This morning, two ASX shares revealed that they have received takeover offers.

Here's what you need to know:

Prospa Group Ltd (ASX: PGL)

The Prospa share price has jumped 15% to 43 cents after the financial technology company accepted a takeover offer. Prospa has entered into a scheme implementation deed with a consortium led by the Salter Brothers Tech Fund.

Prospa's Independent Board Committee (IBC) unanimously recommends that shareholders vote in favour of the 45 cents per share cash offer. That is in the absence of a superior proposal and subject to the independent expert's report.

While a premium to recent levels, it is a long way from the ASX share's 2019 IPO price of $3.78 per share.

In other news, this morning Prospa reported a 7.4% increase in half-year revenue to $145.4 million and a profit before tax of $9 million (from a $6.3 million loss).

QANTM Intellectual Property Ltd (ASX: QIP)

The QANTM share price is up 20% to $1.38. This morning, the intellectual property services company confirmed that it has received a non-binding indicative proposal from Rouse International.

Rouse is a UK-based international intellectual property firm operating in 12 jurisdictions, with a significant emphasis on the Asia Pacific region.

Following careful consideration of the unspecified offer, the QANTM Board has agreed to Rouse's request to conduct due diligence with a view to putting forward a binding offer capable of being considered by shareholders.

Management warned that there is no certainty that a transaction capable of being considered by shareholders will eventuate.

The post 2 ASX shares rocketing up to 20% on takeover news appeared first on The Motley Fool Australia.

Shares of online business lender Prospa Group Ltd (ASX: PGL) are surging into the green today following the release of its quarterly update today.

At the time of writing on Friday, the Prospa share price is currently trading 11.54% higher at 87 cents apiece.

Prospa share price prospers following quarter

Key takeouts from the rival to the big 4 ASX 200 banks include:

• Full-year EBITDA of c.$12 million1 (FY21 $0.5 million) Originations of $245.7 million in 4QFY22, up 35% on the prior corresponding period (pcp)
• Prospa's highest month ever recorded for originations reaching $104.6 million in June 2022
• Revenue reached $53.9 million, up 61% against pcp
• Total active customers increased to ~16,100, an additional ~2,100 from the prior quarter
• Credit losses expected to remain within the board-mandated loss rate range of 4-6%.

What else happened this quarter for Prospa?

It was a strong period for loan originations, recording $104 million in June alone.

As a result of this originations growth, the closing loan book increased to $701.3 million, an increase of 20% from the prior quarter.

Gross Loans reached $633.4 million for the quarter, an increase of 16% from the prior quarter's $546 million.

Total active customers increased to approximately 16,100 last period as well. This represents a gain of around 2,100 from March 2022.

The company achieved this result "while maintaining an industry-leading Net Promoter Score above 80".

In accordance with its buyback program announced in February 2022, Prospa has now repurchased 690,876 ordinary shares up to 30 June 2022.

Management commentary

Speaking on the results, Prospa CEO Greg Moshal said:

We are incredibly pleased with the momentum and outcomes the team has achieved. Each quarter this year, they've come back with greater enthusiasm. Their hard work has translated to recordbreaking results, including the $104.6 million originations in June.

Our partners have played an integral role in the achievement of Prospa's results, placing trust in our products and advocating them to their small business clients. It gives us great satisfaction to know that our funding solutions are supporting small business owners to achieve their business goals. The success stories reaffirm our commitment to keep small business moving, and keep us focused on closing the funding gap for small businesses as a strategic priority.

Prospa is now pushing higher alongside the ASX 200 bank share basket, securing a 21% gain this year to date.

The post Move over big four! This ASX non-bank lender just had a record quarter, and its share price is soaring 12% appeared first on The Motley Fool Australia.

The financial technology company detailed its performance during the fourth quarter of the 2021 financial year.

At the time of writing, the Prospa share price is trading 12.21% higher at $1.195 after hitting a new 52-week high of $1.20 earlier today.

Let's take a closer look at today's news from Prospa.

The quarter that's been

In its release, Prospa reported record originations and revenue growth. The company's revenue for the quarter just been was $33.4 million – 17% higher than the previous quarter.

However, due to increased investments in its technology, products, sales, and marketing, Prospa's operating expenses were $20.9 million – up 17.4% on the previous quarter.

Over the quarter ended 30 June 2021, Prospa saw originations of $182.7 million. That's up 38.2% on the previous quarter's originations and 798% more than the prior corresponding quarter.

Nearly three quarters of its originations came from the company's small business loan and the rest was from its line of credit product.

In New Zealand, the company's originations increased by 72% quarter on quarter.

Additionally, 50% of Prospa's customers were returning customers.

Right now, Prospa has $458.6 million of available third-party debt facilities, of which, $97.2 million is undrawn. The company also has $80.4 million of cash.

Commentary from management

Prospa CEO Greg Moshal commented on the news, saying:

Prospa is now benefiting from the rapid recovery in the Australian, New Zealand and global economies. This quarter, Prospa surpassed many of our all-time record results…

Prospa's success and identity is built on the power of technology. It enables us to efficiently and rapidly service the financial needs of small-to-medium enterprises both within Australia and New Zealand, particularly as many are now reinvesting in the growth of their businesses.

We have further increased our investment in technology this quarter to support our strategy to provide a broader suite of cashflow management products meeting the needs of our customers.

Prospa share price snapshot

Today's gains have seen the Prospa share price lifting almost 38% higher than it was at the start of 2021.

It has also gained 33.3% since this time last year.

The company has a market capitalisation of around $175 million, with approximately 164 million shares outstanding.

The post The Prospa (ASX:PGL) share price is up 12% today. Here's why appeared first on The Motley Fool Australia.

Why is the Prospa share price shooting higher?

