Author: therawinformant

The Opthea Ltd (ASX: OPT) share price is surging higher today. This follows the release of an update on its meetings with the U.S. Food and Drug Administration (FDA) and the European Medicines Agency (EMA).

At the time of writing the clinical-stage biopharmaceutical company’s shares are up over 5% to $2.45.

What happened at the Opthea-FDA meeting?

Opthea, which is developing a novel therapy to treat highly prevalent and progressive retinal diseases, has successfully completed its end-of-phase 2 meetings with the FDA and also a scientific advice meeting with the EMA.

These meetings have been undertaken to receive guidance on the phase 3 clinical development plans of OPT-302 as a treatment for neovascular (wet) age-related macular degeneration (AMD).

According to the release, the outcome of the meetings supports the progression of OPT-302 into Phase 3 and pre-commercial development, with the company aiming to initiate phase 3 trials in early 2021.

What now?

Management advised that the meeting covered key elements of the phase 3 clinical studies and associated manufacturing processes for OPT-302 that will support the submission of a Biologics License Application in the US and Marketing Authorisation Application in Europe for the targeted wet AMD indication.

Both the FDA and EMA agreed on key aspects of the proposed phase 3 clinical trial designs. This includes the conduct of two concurrent, global, multi-centre, randomised, sham-controlled studies evaluating OPT-302 in combination with ranibizumab (Lucentis).

If successful, the investigation of OPT-302 (in combination with two approved standard of care VEGF-A inhibitors) could enable it to be administered with either Eylea or Lucentis.

This could be very lucrative for Opthea given that these two products had combined sales for retinal diseases of US$11.9 billion in 2019.

Furthermore, each trial will compare the clinical efficacy of OPT-302 administered in combination with a VEGF-A inhibitor on an every 4-week and every 8-week dosing regimen in order to understand the durability of OPT-302 treatment effect with less frequent dosing.

Clear direction.

Opthea’s Chief Executive Officer, Dr Megan Baldwin, commented: “We are very pleased with the valuable guidance received from the FDA and EMA which provides clear direction as we advance our Phase 3 registration program towards bringing OPT-302 to market.”

“We remain focused on further demonstrating, in our Phase 3 program, the potential of OPT-302 combination therapy as a novel and transformative treatment for wet AMD patients suffering vision loss,” she added.

More reading

• Why Opthea shares could offer big growth potential
• Why the Opthea share price surged more than 20% today

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 Fortescue Metals Group Limited (ASX: FMG) share price is pushing higher on Friday after providing an update.

At the time of writing the iron ore producer’s shares are up 0.5% to $17.95.

This means the Fortescue share price is now up over 66% since the start of the year.

What did Fortescue announce?

This morning Fortescue released a mineral resources statement for its development properties. These comprise its Greater Chichester Hub, Greater Solomon Hub, Greater Western Hub, Nyidinghu, and other Pilbara developments.

According to the release, the total development mineral resources has increased by almost 2% over the last 12 months from 7,907 million tonnes (mt) to 8,060 mt.

The main driver of this increase was the Greater Solomon Hub, which has increased its mineral resource by 102 mt to 2,682 mt. This follows updates to its Sheila Valley and Raven deposits.

Also increasing was the Greater Western Hub mineral resource. It has increased by 39 mt to 2,086 mt following updates to the Flying Fish, Cobra, Lora, and Wyloo North deposits. At Cobra, 99mt of the mineral resource is now classified as indicated.

Fortescue’s Nyidinghu mineral resources has been updated with an overall increase of 12mt to 2,475mt. Management notes that the additional tonnes include high grade bedded iron deposits in the Brockman and Marra Mamba Iron Formations, along with channel iron deposits and detrital iron deposits.

Fortescue’s chief executive officer, Elizabeth Gaines, was pleased with the mineral resources update.

She commented: “It is pleasing to see the continued growth in Mineral Resources at our Development Properties. With the increase in Mineral Resources at the Greater Solomon Hub, Greater Western Hub and Nyidinghu, our total Development Mineral Resources now exceeds eight billion tonnes.”

With 8 billion of mineral resources under development, Fortescue certainly has a long runway for growth over the next decade and beyond.

