Four ASX shares that are not letting that hold them back are listed below. Here's why they are rising:

Capricorn Metals Ltd (ASX: CMM)

The Capricorn Metals share price is up almost 5% to $4.24. This morning, this gold miner revealed that it has reduced its gold hedge book by 51,000 ounces. This is to provide further exposure to any increase in the A$ gold price over the next 15 months. Capricorn advised that the closure of this gold hedging results in it having no hedging delivery obligations until September 2024.

DDH1 Ltd (ASX: DDH)

The DDH1 share price is up over 6% to 91.5 cents. Investors have been buying this drilling services company's shares after it agreed to be acquired by Perenti Ltd (ASX: PRN). If all goes to plan, DDH1 shareholders will receive 12.38 cents in cash together with 0.7111 Perenti shares per DDH1 share. This values DDH1 at an equity value of $410 million.

Metcash Limited (ASX: MTS)

The Metcash share price is up 4% to $3.73. This morning, this wholesale distributor released its full-year results and delivered profits ahead of expectations. Metcash reported group revenue growth of 6.2% to $15.8 billion and underlying profit after tax growth of 4.6% to $307.5 million. This compares to consensus estimates of $16,241 million and $304 million, respectively.

Silk Laser Australia Ltd (ASX: SLA)

The Silk Laser share price is up 17% to $3.31. This follows news that Wesfarmers Ltd (ASX: WES) has returned with an improved takeover offer of $3.35 cash per share. This values the non-surgical aesthetics clinic operator at $180 million. Wesfarmers had previously offered $3.15 per share and declined to match a higher offer from EC Healthcare.

The post Why Capricorn Metals, DDH1, Metcash, and Silk Laser shares are racing higher appeared first on The Motley Fool Australia.

Surprisingly, the market has reacted negatively to the Perenti share price following the scheme of arrangement announcement. Shares in the larger mining services contractor are down 8.2% to $1.17, while the smaller drilling company, DDH1, trades up 7.9% to 93 cents apiece.

The proposed deal would establish an ASX-listed mining services company with a combined market capitalisation of $1.3 billion.

What's the sales pitch for merging?

Entering into a binding scheme implementation agreement, DDH1 shareholders are expected to receive 12.38 cents in cash alongside 0.7111 Perenti shares per DDH1 share. The offer values the Australian drilling company at an equity value of $410 million.

Before the market opened, Perenti detailed the compelling proposition to merge with DDH1 in a presentation to investors. The main strategic points for undertaking the merger were highlighted as being:

• Synergies: estimated $22 million in post-tax synergies
• Earnings: double-digit earnings accretive
• Scale: creating a global leader in mining services, unlocking the potential for S&P/ASX 200 Index (ASX: XJO) inclusion
• Increases share of earnings from Australian operations
• Fundamentals: improves the balance sheet, improves free cash flow, and increases return on equity

Commenting on the proposed merger of the two ASX mining shares, Perenti CEO Mark Norwell said:

The long-term outlook for a sustained production cycle needs increased drilling spend to ensure mining reserves are not diminished, and drilling is becoming more complex, resulting in larger programs and demand for specialist services.

DDH1 is a highly respected tier 1 global operator, with significant capabilities across a complete range of specialised surface and underground drilling services, that are complementary to our existing clients and service offering.

Notably, the combination will create a company possessing more than 290 drilling rigs — one of the largest fleets on the planet.

How do past earnings of these ASX mining shares compare?

Perenti generated $55.7 million in profits on $2.7 billion of revenue in the 12 months ending 31 December 2022 — equating to a net income margin of 2.1%. Meanwhile, DDH1 pulled in $44.5 million in earnings on $532.7 million of revenue — coming to a margin of 8.4%.

If the two were already a combined company, it would be trading on a trailing price-to-earnings (P/E) ratio of 11.7. Perenti expects $3.45 billion in FY23 revenue for the combined group.

Finally, October 2023 is the targeted date for the deal to be implemented.

The post Billion-dollar fusion: These 2 ASX mining shares are combining appeared first on The Motley Fool Australia.

The Motley Fool chats with fund managers so that you can get an insight into how the professionals think. In this edition, Eley Griffiths portfolio manager Nick Guidera picks 3 ASX shares that are ready to shoot up in 2022.

Hottest ASX shares

The Motley Fool: What are the 3 best stock buys right now?

Nick Guidera: One that might be less familiar to your readers is Tuas Ltd (ASX: TUA). 

Following the merger between TPG Telecom and Vodafone in June 2020, the Singapore mobile business that TPG owned at the time was demerged from the broader group and transferred into a business known as Tuas. 

