Author: therawinformant

In early afternoon trade the S&P/ASX 200 Index (ASX: XJO) is fighting hard to stay in positive territory. At the time of writing, the benchmark index is up slightly to 5,956.2 points.

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

The Flight Centre Travel Group Ltd (ASX: FLT) share price is up 2.5% to $14.30. Investors have continued to buy travel shares on Tuesday amid speculation that a travel bubble will soon open up between Australia and New Zealand. Declining COVID-19 cases in Victoria also appear to have given investor sentiment a boost.

The MoneyMe Ltd (ASX: MME) share price is up over 3% to $1.55. This morning the digital consumer credit company announced that it has established a new warehouse funding facility. The new facility is led by Westpac Banking Corp (ASX: WBC) and reduces its funding costs by more than half. MoneyMe will now introduce more competitive pricing across its risk based priced Personal Loan and Freestyle products.

The Paradigm Biopharmaceuticals Ltd (ASX: PAR) share price has surged 15% higher to $2.77. Investors have been buying the biopharmaceuticals company’s shares after it extended and expanded its exclusive license and supply agreement with bene pharmaChem. This is a big positive for Paradigm as bene pharmaChem is the only FDA approved manufacturer/supplier of Pentosan Polysulphate Sodium (PPS). PPS is used in the company’s Zilosul product.

The Zip Co Ltd (ASX: Z1P) share price has risen over 2% to $6.39 despite there being no news out of the buy now pay later provider. However, a number of tech shares are charging higher on Tuesday following a positive night of trade on Wall Street’s Nasdaq index. At the time of writing, the S&P/ASX All Technology Index (ASX: XTX) is storming 1.8% higher.

More reading

• Why the Paradigm (ASX:PAR) share price is storming 12% higher today
• MoneyMe (ASX:MME) share price jumps 10% on Westpac (ASX:WBC) funding deal
• Are ASX travel shares like Webjet (ASX:WEB) set to soar?
• Why the Paradigm (ASX:PAR) share price has rocketed 8% higher today
• ASX 200 up 0.1%: a2 Milk crashes lower, Flight Centre and Webjet surge higher

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 ZIPCOLTD FPO. The Motley Fool Australia has recommended Flight Centre Travel Group 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 ikegps Group Limited (ASX: IKE) share price has climbed today, up 2.3% to 89 cents in morning trade. This comes after the company released results of its annual general meeting.

Why is the ikeGPS share price on the move?

The company advised that momentum had picked up, after COVID-19 affected revenues in the first quarter of the 2021 financial year. Orders for Q2 are expected to be approximately $3 million. This is above FY20 run rate levels. Ike achieved this through being granted ‘essential business’ status in the United States, which supports critical infrastructure development and maintenance.

The company concluded an oversubscribed capital raising of $19.7 million, with which it plans to grow sales and delivery capability. Ike will also assess additional acquisition opportunities that may arise.

What does ike do?

Ike operates in the designing, marketing and sale of integrated GPS data capture services, related software and consulting solutions. The group’s key products include ikeGPS and Spike.

ikeGPS is a field data collection product that uses the latest mobile hardware and software to measure and locate utility poles. This in-turn allows accuracy and efficiency for aerial fibre deployments and repairs by users.

Spike is the world’s first laser accurate smartphone measurement tool that captures real time measurements. The software product uses the phone camera, laser-based system and mobile app to determine location, heights, width and distance.

Ike’s software and hardware has been widely used by electric utilities, communications and engineering services in North America. Most notably, ikeGPS is adopted by one of the world’s largest communication companies, AT&T.

What did management say?

Chair Rick Christie was pleased with the company’s performance over the past year. He said:

FY20 was a busy and productive year for our business with continued growth and improvement across key metrics. Our core target market has also continued to develop positively, being tier-1 US communications companies, electric utilities and their engineering service providers. Success within this market is the key long-term value driver for our business.

Mr Christie touched on Ike’s determination to be an industry leader.

In keeping with our ambition to be the pole standard in the North American market and to increase our suite of products to pole owners and users, we also acquired certain assets of PowerLine Technology Inc. (PLT) in the period, one of the leading structural analysis software companies in North America.

Post-acquisition activities have been positive with all major PLT customers renewing their annual software licenses post-acquisition, and IKE Analyze cross-sell opportunities with PLT customers have also emerged. In the future IKE will continue to investigate and pursue growth by further acquisitions of relevant market products and technologies.

Where to from here?

