Author: therawinformant

The Integrated Research Limited (ASX: IRI) share price is on the slide on Wednesday.

In morning trade the performance management software company’s shares are down 2% to $3.63.

Why is the Integrated Research share price dropping lower?

Investors have been selling the company’s shares today following the release of its annual general meeting presentation.

At the event, management provided investors with a summary of its performance in FY 2020, an update on current trading conditions, and its expectations for the future.

In respect to the former, Integrated Research was a positive performer in FY 2020 and delivered solid top and bottom line growth.

Revenue came in 10% higher to $110.9 million and profit after tax also rose 10% to $24.1 million. This allowed the Integrated Research board to maintain its dividend at 7.25 cents per share at a time when many companies were either cancelling or deferring dividends.

Management notes that this result was driven by 15% growth in licence sales to $72.1 million and a solid performance from its professional services business.

Trading update.

Unfortunately, Integrated Research’s CFO, Peter Adams, revealed that the company’s positive form hasn’t continued in FY 2021.

He commented: “Our revenues for the first four months of FY21 are behind the prior corresponding period. With the ongoing global uncertainty around Covid and the election in the US, we are seeing our typical sales cycle lengthen and some customers deferring purchasing decisions.”

In addition to this, the company is facing meaningful foreign exchange headwinds.

Mr Adams explained: “With over 95% of IR’s revenues derived outside of Australia, the volatility of currency exchange rates can significantly impact our results. For example, a one cent movement in the AUD/US exchange rate can affect revenue by over one million dollars on an annualised basis. Year to date currency trends represent a headwind.”

In light of the above, the chief financial officer has warned that “there is some risk that both revenue and profit for the first half may be below the prior corresponding period.”

Long term outlook.

While FY 2021 may be a tough year for Integrated Research, management remains positive on the longer term.

Mr Adams said: “Beyond this we have a positive outlook. The recent release of new SaaS products is a key driver to future growth. We anticipate that SaaS bookings will build progressively over the remainder of FY21 and will lead to meaningful revenue contributions in FY22 and beyond.”

“These new solutions come at a time when where we see market trends moving in our favour. This includes the increase in remote working and the increase in cashless transactions,” he concluded.

More reading

• Why the LiveTiles (ASX:LVT) share price is pushing higher today
• Harvey Norman (ASX:HVN) share price higher on stellar sales update
• Fisher & Paykel (ASX:FPH) share price on watch following half-year results
• Is the CBA (ASX:CBA) share price a buy?
• Why the Kogan (ASX:KGN) share price is underperforming

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 Integrated Research Limited. 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 Harvey Norman Holdings Limited (ASX: HVN) share price is pushing higher on Wednesday after the release of a trading update.

At the time of writing, the retail giant’s shares are up 2% to $4.78.

How is Harvey Norman performing in FY 2021?

Harvey Norman has started FY 2021 in a very positive fashion and has recorded strong sales and profit growth.

According to the release, aggregated sales revenue increased by 28.2% between 1 July and 21 November compared to the prior corresponding period.

This has been driven by strong same store sales growth across almost all regions and particularly in the ANZ market.

Harvey Norman’s Australian franchisees delivered a 30.4% increase in comparable store sales and its New Zealand stores reported a 20.4% lift in comparable store sales. This includes stores that were temporarily closed due to COVID-19.

A total of 18 stores were closed in greater Melbourne from 6 August to 27 October due to stage 4 restrictions. These stores quickly moved to a click & collect and contactless delivery model to limit the sales impact.

A further 10 stores were closed in South Australia for a 3-day period from 19 November in order to prevent a COVID-19 second wave in the region. These stores have now reopened as normal.

Strong profit growth.

Pleasingly, for shareholders, Harvey Norman’s profit growth has been even stronger in FY 2021 thanks to margin expansion.

The release explains that its unaudited profit before tax for 1 July to 31 October was up a massive 160.1% on the prior corresponding period.

