Author: therawinformant

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

Earlier this year, Shopify Inc (NYSE: SHOP) surpassed eBay Inc (NASDAQ: EBAY) as the second-largest e-commerce platform in the U.S. by sales volume after Amazon.com Inc (NASDAQ: AMZN).

That was a humbling blow for eBay, the world’s first online auction platform for person-to-person transactions. It also explains why Shopify stock has soared more than 3,700% over the past five years. During that same period, eBay stock rose 76% and Amazon stock advanced 375%.

Investors might be reluctant to buy Shopify stock right now, since it trades at over 290 times forward earnings. Meanwhile, eBay stock trades for 14 times forward earnings, which might make it look tempting as a value play. Nevertheless, it’s smarter to pay a premium for Shopify than a deep discount for eBay, for three simple reasons.

1. Old e-commerce vs. new e-commerce

eBay’s platform was once considered revolutionary. But today, it faces stiff competition from Amazon’s third-party sellers, Etsy Inc (NASDAQ: ETSY), and other similar marketplaces. Social media platforms like Pinterest Inc (NYSE: PINS) and Facebook Inc‘s (NASDAQ: FB) Instagram are also integrating online purchases into their sponsored posts.

Today, Shopify’s services are considered disruptive. Instead of providing a centralized marketplace, Shopify’s e-commerce tools help over a million merchants set up online stores, process payments, manage marketing campaigns, fulfill orders, and access other services. 

In other words, Shopify operates behind the scenes to help companies establish their own online presence without relying on big marketplaces like Amazon and eBay. Shopify also launched Shop, a consumer-facing app that provides searchable listings for its merchants, earlier this year.

Shopify’s decentralized approach enables merchants to expand online without diluting their identity, and it’s easy to scale as a business grows. By contrast, merchants usually need to buy promoted listings to stand out in eBay’s crowded marketplace.

2. Fortune favors the bold

eBay shrank its business over the past five years. It spun off PayPal Holdings Inc (NASDAQ: PYPL) in 2015, shut down its fixed-price subsidiary Half.com in 2017, sold its online tickets platform StubHub this February, and plans to sell its online classifieds platform by the first quarter of 2021.

eBay also reduced its marketing spending last year. The goal was to boost its profit and take rate — the percentage of each sale it retains as revenue — instead of maximizing gross merchandise volume (GMV). Its prioritization of profit over growth, along with its dividends and buybacks, strongly suggest that eBay is a mature tech company with limited growth prospects.

Shopify has expanded significantly since its IPO in 2015. It acquired the digital consulting and product development firm Boltmade in 2016, the drop-shipping platform Oberlo in 2017, and the warehouse automation company 6 River Systems last year.

The company has partnered with Amazon to let merchants sell products on Amazon from their Shopify stores. It has added similar integrations with Facebook, Alphabet Inc‘s (NASDAQ: GOOGL) (NASDAQ: GOOG) Google, Snap Inc‘s (NYSE: SNAP) Snapchat, and ByteDance’s TikTok. It also beefed up its premium Shopify Plus tier for larger merchants.

Shopify has also expanded its own payments platform, Shopify Payments, which processed nearly half of its GMV last quarter. It launched its own fulfillment network last year. Finally, it offers additional services via its own app store for online stores.

All those aggressive moves indicate that Shopify is still expanding. It’s eager to reinvest its cash into itself instead of divesting businesses and cutting costs to protect its bottom line.

3. Shopify is growing a lot faster

eBay’s revenue rose just 1% last year as its GMV dipped 5%. It blamed that sluggish growth on the reduction of its marketing expenses and higher internet sales taxes in several U.S. states. Its adjusted net income rose just 5%, but big buybacks boosted its earnings per share 22%.

This year, eBay expects its revenue to rise 19%-20% after excluding its divested businesses and currency headwinds. Adjusted EPS is on track to grow 18%-20%.

Those growth rates look impressive, but they’re mainly attributable to a temporary acceleration in online sales during the pandemic. Looking past that growth spurt, analysts expect eBay’s revenue and earnings to grow 7% and 9%, respectively, next year.

Last year, Shopify’s revenue rose 47% and its GMV surged 49%, but its adjusted EPS fell 30% as it integrated 6 River Systems into its new fulfillment network. However, analysts expect pandemic-related tailwinds to boost its revenue 81% this year, while adjusted EPS could jump more than tenfold.