I think the tech company has been making small tailwinds since COVID-19 affected its business in Q1. Ike has been busy optimising its internal processes and positing itself for future growth.

I do like what Ike has to offer and will be adding the ikeGPS share price to my watchlist for now.

More reading

• Why Flight Centre, MoneyMe, Paradigm, & Zip shares are pushing higher today
• Where to invest your Coles (ASX:COL) dividends this week
• The latest 3 ASX stocks that brokers just upgraded to “buy”
• ASX 200 up 0.15%: a2 Milk sinks lower, Bank of Queensland tumbles, CTM’s major acquisition.
• Why a2 Milk, Bank of Queensland, Mesoblast, & Northern Star are dropping lower today

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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On Tuesday supermarket giant Coles Group Ltd (ASX: COL) is paying eligible shareholders a 27.5 cents per share final dividend.

If you’re not planning to use these dividends for income and would rather invest them back into the share market, then I would suggest you consider one of the ASX shares listed below.

Here’s why I would buy them:

Appen Ltd (ASX: APX)

If you’re looking to invest the funds into growth shares, then I would suggest you consider Appen. It is the global leader in the development of high-quality, human-annotated training data for machine learning and artificial intelligence. Its team of over 1 million crowd-sourced workers allows the company to collect and label high volumes of image, text, speech, audio, and video data. This data is then used to build and improve artificial intelligence and machine learning models.

Given the growing importance of artificial intelligence and machine learning for businesses and governments, I expect demand for its services to grow strongly in the future. This should put Appen in a position to continue growing its sales and earnings at a strong rate for some time to come.

Rural Funds Group (ASX: RFF)

If you’re interested in generating even more dividends, then I would suggest you look at this agriculture-focused property group. I’m a big fan of Rural Funds due to its very long leases and blue chip tenants. For example, at the end of FY 2020, the company’s 61 properties had a weighted average lease expiry of 10.9 years, with approximately 78% of revenue coming from corporate or listed tenants.

Importantly, these leases include periodic rental increases which are designed to put the company in a position to increase its distribution by 4% each year. This looks set to be the case in FY 2021, with management intending to pay shareholders 11.28 cents per share. Based on the current Rural Funds share price, this works out to be a 4.8% yield.

More reading

• The ASX shares that fund managers were buying this month
• 5 things to watch on the ASX 200 on Tuesday
• How to make money by investing in ASX 200 shares
• ASX 200 Weekly Wrap: Bank shares push ASX 200 higher
• How this small-cap fund manager is shooting the lights out year after year

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended RURALFUNDS STAPLED. The Motley Fool Australia owns shares of Appen Ltd and COLESGROUP DEF SET. 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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Optimism about the upcoming federal budget and interest rate cut is pushing the S&P/ASX 200 Index (Index:^AXJO) higher. But three ASX stocks are getting a further boost from broker upgrades today.

The budget and rate cut are expected to stimulate our COVID-19 stricken economy. These are enough to offset the global risks from a second COVD outbreak and upcoming divisive US election – at least for today.

From trash to treasure

But shareholders in Cleanaway Waste Management Ltd (ASX: CWY) have an extra reason to smile. The CWY share price jumped 1.7% to $2.21 this morning after Credit Suisse upgraded the stock to “outperform” from “neutral”.

The bullish change of heart follows a circa 16% slide in the Cleanaway share price that was triggered by bullying allegations levelled against its chief executive Vik Bansal.

It also didn’t help that Bansal sold more than 70% of his shares in Cleanaway for the first time after five years at the helm.

“The shares are mostly down on fears that the CEO resigns or that the Board is pressured to demand his resignation,” said the broker. “We think neither of these is likely.”

Bansal is highly regarded as the group’s net profit surged by around 300% during his reign. But Credit Suisse thinks the board’s action and the contrition expressed by Bansal means this risk is overplayed.

The broker’s 12-month price target on Cleanaway is $2.45 a share.

Building to a buy

Meanwhile, the Boral Limited (ASX: BLD) share price jumped 1.1% to $4.59 at the time of writing after Citigroup upped its rating to “buy” from “neutral”.

Earnings for the building materials supplier may be at a trough, the broker believes construction markets are rebounding.

“While the path to recovery is mixed, we estimate a ‘mid-cycle’ EBITDA of $956 million (pre AASB-16), and a return to midcycle levels would imply a ~35% rebound from FY20 levels,” said the broker.

“A new management team and upcoming portfolio review in October, could present a catalyst to drive further multiple re-rating from current levels.”

