Author: therawinformant

The Beach Energy Ltd (ASX: BPT) share price is one to watch this morning after narrowly missing its full-year production guidance.

What were the key takeaways?

Revenue for the year ended 30 June 2020 (FY20) fell 17% from the prior corresponding period (pcp) to $1,728.2 million.

Beach had more than $600 million in sales gas and ethane revenues with more than 99% of gas sold under contract.

FY20 production fell 9% to 26.7 million barrels of oil equivalent (MMboe), below the 27-28 million MMboe guidance range. The Aussie energy group drilled 178 wells with an 81% overall success rate during the year.

FY20 underlying earnings before interest, tax, depreciation and amortisation (EBITDA) fell 19% to $1,108 million. Beach’s underlying EBITDA margin fell 400 basis points to 67%.

Net profit after tax (NPAT) slumped 13% lower on pcp to $500.8 million while underlying NPAT fell 18% to $461.0 million.

The Beach Energy share price is down 41.5% to $1.48 per share in 2020 prior to this morning’s open.

Net tangible asset backing jumped to $1.19, up from $1.02 per share in FY19. Net cash slumped 71% to $50 million but Beach did announce a final dividend.

Beach Energy paid out $45.6 million in dividends, unchanged from FY19, which translated to a 1.0 cents per share (cps) payment.

Combined with a 1.0 cps interim dividend, the Aussie energy group paid a 2 cps total dividend for FY20.

The Aussie energy group reported organic 2P reserves replacement above 200% for three straight years.

2P reserves increased by 8% from 326 MMboe to 352 MMboe during the year with 2P reservees life increased from 12.4 years to 13.2 years.

New rig contract

The Beach Energy share price is worth watching after the energy group reported a new offshore drilling agreement with Diamond Offshore General Company this morning.

The agreement will use the Ocean Onyx Semi-submersible rig to undertake Beach’s Victorian Otway offshore drilling program.

The agreement provides for the drilling of up to 9 wells (6 firm with 3 options) with operations expected to start between December 2020 and March 2021.

A new settlement agreement was also signed to dismiss all current legal proceedings with Diamond.

Outlook for Beach Energy share price

The group has reduced planned capital expenditure for FY21 by 30% with an expected slowdown due to the coronavirus pandemic. 

Production is expected to be 26.0-28.5 MMboe with capital expenditure of $650-750 million.

Underlying EBITDA is expected to fall by 10-20% to $900-1,100 million.

Beach reported a 5-year outlook with production on track to deliver 37-43 MMboe in FY25.

The Beach Energy share price is one to watch as management reduced its growth outlook based on COVID-19 and the expenditure deferral.

Beach’s 5-year free cash flow outlook has been revised from $2.7 billion to $2.1 billion based on a lower oil price assumption.

More reading

• The next battle facing these ASX stocks will come from within
• 5 things to watch on the ASX 200 on Thursday
• 5 things to watch on the ASX 200 on Wednesday
• 5 things to watch on the ASX 200 on Tuesday
• Worley share price jumps on contract win and is my key pick in the sector

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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The Kogan.com Ltd (ASX: KGN) share price is dropping lower on Monday following the release of its full year results.

At the time of writing the ecommerce company’s shares are down 3% to $21.12.

How did Kogan perform in FY 2020?

For the 12 months ended 30 June 2020, Kogan reported gross sales of $768.9 million, up 39.3% on the prior corresponding period. From this, revenue came in at $497.9 million, up 13.5% year on year. A key driver of this growth was the shift to online shopping during the pandemic, which led to a 35.7% increase in its active customer base to 2,183,000.

Thanks to a 4.7 percentage point increase in the company’s gross margin to 25.4%, Kogan’s gross profit increased 39.6% to $126.5 million. This margin expansion was underpinned by the growth in commission-based or seller-fee-based revenue across new verticals and Kogan Marketplace.

Also growing strongly was its adjusted earnings before interest, tax, depreciation, and amortisation (EBITDA). Despite a big investment in marketing, Kogan reported a 57.6% increase in adjusted EBITDA to $49.7 million. And on the bottom line, the company reported a 55.9% increase in net profit after tax to $26.8 million.

In light of this strong form, Kogan declared a fully franked final dividend of 13.5 cents per share. This was up 64.6% on the prior corresponding period and brings its full year dividend to 21 cents per share.

What were the drivers of Kogan’s growth?