Management advised that, excluding the net impact of AASB 16 Leases and net property revaluation adjustments, it achieved a profit before tax of $341.11 million for the fourth months. This compares to $131.17 million in the prior corresponding period.

Though, management has warned that there is no guarantee that this strong form will continue throughout the remainder of the half or full year. It notes that “the COVID-19 pandemic has caused, and continues to cause, great uncertainty about the future economy.”

More reading

• 5 things to watch on the ASX 200 on Wednesday
• ASX 200 Weekly Wrap: ASX continues to climb, despite outage
• 5 things to watch on the ASX 200 next week
• 3 ASX dividend shares rated as buys by brokers

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 Fisher & Paykel Healthcare Corp Ltd (ASX: FPH) share price could be on the move today. This comes after the company released its half-year results for FY21.

Fisher & Paykel is a New Zealand-based company that designs, manufacturers and markets products for a range of treatments. These include use in respiratory care, acute care, surgery and the management of obstructive sleep apnoea.

What will be moving the Fisher & Paykel share price?

It will be interesting to see how the Fisher & Paykel share price performs today after the company reported strong results for the first half of FY21.

For the period ending 30 September, Fisher & Paykel reported net profit after tax of $225.5 million. This reflected an 86% improvement over the prior corresponding period (pcp).

Operating revenue grew to $910.2 million, a 59% uplift on the first half of FY20. The strong set of numbers came from a surge in demand for the company’s hospital hardware, particularly Optiflow and Airvo systems. Traditionally, nasal high flow therapy is used in clinical practices, however, this was shifted as a front-line treatment for COVID-19 patients in hospitals.

In the hospital portfolio alone, operating revenue jumped more than 93% over the first-half year results for FY20. The $681 million achievement made up three-quarters of the company’s entire operating revenue, highlighting the importance of its lifesaving products.

The homecare product group, which includes treatment for sleep apnoea, gained 5% in revenue to $226.2 million over the pcp.

Gross margin fell to 61.7% for the half-year as use of air freight was used more frequently. The cost to transport the goods also rose, weighing down on the result. However, the company noted that excluding air freight, gross margin is broadly in line with last year’s performance.

The board declared an interim dividend of 16 cents per share to be paid to shareholders on 16 December. This represents a 33% increase on the prior comparable period’s dividend.

Management commentary

Fisher & Paykel Managing Director and CEO, Mr Lewis Gradon, commented on the group’s scorecard for H1 FY21. He said:

We had a strong first half of the year and have continued to expand our installed base of hardware in hospitals.

Since our last trading update in August, we maintained the same level of both hardware and consumables revenue in our Hospital product group for the half year. In our Homecare product group, OSA masks revenue also continued at similar levels to the first four months of the financial year.

Sales in hardware and consumables continued to track surges in COVID-19 globally, as the virus moved across Europe, North America, South America and South Asia.

Since the pandemic started, many sleep clinics have been closed, resulting in a reduction in new patient diagnoses. Our F&P Evora and F&P Vitera masks for OSA are great products that have yet to reach their full potential.

Remaining outlook for FY21

With focus now on the second-half, Fisher & Paykel did not provide guidance for the end of the FY21 year. This is due to the uncertain nature of COVID-19, and the fact that vaccine developments are still progressing in the background.

However, the company did advise that if things return to normal, it could project some estimations for FY21. This is dependent upon hospital hardware sales, OSA diagnosis rates, and freight costs returning to normal levels.

Based on these assumptions, Fisher & Paykel forecasts operating revenue to be around $1.72 billion. Net profit after tax would fall somewhere between $400 million to $415 million, provided exchange rates remain relatively stable.

About the Fisher & Paykel share price

The Fisher & Paykel share price has been surging forward over the past 12 months. Reaching an all-time high of $34.92 in the middle of July, its shares are sitting just 8% below this level at the time of writing. It will be interesting to see whether the Fisher & Paykel share price can break its record on the back of its robust results.