Prospa reported total originations returning to their pre-COVID levels faster than anticipated. That includes a third quarter (Q3 2021) origination of $121.0 million, marginally higher than the $122.2 million posted in the December quarter. Originations also jumped 20% compared to the December second quarter figures of $100.7 million.

Prospa reported "strong month on month growth" in originations with $30.8 million, $39.9 million and $50.3 million in January, February and March, respectively. 81% of originations were small business loans with a further 19% in its Line of Credit product.

The Prospa share price has shot higher on the news with investors bullish on the latest update. Prospa said its New Zealand business continues to perform well including 11% quarter on quarter originations growth.

Average Gross Loans increased to $354 million in the quarter with an annualised yield stable for the financial year to date of 32%. Total revenue before transactions costs edged 3% higher to $28.5 million, up from $27.7 million in the December quarter. The company said that signals a "post-COVID turnaround point" for the business.

Prospa CEO Greg Mosahl said, "Prospa has seen better than anticipated growth in originations, driven by stronger economic confidence and investment within the SME sector". "It is particularly encouraging to see such high levels of activity in the March quarter considering this is typically a quieter period than the busy December holiday season", he added.

The Prospa share price has left 7.06% at the time of writing to $0.91 per share. That means the company now boasts a $138.8 million market capitalisation after this morning's move.

The All Ordinaries Index (ASX: XAO) has edged 0.2% lower this morning in a soft start to the trading day.

The post Why the Prospa (ASX:PGL) share price has surged 7% appeared first on The Motley Fool Australia.

What is insider buying?

Insider buying is the purchase of shares in a company by an officer or executive of that company, such as a director. Insiders usually have insights into the companies they manage and are more likely to purchase shares when they view them as undervalued.

Insiders must only buy based on publicly available information and must inform the ASX of the trade by lodging an Appendix 3Y. Depending on the circumstances, the purchase by an insider of shares can be seen as a vote of confidence in a business. Buys by multiple insiders can act as a stronger signal, as can larger, rather than smaller, share purchases.

Which ASX shares have had recent director buys?

We have studied recent insider buys to bring you four ASX shares with recent insider buys.

Zip Co Ltd (ASX: Z1P)

Two Zip Co directors acquired shares in the company this month. Zip is a buy now, pay later (BNPL) provider with 5.7 million customers. The Zip share price was trading as high as $13.92 last month but has fallen by around 46% since and is currently trading around $7.35. The company released its half-year results in late February reporting record transaction volumes of $2,320.6 million, a 141% year-on-year increase. 

Zip Co earned revenue of $160 million for 1H FY21 with more than 38,500 merchants across the United States, Australia, New Zealand, and the United Kingdom. During the half, Zip completed its acquisition of Quadpay, accelerating growth in the US. The company also raised $176.7 million via an oversubscribed placement and share purchase plan. According to managing director and CEO Larry Diamond, the December half was transformational, and saw Zip position itself as a "truly global BNPL leader."

As of December, Zip was annualising over $7.5 billion in transaction volume with strong momentum as it expands in the US and launches in the UK. Diamond says global BNPL adoption remains in its infancy, with penetration of global e-commerce spend only 1.6%. Zip is looking to accelerate growth across the globe in FY21 with a strong pipeline of retail partnerships. 

Ardent Leisure Group Ltd (ASX: ALG)

Two Ardent Leisure directors bought shares in the company early this month. Ardent Leisure is the company behind Dreamworld and White Water World and also runs a bowling entertainment business with 43 venues in America. The Ardent Leisure share price has bounced in March, gaining 49% over the month to trade above 90 cents. The company released its half-year results at the end of February which were significantly impacted by COVID-19. But the roll-out of the COVID-19 vaccine, which is gathering pace, offers cause for optimism. 

During 1H FY21 revenue fell 44.3% as trading and travel restrictions resulted in reduced visitation to venues. Dreamworld and WhiteWater World were closed until mid-September 2020. They have since reopened and seen a shift in sales in favour of annual passes as access to international and interstate markets remains restricted. Attendance between reopening and late January was approximately 70% of the prior corresponding period, which is considered a good result given the restrictions. Nonetheless, Ardent Leisure finished 1H FY21 with a net loss after tax of $83.6 million.

The company has warned that 2H FY21 trading is expected to be challenging due to ongoing uncertainty associated with COVID-19 and the end of the JobKeeper subsidy. But the vaccine program has improved the outlook and Ardent says it is ready to accept the challenges of the changing landscape. 

Sonic Healthcare Limited (ASX: SHL) 

Three Sonic Healthcare directors have acquired shares in the company this month. Sonic Healthcare is a healthcare provider with specialist operations in pathology and laboratory medicine, radiology, general practice and corporate medical services. The Sonic Healthcare share price hit a low of $30.55 on 10 March, but has since rallied and is now trading above $35. 

Sonic Healthcare released its half-year results in mid-February which revealed revenue growth of 33% for the year ended 31 December 2020. The healthcare provider reported a statutory net profit for the half-year of $678 million on revenues of $4.4 billion. The strong financial results reflect the millions of COVID-19 tests performed as part of combating the pandemic. The laboratory division achieved organic revenue growth of 39% while the imaging division grew revenue by 14%, higher than long-term industry averages. 

Prospa Group Ltd (ASX: PGL) 

Two Prospa Group directors have acquired shares in the company this month. Prospa Group is an online small business lender that listed on the ASX in 2019. The Prospa share price has been largely flat this year although the lender reported strong growth in originations in 1H FY21. This is a recovery from FY20 when loan originations fell due to the challenging economic conditions brought on by the COVID-19 pandemic. 

