Author: therawinformant

The Reserve Bank of Australia (RBA) has today weighed in on the recent system failures at ASX Ltd (ASX: ASX). The market exchange’s co-regulator says it is “concerned about the recent operational issues affecting CHESS and ASX’s trading systems, and will be working to understand if there are systematic underlying issues.” 

What else did the RBA say?

During the Reserve Bank’s Payments System board meeting today, the panel said it’s worried about this week’s system outage at ASX, and whether there were systemic operational issues that needed to be looked at. The RBA is awaiting ASX’s final investigational report regarding this issue. 

The RBA also outlined its expectations of ASX from both the Australian Securities and Investment Commission (ASIC) and the RBA itself. Both ASIC and the RBA are the regulators of ASX. 

Replacing CHESS

The bank says that the regulators expect ASX to replace CHESS as soon as this can be safely achieved. CHESS is a critical clearing and settlement system for the Australian cash equity market. It contributes to investor confidence, the reduction of systemic risk, and the performance and stability of the Australian financial system.

The RBA says the importance of replacing CHESS in a safe and timely manner was particularly highlighted in recent record trading volumes, and the associated CHESS processing delays observed in March. The bank went on to say that, in implementing the replacement, ASX should take into account CHESS user feedback on a revised implementation timeline. In April 2018, the ASX had sought feedback from its users regarding the scope and implementation of replacing the CHESS system. By September that year, ASX had confirmed the scope and timeline based on the feedback. 

The RBA also says that ASX is expected to demonstrate the readiness of the CHESS replacement system, and will be required to provide supporting independent assurances to the regulators before migrating to the new system.

Earlier this week, ASIC tore into the market operator after it experienced continuing glitches in its Centre Point matching system, just a day after the market was closed down early when the ASX trading systems froze 24 minutes after the morning opening bell.

More reading

• Top brokers name 3 ASX shares to sell today
• ASIC rips into ASX again as more systems go down
• What caused the ASX outage on Monday trading?
• ASIC to investigate if ASX is fit to hold market licence
• ASX trading halt to remain in place for the rest of the day

Motley Fool contributor Eddy Sunarto 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 S&P/ASX 200 Index (ASX: XJO) finished flat today at 6,539 points.

Here are some of the highlights from the ASX:

Washington H. Soul Pattinson and Co. Ltd (ASX: SOL) bids for Regis Healthcare Ltd (ASX: REG)

Soul Patts has made a takeover bid for Regis Healthcare, but that was promptly rejected.

The investment conglomerate made a bid, with its partner Ashburn Pty Ltd (controlled by Regis co-founder Mr Bryan Dorman), of $1.85 per share. That bid represented a 25% premium to the closing share price from yesterday.

Ashburn controls 27.2% of Regis’ ordinary shares on issue.

Soul Patts expected that the proposal would be attractive to Regis shareholders.

The Chair of Soul Patts, Rob Millner, said: “WHSP is a patient and long-term investor and is committed to providing access to capital and support to Regis as it navigates through this challenging period and transitions to a new operating environment in the future.

“Given the regulatory uncertainty and funding challenges currently facing the aged care industry, WHSP believes that Regis’ long-term prospects will be best served in a privately owned setting and that WHSP’s long investment horizons and access to capital make it and Ashburn Pty Ltd logical partners to oversee Regis’ growth and development.”

The Regis board rejected the bid from the ASX 200 investment conglomerate because it “materially undervalued the company having regard to its medium to long term prospects.”

Regis is also expecting that the government will commit more funding to the aged care sector in the May 2021 budget. The board also pointed to the easing impacts of COVID-19.

The Regis share price rose over 23% today. The Soul Patts share price fell around 4%, however the company did also go ex-dividend today.

Commonwealth Bank of Australia (ASX: CBA)

Today, CBA 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 is 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.

The CBA share price finished up around 1.4%.

Mesoblast Limited (ASX: MSB)

The Mesoblast share price jumped 11% after announcing a partnership with Novartis for the development, manufacture and commercialisation of remestemcel-L. The initial focus will be developing a treatment of acute respiratory distress syndrome (ARDS), including that associated with COVID-19.

Novartis will make a $50 million upfront payment including US$25 million in equity. Mesoblast may receive a total of US$505 million pending the achievement of pre-commercialisation milestones for ARDS indicators. Mesoblast may receive additional payments post-commercialisation of up to US$750 million based on achieving certain sales milestones and tiered double digit royalties on product sales.