Kogan successfully delivered growth across its business in FY 2020. The Kogan Marketplace was arguably the highlight, with its second half sales growing 71.2% on the first half.

This was supported by Exclusive Brands revenue and gross profit growth of 26.4% and 43.7%, respectively, for the year. Also performing strongly were the Kogan Internet and Insurance businesses. Kogan Internet reported a 90.9% increase in customer numbers and the Kogan Insurance business grew commission-based revenue by 36%.

The laggard in the group was its Third-Party Brands segment, which reported gross profit growth of 3.3% for the year.

Retail revolution.

Ruslan Kogan, Founder & CEO of Kogan.com, revealed that the company is experiencing some very positive trends. 

He said: “There is a retail revolution taking place as more and more shoppers learn about the benefits of eCommerce. We’re seeing record numbers of first time customers, who then go on to make repeat purchases at a 40% faster pace than previously.”

“For us this is a very exciting trend that shows that once customers learn about shopping online, they change their ongoing behaviour. Once someone discovers the benefits of online shopping, I struggle to see why they would ever go back to the old way of doing things. After almost 15 years of preparation, the revolution occurring in retail represents a significant opportunity for Kogan.com,” he added.

Outlook.

Kogan isn’t resting on its laurels and notes that “there is always more that we can do and new ways we can delight our customers.”

In light of this, it intends to further develop and enhance the Kogan Marketplace, grow its Active Customer base by investing in its platform, expand its Exclusive Brands and Third-Party Brands product divisions, and review ongoing acquisition opportunities.

No guidance will be given for the year ahead. Instead it plans to provide regular business updates during the year.

Speaking of which, in July Kogan achieved unaudited gross sales growth of over 110% and gross profit growth of over 160%. In addition, monthly adjusted EBITDA was more than $10 million in July, which compares very favourably to FY 2020’s entire adjusted EBITDA of $49.7 million.

More reading

• 4 ASX shares to profit from booming ecommerce
• How to find the rare ASX retail share winners
• 4 ASX shares to buy now for a post-coronavirus world
• Can the Kogan share price keep going?
• ASX reporting season reveals some upside surprises

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 Evolution Mining Ltd (ASX: EVN) share price surged 6.5% higher on Friday after a strong earnings result. With gold prices climbing higher, I think there are a couple of ASX gold shares worth a look right now.

Why I like Evolution 

I think the Evolution share price could still have further to climb after a solid full-year result.

Evolution posted a record underlying net profit after tax result of $405.4 million.

FY20 production totalled 746,463 ounces, down from 753,001 ounces in FY19. The group’s all-in sustaining cost  of A$1,043 per ounce was also among the lowest-cost producers in the world.

The ASX gold share rocketed higher on Friday and is now up 62.4% in 2020. That could put off some investors but I think there’s more potential upside for gold prices.

Given a solid growth outlook for both costs and production levels, I think the Evolution share price has further gains ahead in 2021.

And one other ASX gold share

It’s not just Evolution that I’ve got my eye on in 2020. The Saracen Mineral Holdings Limited (ASX: SAR) share price is another that could climb higher.

Saracen shares are already up 69.0% this year with a market capitalisation of $6.2 billion.

I’ve got my eye on the Saracen share price ahead of its August full-year results announcement. There’s no official date for the annual report release but I think Evolution’s result bodes well for profitability.

The ASX gold share could be on the move even higher if we see a strong bottom line. I’d expect the group’s Kalgoorlie Super Pit Mine purchase to flow through to earnings in FY21.

That means this year’s results will largely reflect existing operations. However, I’d expect that to still deliver a decent profit and maybe a new record high for the ASX gold share.

Foolish takeaway

These are just a couple of the ASX gold shares that I like at the moment. Large-cap miners could be set to outperform even further after the dust settles on the August earnings season.

More reading

• Why November could be the best time to re-join the gold bull run
• Why Baby Bunting, Evolution, Mesoblast, & Xero shares are zooming higher
• 5 things to watch on the ASX 200 on Friday
• Northern Star share price falls 1.6% on trading update
• Evolution Mining shares on watch as underlying profit jumps 86%

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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The JB Hi-Fi Limited (ASX: JBH) share price is on watch this morning after the electronics retailer delivered its full year results. The market had high expectations for the JB Hi-Fi share price following strong sales since the onset of the coronavirus pandemic. The retailer has largely delivered, with profits up 33.2% thanks to strong growth in sales. 