FY20 loan originations were $450.9 million, down from $501.7 million in FY19. But volumes have since picked up with originations increasing 265.3% from 4Q20 to 1Q21 and a further 25.9% from 1Q21 to 2Q21. 1H21 loan originations of $180.7 million remain below pre-pandemic levels, down 41.1% on the prior corresponding period. Prospa, however, says recovery is accelerating with December and January origination volumes reaching 69% and 75% of the prior corresponding periods.

Foolish takeaway

While a single director buy may not be telling, several can provide a good indication that those best placed to know consider shares good value. These four ASX shares all had multiple director buys in March which could indicate an optimistic outlook. 

The post 4 ASX shares with director buys this month 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.

Lots have been written about how new nimble technology players will eat the lunch of traditional banks like Commonwealth Bank of Australia (ASX: CBA) and National Australia Bank Ltd. (ASX: NAB).

But the small cap business lender's results showed it is on the wrong side of the technology divide. While several tech stocks like the Afterpay Ltd (ASX: APT) share price have surged in this COVID-19 socially distanced world, Prospa is feeling the heat.

COVID-19 dents demand for credit

Loan originations in FY20 have fallen by around $50 million to $450.9 million compared to last year while earnings before interest, tax, depreciation and amortisation (EBITDA) crashed to a loss of $19.5 million. This compares to an EBITDA loss of $800,000 in FY19.

It's a tough time for any company that depends on small and medium companies. The sharp and sudden recession has hit SMBs hardest.

What's more, this sector is unlikely to bounce back anytime soon, in my view. That means weak demand for business credit from the smaller end of town.

Silver lining to Prospa's profit results

There are a few bright spots for Prospa though. If you excluded the financial impact from the coronavirus outbreak and other one-off items, underlying EBITDA would have been a positive $4 million.

Further, total revenue jumped 4.2% to $142.1 million. Just don't count on more growth in FY21 as the gains all came before COVID-19 struck.

On the other hand, the group is only setting aside $18 million in additional provisioning for potential bad debts. The economic impact from the pandemic on its customers isn't as bad as management initially expected and customer repayments are holding up relatively well.

Growing debt pile

Management also pointed out that total unique customers in Australia and New Zealand continue to increase and is up 43.5% compared to FY19. Prospa claims to have lend more than $1.6 billion to over 28,750 customers since it started.

Not only has the total number of customers gone up, but average gross loans have jumped 35.7% over the previous year to $433.3 million. Let's just hope its borrowers can continue to service their obligations, especially after COVID support expires.

How Prospa's balance sheet is holding up

Management also believes it holds a strong balance sheet with $55.3 million in unrestricted cash versus $29 million in FY19.

Its funding partners are still backing the group and Prospa claimed it held $114.1 million of available facilities with total third-party facilities amounting to $442.9million.

More uncertainty on the horizon

"Management have taken steps to ensure Prospa has the right foundations to manage the impact of COVID-19," said Prospa's chair Gail Pemberton.

"While momentum in FY20 slowed due to the impact of COVID-19 in the final quarter, we believe it will be restored as the economy and the small business sector recovers."

The company declined to provide a guidance due to the volatile conditions but committed to providing quarterly updates through FY21.

The Prospa share price slumped 11.1% to $80 cents in after lunch trade.

The post What Prospa's share price reaction and profit results mean for ASX banks appeared first on The Motley Fool Australia.

Four shares that have failed to follow the market higher today are listed below. Here's why they are dropping lower:

The Catapult Group International Ltd (ASX: CAT) share price is down 1% to $1.89. This appears to be down to profit taking after a very strong gain on Monday. Investors were buying the sports analytics and wearables company's shares after it was awarded a contract to provide video exchange services to the top 130 United States college football teams.

The Perseus Mining Limited (ASX: PRU) share price has fallen 2% to $1.51. A number of gold miners have come under pressure today after investor sentiment improved greatly and led to demand for safe haven assets to soften. The S&P/ASX All Ordinaries Gold index is down by 0.5% at the time of writing.

The Prospa Group Ltd (ASX: PGL) share price has tumbled 3.5% lower to 80 cents. This online lender's shares have come under pressure since the release of its unaudited results for FY 2020 late last week. Prospa expects to report a loss of up to $22 million due to additional provisions and write offs. It has also guided to expected credit losses of 11.7%, which was notably higher than what analysts at UBS were expecting. This morning they reiterated their neutral rating on Prospa's shares.

The Spark Infrastructure Group (ASX: SKI) share price is down 1% to $2.25. This appears to have been driven by softening demand for safe haven assets. As with gold, investors will put money into utilities when they go into risk off mode. But with the market flying higher today, investors appear to be switching back into risk assets.

The post Why Catapult, Perseus Mining, Prospa, & Spark shares are dropping lower appeared first on The Motley Fool Australia.

Prospa shares have since regained some of their losses to be trading 7.65% down at the time of writing.

What does Prospa do?

Prospa is an Australian online business lender. Customers can borrow up to $300,000 with a 10-minute application, with funding available in as little as 24 hours.

Prospa first listed on the ASX last year at an offer price of $3.78. The Prospa share price fell to 75 cents this morning but has since recovered slightly and is now sitting at 84 cents. 

What did Prospa report?

Prospa's unaudited results show a material impact from the coronavirus-induced economic downturn. The lender reports its loan originations have decreased, while provisioning for credit losses has increased. Total loan originations were materially impacted in April and May, but did pick up meaningfully in June. 

Prospa provided 5,501 customers with COVID-19-related relief packages between 1 March and 31 May 2020. These were typically full deferrals of 6 weeks duration or partial deferrals for 12 weeks. Interest during the deferral periods was capitalised. 

The environment remains challenging for Prospa's small business customers. As a result, the company has set aside a $20 million provision to take into account the impact of the COVID-19 pandemic. An additional $5.5 million is being written off following a review of loan book receivables. 