Next year, analysts expect Shopify’s revenue and earnings to rise 32% and 2%, respectively. Investors should expect Shopify to continue generating high double-digit sales growth, but its earnings growth could remain unpredictable due to the ongoing investments in its ecosystem.

Why Shopify is a better buy than eBay

The e-commerce market is rapidly evolving, and it arguably favors disruptive players like Shopify instead of legacy marketplaces like eBay. Shopify lets merchants build their own online brands and optionally link them to Amazon and social networks. eBay wants to trap them in a walled garden filled with low-priced competitors.

Investors seem to believe Shopify’s vision for the future justifies its premium valuation, while eBay deserves a lower valuation. Shopify stock will likely remain volatile, but it should keep attracting more bulls than eBay.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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• ASX 200 drops 0.5%: Treasury Wine sinks, Zip flat after AGM update, Bega Cheese rises
• Why the Myer Foundation aims to achieve 100% ESG investments in 2 years
• The Select Harvests (ASX:SHV) share price is sinking 6% lower today. Here’s why.
• Why Afterpay, Bega Cheese, Humm, & Telix shares are storming higher
• Why is the Atomos (ASX:AMS) share price up 6% this morning?

Leo Sun owns shares of Amazon, Facebook, and Snap Inc. John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to its CEO, Mark Zuckerberg, is a member of The Motley Fool’s board of directors. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Alphabet (A shares), Alphabet (C shares), Amazon, Etsy, Facebook, PayPal Holdings, Pinterest, and Shopify. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends eBay and recommends the following options: long January 2021 $18 calls on eBay, short January 2021 $37 calls on eBay, short January 2022 $1940 calls on Amazon, long January 2022 $1920 calls on Amazon, and long January 2022 $75 calls on PayPal Holdings. The Motley Fool Australia has recommended Alphabet (A shares), Alphabet (C shares), Amazon, Facebook, and PayPal Holdings. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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At lunch on Monday the S&P/ASX 200 Index (ASX: XJO) has given back its early gains and is on course to start the week with a decline. The benchmark index is currently down 0.6% to 6,563.8 points.

Here’s what has been happening on the market today:

Treasury Wine share price sinks lower.

The Treasury Wine Estates Ltd (ASX: TWE) share price crashed as much as 12% lower this morning before staging a partial recovery. The wine company revealed that the Chinese tariffs on its wine exports are expected to hit its sales in the country hard. Given that China contributed 30% of its earnings in FY 2020, management is acting fast to limit the damage. Its plan includes the reallocation of Penfolds Bin and Icon range from China to other key luxury growth market. Though, management has warned it could take three years for this plan to reach its full potential.

Zip Co AGM update.

The Zip Co Ltd (ASX: Z1P) share price has given back its morning gains and is trading flat at lunch. This morning the buy now pay later provider released its annual general meeting presentation. That update revealed that it is now launching in the $600 billion UK market after COVID-19 pushed back its original launch plans. Management revealed that it has 150 merchants live on its platform and will be bringing on global fashion and apparel brands, JD Sports, Boohoo, Fanatics and Fashionova.

Tech shares push higher.

The ASX 200 may be dropping lower, but that hasn’t stopped Afterpay Ltd (ASX: APT), WiseTech Global Ltd (ASX: WTC), and other tech shares from charging higher. This appears to have been driven by a strong night of trade on the technology focused Nasdaq index on Friday. The S&P/ASX All Technology Index (ASX: XTX) is up 0.8% at the time of writing.

Best and worst ASX 200 performers.

The Bega Cheese Ltd (ASX: BGA) share price has been the best performer on the ASX 200 on Monday with a 5% gain. Investors have continued to buy its shares following the announcement of the Lion Dairy & Drinks acquisition for $534 million. The worst performer on the ASX 200 has been the Treasury Wine share price with a 7% decline. This comes after the wine company revealed the extent of the damage that China’s tariffs will have on its business.

More reading

• Why Afterpay, Bega Cheese, Humm, & Telix shares are storming higher
• Zip (ASX:Z1P) share price climbs higher following AGM update
• Treasury Wine (ASX:TWE) share price sinks 12% after responding to China export tariff
• Afterpay (ASX:APT) share price under heavy fire from industry giants
• ASX 200 Weekly Wrap: ASX 200 on track for a top month

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 AFTERPAY T FPO, WiseTech Global, and ZIPCOLTD FPO. The Motley Fool Australia owns shares of and has recommended Treasury Wine Estates Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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Economic, social and governance (ESG) investing, once predominantly the realm of activist investors, is now high on many retail and institutional investors’ radars.

