Day: January 7, 2021

Here’s why the BrainChip (ASX:BRN) share price jumped 15% today

stylised image of exploding cloud coming out of neck of man's suit representing exploding Brainchip share price

The BrainChip Holdings Ltd (ASX: BRN) share price has been among the best performers on the ASX on Friday.

At one stage today the artificial intelligence company’s shares were up as much as 15% to 56.5 cents.

This latest gain means the BrainChip share price is up over 55% since this time last month.

Why is the BrainChip share price zooming higher?

While there hasn’t been any news out of the company this week, investors appear to be still responding to a couple of major announcements released at the end of December.

The first announcement the company released was in relation to its agreement with NASA in the United States.

According to the release, BrainChip has received an order for its Akida Early Access Evaluation Kit from NASA. The space agency will use the evaluation kit within its shared service centre at the NASA/Ames research centre (ARC) in California.

This is expected to allow NASA to evaluate the Akida technology for potential use in programs with a neuromorphic processor that meet spaceflight requirements.

Management believes the processor is suitable for spaceflight and aerospace applications due to the device being a complete neural processor. This means it does not require an external CPU, memory, or Deep Learning Accelerator.

Given that reducing component count, size, and power consumption is a big concern in spaceflight and aerospace applications, this is a big positive.

However, it is worth noting that there’s no guarantee that NASA will take things further once it has evaluated the technology. Furthermore, there are other companies with deep pockets with similar technologies.

What was the second announcement?

The other announcement that got investors excited was an agreement with global semiconductor manufacturer Renesas Electronics America. It specialises in microcontroller and automotive system-on-chip products.

This agreement will see BrainChip deliver its Akida technology for use as a system-on-chip licensed product and includes a single-use design license, implementation support services, royalty payments per unit, and software maintenance services for two years.

Management believes the technology is also well suited for advanced driver assistance systems (ADAS), autonomous vehicles, drones, vision-guided robotics, surveillance, and machine vision systems. These are areas which Renesas has a specialty in.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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2 exciting small cap ASX shares to watch

Woman in pink sweater lying on dock with binoculars to her eyes

As well as being home to countless blue chip shares, the Australian share market is home to a good number of promising small caps.

Two small cap shares that could be deserving of a spot on your watchlist are listed below. Here’s what you need to know about them:

IntelliHR Ltd (ASX: IHR)

The first small cap to look at is IntelliHR. It is a cloud-based human resources and people management platform provider.

IntelliHR has been growing at a very strong rate this year. During the first five months of FY 2021, the company delivered a sizeable 148% increase in subscriber numbers to over 30,000 contracted subscribers.

This strong customer growth has translated into strong recurring revenue growth so far in FY 2021. As of its last update, IntelliHR’s contracted annual recurring revenue (ARR) was up 81.3% to $2.8 million.

Management appears confident there will be more of the same in future thanks to its quality software, international expansion, and favourable industry trends. It notes that the company is well-placed in a high growth global market being disrupted by the Working-from-Home trend.

Volpara Health Technologies Ltd (ASX: VHT)

Another small cap to look at is Volpara. It is the New Zealand-based healthcare technology company behind the VolparaEnterprise software solution.

This product is a cost-effective, mission-critical tool that helps clinics deliver the highest-quality breast imaging services. In addition to this, the company has a growing number of add-on solutions that work with VolparaEnterprise.

These add-ons are expected to drive material average revenue per user (ARPU) growth in the future. At the end of the first half, the company’s ARPU stood at US$1.16. However, management is aiming to grow this to US$10 in the future through its full product suite.

One broker that is a fan of Volpara is Morgans. It currently has an add rating and $1.71 price target on its shares.

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James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends VOLPARA FPO NZ. The Motley Fool Australia has recommended VOLPARA FPO NZ. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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ASX company stops Kakadu uranium production

Kakadu National Park

Energy Resources of Australia Limited (ASX: ERA) on Friday will end all uranium mining and processing at the mine completely surrounded by Kakadu National Park.

The move comes 40 years after mining within the Northern Territory’s famous region started amid controversy.

Uranium is used as fuel for nuclear power generation. The site of ERA’s Ranger mine had long been known to Indigenous peoples as a place that would cause radiation sickness.