The above provisions have contributed to an expected earnings loss before interest, tax, depreciation, and amortisation (EBITDA) of $18 million to $22 million. Prior to these adjustments EBITDA was expected to be $4 million to $8 million for FY20. Revenue grew at an annualised rate of 10% over the 9 months to March. This slowed abruptly with the onset of the pandemic, meaning Prospa now expects its FY20 growth to be around 4%. 

What is the outlook for Prospa? 

Prospa says it is seeking to support its small business customers to rebuild and invest for the future. The company is an approved lender under the SME Guarantee Scheme. This scheme has been extended to 30 June 2021 by the Federal Treasurer to support small business recovery. Prospa continues to provide customer relief packages but reports the volume of customer support requests has returned to pre-COVID levels. 

Prospa says it adapted quickly to the challenge of supporting customers as they navigate this period of economic uncertainty. The company says it sees customers across all sectors planning for their recovery.

Prospa's full-year results will be announced on 27 August. The Prospa share price is trading at 84 cents per share at the time of writing, which is down more than 80% on this time last year.

The post Prospa share price sinks 15% as online lender announces COVID provisions appeared first on The Motley Fool Australia.

Reporting by the Australian Financial Review of the survey showed that around 30% of small businesses have cash on hand that will last for less than three months of business operations. It gets worse for larger businesses – 24% of medium businesses and 12% of large businesses have less than three months of cash to support business operations.

The survey was done on 2,000 businesses between 10 June 2020 and 17 June 2020.

The ABS said: "Several businesses commented that existing cash on hand would not be sufficient to maintain operations if not for government support measures." Government measures like jobkeeper and the cashflow support are due to expire at the end of September 2020.

Revenue has also been heavily affected. Around a quarter of businesses suffered a revenue fall of up to 25%, 37% of businesses saw revenue drop between 25% to 50%, 17% of businesses lost 50% to 75% of revenue and 14% suffered a revenue hit of more than 75%.

What does low cash mean for ASX shares?

Cash is extremely important. You could say cash is king. Businesses need cash to pay for their wages and other expenses.

Many businesses have done capital raisings to ensure their balance sheets remain in good shape through this difficult time. Shares like National Australia Bank Ltd (ASX: NAB), Bapcor Ltd (ASX: BAP), InvoCare Limited (ASX: IVC), Webjet Limited (ASX: WEB), Challenger Ltd (ASX: CGF), Flight Centre Travel Group Ltd (ASX: FLT), Cochlear Limited (ASX: COH), Lendlease Group (ASX: LLC), Ramsay Health Care Limited (ASX: RHC) and Bendigo and Adelaide Bank Ltd (ASX: BEN) are just some of the news to undertake a capital raising to ensure they have enough liquidity.

For me, I think businesses running low on cash is obviously worrying for ASX shares that have a focus on business customers like NAB and Australia and New Zealand Banking Group (ASX: ANZ).

There are other ASX shares with a focus on business customers like Xero Limited (ASX: XRO) and Prospa Group Ltd (ASX: PGL), but it's hard to say how they will be affected.

Banks are already expecting that not all businesses will make it through this difficult period. That's why the big ASX banks of ANZ, NAB, Commonwealth Bank of Australia (ASX: CBA) and Westpac Banking Corp (ASX: WBC) have all collectively provisioned billions of dollars for COVID-19 impacts.

Prime Minister Scott Morrison himself has warned that not every job and business can be saved. Time will tell how many businesses end up going under.

Thankfully most ASX shares seem to be doing okay through this period. Virgin Australia Holdings Ltd (ASX: VAH) has been the highest profile casualty so far, but it's getting close to a rescue deal. The airline is in the final stages of a saviour selection process.

What ASX shares could be worth buying?

There is a still a lot of uncertainty. There are growing infection numbers in several countries.

Valuations of some shares like Afterpay Ltd (ASX: APT), Zip Co Ltd (ASX: Z1P) and Xero are running hot again. Growth shares will probably do well over the long-term, but over the short-term they may be a little too expensive today if growth is hurt over the rest of 2020.

I like the idea of investing in shares that can keep growing regardless of what happens next. I'm thinking of shares like Fisher & Paykel Healthcare Corp Ltd (ASX: FPH), Bubs Australia Ltd (ASX: BUB), A2 Milk Company Ltd (ASX: A2M) and Pushpay Holdings Ltd (ASX: PPH). These businesses are generating positive operating cash flow. 

Defensive shares that may be fairly immune to more COVID-19 disruptions could also be solid ideas like APA Group (ASX: APA), TPG Telecom Ltd (ASX: TPM), Washington H. Soul Pattinson and Co. Ltd (ASX: SOL) and CSL Limited (ASX: CSL).

The post Australian businesses are running out of cash appeared first on The Motley Fool Australia.

Government guarantee

This morning Prospa announced it had received access to the scheme, which provides selected lenders with a government-backed guarantee. The government will guarantee 50% against the outstanding facility balance of eligible products. 

Prospa has received an allocation of $223 million under the scheme. This can be applied to all eligible new lines of credit and loans issued by Prospa between 14 April 2020 and 30 September 2020. The guarantee allows Prospa to provide small businesses with up to $250,000 in unsecured funding for up to 3 years and a 6 month repayment holiday with interest to be capitalised at the end of the 6 month period. 

CEO Greg Moshal said, "it's fantastic to see the Government understands what small businesses need right now to survive. Prospa has always focused on small businesses and access to this Scheme will empower us to support thousands of small businesses during this difficult time."

Prospa's business 

Prospa is an online lender offering small business loans of $5,000 to $300,000. Prospa listed in June 2019 at an issue price of $3.78. Shares reached a high of $4.60 in August 2019, but lost ground later in the year when it reported revenue for CY2019 and 1HFY20 would be below prospectus forecasts. 