More reading

• 5 things to watch on the ASX 200 on Wednesday
• ASX 200 Weekly Wrap: ASX continues to climb, despite outage
• 5 things to watch on the ASX 200 next week
• 3 shares that have reacted adversely to vaccine news
• Why Resmed, Coles, Afterpay and one other have made early share price gains

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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Is the Commonwealth Bank of Australia (ASX: CBA) share price a buy?

Rhett Kessler from Pengana Capital Group Ltd (ASX: PCG) recently said that he was increasing exposure to banks.

Trading update

The major bank recently gave its FY21 first quarter update.

The big four ASX bank revealed that it generated $1.9 billion of statutory net profit after tax (NPAT) in the quarter for the three months to 30 September 2020.

It also said that it made $1.8 billion of cash NPAT, which was down 16% on the same period last year.

CBA reported that its income was stable compared to the quarterly average for the second half of FY20. Its core volume growth helped to offset lower net interest margins. Meanwhile, expenses rose by 2% excluding customer remediation (or down 4% including customer remediation provisions in the second half of FY20).

The big bank said that its credit quality indicators were insulated by repayment deferrals and government support initiatives. The provision coverage was strengthened through forward looking adjustments for economic assumptions and expected COVID-19 impacts.

The strong balance sheet settings were maintained, with deposit funding at 74%. The CET1 capital ratio of 11.8%, which was an increase of 20 basis points after the payment of the FY20 final dividend.

Looking at CBA’s home loan deferrals, there was a reduction in the deferred balance of around $18 billion. There are approximately 45,600 home loans still in deferral at the end of October, worth around $19 billion – of these 27% are due to expire and exit in November, though they may be extended.

CBA CEO Matt Comyn said: “Disciplined execution of our strategy and strong operational performance continued to deliver good outcomes for our stakeholders during the September quarter. Our strong balance sheet, focus on operational excellence and the dedication and commitment of our people ensures we remain well placed to support our customers and the wider community through ongoing challenges of COVID-19.”

The CBA share price went up 2.75% on the day.

APRA remedial plan

CBA also recently made an announcement and acknowledged the outcome of APRA’s review of the progress made against its remedial action plan.

APRA’s validation review found that CBA has made significant progress in implementing the remedial action plan. As a result, the operational risk overlay imposed on CBA was reduced from $1 billion to $500 million with immediate effect. This reduction represents an increase in the CET1 capital ratio of 17 basis points for the ASX 200 bank.

The CBA CEO said that there is still a substantial amount of work to do.

Reasons to like CBA

Mr Kessler said there were four areas for explaining the increase of the exposure to banks.

They could benefit from accelerating loan growth supported by low interest rates and first homeowner support.

The major banks can also benefit from a supportive federal budget, improving housing finance approvals and house prices holding up better than expected.

The big four banks may benefit from a meaningful reduction in loan deferrals.

Finally, the banks may see lower than anticipated loss provisioning.

Pengana continues to focus on companies that have resilient business models, robust balance sheets, competent management and are available at a reasonable price. It also focuses on owning businesses that have demonstrated a track record of “having the power” in their various stakeholder relationships.

According to earnings estimates on Commsec, the CBA share price is valued at 19x FY22’s estimated earnings.

More reading

• Leading brokers name 3 ASX shares to sell today
• Will the Liberty IPO damage the Commonwealth Bank (ASX:CBA) share price?
• ASX 200 Weekly Wrap: ASX continues to climb, despite outage
• Top brokers name 3 ASX shares to sell next week
• ASX 200 ends flat on Friday

Motley Fool contributor Tristan Harrison 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 Is the CBA (ASX:CBA) share price a buy? appeared first on Motley Fool Australia.

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The Kogan.com Ltd (ASX: KGN) share price has underperformed the S&P/ASX 200 Index (ASX: XJO) by 13% so far in November. This follows the company’s phenomenal share price run from around $4 to $25 between March and October this year. How did an ASX 200 growth superstar turn sour so quickly? 