There could be further potential upside from the sale of Boral’s landbank, which could be worth up to $1.23 per share.

Another upside is corporate interest with Seven Group Holdings Ltd (ASX: SVW) buying a close to 20% stake in Boral.

Citi’s price target on the stock $5.30 a share.

Don’t cry over spilled milk

Finally, an upgrade of the A2 Milk Company Ltd (ASX: A2M) share price hasn’t yet helped the infant formula company. The A2M share price tanked another 4% today to $14.59, but Morgans thinks this is a good time to buy the stock.

“While A2M’s trading update was weaker than expected, it shouldn’t come as a big surprise given recent updates from peers,” said Morgans.

“Importantly, A2M believes the issues impacting its business are temporary and is confident strong growth will resume in the 2H21.”

If management is right, earnings could return to double-digit growth by then too.

Morgans lifted its recommendation on the stock to “add” from “hold” with a 12-month price target of $18.14 a share.

More reading

• ASX 200 up 0.15%: a2 Milk sinks lower, Bank of Queensland tumbles, CTM’s major acquisition.
• Why a2 Milk, Bank of Queensland, Mesoblast, & Northern Star are dropping lower today
• Is this the ASX 200 dividend share you can hold into retirement?
• The ASX shares that fund managers were buying this month
• Which shares to buy now with $10,000

Motley Fool contributor Brendon Lau owns shares of Seven Group Holdings Limited. The Motley Fool Australia owns shares of A2 Milk. 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 The latest 3 ASX stocks that brokers just upgraded to “buy” appeared first on Motley Fool Australia.

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At lunch on Tuesday the S&P/ASX 200 Index (ASX: XJO) has given back the majority of its morning gains but is still trading higher. The benchmark index is currently up 0.15% to 5,961.2 points.

Here’s what is happening on the market today:

A2 Milk sinks again.

The A2 Milk Company Ltd (ASX: A2M) share price has continued its slide on Tuesday. This decline has been driven by the infant formula and fresh milk company’s disappointing guidance update on Monday. The company warned that its first half sales would be down in FY 2021 due largely to weakness in the daigou channel. I suspect the fact that management sold millions of dollars worth of shares last month could also be impacting investor sentiment.

Bank of Queensland provisions.

The Bank of Queensland Limited (ASX: BOQ) share price has come under pressure on Tuesday after increasing its COVID-19 provisions. The regional bank’s COVID‐19 related collective provision expense is now expected to be $133 million (pre‐tax) in FY 2020. This is up from an estimate of $71 million previously. In addition to this, a further $11 million (pre‐tax) expense will be recognised for staff underpayments.

Corporate Travel Management’s acquisition.

This morning Corporate Travel Management Ltd (ASX: CTD) revealed that it is raising $375 million via a fully underwritten accelerated non-renounceable entitlement offer. These funds will be used to acquire Travel & Transport for $274.5 million. Travel & Transport is a leading US travel management company which is expected to be highly accretive to earnings. Post-synergies, management is forecasting that it will be approximately 30% earnings per share accretive.

Best and worst performers.

The Janus Henderson Group PLC (ASX: JHG) share price is the best performer on the ASX 200 today with a 4% gain. This is despite there being no news out of the fund manager. The worst performer has been the a2 Milk share price for a second day in a row. Its shares are down over 4% at the time of writing.

More reading

• The latest 3 ASX stocks that brokers just upgraded to “buy”
• Why a2 Milk, Bank of Queensland, Mesoblast, & Northern Star are dropping lower today
• Is this the ASX 200 dividend share you can hold into retirement?
• Corporate Travel Management (ASX:CTD) to raise $375m for Travel & Transport acquisition
• The ASX shares that fund managers were buying this month

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Corporate Travel Management Limited. The Motley Fool Australia owns shares of A2 Milk. 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 followed the lead of U.S. markets and is pushing higher. At the time of writing the benchmark index is up 0.25% to 5,966.3 points.

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

The A2 Milk Company Ltd (ASX: A2M) share price is down a further 3.5% to $14.66. Investors have been selling the infant formula and fresh milk company’s shares following its disappointing guidance update on Monday. Investors may also be unhappy with management after they sold millions of dollars worth of shares last month.

The Bank of Queensland Limited (ASX: BOQ) share price has sunk 4% to $6.10. The catalyst for this decline was the release of an update which revealed an increase in COVID-19 provisions and news of employee underpayments. The regional bank’s COVID‐19 related collective provision expense is now $133 million (pre‐tax), up from $71 million previously. A further $11 million (pre‐tax) expense will be recognised for underpayments.