Prospa shares were trading at around $2 in February. The March market crash caused Prospa shares to fall to just 50 cents, but they have since rallied and are currently trading at 95 cents. Prospa withdrew its FY20 guidance in March, citing the adverse impact of coronavirus on originations. 

The company nonetheless remains well funded with committed funding lines from a range of domestic and international senior and junior funders. At 31 December 2019, Prospa had $102.5 million in cash and cash equivalents and $485 million in available third party facilities. 

The post Why this ASX fintech share is up more than 25% today appeared first on The Motley Fool Australia.

Four shares that are climbing more than most today are listed below. Here's why they are storming higher:

The Afterpay Ltd (ASX: APT) share price has jumped 12.5% to $24.75 following the release of a business update. At the end of the third quarter of FY 2020, Afterpay's underlying sales reached $7.3 billion year to date. This was a 105% increase on the prior corresponding period. The company also revealed that its losses and income margins had remained stable during the quarter despite the pandemic.

The Flight Centre Travel Group Ltd (ASX: FLT) share price has surged 11% higher to $12.90. This is despite there being no news out of the travel agent on Tuesday. However, with its shares down materially and its liquidity now sufficient to sustain the pandemic, investors appear to believe they could be great value.

The Northern Star Resources Ltd (ASX: NST) share price is up a sizeable 10% to $12.67. This follows another rise in the gold price. In fact, the precious metal has been in such strong demand that it hit a seven-year high overnight. Northern Star isn't the only gold miner on the rise. At the time of writing the S&P/ASX All Ordinaries Gold index is up an impressive 7.4%.

The Prospa Group Ltd (ASX: PGL) share price has rocketed 26% higher to 95 cents. Investors have been fighting to get hold of the lender's shares after it was granted access to the Federal Government's Coronavirus SME Guarantee Scheme. This scheme has been setup to help small businesses deal with the impact of COVID-19 over the next six months. Prospa has received an allocation of up to $223 million under the scheme.

The post Why Afterpay, Flight Centre, Northern Star, & Prospa are storming higher appeared first on The Motley Fool Australia.

Four shares that have fallen more than most today are listed below. Here's why they are sinking lower:

The Computershare Limited (ASX: CPU) share price is down 2.5% to $11.52. The transfer agency and share registration company's shares have come under pressure after falling interest rates forced it to downgrade its FY 2020 management earnings per share guidance. According to the release, Computershare expects to report a 15% decline this year, compared to previous guidance of a 5% decline. Management also warned that trading conditions are expected to worsen in FY 2021

The Newcrest Mining Limited (ASX: NCM) share price has dropped over 8% to $26.79. Investors have been selling the gold miner's shares today after it downgraded its production guidance for FY 2020. This was due to the underperformance of its troubled Lihir mine in Papua New Guinea.

The Prospa Group Ltd (ASX: PGL) share price has sunk 11% lower to $1.20. The catalyst for this decline appears to be a broker note out of Macquarie this morning. According to the note, the broker has downgraded its shares all the way from an outperform rating to underperform. It has also taken an axe to its price target and cut it all the way down to 94 cents. It believes the current environment could threaten its earnings and funding model.

The ResApp Health Ltd (ASX: RAP) share price has crashed 50% lower to 84 cents following the release of two updates. The first revealed that healthcare giant Sanofi has not exercised its option to enter into exclusive negotiations for a pilot phase of a joint consumer health-focused product using ResApp's novel respiratory disease diagnostic algorithms. The second update revealed that the US FDA has advised that ResApp's De Novo classification request for ResAppDx-US has not been approved.

The post Why Computershare, Newcrest, Prospa, & ResApp are sinking lower appeared first on The Motley Fool Australia.

How did Prospa perform in the first half?

For the six months ended December 31, total loan originations came in at $306.8 million, bringing originations for the calendar year to $583.0 million. This was a 34% increase on the prior year and exceeded the guidance of $574.5 million it gave in November.

This led to the company reporting group revenue of $75.6 million for the first half, lifting calendar year revenue to $144.4 million. This was a 17% increase on the prior calendar year and was in line with its guidance of $143.8 million.  

Management advised that this was driven by strong loan originations in both Australia and New Zealand.

On the bottom line the company reported a statutory net profit after tax of $0.6 million, up from a loss of $3 million in the prior corresponding period.

Management shuffle.

Prospa has announced a couple of changes in the C-suite with today's result, which it believes will deliver on its future growth aspirations.

According to the release, co-founder and joint CEO Beau Bertoli will now take on the newly created role of Chief Revenue Officer. This leaves fellow co-founder, Greg Moshal, as the sole CEO of the company.

Both co-founders remain significant shareholders in Prospa and will maintain their executive board positions. In addition to this, they both remain in an extended voluntary escrow period until after the company's first half results of FY 2021.

Mr Bertoli said: "I'm super excited to take on the newly created role of Chief Revenue Officer and focusing on growth. The new organisational structure will allow both Greg and me to concentrate on what we do best, and in my case that is focusing on growing originations, customers and our distribution capability."

Outlook.

The online lender has reiterated its FY 2020 guidance and expects to deliver originations of between $626 million and $640 million and revenue of more than $150 million for the full financial year.

Mr Moshal said: "Prospa has the benefit of being a first mover in this space, and we are not complacent. We have a huge amount of data about small businesses in Australia and we are very clear what a good small business looks like. We continue to look at ways we can add value by serving small businesses and helping them meet their goals through new products and services."

The post Prospa share price on watch after strong first half lending growth appeared first on The Motley Fool Australia.

Prospa announced a new funding partner for one of its Australian Warehouse Facilities. At the time of writing, the Prospa share price is up by 4.94% to be trading at $2.02.

What did Prospa announce?

Prospa has announced the introduction of a new Funding Partner into one of its Australian Warehouse Facilities that funds small business loans and line of credit facilities. The Partner has committed to $32.5 million Class B Notes, with the right to increase its commitment up to $65 million.

