Four ASX shares that are falling more than most today are listed below. Here's why they are dropping:

BWX Ltd (ASX: BWX)

The BWX share price is down heavily for a fourth day in a row and nursing an 8% decline to a new record low of 17 cents. Investors have been selling the Sukin skincare manufacturer's shares this week following the release of shocking business update. BWX now has a mountain of debt almost triple its market capitalisation and is on track to breach its debt covenants. A recapitalisation may be needed to save the company from going under at this rate.

Earlypay Ltd (ASX: EPY)

The Earlypay share price is down a whopping 39% to 19.5 cents. Investors have been selling this lender's shares after the release of an update on its exposure to RevRoof. The roofing business has fallen into administration and owes Earlypay approximately $29 million. Management advised that uncertainty has arisen around how much will be recovered by Earlypay from Revroof. As a result, it has withdrawn its guidance for FY 2023.

Evolution Mining Ltd (ASX: EVN)

The Evolution share price is down 3% to $2.93. This follows a pullback in the gold price overnight amid interest rate hike concerns. It isn't just Evolution that is dropping today. The S&P/ASX All Ordinaries Gold index is down 2.2% this afternoon.

Pointsbet Holdings Ltd (ASX: PBH)

The Pointsbet share price is down a sizeable 11.5% to $1.24. This is despite there being no news out of the sports betting company today. And while there is plenty of selling going on in the tech sector after a poor night on the NASDAQ index, PointsBet is being punished far more than most. Interestingly, the company's market capitalisation is now lower than its cash balance at the end of the last quarter.

The post Why BWX, Earlypay, Evolution, and Pointsbet shares are dropping today appeared first on The Motley Fool Australia.

• Earlypay shares rocket on back on record result for H1 FY22
• NPATA came in at $7.5 million, an increase of 110% over the prior comparable period
• Upgraded guidance for the FY22 full-year in the range of $13 million and $14 million

The Earlypay Ltd (ASX: EPY) share price is in fine form today following a positive trading update from the company.

At the time of writing, the payment advance company's shares are up 9.30% to 47 cents a pop.

Earlypay continues its growth story

Investors are snapping up Earlypay shares after the company reported a robust result for the first-half of FY22.

According to its release, Earlypay achieved Net Profit After Tax before amortisation (NPATA) of around $7.5 million. This represents an increase of 110% over the prior corresponding period and is well ahead of forecasts.

Earlypay attributed the strong result to its core Invoice Finance product which is offered to small and medium-sized enterprises clients.

Total transaction volume (TTV) for the 6 months stood at $1.2 billion, up 35% on this time last year. The Equipment Finance business also saw substantial improvement in new originations in recent months and returned to growth.

Earlypay noted that January which is normally impacted by holiday seasonality performed ahead of expectations. This was driven by organic growth in client numbers and continued high utilisation rate of Invoice Finance facilities.

Due to the solid performance of the first-half along with favourable trading conditions, Earlypay upgraded its FY22 NPATA guidance.

As such, the company is anticipating NPATA of between $13 million and $14 million, which is 60% higher than the result achieved in FY21.

The strong profit result is expected to materially increase the first-half FY22 dividend compared to pcp. Earlypay's dividend payout ratio will remain at 60% of NPATA across the full year.

Management commentary

Earlypay CEO, Daniel Riley commented:

We are delighted to announce a record H1 FY22 result, which shows material growth in Invoice Finance. The stronger than expected earnings have been driven by record TTV, lower cost of debt and increased utilisation of proprietary technology to facilitate operating leverage for the business.

It is also pleasing to see the equipment finance book return to growth in recent months. Following the record first half and a notable pickup in SMEs looking for alternate funding, Earlypay has upgraded its FY22 NPATA Guidance from $13m+ to $14m+.

The company noted it will provide additional information in the release of its FY22 first-half results on 24 February.

Earlypay share price snapshot

It has been a solid 12 months for the Earlypay share price, rising by 23% over the period. Year to date, the company's shares are almost 10% higher.

Based on valuation grounds, Earlypay commands a market capitalisation of around $132.29 million and has approximately 281.47 million shares outstanding.

The post Earlypay (ASX:EPY) share price leaps 9% as profits, dividends surge appeared first on The Motley Fool Australia.

At the closing bell, the payment advance company's shares ended 9.52% higher to 46 cents.

How did Earlypay perform for Q1 FY22?

Investors were fighting to get a hold of Earlypay shares after the company reported a robust result for the first-quarter of FY22.

According to its release, Earlypay experienced total transaction volume (TTV) of $569 million, up 40% on the prior corresponding period. This was predominately driven by organic growth in client numbers.

Revenue accelerated to $159.1 million, representing a 52% increase on Q1 FY22. The similar trend came from higher interest income on higher utilisation (LVR) of client facilities in lieu of government stimulus for small to medium business enterprises.

On the equipment finance portfolio, its loan book was steady at $94.3 million through the first-quarter lockdown. The company is anticipating growth to resume in the following quarter. The loan book is expected to swell to $99.6 million.

Earlypay CEO, Daniel Riley commented:

We are pleased to report an outstanding Q1 FY22 result, which shows material growth across all Invoice Finance and Trade Finance metrics. Momentum has continued through October with Earlypay achieving record monthly Transaction Volume of $211m, with a further acceleration in volumes anticipated as lockdown restrictions end in NSW and Vic.

Earlypay upgrades FY22 guidance

Due to the solid performance of the first-quarter along with favourable trading conditions, Earlypay has upgraded its FY22 guidance.

As such, the company is forecasting above 40% for net profit after tax (NPAT) over FY21. The main drivers of growth are projected to come from its core Invoice Finance product.

In addition, Earlypay received a 25% increase on the facility limit for its primary Invoice Finance warehouse to $125 million. The extra funding will help the company fuel growth by aggressively competing against the banks and non-large bank lenders.

The company also released its annual general meeting (AGM) presentation to shareholders today, covering the above results.

Earlypay share price snapshot

Over the last 12 months, the Earlypay share price has performed relatively well over the period, up around 30%. The company's shares hit an all-time high of 53 cents in August, before treading slightly lower ever since.

Based on today's price, Earlypay commands a market capitalisation of around $130.05 million and has approximately 279.67 million shares outstanding.

The post Earlypay (ASX:EPY) share price rockets 9% on 'material uplift' appeared first on The Motley Fool Australia.