The Mesoblast limited (ASX: MSB) share price is down almost 2% to $5.40. This decline appears to be due to profit taking after the biotechnology company’s shares stormed to a record high on Monday. Investors have been buying shares ahead of its priority review by the United States Food and Drug Administration (FDA) on Wednesday. Mesoblast is hoping to gain FDA approval for remestemcel-L as a treatment for paediatric steroid-resistance acute graft versus host disease.

The Northern Star Resources Ltd (ASX: NST) share price has dropped 2% to $13.83. A number of gold miners have come under pressure today despite a small rise in the gold price. Improving investor sentiment may be weighing on the safe haven asset. At the time of writing, the S&P/ASX All Ordinaries Gold index is down 0.4%.

More reading

• Are ASX gold mining shares a buy after the recent selloff? 
• Bank of Queensland (ASX:BOQ) share price on watch after COVID and employee underpayment update
• Where to invest $1,000 into ASX shares today
• Should you buy the dip in the a2 Milk (ASX:A2M) share price?
• Is the Mesoblast (ASX: MSB) share price still good value?

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of A2 Milk. 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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Experts have warned some share trading apps and platforms are deliberately designed to be addictive — and lure users into impulse buying.

The theory is that broker platforms take a cut in each transaction, so naturally they prefer users to buy and sell more. There is no incentive for any online broker to encourage ‘buy and hold’ strategies.

The apps are therefore rigged in a similar way to social media or gambling sites — designed to get the endorphins pumping when the numbers light up.

And the issue is becoming more prevalent as low-cost platforms have entered the market in recent years.

“These trading apps encourage addition and gambling,” RMIT senior lecturer Angel Zhong told The Motley Fool.

“A big selling point of these apps is the low transactional threshold, which encourages investors to buy low-priced stocks. In finance research, low price [is] a feature associated with what we called the ‘lottery-like’ stocks. They are highly risky.”

Superhero and Robinhood: our saviours or villains?

In the United States, zero-brokerage app Robinhood has been credited with making investing more accessible to the masses. 

But it’s also been blamed since COVID-19 for allowing inexperienced investors to make speculative bets. Not only is this dangerous for novice shareholders, but some experts argue it makes markets more emotional and volatile. 

A new ASX share trading app — Superhero — launched this month. It’s been dubbed the local version of Robinhood for charging just $5 a transaction with a minimum investment of just $100.

According to The Australian Financial Review, Superhero has signed up a new user every 20 seconds since launch.

Platforms like IG and eToro have also paved the way for low-cost trading in recent years..

But it’s not just new apps going low. The older players have been forced to follow, as the broking industry becomes more commoditised.

For example, CommSec Pocket last year allowed a $50 minimum investment for a basket of exchange-traded funds (EFTs).

Zhong, who specialises in investor behaviour and biases, said the clean and simple interfaces of the new apps hook the novice user in.

“They claim that it makes it easier for investors to understand stocks. But at the same time, the simplicity encourages retail investors to trade without undertaking thorough research.”

Research firm IBISWorld calls this the “gamification” of online share broking. The apps are designed to feel like playing a game. 

Success is like a drug.

Selfwealth Ltd (ASX: SWF) is a prototypical example of a platform that uses gamified investing.

“SelfWealth [has] gone one step further, incorporating social-network features, such as allowing members to compare their investment performance with each other,” IBISWorld stated Monday.

“SelfWealth had 22,000 active investors in February 2020, while in June 2020 it had grown to almost 140,000.”

How delayed market data encourages impulse buying

Zhong told The Motley Fool that many trading platforms had expensive plans that offered real-time data, while cheaper subscriptions only showed delayed information.

And this was a psychologically effective way to poke a novice investor into dangerous spontaneous transactions.

“The limited data provided to retail investors exacerbate their impulsive buying and selling, as they can’t see a complete picture of the underlying stock.”

Users of low-cost apps are also more likely to be involved in social trading.

“Social trading refers to exchange of stock trading ideas in groups and discussions on social media websites such as Facebook, Twitter and Reddit,” said Zhong. 

“Retail investors are easily influenced by unmoderated commentary on the market and investing. With easy and low-cost trading platforms, retail investors may act on misleading information from social trading and suffer losses in a highly volatile market.”

‘Gamified’ apps are disrupting online broking industry

Rookie investors have flooded the share market since COVID-19 broke.