And for good reason.

Incorporating ESG into your investment considerations not only puts your money to work in more responsible ways, it can also see your returns given a healthy boost.

That’s according to the latest research from Mercer, a global leader in responsible investment advice and solutions, and a wholly owned subsidiary of Marsh & McLennan Companies (NYSE: MMC).

Mercer’s research revealed that the best sustainable investment strategies in Australian shares returned 10.4% annually over the last 3 years through to June 2020. Over that same time, the median actively managed Aussie equities fund returned 5.3%, while the S&P/ASX 300 Index (ASX: XKO) returned 5.2%.

In other words, the ESG strategy roughly doubled the annual returns.

100% ESG in 2 years

That potential boost in returns will surely come as good news to the philanthropic Myer Foundation. The Myer Foundation, established in 1959, aims to achieve a 100% ESG investment portfolio by November 2022.

The Foundation set the ambitious goal last November. And in March this year it commissioned Mercer’s Responsible Investment business to help restructure its portfolio.

Martyn Myer, who led the transition and stepped down as president earlier this month after 11 years in the role said:

Shared Value posits that corporate success and improved social and environmental conditions are in fact inherently linked – and when achieved together, they can dramatically enhance future prosperity.

The SDGs [United Nation’s Sustainable Development Goals] provide a clear pathway to address social, economic and environmental challenges and with 193 nations committed to achieving them, it signals broad global consensus, creating a powerful economic tailwind for aligned companies.

Helga Birgden, Partner, Global Business Leader of Mercer’s Responsible Investment remarked:

Through this project, Mercer has worked with The Myer Foundation to identify the best investment managers globally that we expect to deliver strong investment returns while contributing to solutions to sustainability challenges and a positive impact on the environment and local communities.

While not all responsible investment or ESG funds will outperform over all periods, as long-term investors focused both on returns and truly sustainable investment solutions, rigorous investment and operational due diligence is critical for manager selection.

Myer added that the Myer Foundation is now in a position to help change the attitude that companies need to choose between delivering competitive returns to shareholders and doing good.

As Mercer’s latest research reveals, they can do both.

More reading

• The Select Harvests (ASX:SHV) share price is sinking 6% lower today. Here’s why.
• Why Afterpay, Bega Cheese, Humm, & Telix shares are storming higher
• Why is the Atomos (ASX:AMS) share price up 6% this morning?
• Why the Viva Leisure (ASX:VVA) share price is climbing higher today
• News Corp (ASX:NWS) shares sink after Foxtel buyout rejected

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Select Harvests Limited (ASX: SHV) share price is sinking lower today. This comes after the company released its full-year results for the 2020 financial year. At the time of writing, the Select Harvests share price is trading down 5.9% at $5.84.

What’s driving the Select Harvests share price lower?

The Select Harvests share price is plummeting today after the company released a disappointing result for the past 12 months.

For the period ending 30 September, Select Harvests reported a net profit after tax of $25 million. This reflected a 52% decline on the prior corresponding period (pcp). Although record almond crop was achieved, the fall in global almond prices and delayed shipments heavily offset its strong performance.

Earnings before interest, tax, depreciation and amortisation (EBITDA) came to $57.8 million. In comparison, EBITDA for FY19 recorded $95.2 million. The company attributed the 39% change mainly to higher water prices and orchard lease commitments in its almond division.

At $13.2 million, operating cash flow was down more than 83% over the comparable period. This was a result of COVID-19 impacts with market access issues and delayed customer payments.

Earnings per share (EPS) lost more than 53% with the company registering 26 cents for FY20, as opposed to 55.5 cents in FY19.

Net debt excluding finance leases stood at $57.5 million, with just $1.5 million in cash on hand at the end of the period.

The board declared a fully-franked dividend of 4 cents per share to be paid to shareholders on February 5, 2021.

Management commentary

Commenting on the results, Select Harvests managing director Paul Thompson said:

FY2020 has delivered a third consecutive year of increasing crop volume, validating the company’s targeted horticulture program and investment in risk mitigating frost fans and productivity enhancing on-farm technology. Both our mature and immature orchards again yielded at rates significantly higher than industry standard.

A focus on cost management and consistent high yields helped to mitigate softening almond prices and higher water costs in FY2020.

Mr Thompson said the water market remained challenging in the 2020 season, with record, or near record water prices across the Murray-Darling Basin:

Select Harvests’ balanced water procurement strategy, which includes owning and leasing water entitlements, protected us from the full impact of increases in spot water prices.