The Funding Partner is reported by Prospa to be a global investor with deep technology investing expertise across the US and European markets.

Today's release follows the Junior Funding Partner announcement on 23 December 2019. It will allow the company to redeploy approximately $16 million of additional equity capital back into its growing Australian and New Zealand business.

This brings total released capital to $33.8 million since November 2019. The total third-party funding limits for Prospa's Australian operations now stands at $485 million.

What does Prospa do?

Prospa is a financial technology company that designs, builds and utilises cloud-based, data-rich and API-enabled technologies for the small business economy in Australia and New Zealand. The company's product offering has expanded from the online business loan to now include line of credit facilities and B2B (business to business) payments.

In Prospa's most recent financial results for FY19, total loan originations for FY19 were $501.7 million, up 36.6% on the prior year and up 3.1% on prospectus forecast of $486.5 million.

Group revenue was in line with prospectus forecast with FY19 revenue of $136.4 million, up 31.2% on the prior year. This performance was driven by strong loan originations in Australia and New Zealand.

Sharp share price fall last November

Prospa share dropped sharply last November after the online lender downgraded its full-year guidance. At the time, management explained that revenue and EBITDA were expected to fall short of expectations. This was driven largely by the company's premiumisation strategy exceeding its forecast, which led to increased demand for its offerings from premium credit quality customers who pay lower interest rates over longer terms.

What now?

Prospa is set to release its full calendar year 2019 results to the market on Thursday, February 27, 2020.

The post Why the Prospa share price is charging higher today appeared first on The Motley Fool Australia.

Background on Open Banking

From February, major banks were due to start sharing data on debit and credit cards, deposit and transaction accounts. This has now been pushed out to July 2020. Under the new timetable, major banks will need to share data on mortgage and personal loan accounts from November 2020. 

Open Banking is expected to improve competition in the financial sector and allow smaller players to compete more easily with larger competitors. Under Open Banking, banks must share customer data with other banks and businesses, when directed to do so by the customer. This will make switching providers much easier for customers as information such as direct debits can be transferred automatically. 

The major banks including National Australia Bank Ltd (ASX: NAB), Commonwealth Bank of Australia (ASX: CBA), Australia and New Zealand Banking Group (ASX: ANZ), and Westpac Banking Corp (ASX: WBC) hold vast quantities of customer data. Smaller banks, fintechs and neolenders could benefit from access to this data. Access to customer data allows for greater insight into customer spending and more accurate credit decisioning. 

The Open Banking regime is intended to allow for the development of products and services that are tailored to individual needs. Services that use individual customer data to provide customised, yet automated, outcomes are envisioned. These could include: 

• "super applications" that allow customers to view accounts across multiple providers from a single interface
• comparison services that use customer data to provide tailored product recommendations from panels of financial institutions 
• personalized financial management software. 

Why the delay?

The ACCC has attributed the delay to the need to ensure the Open Banking system is sufficiently robust and secure. ACCC commissioner Sarah Court told the Australian Financial Review that they are committed to delivering Open Banking, but "only after we are confident the system is resilient, user-friendly and properly tested." 

Delays to the implementation of the Open Banking regime will mean banks will not need to share data for a few months longer. This will benefit those banks that hold the majority of data, but is a temporary setback for fintech competitors such as Wisr Ltd (ASX: WZR) and Prospa Group Ltd (ASX: PGL). The impact will inevitably be shortlived, however, as Open Banking will roll out sooner rather than later. 

The post What does the Open Banking delay mean for ASX shares? appeared first on The Motley Fool Australia.

Three ASX shares that have just hit multi-year lows or worse are listed below. Here's why they are down in the dumps right now:

Bank of Queensland Limited (ASX: BOQ)

The Bank of Queensland share price continued its slide and hit a multi-year low of $3.70 yesterday. Investors have been selling the bank's shares following a poor result in FY 2019 and disappointing guidance for the new financial year. At its annual general meeting on Tuesday the regional bank warned that its transformation will take time and FY 2020 will be a "difficult" year. It expects another decline in earnings this year.

Elixinol Global Ltd (ASX: EXL)

The Elixinol Global share price sank lower again on Tuesday and hit a new all-time low of 60 cents. The cannabis company's shares have come under pressure in recent months following a decline in revenues and issues in both Japan and the United States. In October the company revealed that non-compliant hemp-derived CBD products were being sold by Elixinol Japan. And earlier this month it advised of a potential class action in the United States. Elixinol Global is alleged to have mislabelled its cannabis products. 

Prospa Group Ltd (ASX: PGL)

The Prospa share price dropped to an all-time low of $1.80 yesterday. The online lender's shares have come under pressure in recent weeks following a surprise downgrade to its guidance. Although Prospa expects its calendar year 2019 originations to be above its prospectus forecast at $574.5 million, its revenue and EBITDA are expected to fall well short of forecasts. Management revealed that this has been caused by its premiumisation strategy exceeding its forecast. Prospa has experienced increased demand for its solutions from premium credit quality customers who pay lower interest rates over longer terms.

The post Bank of Queensland and these ASX shares just sank to multi-year lows appeared first on The Motley Fool Australia.

Some shares fell so hard they dropped to 52-week lows or worse. Three that achieved this unwanted milestone are listed below. Here's why they are down in the dumps:

The G8 Education Ltd (ASX: GEM) share price hit a 52-week low of $1.87 on Tuesday. Investors have been selling the childcare centre operator's shares since the release of a trading update at its investor day event last month. That update revealed that a greater than expected increase in supply has put pressure on its like for like occupancy growth. As a result of this and higher than planned wages, underlying EBIT is expected in the range of $131 million to $134 million. This compares to its previous guidance of $140 million to $145 million.