The fierce public debate in the 1970s over extracting such a sensitive material from an environmentally and culturally significant area triggered many downstream impacts.

Among those was the very creation of the Kakadu National Park itself in 1979 in an attempt to protect the remaining area. Uranium mining started in 1980.

Since then ERA has produced more than 132,000 tonnes of uranium oxide from the Ranger mine.

Majority shareholder Rio Tinto Limited (ASX: RIO), which has endured its own controversy this year after the destruction of Juukan Gorge, withdrew its backing for mining at Ranger a few years ago.

Actual mining ceased 8 years ago, but ERA had still been processing already-extracted material up until this week.

The cessation of uranium activities this week was required by federal law via the Ranger Authority.

‘A truly historic milestone’

ERA chief Paul Arnold announced the end of uranium production was “a truly historic milestone”.

“Ranger has been a major supplier to global energy markets as well as being a key contributor to the Kakadu region and the Northern Territory,” he said.

“We would like to thank the many generations of ERA employees who devoted their skills and expertise throughout the life of this mine.”

Arnold said his company would remain in the area to rehabilitate the mine site.

“I look forward to the continued support and expertise of our team as we now wholly focus on delivering on our legacy of the comprehensive rehabilitation of the Ranger Project Area.”

ERA controversially raised $476 million of capital on the ASX last year to pay for the rehab.

This diluted minority shareholder’s stakes while Rio avoided paying for a non-productive cost.

ERA has 5 years to finish the rehabilitation work.

Australian Conservation Foundation nuclear-free campaigner Dave Sweeney said last month the remediation was no easy task.

“The community and environment of Kakadu need certainty and a comprehensive clean up,” he said.

“This work is a key test of the commitment and capacity of Rio Tinto, as well as the Northern Territory and federal governments.”

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Motley Fool contributor Tony Yoo has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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Why the Costa (ASX:CGC) share price has surged 70% in a year

fruit and veg share price represented by rising bar chart made from fruit and vegetables

Horticultural producer Costa Group Holdings Ltd (ASX: CGC) has had a good run over the last twelve months. During this period, the Costa share price has risen by 73.58%, despite the challenges presented by the COVID-19 pandemic.

Let’s take a closer look at what’s been driving the Costa share price.

Rundown of 2020 results

The company produced relatively solid results in 2020, despite the market downturn.

In the company’s last announcement on its financials for calendar-year 2020 (CY20), Costa reported that its earnings before interest, tax, depreciation and ammortisation (EBITDA) for the half-year was $93.7 million. This represented a 13.7% increase on CY19’s EBITDA.

Those earnings translated to a bottom line net profit after tax (NPAT) of $45.8 million, which was 12% higher than 2019.

Costa reported that the solid numbers were underpinned by strong retail mushroom demand in Australia, along with the full commissioning of its Monarto mushrooms facility in South Australia.

About Costa’s operations

The Australian fresh produce market is fragmented, and Costa is the largest player in this space.

The company has roughly 15% overall share of Australia’s fresh produce market but for certain categories, like berries, it commands up 60% of the market.

Only a fraction of Australian fresh produce is imported, reflecting the stringent biosecurity measures on imported products.

This has helped to protect Costa’s Australian business from encroaching international competition, however the company is still exposed to local competition in the form of around 18,000 small businesses operating across the Australian supply chain.

Overseas, Costa operates farms in Morocco and China. The company’s Moroccan operations license the export of blueberries to the United Kingdom and Europe. In China, Costa’s berries are farmed and sold locally. According to Costa, its international segment performed strongly in 2020, as well as in previous years.

Costa’s customer base is highly concentrated. According to the company, around 70% of its Australian sales are to just four large supermarket customers – Woolworths Group Ltd (ASX: WOW), Coles Group Ltd (ASX: COL), Aldi, and Metcash Limited (ASX: MTS).

How about the Costa share price?

As mentioned, the Costa share price has risen by nearly 75% over the last 12 months. In fact, in the last 6 months alone, the company’s shares have risen by around 40%.

At the time of writing, the Costa share price is trading 2.1% lower for the day so far at $4.27.

Based on current levels, the company commands a market capitalisation of $1.72 billion.

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Motley Fool contributor Eddy Sunarto has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended COSTA GRP FPO. The Motley Fool Australia owns shares of COLESGROUP DEF SET and Woolworths Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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