That listed entity now is a significantly growing telco… going after the Singapore mobile market. 

If investors can cast their mind back to the early days of TPG, TPG came in to disrupt the core telcos of Telstra Corporation Ltd (ASX: TLS) and Optus — and Vodafone to a lesser extent — offering cheap plans and good coverage, and an affordable solution for [an] area of the market that perhaps wasn't being looked after. 

That playbook is effectively being rolled out in Singapore by the former TPG team. As they look to take share in that market, they've spent the last few years building out their coverage.

They recently reached EBITDA break-even, and in their most recent quarterly update at their AGM last week, they indicated that they were making money at the EBITDA line, as well as growing subscribers. 

Probably the most interesting thing about the business is the plans that they're offering, I've been told, they're at least one-tenth of the price of some of the competitors out there. It's no wonder they're taking share, but they're doing it in a profitable way as demonstrated by [their] last quarter. 

I think that's a really interesting one and one that while it's had a good run, there's a long way to go in that story.

MF: Your second one?

NG: The second one is a sector that has struggled this year, but I think is particularly interesting, and that is DDH1 Ltd (ASX: DDH). DDH1 is a drilling business based out of Perth, WA. They have a significant amount of market share across hard rock commodities, and they provide drilling services for the likes of Fortescue Metals Group Limited (ASX: FMG), Rio Tinto Limited (ASX: RIO), BHP Group Ltd (ASX: BHP) and gold mining companies as well. 

They have had a very positive start to FY 22. Their utilisation of their drilling rigs has picked up substantially and they are also continuing to increase their pricing because of the demand for their drilling services across miners, who are looking to expand production, as they look to recycle mines. 

They recently announced the acquisition of Swick Mining Services Ltd (ASX: SWK), which is another mining company, to expand their fleet and to in-house some of the maintenance that they're currently outsourcing.

If you look at the competitors globally, like Major Drilling Group International Inc (TSE: MDI), they're saying quotes like "given the history of a mine cycle and the projected near term supply deficit for many mining commodities, I believe we're in the early stages of a significant mining industry upcycle" — and that's come from the CEO of Major Drilling, which is one of the largest drillers globally, listed in Canada. 

Given this is the exposure to Australian mining, and I think the sector's ripe for attention as miners who have made a lot of money through the iron ore booms and lithium booms and the gold booms from recent years, look to restock that production. The easiest way they do that is through incremental drilling and these guys are very well placed.

MF: And your final pick?

NG: The third one is Wisr Ltd (ASX: WZR). Wisr is an interesting small company that is one of the fastest-growing consumer finance fintechs. They have a highly automated digital lending and wellness platform that services prime borrowers. They've got really compelling unit economics, in terms of they continue to lower their funding costs, which will ultimately drive improved EBITDA margins. They've got a really big runway for growth as they take share away from the incumbent banks who are focusing less on personal loans. 

They've done it in a way where they're not just trying to gouge the customer with high interest rates. They're actually trying to encourage customers to look at their financial wellness through their tools that they're offering. They've got, I think, more than 450,000 users in their financial wellness ecosystem which they can then use to sell their lending products to. And as the world opens up, there should be some good demand for personal credit to go on holidays, to deal with life events like weddings, and to purchase new cars.

With a really strong management team and a growing loan book — and this stock has been knocked about not dissimilarly for the last 3 or 4 weeks on the fact that it is relatively early stage — I think it looks pretty interesting.

MF: Wisr shares were headed up earlier this year, but it's come down a little bit in recent weeks, hasn't it?

NG: It has. I think it's one of those stocks that were probably subject to some profit-taking. Little fundamentally wrong with the business, just a market that's a little bit more conservative and people wanting to allocate capital differently.

MF: Do you ever worry with these lending businesses about the amount of ongoing capital they require?

NG: Well, the beauty of Wisr's model is they have a warehouse arrangement with a number of the large major banks. Because the major banks can't access the personal loan market as efficiently as perhaps some of these new fintech digital offerings, they're partnering with these emerging companies like Wisr and offering their balance sheet to help with that funding requirement. 

In a way, the actual funding requirement from Wisr specifically is less than what it would be, not having these warehouse funding arrangements. Should the financial system melt down or there be a credit crunch of sorts then, yes, certainly these businesses are vulnerable. But for the moment, with a growing appetite for banks to expand how they lend, I think businesses like Wisr are pretty well-positioned.

The post 3 obscure ASX shares ready to rocket: expert appeared first on The Motley Fool Australia.