More reading

• Is now a good time to buy Fortescue shares?
• Why Fortescue’s share price has surged 72% in 2020
• Tech shares race to record highs as Bank of America tips BHP and Rio shares
• 5 things to watch on the ASX 200 on Monday
• 5 things to watch on the ASX 200 next week

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

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

If you purchased Amazon (NASDAQ: AMZN) on Jan. 1, you’d be up a sizzling 78% today. That’s a $7,800 profit on a $10,000 investment — not too shabby for nine months’ worth of investing in the stock market. 

But if you’d invested in Amazon while the stock market was crashing in March, you’d have even more.

Amazon’s stock held up relatively well during the early stages of the COVID-19 crisis. Investors realized that e-commerce companies would benefit as many traditional retail stores were forced to close due to stay-at-home directives. Still, by March 16, Amazon’s stock price had fallen about 9% from where it started the year as the market sold off. 

If you had used this opportunity to buy Amazon’s shares at a discount, you’d be up a staggering 95% today. Said differently, you would have nearly doubled your money, and your $10,000 investment would now be worth $19,500. 

The takeaway here isn’t to try and time the market perfectly and nab shares of your favorite company at the absolute bottom. That’s a nearly impossible endeavor, even for the best investors.

The more important lesson is to recognize the power of using market sell-offs to amplify your gains. Stock market declines will often give you the opportunity to purchase shares of outstanding businesses at better prices than you’d otherwise be able to. If you can keep some cash aside to invest during these market crashes, you’ll likely boost your returns significantly over time.

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

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Joe Tenebruso has no position in any of the stocks mentioned. John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Amazon and recommends the following options: short January 2022 $1940 calls on Amazon and long January 2022 $1920 calls on Amazon. The Motley Fool Australia has recommended Amazon. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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

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The continuation of many sports leagues around the world could make Pointsbet Holdings Ltd (ASX: PBH) a compelling ASX growth share to buy in August.

The company has recorded strong growth in the domestic Australian market while securing key partnerships and licenses in the significant US market – amid the coronavirus pandemic. I think its potential revenue growth and strong cash position could make it a top ASX growth share to buy.. 

It’s a strong stand-alone business

In the company’s Q4 FY20 business update, Pointsbet Australia delivered quarter-on-quarter net win growth of 109%. This marks its second consecutive quarter of positive EBITDA.

Its quarter-on-quarter net win margin pushed higher due to favourable results and customer’s transfer from sports to racing. This, combined with the timing and execution of its tier 1 Channel 7 Australian horse racing partnership and Fox Sports AFL, were big drivers of growth this quarter.

I believe Pointsbet Australia is shaping up to be a strong stand-alone business that will enable the company to focus its resources on the prime US opportunity. 

Building US market amid COVID-19 

The US market saw a 12.9% decrease in turnover due to all 4 major US sporting leagues (baseball, basketball, football and hockey) being absent for Q4 FY20. Despite a challenging financial performance, the company has achieved a number of key partnerships and licenses. 

On 31 July, the company announced that its partner, Hawthorne Race Course, has been issued a Master Sports Wagering Licence by the Illinois Gaming Board. These approvals will allow Pointsbet to start retail and online sports betting operations in Illinois. 

On 5 August, Pointsbet entered into a multi-year agreement to become an Official Sports Gaming Partner of the Indiana Pacers of the NBA. The next day, the company entered into a ‘primary skin’ agreement with the Twin River Management Group to provide online iGaming/online casinos in the State of New Jersey. This could see Pointsbet providing table game, slot content and Live Dealer casino solutions. 

I believe these partnerships and regulatory approvals serve as a springboard for its growth when sporting markets pick up.

Foolish Takeaway

Pointsbet is in a strong position to pounce at the formidable US growth opportunity. The company is well-capitalised with A$135.4m of corporate cash as at 30 June and no debt. Forthcoming launches of sportsbook operations in Illinois, Colorado and Michigan combined with the re-launch of big 4 US sports in Q1 FY21 should see an improved performance moving forward.

While Pointsbet is a higher risk/reward investment opportunity, I think its strong cash position and foothold in the US market makes it a strong ASX growth share to watch. 