The food division continues to confront a challenging domestic market. While underlying demand and sales were higher for our industrial value-added almond business, higher private label penetration and commodity costs negatively impacted the result.

Outlook for FY21

With focus now towards the new financial year, Select Harvests will continue to execute its growth strategy. Management said its 2021 horticultural program retained a positive outlook with good pollination and growing conditions seen to date.

The company said an improvement in weather saw water prices beginning to move back to long-term averages. In addition, Select Harvests has been taking advantages of the favourable situation by acquiring lease and temporary water in recent months.

No guidance was given due to the early start of the new season. With harvest to begin in February 2021, the company hopes to provide investors with a clearer picture of its market and pricing environment.

About the Select Harvests share price

The Select Harvest share price is trading lower since the start of the calendar year, down 28%. After reaching a multi-year high of $9.10 in February, the company’s shares have failed to break the $8 barrier ever since.

Select Harvests has a market capitalisation of $705.7 million and a price-to-earnings (P/E) ratio of 11.

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Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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In late morning trade the S&P/ASX 200 Index (ASX: XJO) has given back its early gains and is dropping lower. The benchmark index is currently down 0.2% to 6,587.5 points.

Four shares that have not let that hold them back are listed below. Here’s why they are storming higher:

Afterpay Ltd (ASX: APT)

The Afterpay share price is up 3% to $97.44. This appears to have been driven by news of a strong Black Friday sales period and a jump on the technology-focused Nasdaq index on Friday night. It isn’t just Afterpay on the rise. The S&P/ASX All Technology Index (ASX: XTX) is up 1.75% at the time of writing.

Bega Cheese Ltd (ASX: BGA)

The Bega Cheese share price has continued its ascent and is up a further 4% to $5.64. At one stage today, the diversified food company’s shares stormed to a 52-week high. Investors have been buying the company’s shares after the announcement of an agreement to acquire Lion Dairy & Drinks for $534 million. This will add popular brands such as Dare, Farmers Union, Yoplait yoghurts, Pura milk, and Juice Brothers juices to its portfolio.

Humm Group Limited (ASX: HUM)

The Humm share price is up 4% to $1.29. This follows the announcement of the company’s successful rebranding from FlexiGroup to Humm this morning. Humm is the company’s buy now pay later brand. It is expected to be the key driver of the company’s growth in the future.

Telix Pharmaceuticals Ltd (ASX: TLX)

The Telix share price has jumped 7.5% higher to $3.50. Investors have been buying the biopharmaceutical company’s shares after it entered into an agreement to acquire TheraPharm. TheraPharm is a Swiss-German biotechnology company developing innovative diagnostic and therapeutic solutions in the field of hematology. It provides Telix with access to a portfolio of patents, technologies, production systems, clinical data, and know-how in relation to the use of Molecularly Targeted Radiation (MTR) in hematology and immunology.

More reading

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Motley Fool contributor James Mickleboro owns shares of TELIXPHARM DEF SET. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool Australia has recommended FlexiGroup Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Atomos Ltd (ASX: AMS) share price is gaining ground this morning, up by more than 6.3% following the release of a positive trading update for the first-half of FY21. The Atomos share price is trading at $1.01 at the time of writing.

Why did the Atomos share price move higher

Atomos reported that the first-half of FY21 has been a period of continued sales momentum, with return to pre-COVID-19 run-rate revenue levels of $5 million per month.

The company said sales had improved in each of the past four months. Despite growing coronavirus cases and recent lockdown measures in some of its key markets, there has been no impact on the November sales.

Due this momentum, Atomos says that it’s currently on track to deliver a first-half sales result in excess of $28 million. Second-quarter sales are also back to pre-COVID levels, well ahead of the company’s original guidance earlier in the year.

Atomos says it has achieved this result mainly through existing products, with only two new products released during the first five months of FY21.

Cost control measures continue to be in place with fixed costs remaining substantially below pre-COVID levels, with any future increases to be carefully balanced against revenue, the company says.

The company reported a strong cash position of $18.9 million as at the end of November 2020.

Atomos says it is still too early to give any formal guidance for the second-half of FY21. 

What does Atomos do

Atomos is involved in manufacture and sale of video equipment. The company’s stated objective is to expand into the ‘social’ and ‘entertainment’ market segments, whilst maintaining a strong position in the ‘pro video’ segment of the market.