Sales climb as digital takes off 

JB Hi-Fi reported total sales of $7.9 billion for FY20, an increase of 11.6% on FY19. Sales momentum was strong throughout the year and accelerated in Q4 as customers spent more time working, learning, and seeking entertainment at home. Sales growth was seen across the JB Hi-Fi Australia and The Good Guys businesses, which grew sales 12.5% to $5.32 billion and 11.2% to $2.39 billion respectively. The JB Hi-Fi New Zealand business saw sales decline 5.7% to NZD$222.8 million due to store closures resulting from New Zealand Government restrictions. 

JB Hi-Fi is continuing to invest in its digital and online capacity, including launching a new platform for JB Hi-Fi Australia. JB Hi-Fi Australia online sales grew 56.6% to $404 million, or 7.6% of total sales in FY20, with online sales up 155.2% in Q4. Across the group, online sales totalled nearly $600 million for the financial year, a 50% increase year on year.   

Profits and dividends accelerate 

JB Hi-Fi converted increased sales into higher profits – underlying NPAT increased 33.2% to $332.7 million. The jump in profits flowed through to the final dividend, which was up 76.5% to 90 cents per share fully franked. This gives a payout ratio of 65% of underlying NPAT. The Board believes this ratio appropriately balances the distribution of profits to shareholders, repayment of debt, and reinvestment of earnings for future growth. 

What’s the outlook for the JB Hi-Fi share price? 

JB Hi-Fi reported strong sales growth in July with Australian sales up 42.1% for the month. Sales at The Good Guys were up 40.4%, while sales for JB Hi-Fi New Zealand were up 9.1%. This growth may be tempered somewhat by the implementation of stage 4 restrictions in Melbourne, which have forced the closure of 46 JB Hi-Fi stores and 21 The Good Guys stores. Thankfully, online and commercial operations continue to trade and a significant acceleration has been seen in online sales in Victoria since store closures. 

More reading

• 5 things to watch on the ASX 200 on Monday
• Metcash share price and these ASX stocks just got upgraded by leading brokers
• How to find the rare ASX retail share winners
• Top ASX dividend shares to buy in August 2020
• ASX reporting season reveals some upside surprises

Motley Fool contributor Kate O’Brien 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 world’s most popular trade points to further upside for ASX gold miners although the bulls may have to wait till the end of the year to see a payoff.

The wildly popular trade I am referring to is to short the US dollar. A survey by Bank of America found that 36% of fund managers called this their favourite play in August, reported Bloomberg.

This is up from 30% in July and it’s well ahead of other favoured trades, according to BoA. This is the most bearish sentiment against the US dollar since the survey began and investors haven’t been this underweight on the currency since 2008.

Gold benefits from a weaker US dollar

The pessimistic view on the US dollar is good news for gold as the two tend to move in opposite directions.

If the US dollar bears are right, the recent retreat of the gold price from record highs over US$2,000 could be relatively short-lived.

This in turn means the weakness in the Newcrest Mining Limited (ASX: NCM) share price, Evolution Mining Ltd (ASX: EVN) share price and Northern Star Resources Ltd (ASX: NST) share price is a buying opportunity.

Crowded trade risk is no deterrent

Shorts are bets that profit from a decline in value of the underlying asset, and these experts do not seem concerned that this is a “crowded trade”.

A crowded trade describes a situation when most investors are betting on the same outcome. This often leads to volatility as the asset price will surge if all the short-sellers close their positions at the same time (called a short-squeeze).

As it stands, a number of hedge funds have already taken profit on their US dollar shorts as they believe the currency is set to rebound after tumbling around 10% since the March peak.

USD and gold outlook in 2021

However, no one believes the US dollar is going to make a big comeback – not even those that have closed their short positions.

Experts believe a weakening US currency will be an ongoing theme right through 2021, if not longer, although history suggests the greenback may find support over the next few months.

US dollar peak in November

Over the past decade, the Bloomberg Spot Dollar Index (a measure of the US dollar against other major currencies) registered gains in August to November.

Further, the index made a 3% average gain in the quarter when there is a presidential election. There’s a US presidential election coming up this November, and the greenback may only peak after this event.

Eroding reserve status a boon for gold price

However, the bigger longer-term driver for the gold price will rest on whether the US currency loses its prestigious position as the world’s reserve currency.

Some believe this unthinkable event is unfolding before our eyes as central banks around the world have been stocking up on gold over the past few years and are likely to hold less US dollar.

A divided America and the rise of protectionism is aiding this belief and creating a perfect storm for gold.