The Gentrack Group Ltd (ASX: GTK) share price continued its slide and hit a two-year low of $3.46 yesterday. The essential software provider's shares have fallen heavily this year following a series of disappointing downgrades to its earnings guidance. Last month Gentrack downgraded its FY 2019 EBITDA guidance for a third time. Although it expects its revenue to rise 7.2% to NZ$112 million, EBITDA is expected to be below NZ$25 million. This implies a year on year decline of at least 22%. Unfortunately, things aren't likely to improve in FY 2020, with management forecasting flat earnings.

The Prospa Group Ltd (ASX: PGL) share price sank to an all-time low of $1.92 on Tuesday. Investors were heading to the exits in their droves last month after the online lender downgraded its full year guidance. Although Prospa expects calendar year 2019 originations to be above its prospectus forecast at $574.5 million, revenue and EBITDA are expected to fall well short of its forecasts. This has been driven largely by its premiumisation strategy exceeding its forecast. This has led to increased demand for its solutions from premium credit quality customers who pay lower interest rates over longer terms.

The post Why Prospa and these ASX shares just crashed to 52-week lows appeared first on The Motley Fool Australia.

What is insider buying?

Insider buying is the purchase of shares in a company by an officer or executive of that company, such as a director. Insiders usually have exclusive insights into the companies they manage and are likely to purchase shares when they view them as undervalued.

Insiders must only buy based on publicly available information and must inform the ASX of the trade by lodging an Appendix 3Y. Depending on the circumstances, the purchase by an insider of shares can be seen as a vote of confidence in a business. Buys by multiple insiders can act as a stronger signal, as can larger, rather than smaller, share purchases.

Who was buying what on the ASX in November?

We have studied insider buys for the month of November to bring you 2 ASX shares with multiple insider buys during the month.

Prospa Group Ltd (ASX: PGL)

Five Prospa directors acquired an aggregate of 299,913 shares in the company in November. The Prospa share price fell sharply last month when prospectus forecasts were downgraded. Shares in the company fell 27.4% in a day, from $3.86 to $2.80, following the update to prospectus forecasts.

Prospa is an online lender offering small business loans of $5,000 to $300,000 with terms between 3 and 24 months. The company IPOd in June at an offer price of $3.78 and immediately lifted 19% to $4.50. Shares reached highs of $4.96 in September before their recent sharp decline.

According to updated forecasts, CY19 revenue is anticipated to be $12.6 million or 8% below the prospectus forecast at $143.8 million. Calendar year originations are expected to be 2.7% higher than the prospectus forecast, however this has not translated to increased revenue. The variation is due to increased use of Prospa's service by higher credit grade customers. These customers tend to pay lower rates over longer loan terms.

In 1H20 Prospa is forecasting revenue of $75 million, down from the $88 million prospectus forecast. Increased use of products by premium customers mean revenue is recognised over a longer time horizon. Earnings before interest, tax, depreciation and amortisation (EBITDA) is predicted to be $4 million in 1H20, down from $11.3 million in the prospectus forecast.

In the first 4 months of FY20, Prospa originated $181.2 million in loans, a 40% increase on the same period in 2018. Total originations for FY20 are expected to be in the range of $626 million to $640 million, an increase of 25% to 28% on FY19, with revenue of at least $150 million. Prospa is currently trading at $1.94.

PSC Insurance Group Ltd (ASX: PSI)

Four PSC Insurance directors acquired 1,055,917 shares in the company in November. PSC Insurance Group is a diversified insurance services group operating in Australia, New Zealand, and the United Kingdom. The Group is comprised of a portfolio of businesses covering insurance broking and underwriting.

PSC Insurance has been on an acquisition spree of late, snapping up three businesses in 2019. This follows a number of strategic investments and acquisitions in 2018.

In FY19, PSC Insurance reported strong operational revenue growth, with revenue up 19% to $117.4 million. Operational EBITDA was up 19% to $41.7 million. Underlying earnings per share were 11.3 cents up from 10.2 cents in FY18. A dividend of 8.3 cents per share was paid in FY19 up from 7.2 cents the prior year.

In 2019, PSC Insurance acquired the broking business of Griffiths Goodall Insurance Brokers and all share capital of Paragon International Holdings Limited. These 2 acquisitions are expected to contribute $10.5million in incremental EBITDA in FY20. Underlying EBITDA of $57.8 million is expected for the Group in FY20.

Griffiths Goodall Insurance Brokers is a well-diversified Shepparton based insurance broker with more than 30 staff specialising in commercial, industrial, transport, logistics, pleasurecraft, agri-risk, and personal insurance. In July PSC purchased the insurance broking portfolio and other key assets of the business for $48 million in cash and scrip.

Paragon International Holdings Limited is a leading independent Lloyd's and London market broker. PSC entered into an agreement to acquire 100% of the share capital in Paragon for ~AU$75 million in late July. Paragon has more than 90 staff specialising in professional liability, directors and officers, cyber, casualty, healthcare, and mergers & acquisitions insurance.

Paragon provides wholesale brokerage services to clients in the US and both wholesale and direct brokerage services to clients in the UK, with more than 60% of revenue generated from the US wholesale market. Post-completion, Paragon will continue to operate as an autonomous business unit of PSC Insurance.

PSC Insurance conducted a capital raising via institutional share placement July. The placement raised $35 million through the issue of 13,461,358 shares. Funds were used along with existing cash resources to pay for the acquisition of Paragon.

In November, PSC Insurance acquired Carroll Insurance Group (CIG), a direct and wholesale broking business operating in the Lloyd's and London markets, for ~£6.3 million. Incremental revenue attributable to the transaction is expected to be ~£2 million per annum. The acquisition was funded from existing cash reserves and is highly complementary to PSC Insurance's existing brokerage business in London.