What’s happened to the Kogan share price?

Weakness in ASX shares that benefitted from lockdowns 

The recent rotation from tech and growth shares into value and cyclical shares could be weighing down on the Kogan share price. This rotation has seen the likes of airlines, travel shares and banks make significant share price recoveries, which is reflected by the recent surge in the ASX 200 to above the 6,600 level. 

While, we could attribute some blame to the recent rotation and weakness in sectors that benefitted from the lockdown, the Kogan share price is still underperforming some of its e-commerce and retail peers. The JB Hi-Fi Limited (ASX: JBH) share price, for example, is only down 7% this month. Meanwhile, the Redbubble Ltd (ASX: RBL) share price made a swift rebound to be up 17%. 

Shareholders divided over executive bonus 

Last Friday, Kogan shareholders approved the grant of options for Kogan co-founders, Ruslan Kogan and David Shafer. The vote was close, with 56% of shareholders for approval and 42% voting against.

The deal was struck at the height of the COVID-19 sell-down when the Kogan share price was trading at around $4 to $5. Therefore the exercise price for the options at $5.29 per share seemed reasonable at the time. 

However, at today’s Kogan share price, these options would be immediately in-the-money and represent a handy $70 million pay packet for the co-founders. 

Foolish takeaway

One could argue the Kogan growth story is still intact, with the first four months of the financial year delivering a 131.7% increase in gross profit and a 268.8% increase in adjusted earnings before interest, tax, depreciation and amortisation (EBITDA). The company’s strong performance has been attributed to more customers relying on Kogan to deliver goods for their homes and businesses during the period. We are now entering the peak Christmas trading period. November and December are typically the most important months of the year for the business, with strong trading performances having been delivered during these months throughout prior years. 

While the growth story may still appear to be fundamentally sound, the Kogan share price has seen significant selling volume in the past two weeks. Kogan shares are, however, still up nearly 120% year to date and more than 300% from their March lows. 

More reading

• Why ASX, Kogan, Myer, & Northern Star shares are dropping lower
• Why BlueScope, Home Consortium, IAG, & Kogan shares are dropping lower
• Profit up 270% in FY21 YTD, is the Kogan.com share price a buy?
• ASX 200 ends flat on Friday
• Here’s how the voting went down at the Kogan (ASX:KGN) AGM

Lina Lim has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Kogan.com ltd. The Motley Fool Australia has recommended Kogan.com ltd. 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 Zip Co Ltd (ASX: Z1P) share price has seemingly gone nowhere since announcing its Quadpay acquisition back in early June. The glory days saw the Zip share price jump 40% on the day of the announcement and 22% the next, to reach a record all-time high of $6.40 per share. Fast forward six months and the Zip share price is sitting around the exact same levels. What happened to the Zip share price? 

Solid update but did not inspire share price rally

Zip delivered a solid October FY21 year-to-date trading update on Monday. Its revenue for the first four months of the year was up 91% to $96.7 million. It hit record transaction volumes in October of $401.1 million, up 104% year on year. 

The company also became the first buy now, pay later (BNPL) provider to launch a Chrome Extension. This is a mechanism that allows customers to pay later on any website utilising virtual card technology alongside a Google plug-in. 

The Zip share price opened 5% higher on Monday but closed flat. 

Afterpay a clear market leader 

Buy now, pay later shares across the board, including Sezzle Inc (ASX: SZL), Splitit Inc (ASX: SPT), Openpay Group Ltd (ASX: OPY), Flexigroup Limited (ASX: FXL), Laybuy Group Holdings Ltd (ASX: LBY) and Zip, have similar price charts where FY21 returns are flat to negative. 

The Afterpay Ltd (ASX: APT) share price, on the other hand, has more than doubled since June. But it also trades at the most expensive revenue multiple of all the BNPLs. At today’s Afterpay share price, the company trades at approximately 53 times FY20 revenue. Zip trades at 20 times while Laybuy, the cheapest of the lot, trades at 12 times FY20 revenue. 