The company’s flagship is  its 5-inch monitor recorder, Ninja V.  The popularity of Ninja V is due to the growing adoption of RAW recording from major global camera makers, with Atomos being the only monitor recorder able to record Apple Inc (NASDAQ: AAPL)’s ProRes RAW format.

RAW is a file format that captures all image data recorded by the sensor when taking a photo. When shooting in a format like JPEG image, information is compressed and lost. Because no information is compressed with RAW, it is able to produce higher quality images.

The company says the global move to online video conferencing driven by COVID-19 lockdowns will present the company with future opportunities to offer improved image and video quality products.

About the Atomos share price in 2020

The Atomos share price has lost 28% of its value in 2020, after its full year revenues dropped by 18% as sluggish demand driven by the pandemic slowed down its business. The Atomos share price enjoyed a 52-week high of $1.67 in February. At the current share price, it commands a market cap of $220 million.

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• Down 17%, is Apple stock a buy?
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Eddy Sunarto 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 Apple. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Atomos Ltd. The Motley Fool Australia has recommended Apple. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Viva Leisure Ltd (ASX: VVA) share price is back from its trading halt and pushing higher on Monday morning.

At the time of writing, the health club operator’s shares are up 2% to $3.10.

This leaves the Viva Leisure share price trading within sight of its record high of $3.31.

Why was the Viva Leisure share price in a trading halt?

Viva Leisure requested a trading halt late last week so it could undertake a fully underwritten $30 million institutional placement.

This morning the company announced the completion of the institutional placement, raising $30 million at a 4.3% discount of $2.90 per new share. Approximately 10.3 million new Viva Leisure shares are to be issued under the placement.

According to the release, the placement was well supported by both existing shareholders and several new institutional investors.

Why was Viva Leisure raising funds?

Management advised that the proceeds will be used to pursue future growth opportunities. This includes the acquisition of health clubs and locations, the buyback of franchisee owned Plus Fitness centres, and greenfield rollouts.

It believes this will accelerate Viva Leisure’s growth and help it execute on its target of having 400+ corporate owned locations by 2025. This compares to the 79 locations it had operating at the end of FY 2020.

Management notes that it has identified a plan to add approximately 300 locations across its network. This will be through utilising its pipeline of franchisee owned Plus Fitness franchises, the continuous roll out of new greenfield locations, and other acquisitions.

Viva Leisure’s CEO and Managing Director, Harry Konstantinou, commented: “We are pleased with the support that Viva Leisure has again received from both existing and new institutional investors. We will look to immediately deploying the funds raised to accelerate our growth and execute on our 2025 target of having 400+ corporate owned locations.”

More reading

• Why the Viva Leisure (ASX:VVA) share price is in a trading halt
• Top fundie, Wilson, names ASX shares to buy

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. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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News Corporation (ASX: NWS) reportedly declined a buyout offer of its troubled pay television subsidiary Foxtel.

An unnamed special purpose acquisition investment company (SPAC) approached News Corporation with an offer to buy Foxtel, according to SMH.com.au.

A SPAC, which is also called a “blank cheque company”, is a publicly listed entity that’s cashed up with the sole purpose of acquiring an unlisted business.

The United States concept is a cousin of the Australian phenomenon of “reverse-listing”, in which a company can float on the ASX without going through the normal rigours of a new listing.

A sale would have provided relief for Foxtel, which owes $2.1 billion of debt.

News Corporation, which owns 65% of the pay TV brand, did not accept the takeover proposal.

In early Monday morning trade, the News Corporation share price is down 0.53% to $24.41. It had rallied for the past month after trading at $18.14 on 30 October.

News Corporation and Foxtel declined to comment to The Motley Fool.

Foxtel’s slow death

Foxtel has been on a downward slope in recent years, losing clientele and revenue to cheaper streaming services from Stan, Netflix Inc (NASDAQ: NFLX), Walt Disney Co (NYSE: DIS) and Amazon.com Inc (NASDAQ: AMZN).

Its one saving grace was live sport, but even that’s now under attack after Nine Entertainment Co Holdings Ltd (ASX: NEC) secured the broadcast rights to Australian rugby union this month.

Nine intends to put much of that content on its Stan streaming service.

The COVID-19 pandemic has also devastated Foxtel’s pubs and clubs subscription base, which was formerly a reliable cash cow.

Last year the pay TV operator tried to raise billions to pay off old debts. It was unsuccessful, and News Corp was forced to chip in $300 million. Minority shareholder Telstra Corporation Ltd (ASX: TLS) declined to put any more money into the sinking ship.