After listing at $1 per share, those lucky enough to put in $10,000 during the 2016 initial public offering would now be sitting on $1.2 million.

So it's no surprise the last few years have seen a whole bunch of buy now, pay later and 'something-pay' companies floating on the ASX.

But most of them are early-stage businesses burning cash and not yet turning a profit. Not to mention competing in a hot sector that sees a new rival pop up almost each month.

Even the market leader Afterpay doesn't currently make any money. It's still concentrating on spending capital to try to grow faster than its rivals.

But there is one battler with a market capitalisation of just $105 million that's bucking the trend: Earlypay Ltd (ASX: EPY).

Earlypay is actually making money 

Earlypay's clientele is businesses, rather than end consumers. The North Sydney company sells products like line-of-credit and equipment finance.

According to Burman Invest chief investment officer Julia Lee, Earlypay seems to be doing everything right.

"When you have a look at anything with 'pay' in it, usually it's not making a profit. But this one actually is," she told SwitzerTV Investing this week.

"This year, they're actually forecasting a net profit after tax and amortisation of above $8.5 million… Next year they're forecasting a net profit after tax and amortisation around about $12 million — so almost 50% growth there."

Not only is the company earning more than it spends, but the share price is attractive at the moment.

"PE multiples in this space are commonly above 80 or 100 times. But this one's trading at around about 20 times historical," Lee said.

"And you've got a dividend yield of about 5% as well."

The Earlypay share price was trading at 45 cents per share at market close on Tuesday, which is 4.26% down for the day. The stock is up 18.4% for the year.

"We usually don't track smaller companies like this. But having a quick look through some of the numbers… the numbers don't look too bad in the type of market that we're in."

But Earlypay has these headwinds…

Tribeca Investment Partners portfolio manager Jun Bei Liu disagrees with Lee, indicating she would stay away from Earlypay.

The fear is that interest rates would rise due to post-COVID inflation.

"My view is that a lot of those financing businesses, when you have bond yields start moving higher it's not in a great environment for these guys to do business," she said.

"It is well-funded and exposed to the SME [small to medium enterprise] space — it will have a little bit of growth. But it's not something that I would rush into."

Earlypay just last week announced it would raise $18.75 million through the issue of almost 45 million new shares.

The post Unlike Afterpay, this ASX fintech actually makes a profit appeared first on The Motley Fool Australia.

Four ASX shares that are falling more than most today are listed below. Here's why they are tumbling lower:

Catapult Group International Ltd (ASX: CAT)

The Catapult share price has sunk 8% to $2.00. The sports analytics and wearables company's shares have come under pressure after it announced the completion of its equity raising. According to the release, the company has raised $35 million via an underwritten institutional placement of new shares at a price of $1.90. This represents a discount of 12.8% to its last close price. Catapult is raising funds to acquire SBG Sports Software and accelerate its growth strategy.

Earlypay Ltd (ASX: EPY)

The Earlypay share price has fallen 6% to 45 cents. This decline has also been driven by an equity raising. The payment advance company revealed that it has received commitments to raise $18.85 million via a placement to new and existing institutional and professional investors. According to the release, the company is raising the funds at a price of $0.42 per new share. This represents a 12.5% discount to its last close price. The proceeds will be used to support its new trade finance product.

Nuix Ltd (ASX: NXL)

The Nuix share price is down 2.5% to $2.54. This morning the embattled investigative analytics and intelligence software provider informed the market that a search warrant was executed at Nuix's Sydney office seeking documents. It advised that this is in relation to an investigation into the affairs of an individual and does not relate to any allegation of wrongdoing by Nuix.

Woolworths Group Ltd (ASX: WOW)

The Woolworths share price has tumbled 11% to $37.88. Today's decline has been caused by the spin-off of its drinks business. This has seen Endeavour Group Limited (ASX: EDV) join the ASX 200 index today, with Woolworths' shareholders receiving one Endeavour Group share for every Woolworths share they hold. The Endeavour Group share price is trading at $6.17 this afternoon.

The post Why Catapult, Earlypay, Nuix, & Woolworths are tumbling lower appeared first on The Motley Fool Australia.

At the time of writing, the payment advance company's shares are down 8% to 44 cents.

Why is the Earlypay share price tumbling?

This morning Earlypay announced that it has received commitments to raise $18.85 million via a placement to new and existing institutional and professional investors.

According to the release, the company is raising the funds via the issue of 44,897,846 new shares at a price of $0.42 per new share. This represents a 12.5% discount to its last close price.

Why is Earlypay raising funds?

The release explains that the proceeds of the raise will be used to fund the expansion of its new trade finance product while the company puts in place a new $50 million warehouse facility.

Once the proposed warehouse facility is complete, Earlypay expects the majority of cash to be released back onto the balance sheet. After which, that cash will be used for the repayment of its remaining expensive bonds and potential acquisition opportunities.

The new trade finance product is expected to enhance Earlypay's offering by supporting SMEs with a financing option for purchasing inventory. Then once the clients sell the final product to their customers, the loan converts to its established Invoice Finance product. Management notes that it builds on the record lending volumes Earlypay is experiencing in its established products.

Earlypay's CEO, Daniel Riley, commented: "Earlypay has continued its strong momentum in CY'2021, with our new Trade Finance product garnering significant demand from new and existing clients. Importantly, we expect the capital raise and product expansion to be earnings accretive in FY'22.

"The performance of the new Trade Finance product, combined with our record business lending volumes in established products, has provided strong validation for the Board to endorse a capital raising to support the new business pipeline while a proposed $50m warehouse facility to support the Trade Finance product is established."

Trading update

Earlypay took this opportunity to also provide the market with an update on its performance in FY 2021.

It has reiterated its FY 2021 guidance of NPATA of $8.5 million. It is then expecting NPATA of ~$12 million in FY 2022, before the net returns on the new Trade Finance product.

Mr Riley commented: "New initiatives are well advanced and include expansion of Trade Finance and broader promotion of Equipment Finance. The new initiatives leverage existing staff and technology capability and have the potential to contribute substantially to topline growth during FY'22 and beyond with little corresponding cost."

Despite today's sizeable decline, the Earlypay share price is still up 16% year to date.

The post Why the Earlypay (ASX:EPY) share price is sinking 8% today appeared first on The Motley Fool Australia.