 

More reading

• How investing in ASX shares could help you grow $10,000 into $100,000
• Pointsbet share price on watch after ANOTHER new partnership
• Pointsbet share price edges higher on new market opportunity
• Why Mesoblast, Northern Star, PointsBet, & Splitit shares are racing higher
• PointsBet share price jumps 4% on new US deal

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 Pointsbet Holdings Ltd. The Motley Fool Australia has recommended Pointsbet Holdings 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 TPG Telecom Ltd (ASX: TPG) share price is pushing higher following the release of its half year results.

At the time of writing the telco’s shares are up 1% to $7.37.

What did TPG Telecom announce?

To begin with, it is worth noting that these results are a predominantly going to reflect the performance of the Vodafone Australia business during the six months ended 30 June 2020.

This is because the merger between TPG and Vodafone Australia only became effective for accounting purposes on 26 June. Which, despite the company name, means its statutory income includes a full six months from Vodafone Australia but only four days from the TPG business.

It is also worth noting that significant pre-merger implementation restructuring steps occurred between 2 July 2020 and 13 July 2020. As a result, its balance sheet on 30 June was not fully reflective of its balance sheet after the merger was implemented.

What were its results?

During the first half of FY 2020, the company’s reported earnings before interest, tax, depreciation and amortisation (EBITDA) was $531 million. This includes an EBITDA contribution of $9 million from the TPG business and $24 million of merger transaction costs.

On a like for like basis, excluding the TPG contribution and merger costs, underlying EBITDA was down 8% on the prior corresponding period to $546 million.

On the bottom line, the company’s reported net profit after tax was $83 million. This includes a $226 million one-off, non-cash credit to its tax expense.

Excluding this, the effect of the merger transaction costs, and TPG’s contribution, the company’s underlying net loss after tax was $117 million. This is a $27 million improvement relative to the prior corresponding period.

What if the merger had completed on January 1?

To give investors an idea of what this half year result would look like if it had a full contribution from the TPG business, the company provided a pro forma result.

Pro forma revenue was $2,712 million for the half, comprising TPG revenue of $1,248 million and Vodafone revenue of $1,513 million.

Whereas pro forma EBITDA would have been $918 million. This comprises TPG EBITDA of $391 million and Vodafone EBITDA of $545 million. Pro forma EBITDA (pre AASB16) would have been $836 million.

COVID-19 impacts.

As with rival Telstra Corporation Ltd (ASX: TLS), there have been some negative impacts on its performance because of the COVID-19 pandemic.

Management revealed that global travel restrictions have had a significant impact on revenue and EBITDA, causing a ~80% reduction in roaming margin, ~30% decline in prepaid connections, and ~20% decrease in post-paid connections.

In addition to this, the company’s ability to connect new customers was impacted during March and April when call centre capacity was temporarily reduced due to local lockdown restrictions in India. And while operations have now returned almost to full capacity, higher costs are being incurred due to changes in service delivery. I

t was a similar story for its retail store network. With about one third of retail stores temporarily closed between April and June, its sales were impacted negatively.

The company also offered financial support to its customers with a temporary $10 ‘Stay Connected’ financial hardship plan during April and May. Combined with extra data and free national calls, TPG Telecom’s mobile average revenue per user (ARPU) was negatively impacted.

Outlook.

No guidance was given for the full year. Though, it advised that it will continue to prioritise activities to realise merger synergies, while responding to the ongoing COVID pandemic. 

Management also advised that demand for fixed line services is expected to remain strong. However, it expects continued challenging conditions in mobile while global travel restrictions remain in place.

More reading

• 5 things to watch on the ASX 200 on Friday
• Telstra share price hit by broker downgrade today
• Telstra just announced its dividend! Are Telstra shares now a buy?
• Got $3,000 to invest? Try these 2 dirt-cheap ASX shares
• The latest ASX 200 stocks downgraded by top brokers

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Telstra 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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This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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

Might Johnson & Johnson (NYSE: JNJ) soon vault to the top of the coronavirus stock list?

It’s conceivable, as an entry on the government’s list of clinical trials reveals that the company’s Janssen Vaccines subsidiary is about to launch a relatively large-scale, phase 3 study of its Ad26.COV2-S vaccine candidate. The estimated start date is 5 September, with both the primary and completion date anticipated for 10 March 2023.