The ASX 200 company will retain full rights and economics for remestemcel-L for graft versus host disease, and Novartis has the option to, if exercised, become the commercial distributor outside of Japan.

Mesoblast CEO Dr Silviu Itescu said: “Our collaboration with Novartis will help ensure that remestemcel-L could become available to the many patients suffering from ARDS, the principal cause of mortality in COVID-19 infection. This agreement is in line with our corporate strategy to collaborate and partner with world-leading major pharma companies in order to maximise market access for our innovative cellular medicines.”

Kogan.com Ltd (ASX: KGN)

The Kogan.com share price fell more than 4% today after giving a trading update at its annual general meeting (AGM).

Kogan.com said that in the year to date for FY21 to October 2020, gross sales went up 99.8%, gross profit increased 131.7% and adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) jumped 268.8%.

The company said that in the year to date, it has seen a strong performance from its product divisions and Kogan Marketplace. The company pointed out that November and December are typically the most important months of the year for the business.

It has been investing in its marketing to grow its customer base and brand, which it expects will have long-term benefits for the company.

More reading

• ASX stock of the day: Japara Healthcare (ASX:JHC) share price soars 23%
• Here’s how the voting went down at the Kogan (ASX:KGN) AGM
• Why the Oil Search (ASX:OSH) share price is the worst performer today
• Why Kogan, Oil Search, Orica, & Soul Pattinson shares are dropping lower
• What would it take for the ASX 200 to hit 7,000 again?

Tristan Harrison owns shares of Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Kogan.com ltd. The Motley Fool Australia owns shares of and has recommended Washington H. Soul Pattinson and Company Limited. 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 Openpay Group Ltd (ASX: OPY) share price was out of form on Friday and dropped lower again.

The buy now pay later provider’s shares dropped 0.75% to $2.75.

This means the Openpay share price is now down 43% from its 52-week high of $4.80.

Is this a buying opportunity?

One broker that believes this is a buying opportunity is Shaw & Partners.

In fact, the broker believes Openpay’s shares can go even higher than its 52-week high over the next 12 months.

According to a note out of the broker this week, its analysts have reiterated their buy rating and $5.00 price target on the company’s shares.

Based on the current Openpay share price, this price target implies potential upside of 82%.

What did the broker say?

Shaw & Partners was pleased with Openpay’s recent trading update which revealed strong growth across customers, merchants, plans, and transaction value during October.

It also notes that management spoke positively about trading so far in November thanks partly to the Click Frenzy event.

Another big positive for the broker was its merchant additions. Shaw & Partners was pleased with the significant and numerous merchant wins. These include Kogan.com Ltd (ASX: KGN), NASDAQ-listed BigCommerce Holdings, Surfstitch, Dick Smith, BBQs Galore, Intersport, and Tarocash.

Also catching the eye of its analysts was its cash balance. At the end of the first quarter, Openpay’s cash balance stood at a healthy $65 million. It notes that this equals a solid 16 quarters of funding runway.

What about the future?

Shaw & Partners appears confident Openpay’s strong growth will continue.

It explained: “Key take-away: 2Q21 is shaping up to be potentially massive period given (1) underlying seasonal growth expected to be significant given peak Black Friday/Click Frenzy/Xmas trading to come; (2) recent wins from Kogan, JD Sports Australia and Just Group all contributing; (3) WOW deal now “live”; (4) Pentana / MSL still to be fully implemented; and (5) VIC re-opening,”

“BUY on TSR of 83%. OPY also trades at a significant – and attractive – 40% discount to listed BNPL peers on an FY21 EV/Sales multiple of 7.6x vs. combined 13.2x (consensus) for APT, LBY, SPT, SZL, Z1P,” it concluded.

More reading

• Is buy now, pay later (BNPL) giving Aussies a headache?
• Why the Openpay (ASX:OPY) share price is up and down today
• Afterpay (ASX:APT) share price underperforming after ASIC finds more BNPL customers falling behind
• PayPal’s buy now, pay later service is surging
• Why these 5 fintech ASX shares are surging

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 Kogan.com ltd and 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 Kogan.com ltd 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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Woodside Petroleum Ltd (ASX: WPL) shares have not had a good year. Backtrack to the dawn of 2020, and Woodside shares were flying high, going for around $36 a share. But 2020 has ravaged the oil industry, and Woodside is the ASX’s largest pureplay oil company. Between January and March, Woodside shares went from more than $36 to a low of $14.93 – a level that the company hadn’t seen since 2004.