At the market close, shares in the company were trading 8.64% higher at 44 cents.

Earlypay is a small-cap ASX-listed company that delivers financial management and payroll services. The company aims to provide small and medium-sized enterprises (SMEs) access to financing in order to grow and enable them to focus on their core activities.

Why the Earlypay share price was flying

In today's update, the company announced record transactions in March with volumes for the month at $199 million, 34% higher than the same period last year. The company said it expected this momentum to translate to a material increase in earnings for FY22.

Earlypay also announced improvements to all three of its warehouse facilities, providing "cost savings and greater flexibility". This in turn would support the continued growth of Earlypay's loan book.

In addition, the company reconfirmed its FY21 guidance of $21m earnings before interest, tax, depreciation and amortisation (EBITDA) and NPATA of $8.5m.

Earlypay advised this would result in a minimum final dividend of 1.3 cents per share (cps), bringing the full year's dividends to 2.3 cps, fully franked and giving the company a dividend yield of 5.23%.

Management comments

Earlypay CEO Daniel Riley welcomed the performance, saying:

Q3, which is seasonally our lowest quarter, ended with record volumes in March, underpinned by Earlypay's online lending platform, which continues to deliver growth and momentum in client acquisition and client experience.

This growth is due to an increase in funding requirements from existing clients, as well as new clients coming on board as our organic growth continues to build.

The support from Earlypay's senior funders, which is evidenced by the increase in facility limits, broadening of product parameters and an overall reduction in interest costs, further supports the strength of our business and outlook.

About the Earlypay share price

The Earlypay share price has enjoyed a solid run of late, rising by 55% over the last year and outpacing the All Ordinaries Index (ASX: XAO) 30% gain for the same period.

The financial company currently boasts a market capitalisation of $103.55 million.

The post Why the Earlypay (ASX:EPY) share price is flying 8% higher today appeared first on The Motley Fool Australia.

The wine distributor advised that its subsidiary, WINEDEPOT, has partnered with ASX listed financial technology company Earlypay Ltd (ASX: EPY). Together, they will create a BNPL service for WINEDEPOT's business-to-business marketplace.

Let's take a closer look at the news released this morning.

New BNPL service

Digital Wine's WINEDEPOT is set to launch LIQUIDITY, its brand new BNPL service, in partnership with Earlypay.

LIQUIDITY will be accessible to businesses buying wine and other alcoholic products from the WINEDEPOT platform.

The company said its BNPL service will mean cost won't be a barrier to sales, keeping its average order value high.

LIQUIDITY will be backed by Earlypay's comprehensive credit insurance. The fintech company will also provide back-end technology and operational support for LIQUIDITY.

Digital Wine CEO Dean Taylor said the BNPL service would make WINEDEPOT more appealing to businesses, as many aimed to simplify and stabilise their operating costs after the coronavirus pandemic.

Taylor said the average fine dining restaurant sourced alcoholic products from around 50 to 200 different suppliers, and suppliers often spent several days each month chasing overdue invoices. He described WINEDEPOT and its multitude of payment options as a "game-changer" for businesses and suppliers.

The agreement between WINEDEPOT and Earlypay will be in place for 3 years after LIQUIDITY's launch.

Earlypay will charge WINEDEPOT an initial implementation fee and monthly fees thereafter. The fees are said to be market-standard and not considered material to Digital Wine Ventures.

Digital Wine Ventures also advised it has scrapped its partnership proposal with Trevipay (formerly known as Multi Service Pty Ltd).

The Trevipay partnership was proposed before WINEDEPOT's launch. It would have seen WINEDEPOT providing its customers with credit as a service.

Commentary from management

Dean Taylor commented on Digital Wine's agreement with Earlypay, saying:

What attracted us to Earlypay is that they are an innovative Australian owned and operated company with 20 plus years of experience in supporting Australian businesses…

We know that credit terms are a critical element for success on B2B marketplaces and are excited to be able to partner with Earlypay to offer the Australian wholesale beverage market a much simpler payment solution.

Earlypay CEO Daniel Riley also commented on the agreement, saying:

We're really excited to support a fast growing and innovative business like WINEDEPOT as they use technology to reinvent the supply chain of Australia's wine industry. For many Australian businesses, managing cash flow is a challenge so we're proud to provide additional payment flexibility for marketplace buyers and facilitate early payment for suppliers. 

Digital Wine share price snapshot

The Digital Wine share price is having a roaring performance on the ASX in 2021. Today's news may just bring it another boost.

Currently, the Digital Wine share price is up 275% year to date. It's also up a mammoth 1,400% over the last 12 months.

The company has a market capitalisation of around $249 million, with approximately 1.6 billion shares outstanding.  

The post What's with the Digital Wine (ASX:DW8) share price today? appeared first on The Motley Fool Australia.

The company provides tailored financing solutions to both small and large businesses across Australia. Let's take a look at what it reported.

What did EarlyPay report?

EarlyPay shares are moving higher today after the company reported the increase in its new business volumes were continuing during the first two months of the new financial quarter (Q3 FY21). EarlyPay had earlier reported the increase in new business volumes in its half-year financial report (H1 FY21) for the year ending 31 December. That release saw the share price surge 10% on the day.

The company reported that the third quarter tends to be a quieter business period due to holiday disruptions, but this was not the case this year. It reported being on track to increase the number of its Invoice Financing clients by 10% during Q3.

Additionally, Total Transaction Volume increased 10% year on year, which was before COVID-19 impacted the market.

The company credits its online strategy for the growth, reporting more than 90% of all new invoice financing clients used its online platform during Q3 so far, compared to 56% in Q2.

EarlyPay also provided an update on the facility it holds with Greensill, which is now under administration. It said this debt represents "less than 10% of Earlypay's total loan portfolio and will be transitioned to an existing bank warehouse facility which has ample headroom".

The company reaffirmed its full 2021 financial year guidance of earnings before interest, taxes, depreciation and amortisation (EBITDA) of $21 million and net profit after tax and amortisation (NPATA) of $8.5 million. It intends to pay a full-year dividend in the range of 1.3 cents per share, fully franked.

EarlyPay share price snapshot

Over the past full year, EarlyPay shares are down by 12%. That compares to a gain of 32% on the All Ordinaries Index (ASX: XAO).

Year to date, the EarlyPay share price is up 16%.