A lack of international expansion  

While Zip does have exposure to major international geographies, being the United States and the United Kingdom, the company has not announced any additional expansions. 

Afterpay is the only BNPL player to have invested and mobilised in other countries beyond the US and the UK. Its acquisition of Pagantis is progressing well and is on track for completion by the end of the 2020 calendar year, pending regulatory approval by the Bank of Spain. Pagantis provides Afterpay with a license to operate in Spain, France, Italy and Portugal as well as pending license passport applications to Germany and Poland. The combined population of all these countries totals approximately 300 million, compared to the 328 million population of the US. 

Afterpay has also established a base in Singapore to drive the development of the South East Asia market. The initial development of its EmpatKali acquisition opportunity in Indonesia is also underway. 

More reading

• Leading brokers name 3 ASX shares to sell today
• ASX 200 rises again on Monday
• ASX 200 up 0.7%; Zip trading update, Ampol buyback, IAG sinks
• Zip Co (ASX:Z1P) share price pushes higher on trading update
• Tech shares could crash 40%, warns fundie

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Lina Lim 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 Alphabet (A shares) and Alphabet (C shares). The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of ZIPCOLTD FPO. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends Sezzle Inc. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool Australia has recommended Alphabet (A shares), Alphabet (C shares), FlexiGroup Limited, and Sezzle Inc. 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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A new exchange-traded fund (ETF) is listing on the ASX next month, specifically targeting investors with “a very high tolerance” for risk in return for massive potential growth.

BetaShares Diversified All Growth ETF (ASX: DHHF) will be released for trade on 16 December, marketed as a portfolio consisting entirely of growth assets.

The ticker DHHF is currently used by BetaShares Diversified High Growth ETF (ASX: DHHF), but after the close of trade on 15 December, the investment strategy will switch for a fresh start.

The new fund will hold 8,000 different companies from 60 exchanges, and will be agnostic on market capitalisation and country-of-origin.

“It offers investors exposure to a diversified portfolio with the potential for high growth in a single trade,” a BetaShares spokesperson told The Motley Fool.

“The target investor is an investor seeking the potential for high growth, who has a very high tolerance for risk and is willing to accept a high degree of volatility.”

Given the risky nature, the investment firm suggested younger clients with a long investment timeframe might be best suited to this new product.

Is this ETF actually ‘100% growth’?

Despite BetaShares’ claim that the fund is 100% growth, The Motley Fool understands the starting portfolio will include Australian banks like Commonwealth Bank of Australia (ASX: CBA), Westpac Banking Corp (ASX: WBC), National Australia Bank Ltd (ASX: NAB) and Australia and New Zealand Banking Group Ltd (ASX: ANZ).

Mining giants BHP Group Ltd (ASX: BHP) and Rio Tinto Limited (ASX: RIO), which are more cyclical than growth, are also in the mix.

United States holdings include growth darlings like Apple Inc (NASDAQ: AAPL) and Amazon.com, Inc (NASDAQ: AMZN) — but also 183-year-old Procter & Gamble Co (NYSE: PG) and 134-year-old Johnson & Johnson (NYSE: JNJ).

The ETF’s holdings outside the US and Australia also raise some eyebrows, with stocks like 115-year-old Nestle SA (SWX: NESN), 124-year-old Roche Holding AG (SWX: RO) and Toyota Motor Corp (TYO: 7203) in the fold.

Afterpay Ltd (ASX: APT), Alibaba Group Holding Ltd (NYSE: BABA), Tencent Holdings Ltd (HKG: 0700), Taiwan Semiconductor Mfg Co Ltd (TPE: 2330) and JD.Com Inc (NASDAQ: JD) are also believed to be in the starting stable to actually represent growth shares. 

The management fee is only 0.19% per annum, which is relatively low for an actively managed ETF.

The geographic split is 37% Australian shares and 63% overseas stocks to start with. 