Today, Woodside has recovered somewhat but is still trading for $21.69 at the time of writing. Even at this share price, you’d have to go back to 2005 or so to find another period of similar valuation.

Black gold no more

So why is this company at multi-decade lows? Well, it’s all about the oil. Woodside is a commodity company – it digs and drills oil out of the ground. Like most commodity companies (and unlike most other companies), Woodside has no say in what it is able to sell its product for. Oil prices are set by a homogenous global market, and no matter how ‘good’ Woodside’s oil is, it’s always going to have to accept what the market is willing to pay.

And oil has had a shocker of a 2020. Remember, back in 2018, West Texas Intermediate (WTI) crude was as high as US$75 a barrel. In January this year, WTI was going for roughly US$60 a barrel. Today, WTI is going for around US$40 a barrel, the level it has seemed to settle at since June. Back in April, the WTI oil price actually went negative for the first time in history, albeit briefly.

Simply put, this has been disastrous for the companies that produce oil like Woodside, and likely explains why the Woodside share price is still at historical lows.

Is Woodside a buy today?

However, with low prices often comes attention from value investors. We still need oil after all, whether it’s for our cars and transport, our plastics or our roads.

One broker who is extremely bullish on Woodside today is Goldman Sachs. You could even say Goldman is rating Woodside as a ‘screaming buy’ given it has a price target of $31 on Woodside shares presently. That implies a potential upside of 42% on the current share price, not including any potential dividend returns as well.

Goldman notes that Woodside’s liquidity and balance sheet remain “resilient” and tells investors that Woodside is “cheaper than its peers. trading on a ~12% free cash flow yield” right now.

More reading

• Why the Oil Search (ASX:OSH) share price is the worst performer today
• Global fund managers are bullish on these 3 things
• 5 things to watch on the ASX 200 on Thursday
• 5 things to watch on the ASX 200 on Tuesday
• ASX 200 Weekly Wrap: ASX continues to hit post-COVID highs

Motley Fool contributor Sebastian Bowen 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 afternoon trade the Crown Resorts Ltd (ASX: CWN) share price is on course to end the week in the red.

The casino and resorts operator’s shares are currently down 1.5% to $9.32.

Why is the Crown share price dropping lower today?

Investors have been selling Crown’s shares on Friday after a leading ratings agency downgraded its issuer rating.

According to the release, Moody’s Investors Service has informed the company that it has downgraded its issuer rating from Baa2 to Baa3.

Furthermore, the ratings agency has advised Crown that the Baa3 rating remains on review and could still be downgraded again in the future.

In light of this downgrade, Crown has revealed that there will be an increase in its interest costs.

The company explained that the interest costs associated with its Euro Medium Term Notes will now increase by approximately US$1 million per annum.

After which, a further downgrade would entitle the noteholder of Crown’s Euro Medium Term Notes to elect to redeem the notes with a make whole.

Why did Moody’s downgrade Crown?

Moody’s revealed that it made the move following the decision by the New South Wales Independent Liquor and Gaming Authority (ILGA) to defer its consideration on a number of applications required for the opening of gaming operations at Crown Sydney until February 2021.

The company was previous intending to open Crown Sydney’s gaming and non-gaming operations from December 2020.

Moody’s Analyst, Maadhavi Barber, commented: “The downgrade reflects our opinion that there is an increasing likelihood of material downside implications from the escalating regulatory investigations Crown is facing. In particular, the review will focus on the potential for further material negative outcomes that could not only affect the license for Crown Sydney, but could also bring forth regulatory challenges to Crown’s other licenses.”

Moody’s notes that Crown is currently being investigated following negative media reports accusing it of knowingly breaching Chinese gaming laws, circumventing visa requirements, facilitating money laundering, and using junket operators with links to organised crime.

It is concerned that adverse outcomes from these investigations could potentially result in large fines and/or changes to its licensing conditions in Sydney. This could potentially be as severe as the loss of its license.

In addition to this, it notes that the review will assess the potential for adverse regulatory actions in respect of Crown’s operations in Victoria and Western Australia.