The post Here's why the EarlyPay (ASX:EPY) share price is rising today appeared first on The Motley Fool Australia.

Earlypay is a business that provides finance to small and medium businesses (SME) in the form of secured invoice financing and equipment financing. SMEs can receive an advance payment of up to 80% of a client's invoice to help cashflow pressures.

What was in the Earlypay result?

The company revealed that it generated $9.8 million of earnings before interest, tax, depreciation and amortisation (EBITDA), which was down 4% compared to the prior corresponding period.

Net profit after tax (NPAT), after adjusting for non-cash amortisation, was down 24% to $3.5 million.

Earlypay said that new business outcomes were accelerated by the acquisition of Skippr platform, with online applications representing 56% of new business in the second quarter after the launch in September 2020.

The company has been working on reducing its costs. It said it had achieved permanent cost savings of $1.5 million through the restructure of its funding lines during the second quarter of FY21.

Management were pleased with the company's performance in the first half considering the impacts on the SME market relating to COVID-19. Indicators point to a recovery across most metrics going into the second half.

Earlypay said that it showed resilience with no material defaults or losses through the peak of the COVID-19 downturn. It said that it's well provisioned against elevated SME insolvency risk as government support reduces in the coming months.

The company revealed that the second quarter group revenue was up 5% quarter on quarter to $11.1 million, the EBITDA grew 33% quarter on quarter to $5.6 million (with the EBITDA margin improving from 43% to 47% in the second quarter) and the NPATA increased 92% quarter on quarter to $2.3 million.

CEO commentary

Earlypay CEO Daniel Riley said:

Current volumes indicate that we are now back trading in excess of $2 billion total transaction value (TTV) on an annualised basis. This is due to an increase in funding requirements from existing clients, as well as new clients coming on board as our organic growth continues to build.

Restoring the Earlypay brand signified a return to our company's roots as a leader and innovator in the small business finance sector. The integration of the Skippr business, acquired in August 2020, is driving our digital transformation by improving client acquisition and client experience through new technology, while making our business more efficient. The firm-wide digital transformation is ongoing and we expect this investment in technology to drive organic revenue growth and operational efficiencies for years to come.

Earlypay dividend

The company's board decided to declare an interim dividend 1 cent per share. It didn't pay anything in the prior corresponding period.

Earlypay share price movements

Excluding today's gain, the Earlypay share price hadn't done much since the start of 2021. Over the last 12 months it's down 22%, though it has risen over 80% since the bottom of the share price at the end of FY20.

Outlook

It said that it's expecting to report record half-year earnings for the second half and has provided guidance of FY21 EBITDA to be more than $21 million, NPATA to be more than $8.5 million and a final dividend of 1.3 cents per share.

The company sees the second half of FY21 as a place from which it can start building growth again and capitalise on the digital changes it has made, as well as the improved client experience and bigger addressable market.

The post Why the Earlypay (ASX:EPY) share price is going nuts appeared first on The Motley Fool Australia.

The price movements are cause for some head-scratching, as there are no announcements. Let's take a look at what could be happening.

What might be moving the EarlyPay share price?

EarlyPay rebranding resonates with rocketeers

EarlyPay was previously known as CML Group – just doesn't have the same ring to it, does it? The recent rebranding was a part of the company's shift towards a new software-as-a-service (SaaS) operation after acquiring Skippr.

Transitioning to more of a digital-leaning lender, EarlyPay likely hopes to replicate the success of ASX-listed Wisr Ltd (ASX: WZR) in its digital endeavours. EarlyPay does differ from Wisr though, as the former provides secured finance to small and medium-sized businesses. Whereas Wisr offers loans to individuals for travel, car purchase, etc.

With the acquisition of Skippr, EarlyPay can now assess credit quality through integration with cloud accounting data automatically. Additionally, the whole onboarding process for a customer is now automated – significantly reducing the time and effort required on EarlyPay's end to facilitate a loan.

There is the potential that some are speculating over the name EarlyPay, as it sounds a little like Afterpay Ltd (ASX: APT). With the buy now, pay later (BNPL) sector heating up, everyone is hunting for new entrants. However, EarlyPay isn't quite a BNPL company – although the debate rages on whether BNPL is just glorified credit.

EarlyPay profitable growth play

Investors could also be enticed recently by the fact EarlyPay is profitable. As a consequence of the recent SaaS shift, the company may be appealing to investors less fancied with loss-making businesses.

In its October 2020 investor presentation, EarlyPay recorded $8.4 million in profits on $47.5 million revenue. Based on today's valuation, that gives EarlyPay a P/E ratio of 11.85 – which would be considered low for a technology company. But, then the debate arises, is it a technology company or just a lender?

Whatever the answer, the EarlyPay share price has had a whirlwind day. At the time of writing, EarlyPay shares are swapping hands for 44 cents, which puts it up 1.16% today and 14% for the year so far. 

The post What's the go with the EarlyPay (ASX:EPY) share price today? appeared first on The Motley Fool Australia.

There were also many other structural changes announced during the AGM. For instance, a restructure of the company's debt financing portfolio, a distribution agreement with a large scale brokerage network, and the formal launch of its SaaS platform.

What's driving the Earlypay share price?

Earlypay is a non-bank lender in the commercial sector. Nonetheless, unlike non-bank lenders in the mortgage sector, its loans are not secured by real estate. Moreover, it specialises in debtor finance in the areas of invoice finance, asset finance and trade finance.

The company recently purchased a SaaS platform, moving its invoice financing operations onto a digital platform. The company believes this will increase its addressable market by 140%. 

Debt management

Like other non-bank lenders, Earlypay does not have deposits. Nor does it have access to the Reserve Bank of Australia's (RBA) $200 billion term funding facility (TFF). This is a facility that provides banks access to funds at the very low current cash rate of 0.1%. As a result, the company must rely on other mechanisms to secure the capital it needs to provide its loans. 

The Earlypay share price is benefitting, in part, by the restructure of its debt portfolio, shaving $1.5 million from its annual costs. This will include retirement of corporate bonds in December. In addition, it will move to warehouse funding, and tap the Australian Office of Financial Management (AOFM) for $36 million of capital via COVID-19 initiatives. 