Betashares is the most popular ETF provider on the ASX so far this year, attracting $4.35 billion into its products to the end of October. Vanguard is not far behind, enjoying $4.33 billion of inflow.

More reading

• Could these ASX renewable energy shares benefit from the Biden win?
• Why the Kathmandu (ASX:KMD) share price could charge higher today
• Why these ASX 200 shares just hit record highs
• Is the Brickworks (ASX:BKW) share price a buy?
• 2 fantastic ASX growth shares to buy

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Tony Yoo 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 Alibaba Group Holding Ltd., Amazon, Apple, and JD.com. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends Johnson & Johnson and recommends the following options: short January 2022 $1940 calls on Amazon and long January 2022 $1920 calls on Amazon. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool Australia has recommended Amazon, Apple, and JD.com. 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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President-elect Joe Biden’s plans for a clean energy revolution in the United States has seen various renewable related sectors jump in value. ASX lithium shares, Galaxy Resources Limited (ASX: GXY), Orocobre Limited (ASX: ORE) and Pilbara Minerals Ltd (ASX: PLS), for example, have all rallied more than 40% in November. Could this place pressure on Australia to step up its commitment to curbing climate change? On that note, let’s take a closer look at three large cap ASX renewable energy shares that could help lead the charge.  

1. AGL Energy Limited (ASX: AGL) 

AGL supplies energy and other services to more than 3.8 million consumer accounts. Its electricity portfolio is made up of traditional coal and gas-fired generation combined with renewables such as wind, hydro and solar. 

The company is focused on developing a flexible supply of energy and building on its history as Australia’s leading private investor in renewable energy to support the transition to a new energy system. 

AGL’s climate statement advises the company aims to achieve 34% of its electricity capacity from renewables and clean storage by FY24. This compares to its current 22%. 

Despite the noble intentions of AGL, its share price has struggled in recent years and currently sits at 5-year lows. The AGL share price did not move in tandem with the recent rise in cyclical and value shares. The company does however, generate strong cash flows and currently pays a dividend yield of 7.28%. 

2. Tilt Renewables Ltd (ASX: TLT) 

Tilt owns and develops an extensive portfolio of wind and solar assets. The company is profitable, and in the first half of its FY21, delivered a 125% increase in net profit after tax of $26.8 million. 

Tilt currently has an operational output of 366 megawatts (MW) with 469 MW under construction. The company is also working on two significant projects, the Dundonnel Wind Farm (DDWF) and Waipipi Wind Farm (WWF) which will bolster its operational output to 836 MW post completion of DDWF and WWF. 

The Tilt share price is currently near record all-time highs and is up 14% year to date. 

3. Origin Energy Ltd (ASX: ORG) 

Origin supports the Paris Agreement to limit the the world’s temperate rise. According to Origin, in line with its decarbonisation strategy it plans to: 

• Target more than 25% of owned and contracted generation capacity from renewables and stage by the end of 2020. 
• Include a new climate change target linked to executive remuneration. 
• Aim to achieve net zero emissions by 2050. 

The company follows a similar share price and earnings narrative as AGL. The Origin share price was a stronger performing leading into the initial COVID-19 sell-off in March. However, it has struggled in recent months to make a recovery and is currently hovering above 4-year lows. 

More reading

• ASX energy shares surge ahead as oil rises to 9-month high
• Why the Fortescue (ASX:FMG) share price is shooting up more than 5% today
• ASX 200 events this week that could move the market
• Origin (ASX:ORG) share price rising on vaccine and green exports news
• Aussie companies blast ‘knee-jerk’ COVID-19 border closures

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.

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The Kathmandu Holdings Ltd (ASX: KMD) share price will be on watch this morning following the release of a first quarter update.

In early trade in New Zealand, the retailer’s NZX listed shares are up 4.5%.

How did Kathmandu perform in the first quarter?

For the three months ended 31 October, Kathmandu delivered a 72% increase in group total sales.