Though, the ratings agency has acknowledged that it could change its outlook rating to stable if Crown is found to be suitable, or it can action recommendations made by the Commissioner for the NSW Inquiry and ILGA, to maintain its Sydney gaming license.

More reading

• Why a2 Milk, Crown, Immutep, & Suncorp shares are dropping lower
• ASX 200 down 0.3%: Altium FY 2021 guidance, Crown drops, insurance shares sink
• 5 things to watch on the ASX 200 on Thursday
• ASX 200 rises again on Wednesday
• Crown (ASX:CWN) share price on watch after being told to delay Crown Sydney opening

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Crown Resorts 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 Japara Healthcare Ltd (ASX: JHC) share price is rocketing today, up 23.39% to 76 cents a share at the time of writing. Japara shares closed at 62 cents yesterday, but opened at 71 cents a share this morning and have since risen to the current level, giving this company a market capitalisation of $199 million on current prices.

Today’s moves will no doubt offer some relief for Japara shareholders, who have had to watch the Japara share price relentlessly slide over the past 5 years. Back in late 2015, this company was commanding a share price of $3.40, but it has been very much downhill from there.

Japara shares are still down 25% year to date in 2020 on the current share price, and down more than 78% from the 2015 highs. Even so, you only have to go back to September this year to find this company at an all-time low of 34 cents a share. That also means Japara is up 112% since 25 September.

A closer look at Japara

Japara describes itself as “one of the largest and most respected providers of residential aged care and retirement living in Australia” as well as “a leader in the specialist field of dementia care.”

Japara has more around 4,000 people in its care, and more than 6,000 staff employed. The company has a portfolio of 50 homes/centres across 5 states.

Like many aged care providers in 2020, Japara has had a tough year. Its annual general meeting was held last month, in which the company told investors that it reported a net loss of $292.1 million for the second half of FY2020, compared to a profit of $16 million over the same period last year.

In the meeting, Japara also declined to provide guidance for FY21, noting the ongoing uncertainties of the coronavirus pandemic. The company noted that short-term expenses are expected to continue to climb as Japara shells out on staff training, protective equipment and sanitation. It also stated that no further property developments will commence until the pandemic outlook improves.

However, it wasn’t all bad news. Japara also reported that its occupancy rate (as at 25 October) was sitting at 87.6% – the highest occupancy in the industry right now, according to the company.

Why is the Japara share price rocketing today?

It’s been an interesting day for Japara, given there is no major ASX releases or news out of the company. In fact, the last official release from Japara came out a week ago, and told us that one of the company’s directors had just picked up a large tranche of shares. 

So what’s going on?

Well, another aged care provider has been in the news yesterday and today – Regis Healthcare Ltd (ASX: REG). Regis shares attracted some attention this morning when they opened 18.3% higher. The catalyst? A takeover bid from Washington H. Soul Pattinson & Co Ltd (ASX: SOL) announced after market close yesterday.

Although the bid (offering $1.85 a share) for Regis was rejected by the company this morning, it appears it has also triggered a sector-wide re-rating. That view was discussed by my Fool colleague Brendon Lau earlier today, who noted that Regis, Japara, and Estia Health Ltd (ASX: EHE) shares have all exploded on this news following some positive broker notes on the subject.

More reading

• Why the Oil Search (ASX:OSH) share price is the worst performer today
• Why Kogan, Oil Search, Orica, & Soul Pattinson shares are dropping lower
• Why Accent, Mesoblast, Redbubble, & Regis Healthcare shares are charging higher
• Takeover battle for Regis (ASX:REG) share price triggers sector-wide upgrade
• Here’s why the Regis (ASX:REG) share price has soared by 21% today

Motley Fool contributor Sebastian Bowen owns shares of Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia owns shares of and has recommended Washington H. Soul Pattinson and Company 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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Australia’s top brokers have been busy adjusting their estimates and recommendations again, leading to the release of a large number of broker notes this week.

Three broker buy ratings that have caught my eye are summarised below. Here’s why brokers think these ASX shares are in the buy zone:

A2 Milk Company Ltd (ASX: A2M)

According to a note out of Morgans, its analysts have retained their add rating but reduced their price target on this infant formula and fresh milk company’s shares to $17.28. This follows the release of an update at its annual general meeting earlier this week. While Morgans has concerns over a2 Milk’s ability to achieve its guidance in FY 2021, it believes the weakness it is experiencing now is only temporary. In addition to this, it sees the recent pullback in the a2 Milk share price as a buying opportunity for investors. The company’s shares are trading at $13.88 this afternoon.