Distribution agreements

Earlypay also announced a formal distribution agreement with COG Financial Services Ltd (ASX: COG), Australia's largest asset finance broker and aggregator. This will provide Earlypay with a much enlarged broker network through which the company can market to and educate potential customers. COG Financial Services currently holds a 16.3% stake in Earlypay as a result of a FY20 aborted takeover attempt.

In addition, Earlypay has appointed Mr. Stephen White to the board. Mr. White is also a current director of COG Financial Services. He has been appointed, in part, to facilitate the relationship between the two companies. 

Commenting on the opportunity with COG, Daniel Riley, CEO of CML said;

The agreement with COG facilitates access for CML to Australia's largest distribution network for commercial finance. The CML team looks forward to working with COG brokers to offer its finance solutions to SME's and anticipates an opportunity to expand business volumes across all products.

Foolish takeaway

Earlypay believes it has significantly increased its addressable market by moving to a SaaS platform, and a distribution agreement. It has also dramatically reduced costs in its debt portfolio, along with cost reductions achieved during the COVID-19 lockdowns.

The Earlypay share price is now enjoying a level of upward momentum. This was after falling substantially in May when the aforementioned takeover deal fell through.

The post Why the Earlypay (ASX:EPY) share price rocketed up 7% last week appeared first on The Motley Fool Australia.

The following ASX shares represent possible alternatives for investors looking for exposure to the lending market from outside of the big four banks.

Non-bank lenders for personal spending

Resimac Group Ltd (ASX: RMC) is a small cap non-bank lender with a loan book of $12.4 billion. Its FY20 statutory net profit after tax increased 19% on FY19, and the company's sales have grown by an average of 29.8% over a ten year period. The company has recently outlined its digital roadmap, designed to reduce friction and increase customer loyalty. 

Wisr Ltd (ASX: WZR) is an online non-bank lender specialising in low-rate, unsecured loans. In FY20, the company saw an increase in revenue of 136% and an increase in loan originations by 95% when compared with FY19. The number of users in the Wisr system also increased by 389% on the prior year. Wisr is currently in the process of entering the $33 billion secured vehicle finance market. 

Commercial lender ASX shares

With the economic challenges continuing to be faced due to the pandemic, many small to medium enterprises are trying to gauge the level of capital they need on hand. 

CML Group Ltd (ASX: CGR) specialises in debtor finance, with its principal revenue generation coming from invoice finance. This company recently entered the fintech universe with the purchase of an online software-as-a-service (SaaS) platform. While already integrated with accounting platforms like Xero Limited (ASX: XRO), the company is planning on utilising the new platform to help it pursue clients at lower invoice levels, and improve customer lifecycle value.

Zip Co Ltd (ASX: Z1P) recently announced a deal with the Australian arm of eBay Inc (NASDAQ: EBAY) to provide what is essentially a form of trade finance. To illustrate further, it provides credit secured on products for sale to pay for marketing and other running costs. The company already provides up to a $25,000 revolving credit line with 0% interest if under 60 days. The non-bank lender is increasing its line of credit products in this area, providing it with revenue outside of the buy now, pay later (BNPL) markets.

The post Looking to invest in non-bank lending ASX shares? appeared first on The Motley Fool Australia.

Iron ore is up, LNG is down

This has been the story for a few months now. However, it is becoming more entrenched each week. 

Iron ore has risen by 57.2% in USD since the market low point on 23 March. To illustrate further, the Pilbara mining ASX shares have billions of dollars in future spending under way to capitalise on sustained high demand. Meanwhile, China became a net importer of steel in June for the first time in 11 years. Lastly, the feared competition from Simandou is clearly not going to have an industry-destroying impact.

The best ASX share in iron ore, for me, is Fortescue Metals Group Limited (ASX: FMG). I believe this company will deliver both share price growth and consistent dividends. 

The oil price is under threat yet again. A combination of high stockpile builds, Saudi Arabia cutting oil prices, and low international demand is impacting all energy prices. This is a permanent shift I believe in an industry that is in long-term terminal decline. For me, the best option to take advantage of this market is Origin Energy Ltd (ASX: ORG). Origin does have a significant stake in Asia Pacific LNG, however it is also Australia's largest gas retailer. 

Finance is changing (again)

The buy now, pay later (BNPL) ASX shares have been on a slide since 18 August. When the market fell over on Tuesday, the BNPL sector was one of the hardest hit. When it rose again yesterday the BNPL shares were either flat or falling. This can be traced back to the entry of Paypal Holdings Inc (NASDAQ: PYPL) into the market. However, Commonwealth Bank of Australia (ASX: CBA) is already there with Klarna, and it is clear now that there is little barrier to entry.

To paraphrase Paul Keating, every pet shop gala will soon have their own BNPL company. However, there are other beneficiaries in the finance sector. I am keeping an eye on Tyro Payments Ltd (ASX: TYR) as well as CML Group Ltd (ASX: CGR). I have favoured the latter for a long time. 

Growth investors favour innovative ASX shares

As the heat is coming out of the BNPL sector, others are starting to see share prices inflate. In particular I have noticed this in ASX shares for non-software innovation. For example, artificial intelligence company Brainchip Holdings Ltd (ASX: BRN) has seen its share price rise by 264% in the past month. BrainChip is developing a new form of artificial intelligence which has moved into proof of concept partnerships.

Another strong performing innovation ASX share is DroneShield Ltd (ASX: DRO). This is an innovative company developing non-ballistic drone sensing and disrupting technologies. Droneshield has announced a number of new contracts in the past couple of weeks and has seen its share price rise by 55% in the past month.

Foolish Takeaway

These are some of the stronger trends that are likely to carry ASX shares through to the end of September. As always, I believe they provide strong investing opportunities.

For instance, while prices are still reasonable it is a good time to stock up on iron ore shares as a long-term hold. If you are waiting for LNG companies to rise back to previous levels then either cut your losses or don't look at them for two to three years. Moreover, I think it is time to take profits on BNPL and to redeploy growth investing funds into companies delivering offline innovation. Particularly those with a high level of momentum. 

The post A definitive guide to September ASX share trends appeared first on The Motley Fool Australia.

In the buy now, pay later (BNPL) sector, Paypal Holdings Inc (NASDAQ: PYPL) announced it would be entering the market with an existing global platform. Consequently, companies like Sezzle Inc (ASX: SZL), Zip Co Ltd (ASZ: Z1P) and even the market leader, Afterpay Ltd (ASX: APT), saw their share prices fall by greater than 5%. In addition, the expectation of harder times ahead saw the Commonwealth Bank of Australia (ASX: CBA) share price fall by 2.13%, while the other big 4 banks saw falls of over 3%.