This was driven entirely by the transformational acquisition of the Rip Curl business which completed in the second quarter of FY 2020.

On a pro forma basis, group direct to consumer same store sales, including online sales, for the 16 weeks ended 15 November were down 24.1%. Adjusted for lockdown closures, same store sales were down 7.6%. This was despite a 37% increase in group online sales over the period.

Also under pressure during the first quarter were the company’s wholesale sales. They were down 14.4% compared to the prior corresponding period.

Pleasingly, group earnings before interest, tax, depreciation and amortisation (EBITDA) for the first quarter were in line with last year. This includes government subsidies and the realisation of cost synergies.

Management commentary.

Kathmandu’s CEO, Xavier Simonet, appeared pleased with the company’s performance given the tough trading conditions.

Mr Simonet said: “We are realising the benefit of a diversified Group, with strong performance in summer weighted product categories for Rip Curl in all key geographies, following successful winter trading for Kathmandu.”

“Rip Curl’s strong sales performance in its key markets of Australia, Europe and North America is very pleasing. It highlights the strength of Rip Curl’s global brand and innovative products as more people take to surfing. At broadly pre-COVID-19 levels, wholesale sell-in for Rip Curl for the second half year is also encouraging,” he added.

Mr Simonet notes that the Kathmandu business has struggled with low foot traffic during the COVID crisis.

He explained: “As for Kathmandu, camping and footwear categories have over-performed, but have not compensated for the impact of COVID-19 with low footfall in CBD and tourist locations as well as lower travel-related purchases. Oboz’s performance has been robust with strong sales to key accounts, and the forward order book tracking above pre-COVID-19 levels.”

Outlook.

As always, the company has warned that its half year result will be dependent on the key Christmas trading period. However, this year, it also warned that the impact of COVID-19 on consumer sentiment remains a risk.

Nevertheless, management appears confident on the future and revealed that it is keeping its eyes open for growth opportunities.

“The Group continues to maintain a strong balance sheet and liquidity position, allowing it to respond to current trading conditions and pursue attractive growth opportunities that may arise. The Group intends to resume dividend payments subject to market conditions and trading performance following first half results,” Mr Simonet concluded.

More reading

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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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With the S&P/ASX 200 Index (ASX: XJO) racing significantly higher this quarter, it will come as no surprise to learn that a number of shares have climbed strongly with the market.

Two popular ASX 200 shares that have climbed so strongly they have just hit record highs are listed below. Here’s why they are flying high right now:

Wesfarmers Ltd (ASX: WES)

The Wesfarmers share price climbed to a record high of $50.09 on Tuesday. Investors have been buying the conglomerate’s shares this year thanks to its strong performance during the pandemic. Pleasingly, this strong performance has continued in FY 2021, with Wesfarmers recently releasing an impressive trading update.

This has particularly been the case for its key Bunnings business. According to its update, the hardware retailer achieved sales growth of 25.2% for the first four months of FY 2021. Management notes that its strong sales growth was driven partly by customers spending more time undertaking projects around the home.

But it wasn’t just Bunnings growing quickly. Wesfarmers revealed a 23.4% increase in Officeworks sales and a 114.4% jump in Catch sales.

Xero Limited (ASX: XRO)

The Xero share price continued its remarkable run and hit a record high of $136.94 yesterday. The cloud-based business and accounting platform provider’s shares have been on fire this year thanks to its strong performance despite the tough operating environment.

For example, earlier this month Xero released its half year results and revealed impressive sales and profit growth. For the six months ended 30 September, the company delivered a 21% increase in operating revenue to NZ$409.8 million. This was driven by a 19% increase in total subscribers to 2.45 million. And on the bottom line, Xero’s net profit after tax came in 26 times greater than the prior corresponding period at NZ$34.5 million.

While no guidance was given for the remainder of the year because of COVID uncertainties, management reiterated that Xero is a long-term oriented business with ambitions for high-growth.

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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 Xero. The Motley Fool Australia owns shares of Wesfarmers 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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