In November, Foxtel finally managed to refinance $1.1 billion of its debt to provide it more breathing space in terms of time due.

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John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Tony Yoo owns shares of Amazon. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Amazon, Netflix, and Walt Disney and recommends the following options: long January 2021 $60 calls on Walt Disney, short January 2022 $1940 calls on Amazon, long January 2022 $1920 calls on Amazon, and short January 2021 $135 calls on Walt Disney. The Motley Fool Australia owns shares of and has recommended Telstra Limited. The Motley Fool Australia has recommended Amazon, Netflix, and Walt Disney. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Newcrest Mining Ltd (ASX: NCM) share price is dropping lower on Monday despite the release of a positive announcement.

In morning trade, the gold miner’s shares are down 1% to $26.86.

What did Newcrest announce?

This morning Newcrest announced that it has entered into a fully-termed joint venture agreement with Greatland Gold for the Havieron Project. This project is located 45km east of Newcrest’s existing Telfer operation.

As part of the agreement, the company has provided Greatland Gold with a US$50 million loan to fund certain early works and growth drilling activities at the project.

This means that Newcrest has now met the Stage 3 expenditure requirement of US$45 million and is entitled to earn an additional 20% joint venture interest. This will result in an overall joint venture interest of 60%.

In addition to this, Newcrest has entered into a farm-in and joint venture agreement with respect to Greatland Gold’s Black Hills and Paterson Range East exploration licences. This is through a new joint venture agreement with Greatland Gold called the Juri Joint Venture.

These projects are located within the Paterson Province, approximately 50km from the Telfer operation. The new joint venture covers a huge area of approximately 248km.

Newcrest’s Managing Director and Chief Executive Officer, Sandeep Biswas, is very excited with these projects.

Mr Biswas commented: “We are excited to extend our relationship with Greatland Gold and expand our presence in the highly prospective Paterson Province. The Havieron Joint Venture and Loan Agreements support the continued progress at Havieron with the potential to deliver commercial production within two to three years from the commencement of the decline.”

“The Juri Joint Venture complements our strong pipeline of exploration prospects and the associated tenements are favourably located in close proximity to our established Telfer operation,” he concluded.

Why is the Newcrest share price dropping lower?

While this is a positive development for Newcrest, it hasn’t been enough to offset another pullback in the gold price at the end of last week.

The spot gold price is currently fetching US$1,789 an ounce, which is down 1% since this time last week.

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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. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Keytone Dairy Corporation Ltd (ASX: KTD) share price is near the same level it started at when the company first debuted on the ASX in July 2018. However, the Kiwi dairy producer has continued to develop its operational and financial performance despite its underwhelming share price performance to date.

The company today announced record sales for the 6 months ending 30 September 2020. The Keytone Dairy share price is currently trading 6% higher at 26.5 cents at the time of writing. 

First half FY21 highlights

Keytone Dairy continued record sales growth across all divisions, with sales totalling more than $24.5 million for the first six months of FY21. This exceeds the 12-month full year FY20 result of $22.5 million. 

Keytone’s proprietary product grow increased 141% to $2.3 million. Significant retail ranging was delayed due to COVID-19 and implemented only after 30 September 2020 and is not reflected in the results to date. 

The company continues to experience strong growth in its private label business with substantial increased forecasts received from existing clients for 2021 and new contract wins across Australia and New Zealand.

Along with an increase in revenue, its Australian and New Zealand operational business units all recorded underlying earnings before interest, tax, depreciation and amortisation (EBITDA) profitability. The group’s consolidate normalised EBITDA loss decreased 57% to $900,000, compared with prior corresponding period loss of $2.1 million. 

Its EBITDA has been negatively impacted by initial retail rebates, promotions and marketing to establish brand awareness and achieve market penetration in key retail channels. The company expects these costs to normalise over time. 

Commenting on the results, Keytone Dairy CEO Danny Rotman said: “The company has continued to grow sales at an impressive rate, significantly reduce operational cash burn and gain important distribution in key retail channels for our proprietary brands”. 

As at 30 September 2020, Keyone Dairy had a cash balance of $9.0 million, this includes a $12.5 million capital raising back in May. During the half, the company also spent $2.25 million to acquire AusConfec assets, consisting of state-of-the-art equipment for the manufacturing of protein bars with contracts with Woolworths and Coles.

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Motley Fool contributor Lina Lim has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post Keytone Dairy (ASX:KTD) share price higher on record half-year results appeared first on Motley Fool Australia.

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