More reading

• Evolution Mining and 1 other ASX gold share in the buy zone
• These were the highlights of ASX reporting season last week
• Take a look at last week’s worst performing ASX shares
• 5 things to watch on the ASX 200 on Monday
• These were the worst performing ASX 200 shares last week

Motley Fool contributor Brendon Lau owns shares of Evolution Mining Limited and Newcrest Mining Limited. Connect with me on Twitter @brenlau.

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 ASX reporting season continues to deliver, revealing the impact of the coronavirus on share price bottom lines. It’s been full of surprises as some companies deliver better than expected results, while others slash dividends in the face of retreating revenues. Last week was no exception, with some big financial shares revealing falling profits, but miners and retailers reporting surprisingly strong results. 

ASX reporting season: Is the worst over for banks? 

Commonwealth Bank of Australia (ASX: CBA) reported its full year results on Wednesday, slashing its dividend as profits tumbled. Cash profits declined 11.3% thanks to high loan impairment provisions related to COVID-19. The final dividend was reduced to 98 cents, in line with APRA’s guidance that banks should retain at least 50% of earnings. Full year dividends were $2.98, a 31% decrease on FY19. 

National Australia Bank Ltd (ASX: NAB) reported more resilient than expected third quarter results on Friday. Unaudited cash earnings were $1.55 billion, 7% down on 3Q19. Compared with 1H20, credit impairment charges actually fell 2% to $570 million. This reflected the non-repeat of COVID-19 economic adjustment top-up in March. The NAB share price rose in response, and was up 7.4% over the week. 

Retail goes from strength to strength 

Stronger than expected results from the retail sector continued when Breville Group Ltd (ASX: BRG) reported full year results on Thursday. Breville saw revenue climb 25.3% over the full year as customers spending more time at home upgraded home appliances.

Profits were skewed by abnormal expenses including an increase in doubtful debt provisions and a write-down on the company’s proprietary internet of things platform. CEO Jim Clayton said, “In FY20 we faced a cluster of headwinds in the form of Brexit uncertainty, exchange rates, US tariffs and COVID-19, and equally we had our share of good fortune in terms of our inventory levels and the relevance of our products to the ‘new normal’.”

Gold mining shines through

On Friday, gold miner Newcrest Mining Limited (ASX: NCM) reported underlying profit of $750 million, up 34% on the previous year.

The miner was helped by increases in the gold price over 2020 – gold is now trading at around $2700 an ounce, up from around $2200 at the start of the year. Although gold production was lower, at 2,171,118 ounces compared to 2,487,739 ounces in FY19, revenue was 5% higher.

The miner’s strong balance sheet and performance allowed it to increase dividends for the fifth consecutive year, with the full year dividend 14% higher than last year. 

More reading

• Why November could be the best time to re-join the gold bull run
• Take a look at last week’s worst performing ASX shares
• Take a look at last week’s best performing ASX shares
• 5 things to watch on the ASX 200 on Monday
• These were the worst performing ASX 200 shares last week

Motley Fool contributor Kate O’Brien 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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ASX buy now, pay later share market darling Afterpay Ltd (ASX: APT) has been hogging most of the media spotlight recently.

And not without cause – despite a gloomy economic outlook and collapsing consumer sentiment, its share price has skyrocketed almost 850% since March.

With a market cap nearing $20 billion, it is now bigger than ASX heavyweights like Ramsay Health Care Limited (ASX: RHC) and REA Group Ltd (ASX: REA).  

But there are plenty of other companies that also operate in the ASX  buy now, pay later space. Most of you have probably heard of Zip Co Ltd (ASX: Z1P). But what about Splitit Ltd (ASX: SPT), Sezzle Inc (ASX: SZL), Openpay Group Ltd (ASX: OPY) or FlexiGroup Limited (ASX: FXL)?

These companies have all been lighting up the market recently. Since March, FlexiGroup has gained more than 200%, Splitit shares are up close to 600%, Openpay has soared 1000%, and Sezzle shares have skyrocketed an astronomical 2000%!

These sorts of returns are difficult to ignore, so let’s look at the driving forces behind these incredible gains.

We’ll focus on the two ASX  buy now, pay later companies that have delivered the strongest recent returns: Sezzle and Openpay.

Sezzle

Let’s start with Sezzle. Like Afterpay, Sezzle gives consumers the ability to repay their purchases over 4 fortnightly instalments. Provided all instalments are paid on time, there are no interest or late fees charged to the customer – instead, Sezzle makes its money by charging a small fee to the merchant.