Nevertheless, there were definitely bright spots in the market. In my view, the positive performance of these companies serves to highlight investor sentiment, and where there is the possibility of share price growth over the next 6 – 18 months. 

Business credit

Three of the share prices I saw rise on Friday were related to personal and business credit. For example, CML Group Ltd (ASX: CGR) saw its share price go against the tide and rise by 1.37%. CML offers financing services for small businesses secured by assets other than real estate. It also has an online platform called Earlypay to increase customer loyalty and smooth the credit process. I have been watching this company for a while now and I think it is likely to perform well in the current market. 

CML Group is selling at a price-to-earnings (P/E) ratio of 22.29 and has a trailing 12 month dividend yield of 4.73%.

Consumer Credit

The Moneyme Ltd (ASX: MME) share price rose by 2.56% Friday. This company is an online loan provider. In FY20 it was able to increase origination by 52.8% and its gross loan book by 52.7%.  It has BNPL style services in real estate renting and sales, as well as a short-term, interest-free virtual credit card. However, the neo-lender is a very innovative and versatile company. Its principal business line is personal loans for up to 5 years. Well beyond that of the BNPL sector.

Moneyme is selling at a P/E of 190, which is very high. Clearly the market expects a lot from this company and I think they may be right. 

Money3 Corporation Limited (ASX: MNY) is another consumer lender primarily targeting the car loans sector, but also long-term personal loans. Recently, the Money3 share price rose after the company reported an increase in revenue of 35.3% and a 16.4% growth in its loan book. The company has been able to expand significantly in the near prime sector. Near prime is a sector for those with a problematic credit history. Consequently, they are able to charge higher margins. 

If even half of the forecasts are correct, we are headed for a pretty rough ride over the next 1 – 2 years. Therefore, companies like this will probably see higher revenues. Money3 is selling at a P/E ratio of 17.29 and has a trailing 12 month dividend yield of 3.86%.

Foolish takeaway

To me, the trends reflected last week signify that investors are repositioning their portfolios for a change in the economy. As such, acting sooner rather than later could be wise. Once shares like these take off, then some potential share price gains could be curtailed. I like all three of these companies, with CML Group being my stand out option. 

The post Share price opportunities to buy this week appeared first on The Motley Fool Australia.

And I believe this is only the beginning. Here are a range of ASX shares that have been so successful, the banks may have already lost the argument. 

Alternative finance

According to the University of Cambridge in the United Kingdom, alternative financing was worth $1.127 billion in Australia during 2018. This is the second largest market after China in the Asia Pacific region. However, I believe that if alternative financing was more available, it would be more widely used. One of my own frustrations when I owned a consultancy firm, was securing finance. Alternative financing can take a number of forms including invoice financing, equipment finance, and trade finance, for example.

Xero Limited (ASX: XRO) is a pioneering online accounting software platform. This market leading ASX share recently announced its acquisition of a business called Waddle, a software-as-a-service (SaaS) platform that provides invoice finance to small to medium enterprises. Specifically, it allows companies to borrow up to 80% of outstanding invoices. Then, on payment of the invoice, they receive the last 20% minus the loan fees and interest. This product looks pretty slick and is integrated with Xero.

Zip Co Ltd (ASX: Z1P) also purchased a small business finance company called Spotcap in 2019. This is yet another point of difference from its main competitor Afterpay Ltd (ASX: APT). It allows the ASX share to provide invoice finance and small business loans. The company's share price rocketed on Wednesday last week after Zip announced a deal with the Australian arm of eBay Inc (NASDAQ: EBAY). Consequently, Zip Co will provide cash flow and trade financing for small to medium businesses on eBay via its Zip Business arm. 

Down the shallower end of the pond is CML Group Ltd (ASX: CGR), a pure play alternative financing company. It provides invoice finance, equipment finance and trade finance. CML Group recently purchased the platform now called earlypay.com. This is also integrated with Xero and other platforms. Furthermore, it provides the company with an engagement tool for repeat customers and automating work processes. 

ASX shares for business loans

Tyro Payments Ltd (ASX: TYR) is predominantly a payments processing company. However this ASX share also provides small business loans under the government guarantee. This is part of coronavirus assistance whereby the government guarantees up to 50% of the loan. Tyro is the largest authorised deposit taking institute to process payments after the big four banks. The company's network of customers is a powerful asset. It means Tyro could easily offer additional services such as buy now, pay later (BNPL) at the point of sale for B2C businesses, or invoice financing for B2B companies. 

Prospa Group Ltd (ASX: PGL) is a company you don't hear much about. It has, however, been diligently working away in the background as a lender to small businesses. In its recent results, Prospa showed a continued growth in sales which is very promising for a small company. It managed to increase its top line revenue by 4.2%, and has $55 million in unrestricted cash on hand.

The post 5 ASX shares better than banks appeared first on The Motley Fool Australia.

While this is higher risk, it doesn't have to be an absolute gamble. However, here are a few quick rules to remember. Growth companies often sell at high price-to-earnings (P/E) multiples. Also, very importantly, do not invest so much you cannot sleep at night. Risk is real, not just a figure, and not everything goes to plan.

Artificial intelligence is the future

The Brainchip Holdings Ltd (ASX: BRN) share price has risen by 91.17% over the past two weeks. It is the world's largest listed pure play artificial intelligence (AI) company. The company is very close to finishing its first-of-a-kind neuromorphic chip.

This is a company already has an array of products, patents, and groundbreaking technological developments. For example, Brainchip has good market share in the casino industry where it is used in security applications. Another prominent vertical is facial recognition of terror suspects and wanted criminals in airports and subways. With a market capitalisation of $486.50 million, I think Brainchip is a good share to own if you want to retire rich.

Retire rich from fintechs

One of the companies I have been watching for a fair while is Ecofibre Ltd (ASX: EOF). I think the management of this company comprises some pretty astute individuals. It produces non-psychoactive hemp products for distribution in the United States and Australia. The company's primary product is cannabidiol (CBD), used in nutraceutical products. The company reported a 42% increase in top line revenues, and an eye watering 119% increase in net profit after tax (NPAT). 