All told, the Johnson & Johnson/Janssen study aims to involve roughly 60,000 participants with moderate to severe COVID-19, aged 18 and older. It will be a randomised, double-blind, and placebo-controlled trial.

That 60,000 figure is double the typical late-stage participant number; front-runners Moderna Inc, with its mRNA-1273 candidate, and Pfizer and BioNTech with BNT162b2 have both targeted approximately, or at most, 30,000 patients in their respective trials.

Although other biotechs and pharmaceutical companies are in more advanced testing stages of their coronavirus vaccine candidates, Johnson & Johnson has a particular advantage that might ultimately pull it ahead of the pack.

In preclinical testing on primates, Ad26.COV2-S produced high levels of antibodies to combat infection with only a single dose; other vaccine candidates further along in their development require two doses to produce a similar response.

The coronavirus ‘race’ is one of the most closely watched developments in the healthcare world just now. The outbreak is still very much a threat to global health, and no vaccine has yet been approved for use by any major regulator.

In late afternoon trading on Thursday, Johnson & Johnson’s stock was up by 0.6%, outpacing the 0.4% rise of the S&P 500 Index.

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

More reading

• This could be the ace in the hole for Johnson & Johnson’s COVID-19 vaccine
• Everything you need to know about the coronavirus vaccine race

Eric Volkman has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends Johnson & Johnson. 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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This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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The Redbubble Ltd (ASX: RBL) share price may be poised to hit another record high this morning after it posted a solid profit result.

The RBL share price more than tripled in value since the start of calendar 2020 and closed at $3.55 yesterday when the S&P/ASX 200 Index (Index:^AXJO) lost 8% of its value.

The online market place for artists is benefitting from two COVID-19 tailwinds. The acceleration towards online transactions in this new socially distanced world and surging demand for fashionable facemasks.

Big jump in sales and bigger jump in earnings

These trends triggered a 36% jump in its Marketplace revenue to $349 million while operating earnings before interest, tax, depreciation and amortisation (EBITDA) surged 141% to $15.3 million.

The generally weaker Australian dollar is also giving the group a boost. In constant currency terms, revenue was up a more modest 29% as EBITDA improved 123%.

Ballooning margins is the real share price kicker

What’s maybe more exciting is that profit margins for the group is expanding rapidly. This is likely due to operating leverage, and tech platforms typically have lots of that.

As a large proportion of costs are fixed (such as investment in IT infrastructure), any rise in revenue will have a bigger impact on earnings.

A scalable business like Redbubble should have little trouble maintaining its margin growth trend as long as it can keep growing sales.

Not all companies benefitting from the COVID chaos can claim stronger margins. Woolworths Group Ltd (ASX: WOW) is one example as panic buying led to a sales surge but an increase in costs.

Strong start but cloudy outlook

On that front, management said FY21 kicked off to a strong start with Marketplace revenue (measured on paid basis) jumping 132% in July over the same month last year. Sales in the first two weeks of August grew at a similar pace too.

However, the company declined to offer any sort of guidance, which isn’t surprising given the unpredictable COVID-19 situation.

Another possible negative is the recent bounce in the Australian dollar. Currency experts believe the Aussie battler is likely to make further gains over the next 12 months or so. This is due to the resilient iron ore price and the general expected weakness in the US dollar.

Business expansion and cash flow

During the last financial year, Redbubble expanded its fulfilment network to Europe, Canada and the United States. It now operates across 10 countries with 37 fulfillers in 41 locations.

There was also a 51% increase in the number of selling artists to 511,000 and a 30% rise in unique customers to 6.8 million on its Marketplace platform.

Shareholders will also be pleased that its free cash flow turned to a positive $38 million. This compares to an outflow of $200,000 in FY19.

Just don’t expect a dividend anytime soon, although this shouldn’t be a problem as investors don’t buy tech stocks for income but for growth.

More reading

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• The latest ASX 200 stocks hit by broker downgrades

Motley Fool contributor Brendon Lau owns shares of Woolworths Limited. Connect with me on Twitter @brenlau.

The Motley Fool Australia owns shares of Woolworths 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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It might sound crazy, but this company has returned more than 1,200% in the last 6 months alone.

Prompted by massive demand during the coronavirus pandemic, this meal-kit provider has captured a flood of new business.

It’s a name you might already be familiar with in your own home if you are the kind of person who appreciates a little evening convenience.