During the first lockdown between late February and the middle of May, retail investors bought $9 billion of shares while institutional investors sold off $11 billion.

“The ‘gamification’ of investing has made equities far more accessible to tech-savvy demographics,” said IBISWorld senior industry analyst, Matthew Barry.

“‘Faltering trust in Australia’s big banks, particularly in the wake of the banking Royal Commission, may be another factor driving young consumers to alternative investment platforms.”

Barry said the older trading platforms now needed to match the user experience of the addictive new apps to stay competitive.

“Traditional brokers will need to gamify their user experience over the next five years, by significantly increasing the usability and capability of their smartphone applications,” said Barry.

“Convenience and simplicity are critical to attract and retain young first-time investors.”

There will also be a race to the bottom for brokerage fees.

“Fierce price competition from new entrants is projected to erode margins for brokers across the industry, as consumers continue to demand cheap fees and demonstrate weakening loyalty to their existing brokerage providers,” Barry said.

More reading

• Why a2 Milk, Bank of Queensland, Mesoblast, & Northern Star are dropping lower today
• Is this the ASX 200 dividend share you can hold into retirement?
• Why the Paradigm (ASX:PAR) share price is storming 12% higher today
• Corporate Travel Management (ASX:CTD) to raise $375m for Travel & Transport acquisition
• The ASX shares that fund managers were buying this month

Motley Fool contributor Tony Yoo has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. 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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Quality dividend shares amid the COVID-19 pandemic are few and far between. Could WAM Capital Limited (ASX: WAM) be the best S&P/ASX 200 Index (ASX: XJO) dividend share to hold into retirement? 

What does WAM do? 

WAM is a listed investment company (LIC) which provides investors exposure to an actively managed portfolio of undervalued growth companies listed on the ASX. The company’s investment objectives are to deliver investors a steady stream of fully franked dividend, provide capital growth and preserve capital. 

A consistent ASX 200 dividend share

Since the company’s inception in August 1999, it has paid a total of 246.25 cents per share in fully franked dividends to shareholders. WAM has more than a decade of steadily increasing fully franked dividends paid out to investors.

The company’s FY20 dividend of 15.5 cents would represent a yield of 6.75% at today’s prices. Its history of increasing dividends combined with a market leading yield could make it one of the best ASX 200 shares for sustainable dividends.

In FY20 WAM delivered an investment portfolio outperformance of 4.4% to shareholders during the highly volatile 12-month period to 30 June 2020. The WAM share price is also down 2% in 2020 compared to the 11% fall of the ASX200. 

A versatile portfolio 

As the coronavirus spread in February 2020, WAM swiftly reduced its exposure to less liquid small-cap companies that had performed strongly over the prior 12-24 months, as well as indebted and cyclical companies. In February, the company increased its cash weightings from 13.7% to 23.2% and further increased its cash holdings to 37.9% in March.

As the market started to recover in April, WAM found much success in companies such as BWX Ltd (ASX: BWX), Flight Centre Travel Group Ltd (ASX: FLT) and A2 Milk Company Ltd (ASX: A2M). While the market was still in a vulnerable state, WAM approached it with confidence in selecting opportunities in companies with strong industry positions, balance sheets and earnings growth.

In the company’s most recent portfolio update, it cited that August had been the best reporting season in the company’s history. Significant contributors to the investment portfolio outperformance included research driven holdings in communications technology company Codan Limited (ASX: CDA) and medical imaging services company Integral Diagnostics Ltd (ASX: IDX).

Foolish Takeaway

WAM could be one of the best ASX200 dividend shares given its history of dividends. Its proven investment philosophy does all the hard yards for investors with portfolio conservatism and aggression where appropriate. 

More reading

• The ASX shares that fund managers were buying this month
• Are Resolute Mining (ASX: RSG) shares as good as gold?
• 3 profitable October ASX 200 trends
• Is the Mesoblast (ASX: MSB) share price still good value?
• Are ASX travel shares like Webjet (ASX:WEB) set to soar?

Motley Fool contributor Lina Lim has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended BWX Limited. The Motley Fool Australia owns shares of A2 Milk. The Motley Fool Australia has recommended Flight Centre Travel Group 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 Paradigm Biopharmaceuticals Ltd (ASX: PAR) share price has been a very strong performer on Tuesday.

In morning trade the biopharmaceutical company’s shares are up a sizeable 12% to $2.70.

Why is the Paradigm share price surging higher?

Investors have been buying the company’s shares following the release of its second positive announcement in as many days.