It has three main verticals. Food, nutraceuticals of where it has 51% of the USA pharmacy sales market, and clothing. The clothing vertical shows how astute and agile these managers are. After spending 2 years developing this technology at Thomas Jefferson University and filing patents, the management wisely pivoted from its planned yoga wear products to face masks and neck gaiters. Consequently, they were able to break even in three months.

I feel that management as agile and financially astute as this can easily help you to retire rich. Ecofibre has a market capitalisation of $926.98 million.

A necessary service

CML Group Ltd (ASX: CGR) is one of those companies I think is undervalued by the market. It has a market capitalisation of just $73.97 million. This company provides various forms of short term debtor finance for small businesses. These are short term credit services where assets other than security are used. For example, with invoice finance, the invoice is the security, 80-90% would then be provided in immediate funds, and the credit provider is paid back the principal plus the margin when the invoice is paid.

The company also acquired a software as a service (SaaS) company, Skippr. This platform allows CML to provide greater support to small business, one of its key verticals. It allows their clients to automatically qualify, apply for invoice credit. As well as monitoring payments and invoice tracking. This gives the company the potential to service smaller receivables accounts as the overheads are now far lower. 

Foolish Takeaway

These companies have three common traits. In my view these are essential parts of the search for growth shares that can help you retire rich.

First, they are all run by professional managers. Every one of them is a revenue generating company. The financial records show continual growth in sales, cash flow and revenue. 

Second, they all have very large addressable markets and have built significant barriers to entry. In the case of these three companies, they are protected either by one of a combination of being the first mover, technological patents, and company secrets. 

Third, all of them have a market capitalisation under $1 billion. The actual figure doesn't matter. But when I am reviewing these companies I ask myself; can I see it doubling its share price? For example, Afterpay Ltd (ASX: APT) is now worth the same as Coles Group Ltd (ASX: COL), and more than Woodside Petroleum Limited (ASX: WPL). Personally, I cannot see it doubling again. But I think any of the companies above could do so over a 2 – 3 year timeframe.

The post 3 ASX growth shares that could help you retire rich appeared first on The Motley Fool Australia.

In most cases, without the pandemic payments, thousands, if not millions, of people would have lost their jobs before dividends would have been sacrificed. This is part of a director's fiduciary responsibility in Australia, punishable by law. However, and more importantly, it has highlighted just how fragile the economy is, and how close to the precipice we are.

Counter-intuitively, I believe this makes August is a great time to invest, before the subsidy finishes in September. However, investments need to be chosen with care. Consequently, if I were entering the market with $10,000 in August, these would be my carefully targeted choices.

An ASX share for short term credit

Managing cash flow is going to become more important for Australia's small to medium enterprises (SME). As JobKeeper fades away in most parts of Australia, the impact of reduced revenues is likely to bite. While this may see unemployment lines grow, many companies will seek to smooth out cash flow as they return to normal.

One ASX share I have been watching in the short term credit space is CML Group Ltd (ASX: CGR). CML Group provides SME debtor funding via a range of mechanisms. The largest revenue earner for this company is invoice finance. This is where a company takes an invoice as security, and then provides funding for 80-90% of the invoice. It then receives the full amount of the invoice when it is paid.

It has other financing mechanisms, some of which are quite innovative, but this is of greatest interest to me. The company recently acquired a software as a service (SaaS) website, Skippr. This platform allows CML to develop a closer and more long term relationship with its SME customers.

I would invest $2,000 in CML Group. It is a small cap company worth only $76.15 million. At the time of writing it pays a trailing 12 month dividend of 6.86%.

SME Business loans

Another ASX share in a similar space is Tyro Payments Ltd (ASX: TYR). Although Tyro payments is generally known as an EFTPOS provider, it also provides short term credit solutions. The company has a business loan facility for up to $100,000 for first time SME's, and $120,000 for subsequent loans. 

Moreover, Tyro has been selected as a loan provider under the SME Guarantee Scheme. This means the government will guarantee 50% of new loans issued by eligible lenders. The initial phase of the scheme remains available until 30 September 2020. Then, the second phase will run until 30 June 2021.

I would invest a further $4,000 in Tyro Payments. The loan capability is only one element of this company. I believe it has a long runway in front of it.

ASX shares in real estate

I have become increasingly focused on REITs to build larger income streams in my portfolio. One of these I have been researching a lot is Abacus Property Group (ASX: ABP). This REIT invests in real estate sectors that fortunately have little exposure to the coronavirus. Moreover, it is likely to remain prosperous as JobKeeper is reduced. 

The Abacus portfolio consists of 50.6% in office buildings, 34.4% in storage space, 6.8% in small convenience shopping centres, and about 8.2% in non-core assets. All of these have proven resilient. For example, offices have long leases and are leased by blue chip companies. Furthermore, convenience retail stores largely stayed open during the lock down. 

However, it is the self storage sector that I find interesting. Abacus has begun to show a growing interest in accumulating storage assets. Recently it increased its holding in rival ASX share National Storage REIT (ASX: NSR) to 8.09%.

What this means is that it has a more predictable, annuity style revenues. Offices and retail centres always require value adding to retain customers. Self storage does not. This market is dominated by small businesses and lone entrepreneurs. Hence, there is a lot of room for a focused company to consolidate assets. 

I would invest the last $4,000 in Abacus Group. With a low price-to-earnings (P/E) ratio of 10.5, the company has the potential to grow further. Moreover, Abacus has a very healthy trailing 12-month dividend yield of 6.8%.

Foolish Takeaway

Now is the time to prepare for a world with diminishing support from JobKeeper. While it will remain in selective circumstances, it will start to be withdrawn. In my view, the ASX shares that will benefit will be those that can stand alone without it, and those providing short-term credit.

The post ASX shares to buy with $10,000 in August appeared first on The Motley Fool Australia.

I believe this exposes two core truths about the Australian fintech sector in 2020. First, the BNPL sector, or pay by instalments, is no longer revolutionary in Australia. And second, all of this and more is due to the failure of the big four Australian banks.

The failure of the big four

The big four banks are fundamentally mortgage providers, with business loans and digital payments thrown in. They have been woeful at defending their turf. For instance, by population Australia is a small country, dominated by four large banks protected by legislation. So how on earth did Tyro Payments Ltd (ASX: TYR) become the fifth largest merchant acquiring bank, after the big four, by number of terminals? Moreover, bank lending to households via credit cards has been falling significantly since 2002. The Australian aversion to consumer debt has been growing for almost two decades. So why didn't any of them come up with Afterpay Ltd (ASX: APT)? 