Marley Spoon AG (ASX: MMM) is one ASX small-cap company that Australia has fallen in love with during a time of crisis. However, it’s not just Aussies that are signing up, our American and European friends are just as partial to the dinner-time hero.

The global pandemic hit the whole world at the same time, causing people from all cultures, locations and backgrounds to remain indoors far more than they normally would. Marley Spoon was in a prime position to step up to the plate and save us all from eating cans of baked beans for dinner during lockdown.

About Marley Spoon

Marley Spoon creates and distributes meal kits with the goal of bringing healthy seasonal ingredients to people who want a little more convenience at dinner time. Meal kits are a perfect compromise between doing everything yourself and getting a takeaway.

Marley Spoon offer a meal delivery app, which allows subscribers to order what they want, when they want. 

Marley Spoon share price

This company is relatively new to the ASX, listing in July 2018 at around $1.25. The first 18 months or so were a little rough on the Marley Spoon share price. After some volatility, the price settled at an all time low of around 20 cents – a far cry from IPO day. However, Marley Spoon pressed on and when the coronavirus pandemic struck, it really moved into a higher gear.

While other companies began bleeding, Marley Spoon shares soared.

In fact, in the same 30-day period from 24 February to 23 March that the S&P/ASX 200 Index (ASX: XJO) fell almost 40%, the Marley Spoon share price rose a staggering 150%! This was only the beginning for the meal kit provider, as it has continued in a strong upward trend thereafter.

Recent results

During the 2nd quarter of this year, Marley Spoon reported a 103% increase in revenue in Australia alone.

The quarterly report reads like a battle summary, describing how the company has pushed hard to achieve results in spite of bush fires, floods and a global pandemic interfering with its supply chain and operations.

Likewise, the American business reported a revenue increase of 171% and Europe reported an 83% increase. Certainly good news all round.

Is the Marley Spoon share price still a buy?

Normally I wouldn’t be interested in a company after it has experienced this amount of growth, as it’s very often unsustainable. Usually I would wait for a pullback in price to a place of more value to me as an investor. However, in this case, I don’t see anything other than a positive future for Marley Spoon. Even if a short-term pullback should occur, I can’t see it lasting.

Foolish takeaway

With a such a convenient and high quality product, I can’t see subscription customers leaving Marley Spoon anytime soon. In Australia, Victoria is still struggling to contain the spread of coronavirus and its residents are in the middle of a Stage 4 lockdown. As a relevant point here, only one person per household is currently permitted to visit a grocery store. It makes far more sense for the food to come to you.

Sydney is also making an attempt to control growing daily cases as well. If the pandemic continues, this company should see ongoing strength in revenue. If the pandemic ends tomorrow, I can’t see loyal user simply cancelling a product that’s so convenient. Either way, the future looks bright for this meal prep superstar.

More reading

• Even after the meteoric rise in the Marley Spoon share price, here’s why it remains a core holding for one leading fund manager
• 3 ASX small cap shares with serious growth potential
• Can the Bubs share price go higher in 2020?
• ASX shares that could get a boost from Victoria’s shutdown
• Up 1,000% in 2020! Is it too late to buy Marley Spoon shares?

Motley Fool contributor glennleese 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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Wesfarmers Ltd (ASX: WES) has admitted that the empty shelves seen in Kmart this year occurred from a deliberate decision to cut supply.

As the first wave of COVID-19 hit in Australia, news and social media reported annoyed customers at Kmart stores staring at rows of cleared out shelves.

Many of us would have personally visited a Kmart this year to see a desired item not in stock. The retail chain even apologised for the phenomenon on Facebook back in June.

Parent company Wesfarmers, during its results briefing on Thursday, revealed that the lack of Kmart stock actually arose from a deliberate move.

“What we know in our business is too much inventory is a difficult problem for us to manage. And it lasts for a long period of time,” said Kmart managing director Ian Bailey.

“We made a call when COVID-19 hit, we looked around the world at particularly like-retailers… We could see issues with inventory and too much of it.”

The department store thus immediately decided to reduce supply “in anticipation of lower demand” during the pandemic.

And while sales did drop off in April, Kmart was unprepared for shoppers coming back in massive numbers in May.

