable markets, balanced economic model and diverse geographic footprint, ensure the business is able to withstand changes in market conditions. In addition, the combination of growth from our existing business, new entrants to the market wanting to partner with us and strategic acquisition opportunities provide a significant platform for sustainable earnings growth over the long term.

What's next for Eagers?

Management expects demand for vehicles to continue to outstrip supply in 2H22.

The management team is focused on enhancing productivity via property and staff and rolling out omnichannel offerings. It expects the ACT and South Australian acquisitions to be fully integrated in 2H22.

As for future acquisition opportunities, management will continue to evaluate this via existing partnerships and new market entrants.

The Eagers share price has dropped by around 21% over the past year and 5% year to date, but is up 7% over the past month.

In comparison, the S&P/ASX 200 Index (ASX: XJO) has fallen 6% over the past year and 7% year to date, but has risen 4% across the last month.

Eagers has a market capitalisation of $3.4 billion.

AP Eagers is currently trading at a price-to-earnings multiple of around 10x.

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City Chic share price plummets 13% as cash flow sinks in FY22

Raymond Jang — Thu, 25 Aug 2022 00:53:56 +0000

The City Chic Collective Ltd (ASX: CCX) share price took a deep dive this morning on the back of a challenging set of full-year results for FY22.

The City Chic share price closed at $2.46 per share yesterday and plummeted 13.4% to a low of $2.13 at the open today. After regaining some ground this morning, shares in the company are now trading 11.3% lower at $2.18.

Let's dive into the FY22 results for the ASX-listed plus-sized apparel global retailer.

What did City Chic report for FY22?

Here are the key highlights from the City Chic FY22 results.

Revenue grew 39% to $369.2 million relative to FY21
Net profit after tax increased slightly from $21.6 million to $22.3 million
The inventory balance nearly tripled from $67 million to $196 million
Operating cash flow plummeted from $15.2 million to negative $51.9 million

In Australia and New Zealand, revenue rose by 11% despite the adverse impact of mandated COVID-19 store closures. Online growth sales of 27.5% helped with offsetting the store closures.

Americas contributed a significant 53.9% jump in revenue, mainly due to solid website traffic growth of 31% and 42% growth in customer numbers.

Europe, the Middle East and Africa regions recorded $45.1 million in sales but reeled in lower gross margin and earnings before interest, taxation and amortisation (EBITDA) margin. This was down to supply chain and logistics issues, in particular across the second half of FY22.

City Chic ramped up its inventory levels heavily to mitigate the impact of supply chain issues in FY23. As a result, the current inventory balance sits at $195.9 million.

This would appear the biggest reason why operating cash flow reversed dramatically as management anticipates greater macroeconomic and consumer spending uncertainty. Given the challenging environment ahead, management decided not to declare a dividend for FY22.

City Chic's balance sheet appears stable, with a net debt position of $4 million.

FY23 update

Management advises the first seven weeks of trading in FY23 have been consistent with FY22, with some positive momentum in August.

Both physical stores and online are performing above expectations in Australia. In the United States, the City Chic website outperforms last year, while the Avenue website is trading below over the same period. However, there are signs of week-on-week improvement.

Cyclical issues are still present in the UK, but the region continues to signs of growth.

Management commentary

City Chic CEO and managing director Phil Ryan said management was focused on delivering free cash flow in FY23. He said:

To support this growth and ensure sustained growth into the future, we established a
sophisticated global distribution network through our own websites and a global partner
network. This included diversifying our global supply chain into new sourcing regions and
investing in inventory ahead of the curve.
This investment will unwind in FY23 as accelerated inbounding reduces and we leverage new supply chain relationships. This will deliver strong free cash flows into FY23 which, along with our expanded debt facility, provides good funding flexibility to execute on our growth plans.

City Chic outlook

Management appears confident in producing another year of profitable growth. However, this is dependent on the level of geopolitical uncertainty.

To counter the risk of margin reductions, management has flagged it will raise retail prices where appropriate and aim to grow market share simultaneously.

The plus-size retailer also indicated inventory levels will return to a more normal level, targeting $125 million to $135 million in FY23. Management hopes to generate a positive net cash position in the second half.

The ASX hasn't been kind to the City Chic share price in the last year, plummeting by 60%, but there are signs of recovery as it rallied 3% higher in the past month.

The S&P/ASX 200 Index (ASX: XJO) suffered a drop of 7% and is rebounding in tandem with the City Chic share price, lifting by 3% in the last month.

Based on the current share price, City Chic has a market capitalisation of around $535 million.

In terms of valuation, City Chic is trading at a price-to-earnings multiple of 27x.

The post City Chic share price plummets 13% as cash flow sinks in FY22 appeared first on The Motley Fool Australia.

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Motley Fool contributor Raymond Jang has no positions in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Raymond Jang, Author at The Motley Fool Australia

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