But whether a full-on correction does or doesn't arrive, it pays to buy ASX shares in quality businesses that mostly have their fate in their own hands.

If the market drops, those stocks will be more resilient against price falls.

If the market rises, those shares will have more potential for growth than their rivals.

In a recent client-only webinar, 2 fund managers from Eley Griffiths Group (EGG) picked out 3 such ASX shares that excite them after the August reporting season.

Only just above the IPO price

EGG portfolio manager Nick Guidera likes the look of DDH1 Ltd (ASX: DDH), which listed on the ASX in March.

"Despite exceeding every major metric in its prospectus forecast at its maiden results, the stock is only just above IPO price at $1.10."

Indeed, on Tuesday afternoon, DDH1 shares were trading at $1.23.

The company provides drilling services to the mining industry.

"It's a high-quality contractor with sector-leading return on capital, one of the highest margins amongst the mining services sector, and one of the strongest balance sheets," Guidera said.

"This stock has all things going for it at the moment — rig numbers improving, utilisation improving… We think there's significant upside."

Can you reject this ASX share?

Discount variety store Reject Shop Ltd (ASX: TRS) has burned more than a few investors the past few years.

As of Tuesday afternoon, the stock was trading at $6.30 which is more than 39% down over the past 5 years, as well as 14.5% lower over the past 12 months.

But Guidera reckons there's only one way it can go from here.

"There's a possibility the low may be in for that one."

After its results announcement last month, brokers at Morgan Stanley agreed with Guidera.

They have rated Reject Shop as a 'buy' with a target of $10, which would be a tidy 59% gain from the current price.

Retail and hospitality will be roaring back after lockdown

With Australia's 2 largest states hurtling towards 70% and 80% vaccination coverage, the end of lockdowns is looming.

And with that, Australians (or at least the vaccinated ones) are forecast to spend big on retail and hospitality.

EGG portfolio manager David Allingham reckons Tyro Payments Ltd (ASX: TYR) is poised to take full advantage.

"This business is, we think, absolutely at the forefront of the reopening trade that we're going to see coming into Christmas across NSW and Victoria."

Tyro provides card payment terminals to customer-facing businesses.

"Its 2 key payment verticals, physical, are retail and hospitality. It's about 80% of its transaction value," he said.

"This business has clearly been hampered by what has happened with the lockdowns. This is going to have an enormous reopening benefit."

Tyro shares are up 19.5% for the year, trading at $4.05 on Tuesday afternoon.

"We're bullish on Tyro. It's trading at $4 today — we think it can trade comfortably with a $5 handle as we move into next year."

The post 3 beaten-up ASX shares that are exciting us: experts appeared first on The Motley Fool Australia.

At the time of writing, the drilling company's shares are up 9.55% to $1.20. In comparison, the All Ordinaries Index (ASX: XAO) is ascending 0.9% to 7,665 points.

How did DDH1 perform?

Investors are buying up DDH1 shares after the company reported robust growth for the year ending 30 June 2021.

According to the release, DDH1 reported preliminary unaudited pro-forma earnings before interest, tax, depreciation and amortisation (EBITDA) of $74.8 million.

This represents an increase of 7.9% on the original forecast of $69.3 million in its February 2021 prospectus.

In addition, the company expects preliminary unaudited pro-forma earnings before interest and tax (EBIT) to be $51.1 million, a lift of 16.1%. Its initial public offering (IPO) prospectus predicted the metric to come in at $44 million.

DDH1 attributed the improved performance to revenue exceeding previous estimates. Further training incentives received $2.3 million, with $1.6 million lower depreciation than assumed.

The company is scheduled to release its full-year FY21 audited financial results late next month.

DDH1 managing director and CEO Sy Van Dyk commented:

Since listing on the ASX in March, DDH1 has continued to benefit from the strong macro-economic conditions that suit our diversified commodities exposure, client base and geographic footprint.

… Our Australia-wide, diverse client base and prospective client base remain actively engaged across all stages of mineral exploration and resource-definition drilling and we are delivering the range of quality drilling services that they are demanding.

The preliminary unaudited results for FY21 are very pleasing and are the result of the company's operational excellence, strong balance sheet and disciplined investment in growth.

About the DDH1 share price

From its debut on the ASX in March, DDH1 shares have gained close to 40%. The DDH1 share price is nearing its all-time high of $1.265. It is currently just 5% shy of this record.

DDH1 presides a market capitalisation of roughly $408.7 million, with 342 million shares on its books.