The Moneyme share price isn't the only one to benefit by being more accessible, user friendly and offering cheap pricing. To paraphrase Paul Keating, every pet shop galah has an opinion on fintech shares these days. Companies like CML Group Ltd (ASX: CGR) provide cashflow solutions to small and medium sized companies through innovative debtor finance platforms. Additionally, lenders such as WISR Ltd (ASX: WZR) provide short term personal finance, while RAIZ Invest Ltd (ASX: RZI) is helping the public to save money.

It is almost like watching the death of Borders Bookstores again after the rise of Amazon.com (NASDAQ: AMZN). Consequently, given that the big four banks have allowed these spaces to open up, what does this mean for Moneyme?

Is the Moneyme share price sustainable?

In my view, there is not a chance that the company's share price is sustainable. Not in the medium term anyway. It announced it had acquired 55 merchants. Zip Co has 23,600. Moreover, its most similar payments competitor, Tyro, has 32,000 Australian merchants. Not only that, but a BNPL service is something Tyro could quickly open up at the point of sale.

Furthermore, the Commonwealth Bank of Australia (ASX: CBA) is already doing so slowly via its part ownership of Klarna, the world's largest BNPL company. To illustrate further just how competitive this sector is now, the Splitit Ltd (ASX: SPT) model of working with the large credit cards, to break down payments into instalments, is also likely to eat into market share. 

Foolish takeaway

The Australian buy now, pay later sector has become crowded to the point of normalcy. Accordingly, I believe the spike in the Moneyme share price is irrational optimism, not a sustainable valuation. Additionally, this is without considering the impacts of inevitable Australian regulation, and a raft of unlisted companies.

I think there are plenty of other growth opportunities in the fintech sector generally. However, within the BNPL sector, I believe it is now a race for the United States market. The startup companies that can establish a beachhead in that $5 trillion retail market are the ones that will survive this modern day gold rush.

The post MoneyMe share price surges, but is it sustainable? appeared first on The Motley Fool Australia.

When investing in ASX growth shares, it's important to remember 3 pieces of advice. First, with great upside potential comes the ability to rapidly go to zero (this is what high risk looks like). Second, always consider investments over a minimum 3–5 year time frame. Third, do not commit to invest anything more than you can live with losing. 

So, if you have the nerve for investing in growth stocks, then here are 3 that I think are well worth your attention.

3 ASX shares with big potential

Fintech sector

The finance technology, or fintech, sector in Australia is fascinating. This is an area where companies are delivering financial services using modern technologies.

In this space, the ASX share that I believe is under appreciated is the blandly named CML Group Ltd (ASX: CGR). I believe this is a company made for our times. It provides debtor finance; that is, securing short-term finance with assets other than property. The largest example of this is invoice financing. CML Group will take your invoice as security and fund you up to 80–90% of it, with the loan paid back when the invoice is paid.

Short term credit like this is vital to small businesses for cashflow management. The "tech" part of this fintech is its recent acquisition of a a software-as-a-service (SaaS) website called Skippr. The platform integrates with common fintech platforms like Xero Limited (ASX: XRO) and MYOB, as well as a number of others. 

It provides small business with a subscription-based approach to quickly access short-term finance. It also automates a lot of the process making it feasible for CML Group to finance much smaller companies. Previously, it had to target companies with receivables of $200,000 or more to make it profitable. 

Aside from the business dynamics, there are a number of other reasons why I favour this company. First, it has a solid financial track record. In fact, over an 8-year period it has grown its earnings per share by about 12% per year. Second, it has a small market capitalisation. At $78.33 million, the idea of multiplying one or two times the initial  investment is believable. Last, at its current price it has a trailing 12-month dividend yield of 6.67%, which I find respectable.

Biotech sector

There are many innovative biotech ASX shares that are shaping the future not only in Australia, but throughout the world. Dimerix Ltd (ASX: DXB) is currently developing a drug, DMX-200, to treat diabetic kidney disease and focal segmental glomerulosclerosis (commonly referred to as FSGS). FSGS is a scarring of the kidneys and some cases may end in kidney failure, requiring dialysis or a kidney transplant.

Proteinuria, or protein in the urine, is a sign of kidney disease. DMX-200 demonstrated a 29% reduction in protein for all test subjects versus the placebo. Moreover, 29% demonstrated a greater than 40% reduction. In the first half of CY21 the company plans to commence the investigational new drug process with the FDA in the USA. 

Dimerix is valued at $92.94 million. Year to date, the company's share price has risen 261%. This company is a pure research organisation and it may take a year or so to start seeing real on the ground results. However, I think the ASX share price is likely to continue rising over the near term as it moves closer and closer to production. Most importantly, the potential addressable market for this company is massive and global.

Defence sector

In the defence sector there are a number of ASX shares worth looking into. These include aluminium ship building giant Austal Limited (ASX: ASB), sensor technology experts Electro Optic Systems Hldg Ltd (ASX: EOS), and body armour manufacturer Xtek Ltd (ASX: XTE). However, personally I think near-term growth is likely to come from Orbital Corporation Ltd. (ASX: OEC).

Orbital is the world leader in propulsion systems for unmanned aerial vehicles (UAV) or drones. The company recently announced it had achieved revenue of $33.8 million. This is an improvement of 121% on the FY19 revenue. Moreover, it now has 2 engine models in continuous production for Insitu, a subsidiary of Boeing. The 3rd of the 5 contracted engine models is scheduled for production in 2021.

In addition, Orbital signed a new MoU with one of Singapore's largest defence companies for the design, development and initial production of a multi-fuel UAV engine. Furthermore, it has a new contract with leading aerospace company Northrop Grumman for a hybrid propulsion system for a vertical take-off and landing UAV.

Foolish takeaway

There are many ASX shares that are poised for growth over the next 3–5 years. I have chosen 3 that I believe have strong momentum and are likely to see at least a doubling of their share price. Each of the 3 ASX shares above is advanced in their technologies, with CML and Orbital already generating revenues. Lastly, each of them has a very sizeable addressable market.

The post 3 ASX shares that could make you rich appeared first on The Motley Fool Australia.