Aventus Group (ASX: AVN)

A note out of Macquarie reveals that its analysts have retained their outperform rating and lifted the price target on this retail centre operator’s shares to $2.93. The broker was pleased with Aventus’ guidance for FY 2021, which was broadly in line with its own estimates. In addition to this, Macquarie likes Aventus due to its favourable tenant mix. It is also expecting the company to pay a full year distribution of 16.7 cents per share. Based on the current Aventus share price of $2.70, this equates to a generous 6.2% distribution yield.

SEEK Limited (ASX: SEK)

Analysts at Credit Suisse have retained their outperform rating and lifted their price target on this job listings company’s shares to $28.50. This follows the release of an update by SEEK this week at its annual general meeting. SEEK has lifted its guidance after a stronger than expected rebound in its performance across a number of markets. This update went down well with Credit Suisse, underpinning its price target increase. The SEEK share price is changing hands for $25.49 on Friday.

More reading

• Why Accent, Mesoblast, Redbubble, & Regis Healthcare shares are charging higher
• Broker retains $20 price target on A2 Milk (ASX:A2M) share price
• Redbubble (ASX:RBL) share price on watch after naming former SEEK exec as new CEO
• 2 high quality ASX dividend shares to buy today
• ASX 200 rises on mixed Thursday

Motley Fool contributor James Mickleboro owns shares of SEEK Limited. The Motley Fool Australia owns shares of and has recommended A2 Milk. The Motley Fool Australia has recommended AVENTUS RE UNIT and SEEK 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 Kazia Therapeutics Ltd (ASX: KZA) share price is one of the best performers on the ASX this past month, almost doubling in value before retreating today by 12% to $1.53. Overall, the drugmaker’s share price has gained over 82% during the past month of trading. 

Why the big rise in the Kazia share price

Kazia is a Sydney-based, oncology-focused biotechnology drugmaker. The company’s flagship is the paxalisib drug used for the treatment of glioblastoma, which is the most common and aggressive form of primary brain cancer. The Kazia share price has risen strongly on the back of the ongoing and promising development of this particular drug. 

In August, paxalisib was granted a fast track designation (FTD) by the United States Food and Drug Administration (FDA). This designation was a significant first step for the development of the drug, as it allowed Kazia to get better access to the FDA, including opportunities for face-to-face consultations throughout paxalisib’s development. 

Later that month, it was again announced that the FDA has also awarded the rare pediatric disease designation (RPDD) to paxalisib. This designation would allow the company to receive a priority grant from the US government for the treatment of intrinsic pontine glioma, a rare and highly-aggressive childhood brain cancer.

And just two days ago, Kazia released an announcement to the market confirming that the phase-2 studies of Paxalisib has returned highly consistent results against prior data. In the release, the company says that the paxalisib compares favourably to temozolomide, the existing FDA-approved standard of care drug. The results showed that the median progression-free survival (PFS) is 8.4 months (versus 5.3 months for temozolomide), and the median overall survival (OS) is 17.5 months (versus 12.7 months for temozolomide).

What about the Kazia share price in 2020?

As mentioned earlier, the Kazia share price has risen by around 82% during the past month. On a year-to-date basis, the Kazia share price has surged by almost 170%. At the current share price of $1.53, it commands a market cap of $220 million. 

Kazia is dual listed, and has a listing on Nasdaq under Kazia Therapeutics Limited (NASDAQ: KZIA). That share price has risen by over 100% during the past month.

More reading

• Here’s how the voting went down at the Kogan (ASX:KGN) AGM
• Here’s why the Clover (ASX:CLV) share price is rising today
• Why the Oil Search (ASX:OSH) share price is the worst performer today
• Why Kogan, Oil Search, Orica, & Soul Pattinson shares are dropping lower
• What would it take for the ASX 200 to hit 7,000 again?

Motley Fool contributor Eddy Sunarto 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 Kogan.com Ltd (ASX: KGN) share price has come under pressure on the day of its annual general meeting (AGM).

In afternoon trade the ecommerce company’s shares are down over 3% to $17.72.

How did the voting go at the AGM?