The post Here's why the DDH1 (ASX:DDH) share price is rocketing 9% today appeared first on The Motley Fool Australia.

Funding for growth

The DDH1 share price entered new territory today after providing investors with a positive update.

According to its release, DDH1 advised that it agreed to the terms with Bankwest to receive debt facilities of up to $60 million. Furthermore, the available funds consist of a $50 million revolving credit line and $10 million in asset finance.

This follows the company's previous announcement in its Initial Public Offering (IPO) prospectus to secure funding to drive future growth.

DDH1 stated that the Bankwest debt facilities represent the sole significant credit line available for expanding its operations. In addition, it paves the way for another third-party, asset-backed finance if needed.

The company is focused on executing its growth strategy in servicing increasing demand from its clients and winning new work. By the first half of FY22, DDH1 is planning to have 103 drill rigs in its arsenal, up from the current 97 to date. This will allow the company to expand operations and further enhance its market position as Australia's leading mineral drilling contractor.

The revolving credit facility has a 5-year term and can be used for a variety of purposes. This includes general corporate purposes including acquisitions, capital expenditure, and working capital. The $10 million asset finance is uncommitted and can only be used for equipment purchases.

Management commentary

DDH1 chief financial officer, Ben MacKinnon welcomed the approval of the credit facility, saying:

We are delighted to have agreed on terms with Bankwest that provide DDH1 with funding to execute our strategic growth plan – at a time when there is increasing market demand in Australia for the high- quality services that we deliver.

The support from Bankwest underscores DDH1's standing as a financially responsible and disciplined mineral drilling sector operator and is built on our strong balance sheet, which had net cash of $3.3 million at 9 March 2021.

Since the company's inception in 2006, DDH1 has established a track record of executing its long-term vision alongside balancing short-term profitability and investment in growth, enabling us to remain consistently profitable while growing market share.

DDH1 share price snapshot

Since listing last month at an issue price of $1.10, the DDH1 share price has slightly lost over 2%. The company's shares notably fell to a low of 81 cents that day, never reaching its issue price until today.

On valuation grounds, DDH1 commands a market capitalisation of roughly $366.8 million, with 342.8 million shares on issue.

The post DDH1 (ASX:DDH) share price edges higher on credit facility appeared first on The Motley Fool Australia.

At the time of writing, the drilling company's shares are down a very disappointing 26% from its issue price to 81 cents.

What is DDH1?

DDH1 was founded in 2006 and provides a range of specialised drilling services to companies mining or exploring for mineral deposits in Australia.

Management notes that mineral exploration and mining companies have an ongoing need for drilling services to provide them with rock samples for analysis of their mineral content and other geological, chemical, and structural properties.

These companies typically use service providers such as DDH1 rather than undertaking this activity in-house.

Among its 102 customers are the likes of BHP Group Ltd (ASX: BHP), Evolution Mining Ltd (ASX: EVN) Newcrest Mining Ltd (ASX: NCM), Rio Tinto Limited (ASX: RIO), Roy Hill Iron Ore, and St Barbara Ltd (ASX: SBM).

In FY 2020, the company reported pro forma revenue of $249.8 million and EBITDA of $64.5 million. This is expected to grow to $280.2 million and $69.3 million, respectively, in FY 2021.

The DDH1 IPO

DDH1 raised $150 million from investors via the issue of 136,363,636 shares at an issue price of $1.10 per share.

Combined with the other 205,866,215 shares held by existing shareholders, this gave DDH1 a market capitalisation of $376 million upon listing.

According to the prospectus, the proceeds will be used mainly to provide certain existing shareholders with an opportunity to realise part of their investment in the company.

In addition, the company will use some of the funds for the repayment of debt and the payment of certain expenses incurred in relation to the offer.

DDH1 also notes that the listing will give it access to capital markets. It expects this to provide additional financial flexibility to pursue further growth opportunities.

Management commentary

DDH1's Managing Director and CEO, Sy Van Dyk, commented: "The growth and success of DDH1 to date is testament to the commitment of the whole team, which strives to ensure the safety of all stakeholders while delivering exceptional service to our clients."

"Our long-term client relationships are built on the provision of quality drilling services and a deep understanding of our client's business needs. The Company's significant market position reinforces the strong levels of industry recognition."

"There is growing demand in the Australian mineral drilling sector for DDH1's services because of increased exploration, development and production spending by minerals exploration and mining companies. As an ASX-listed company with a strong balance sheet, a committed shareholder base, a disciplined approach to growth and access to capital markets, DDH1 is well positioned to pursue its growth strategy."

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