“We didn’t anticipate the speed of improvement in Australia,” Bailey said.

“[Customers] shopped with a vengeance during that period and cleaned our shelves out.”

Would Australian-made products have solved the problem?

Bailey made the comments in response to accusations that Kmart might have a supply chain problem.

At the height of the low-stock period, shoppers criticised the store on social media for relying too much on overseas manufacturing.

But retailers and economists know those people want their cake and eat it too – because they will not dare pay $100 for a baby onesie.

Founder of Australian confectionery maker Poppy’s Chocolate, Lynda Pedder, explains this perfectly.

“I feel that in Australia, we have a double standard. We want Australian quality but we want it at Chinese prices,” she said on her blog.

“Australia has the highest wages in the world. That means that if you want something that is Australian made, that is handmade, it will take a lot of that ‘expensive’ labour to make it. We don’t pay people a minimum of $2 a day in Australia, we pay them closer to $200 per day.”

Wesfarmers reported a 5.4% lift in revenue at Kmart, hitting $6,068 million for the 2020 financial year.

The share price for Wesfarmers dipped 0.2% on Thursday, to rest at $48.78 at market close.

More reading

• Should you buy ASX shares before or after reporting season?
• ASX 200 down 0.8%, IDP Education soars
• Where to hunt for ASX dividend share income in 2020
• ACCC nod for Metcash acquisition of Total Tools
• Why it may not be too late to chase ASX reporting season record breakers

Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to its CEO, Mark Zuckerberg, is a member of The Motley Fool’s board of directors. 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 Facebook. The Motley Fool Australia owns shares of Wesfarmers Limited. The Motley Fool Australia has recommended Facebook. 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 Mayne Pharma Group Ltd (ASX: MYX) share price is one to watch this morning after reporting its latest full-year results.

Why is the Mayne Pharma share price on watch?

The Aussie pharma group reported revenue down 13% on FY19 to $457.0 million for the year ended 30 June 2020 (FY20).

Underlying earnings before interest, tax, depreciation and amortisation (EBITDA) fell 27% to $95.3 million.

That saw Mayne Pharma reported a net loss after tax of $92.8 million. That was still a 66.7% improvement on FY19 figures even accounting for a $99.0 million impairment.

The pharma company reduced operating expenses by $16 million to optimise global infrastructure with a $15 million reduction in product development spend.

Net operating cash flow was up 16% on the first-half but down 6% for the year to $99.8 million.

On the operations side, there were some important updates that make the Mayne Pharma share price worth watching.

The company’s generic products division stabilised in the second half. Sales were down 21% on FY19 to $253 million, however, gross profit was up 10% on the first half.

Metrics contracts services delivered solid revenue growth, up 15% on FY19 to $82.8 million. That saw gross profit climb 11% to $39.4 million with 5 commercial manufacturing clients now locked in.

The speciality brands division saw sales slump 14% to $78.8 million with gross profit down 18% to $65.4 million. The coronavirus pandemic hurt the business segment with fewer patient visits to doctors.

Positively, Mayne Pharma International sales were up 4% on FY19 to $42.4 million with gross profit flat at $11.0 million.

What did management have to say?

CEO Scott Richards noted the “unprecedented challenges” in dealing with COVID-19. The company focused on maintaining an uninterrupted supply of medicines and services during the second half.

That saw the half-year revenue flat on 1H FY20 numbers with net operating cash flow climbing 16% higher in the last 6 months.

The pharma group is looking to restructure its cost base, rationalise its generic portfolio and explore new areas of growth.

The Mayne Pharma share price will be one to watch in early trade as investors weigh up the latest strategy.

That includes completing the licensing of its NEXTSTELLIS product in the United States and Australia having received FDA filing acceptance for the novel contraceptive product.

The group also expects to commence a phase 3 trial in basal cell carcinoma nevus syndrome (BCCNS or Gorlin Syndrome) patients in FY21.

Outlook

There was no specific guidance provided by Mayne Pharma other than reiterating its near-term goals.

That included repositioning the company into “sustainable products, distribution channels and therapeutic areas.”

Prior to the open, the Mayne Pharma share price was down 22.2% for the year versus an 8.5% decline in the S&P/ASX 200 Index (ASX: XJO).

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Motley Fool contributor Ken Hall 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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