On Monday Paradigm announced that it has received positive feedback from the European Medicines Agency after its recent scientific advice meeting.

Based on this feedback, applications to commence clinical trials in EU member countries can now begin for its Zilosul product. This product is targeting the knee osteoarthritis market.

What was today’s announcement?

Today’s announcement reveals that its exclusive license and supply agreement with bene pharmaChem has been amended with positive and material commercial outcomes for Paradigm.

The company notes that this is an important development as bene pharmaChem remains the only FDA approved manufacturer/supplier of Pentosan Polysulphate Sodium (PPS).

This is very important to Paradigm’s commercial plans, as the aforementioned Zilosul product is an injectable pentosan polysulfate.  

According to the release, Paradigm now has a term of 25 years from the date of marketing approval. In respect to territories, its agreement now includes all major pharmaceutical markets. This excludes Japan, which is covered under a separate arrangement. It also has the option to expand the clinical indications.

Paradigm’s CEO and Managing Director, Paul Rennie, commented: “There are no generic versions of bene PPS on the market and this makes the exclusive supply of bene PPS so valuable to our commercial plans.”

“Paradigm is focussed on executing on our pivotal clinical trials in the USA and Europe and moving onto registration of Zilosul in the major pharmaceutical markets. We are very grateful for the support that Dr Harald Benend and his Bene colleagues have provided to Paradigm and we are very excited about the additional territories, clinical indications and the 25-year exclusive supply of bene PPS post registration,” Mr Rennie concluded.

More reading

• Why the Paradigm (ASX:PAR) share price has rocketed 8% higher today
• Why Flight Centre, OneVue, Paradigm, & PointsBet shares are charging higher

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 Corporate Travel Management Ltd (ASX: CTD) share price remains in a trading halt on Tuesday whilst it undertakes a capital raising. 

What is Corporate Travel Management raising?

This morning Corporate Travel Management revealed that it is raising $375 million via a fully underwritten accelerated non-renounceable entitlement offer to fund a major acquisition.

Under the entitlement offer, eligible shareholders will be able to subscribe for 1 fully paid ordinary share for every 4.03 shares they hold on Thursday 1 October 2020 at the issue price of $13.85 per new share.

The offer price of $13.85 represents a discount of 14.3% to its last close price of $16.16.

What is the company acquiring?

Corporate Travel Management has entered into a binding agreement to acquire 100% of Travel & Transport, Inc. for a cash and debt free enterprise value of US$200.4 million (A$274.5 million).

Travel & Transport is a leading US travel management company that was founded in 1946 and is headquartered in Omaha, Nebraska.

It generated total transaction value (TTV) of US$2.8 billion (A$4 billion) and pro forma EBITDA of US$29 million (A$41 million) in calendar year 2019. Approximately 60% of its TTV came from the corporate air travel market.

Management notes that Travel & Transport’s customer mix is highly complementary to its business, with a focus on professional services and healthcare clients. It has low customer concentration, with the largest customer representing only 2.5% of 2019 air volumes. Furthermore, its top 50 customers represent less than 45% of 2019 air volumes.

According to the release, the transaction is expected to be approximately 10% earnings per share accretive on a pro-forma calendar year 2019 basis (excluding synergies).

When including estimated full run-rate synergies of US$18 million (A$25 million), the transaction is expected to be approximately 30% earnings per share accretive.

Corporate Travel Management’s Founder and Managing Director, Jamie Pherous, commented: “We are excited to bring our two companies together under the CTM umbrella. Travel & Transport has an incredible reputation and a long history of success within the global travel industry, and we have shared views about delivering personalised service and proprietary technology to generate strong returns for clients on their travel investments.”

Trading update.

In addition to the entitlement offer and acquisition, management provided the market with a trading update.

It advised that COVID-19 has had a material impact on both companies. Transaction volumes for Corporate Travel Management and Travel & Transport are currently down 25% and 13%, respectively, compared to the prior corresponding period.

Over July and August 2020, the pro-forma group generated average revenue of A$14 million per month and an average underlying EBITDA loss of A$5.7 million per month.

Further, the average pro-forma group cash burn was A$7.5 million per month over the period.

Fortunately, the company is well-placed to ride out the storm. Its net cash position post equity raising will be A$126.8 million, with 100 million pounds (A$181.8 million) of additional liquidity via a committed undrawn finance facility.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Corporate Travel Management 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.

The post Corporate Travel Management (ASX:CTD) to raise $375m for Travel & Transport acquistition appeared first on Motley Fool Australia.

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