Foolish takeaway

While a single insider buy may not be telling, several can provide a good indication that those best placed to know consider shares good value. ASX shares with multiple recent insider buys in November span the financial and insurance sectors.

The post These 2 ASX shares had multiple recent insider buys appeared first on The Motley Fool Australia.

The rise of online lenders

Not so long ago, taking out a personal or business loan involved attending the branch of a bank or mutual society in person. As technology has advanced, much of the loan application process has become automated. This means that customers can apply for a loan and supply the relevant data without needing to attend in person. 

Customers can enter the relevant application details and upload required supporting documents online. Once received, large components of credit assessment can be conducted via artificial intelligence. This allows for a preliminary response to the application to be provided within minutes. 

Online lenders have utilised these advances in technology to carve out niches in the lending marketplace. They do not attempt to be banks, and avoid competing head to head with Westpac Banking Corp (ASX: WBC), Australia and New Zealand Banking Group (ASX: ANZ), National Australia Bank Ltd (ASX: NAB) and Commonwealth Bank of Australia (ASX: CBA). Instead, they seek market share in areas where they have a perceived competitive advantage. 

Money3 Corporation Limited (ASX: MNY)

Money3 provides personal loans up to $12,000 and car loans up to $50,000. The company originates over $1 million in loans every business day; currently 1 in 500 registered vehicles in Australia have a loan with Money3. Shares are currently trading at $2.20, up 40% from $1.57 at the start of the year. 

Revenue grew 24.6% to $91.7 million in FY19. Earnings before interest, tax, depreciation and amortisation (EBITDA) increased 17.3% to $47.5 million and net profits after tax increased 14.2% to $24.2 million. Earnings per share were 13.48 cents and a dividend of 10 cents per share fully franked was paid. 

Money3 acquired Go Car Finance in New Zealand in 2H19, expanding the company's geographic footprint. Currently 1 in 800 registered vehicles in New Zealand have a loan with Go Car Finance. New Zealand has the fourth highest rate of vehicle ownership globally. 

In 1Q20 Money3 delivered unaudited revenue of $30.5 million, up 48.8% on the prior corresponding period. EBITDA was up 41% to $14.8 million and net profit after tax (NPAT) was up 53.1% to $7.5 million. 

In FY20, NPAT growth is forecast to exceed 25% from continuing operations. Money3 also plans to expand its addressable market by geography and product. Credit decisioning is to be streamlined and the application process simplified to reduce loan turnaround times. Money3 forecasts it will originate 26,000 loans in Australia and 5,000 loans in New Zealand in FY20. 

Prospa Group Ltd (ASX: PGL)

Prospa offers small business loans of $5,000 to $300,000 with terms between 3 and 24 months. 

Prospa IPO'd in June at an offer price of $3.78 and immediately lifted 19% to $4.50. Prospa shares reached highs of $4.96 in September, before dropping off a cliff in November. Shares in the company fell 27.4% in a day, from $3.86 to $2.80, on an update to prospectus forecasts. 

CY19 revenue is anticipated to be $143.8 million,  $12.6 million or 8% below the prospectus forecast. CY19 originations are actually expected to be 2.7% higher than the prospectus forecast. The variation is due to increased use of Prospa's service by higher credit grade customers. These customers pay lower rates over longer loan terms. 

In 1H20 Prospa is forecasting revenue of $75 million, down from the $88 million prospectus forecast. Increased use of products by premium customers mean revenue is recognised over a longer time horizon. EBITDA is predicted to be $4 million in 1H20, down from $11.3 million in the prospectus forecast. 

In the first four months of FY20, Prospa originated $181.2 million in loans, a 40% increase on the same period in 2018. Total originations for FY20 are expected to be in the range of $626 million to $640 million, an increase of 25% to 28% on FY19, with revenue of at least $150 million. Prospa is currently trading at $2.01.

Wisr Ltd (ASX: WZR)

Wisr offers personal loans of $5000 to $60,000 on 3, 5, and 7 year loan terms and advertises itself as Australia's first neo-lender. Wisr's average loan size is $25,000 with a loan term of 4 years. Shares in Wisr are currently trading at 16 cents per share, up from 4 cents at the start of the year. 

Wisr originated $3.6 million in loans in FY17, $18.1 million in FY18, and $68.9 million in FY19. Revenue is predominantly derived from loan establishment fees and management fees from servicing loans sold to third parties. 

Operating revenue increased 91% in FY19 to $3.04 million, up from $1.6 million in FY18. A net loss after tax of $7.7 million was reported in FY19, attributed to forward investing in the Wisr ecosystem to position the company for long-term growth. 

FY19 was focused on creating the neo-lender model and building a strong brand that resonates in the market. In FY20, the company is looking to diversify funding structures to increase margins, launch a secured vehicle finance product to expand its addressable market, and open B2B2C channels to reach additional customers. 

Wisr reports that there has never been a better time to be a fintech operating in the consumer lending market. Fintech online lending launched in 2014 in Australia and held 0.5% of the market share in 2017, doubling to 1% in 2018. In the US and UK, fintech online lending launched earlier, in 2006. By 2018 fintech online lending held 38% of market share in the US and 25% in the U.K. There is potentially scope for a similar take up rate in Australia. 

Local influences such as the Royal Commission, positive credit reporting, and Open Banking may facilitate the flow of customers to alternative lenders such as Wisr. These influences could also improve the ease with which alternative lenders are able to access relevant customer information and process loan applications.

Foolish takeaway

Australia's loan market is fragmenting as new players enter the field. Consumers are demanding increased choice and ease of access. Fintechs and neo-lenders are heeding the call and coming to market with alternative offerings. The only question is to what extent consumers will embrace these new players. 

The post ASX-listed lenders shaking up the loan market appeared first on The Motley Fool Australia.