As readers might be aware, there was a lot of controversy over Kogan’s AGM this year due to its plan to issue options to its Chief Executive Officer, Ruslan Kogan, and its Chief Financial Officer, David Shafer.

The Kogan board was wanting to grant 3.6 million share options to Mr Kogan and a further 2.4 million share options to Mr Shafer. These retention options, as they have called them, have been proposed as an incentive for the two executives to stay with the company for the next three years.

They will be exercisable for $5.29 per share in three years if the executives remain with the company.

This means for ~$19 million and ~$12.7 million, respectively, the two directors can convert these options into shares worth ~$93.7 million and ~$42.5 million, respectively, at today’s market price.

This plan did not go down well with many investors and particularly proxy advisors, who urged shareholders to vote against the issuing of these options at its AGM.

Though, for extra controversy, the Kogan board suggested it would just buy the shares on-market in the future and gift them to the executives if shareholders voted against their issue at the AGM.

But that won’t need to the case, because today Kogan shareholders narrowly voted in favour of the issue of these options.

According to the release, 56.35% of votes were in favour of granting options to Mr Kogan and 56.3% of votes were in favour of granting options to Mr Shafer.

Remuneration report receives a first strike.

Proxy advisers may not have been able to block the options from being granted, but they delivered Kogan a first strike for its remuneration report.

A total of 43.74% votes were against the report according to the release (compared to the 25% required for a strike). This means that if Kogan receives a second strike next year, the Kogan board could be voted out of office.

The company’s Chairman, Greg Ridder, was perplexed by the strike. Prior to the vote, he commented: “Based on Proxies received to-date, the vote on adopting the Remuneration Report is also interesting.”

“For a company that delivered strong returns in FY20; was right at the top of performance relative to peers and ASX200 companies; did not pay any LTI to Executive Directors; and had Executive Directors with their pay at the bottom of the peer set (many of whom didn’t generate positive shareholder returns), it was perplexing to see proxy advisers recommend a vote AGAINST the adoption of the Remuneration Report, and for many super funds to follow the proxy advisers’ recommendations.”

“While the Remuneration Report is retrospective, it appears many of the votes received are prospective and we will receive a “strike”, albeit that – based on Proxies – it does seem that a majority of Shareholders are in favour of adopting the report,” he added.

More reading

• Why Kogan, Oil Search, Orica, & Soul Pattinson shares are dropping lower
• Kogan (ASX:KGN) share price lower on AGM and trading update
• Tussle at Kogan (ASX:KGN) over executive compensations
• Why ASX tech shares should fly long after this crisis is over
• Dow Jones hits new record highs. Are ASX 200 shares next?

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 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 Clover Corporation Limited (ASX: CLV) share price is trading higher by 1.10% today, after the company announced in its annual general meeting (AGM) that it has a pipeline of new product releases, and that it has won additional business in FY21.

What was said in today’s AGM?

Clover says that during FY20, it has faced incredible hardship with bushfires, COVID‐19, and regulatory challenges. Despite all that, the company says it was still able to deliver a solid result for the full year, which was announced in September.

Clover reported a revenue growth of 15% to $88 million, and a 35% increase in its earnings before interest, tax, depreciation and amortisation (EBITDA) to $18.9 million for the full year. The company says that it achieved those results without receiving any government support such as JobKeeper.

Clover highlighted that although the underlying demand in the infant formula market remains strong, it has experienced reduced orders for the first quarter FY21. The company says it is now reiterating its previous advice released to the market on 20 October, which stated that revenues for the first half FY21 would be down 15% to 25% to previous year.

On the day of that announcement, the Clover share price dropped by 20%. 

Where future growth will come from

Clover announced its strategic growth plan for the coming years. It says that its research and development department is about to release a range of new products that will help to deliver growth in the future. It also says that its concentrated powders have won additional business in a range of new applications across bread, yoghurt, health bars and sport nutrition.

In addition, the company has participated in clinical trial work to prove the health benefits of docosahexaenoic acid (DHA), adding to the credibility of Clover’s product use and applications. DHA is an omega-3 fatty acid that is a primary structural component of the human brain, cerebral cortex, skin, and retina.

Clover says that it will continue to grow its sales across all geographical markets and food segments. The company is currently selling into Asia, the European Union and the US.

More reading

• Here’s why the Clover (ASX:CLV) share price crashed 20% lower today

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 Clover 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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