The reason you may not have heard too much about Sezzle is that it is headquartered in Minneapolis and predominantly targets the North American market. It has been growing rapidly in the US, driven by rising rates of online shopping spurred by COVID-19 lockdowns.

Sezzle reported cash receipts from customers for June of almost US $170 million, driven by record growth in both active customers and active merchants. The company is targeting US$1 billion in annualised underlying merchant sales by the end of this year.

Openpay

Openpay’s point of difference from other ASX  buy now, pay later companies is that it gives users the option to spread their repayments out over longer timeframes – ranging up to 24 months.

It has also reported record growth recently: active customers soared 145% higher year-on-year in July, while active merchants increased 48%. Revenues for the month came in at $2.1 million, a year-on-year uplift of 73%.

While its flexible repayment plans might be appealing to customers, it’s a riskier business model for investors. Companies like Afterpay and Sezzle both turn over their receivables quickly (generally within 6 weeks), which promotes smaller purchases and leaves less time for a customer’s credit to deteriorate.

This is reflected in the companies’ differing net transaction losses. For July, Openpay estimated net bad debts to be 1.54% of total transaction volume, down from 2.89% in the fourth quarter FY20.

Compare this to Afterpay’s estimated net transaction loss of just 0.55% of underlying sales for FY20. This will be a key metric to focus on if economic conditions worsen over the next 12 months.

More reading

• Take a look at last week’s best performing ASX shares
• 2 important investing lessons you might have forgotten
• Should you invest in Splitit shares?
• 2 exciting high-growth ETFs to buy for high returns today
• Openpay share price on watch after July update

Rhys Brock owns shares of AFTERPAY T FPO, Ramsay Health Care Limited, REA Group Limited, and ZIPCOLTD FPO. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of ZIPCOLTD FPO. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends Sezzle Inc. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool Australia has recommended FlexiGroup Limited, Ramsay Health Care Limited, REA Group Limited, and Sezzle Inc. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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Battery technology is a pretty exciting space right now. The world needs more energy and, preferably, it needs to be clean. There is already an existing threat to fossil fuels, not only from a supply point of view, but simply because of public pressure. The world wants clean energy and batteries will play a key role in delivering it. 

Much like the technology space in general, it can be very challenging for an investor to choose a particular battery technology company to invest in. As an alternative, I have found an ASX exchange-trade fund (ETF) that allows investors to gain exposure to this exciting industry, without the legwork and risk involved in a single company selection.

Introducing ETFS Battery Tech & Lithium ETF (ASX: ACDC)

This ASX ETF, offered by ETF Securities, provides investors with exposure to the energy storage and production industry. It holds shares in companies involved in both the supply chain and production of battery technology and lithium mining, thereby providing exposure to the whole industry. ETF Securities states on its website that the “demand for energy storage is being driven by the movement towards emissions reduction and renewable energy, such as solar and wind.” 

Why battery technology?

Battery technology offers an energy storage solution that is becoming more and more prevalent in everyday life. Lithium-ion batteries are at the cutting edge of current product offerings. Some researchers believe that we might even see further development and advancement through related battery technology such as lithium-sulfur and solid-state batteries.

There is some very exciting work happening in this sector.

ETF Securities believes that battery technology is central to the growth of renewable energy and vehicle usage. I would agree. This means that investors in battery technology are also ‘doing their bit’ to help the planet, if you like. Whilst I’m not a die-hard environmentalist, I certainly prefer to invest in positive change where I can. 

If you’re keen to bolster your contribution to environmental protection, investing in clean energy is one way to help effect real, long-term change. Companies which are involved in the battery supply chain are directly assisting with the global transition to clean energy.

Tracking

The Battery Tech & Lithium ETF aims to track the performance of the The Solactive Battery Value-Chain Index (USD). This index follows the performance of companies that are providers of electro-chemical storage and technology in the battery technology space. It also tracks mining companies that produce metals used for producing lithium batteries.

The companies in this index related to energy storage technology have been taken from the list of projects provided by Clean Horizon’s Energy Storage Source. These are electrochemical companies that have been identified as energy storage technology manufacturers. Companies related to mining have been taken from Fastmarket’s Metal Bulletin which includes those producing battery-grade lithium. 

ETF Performance

Since its inception in September 2018, the Battery Tech & Lithium ETF has returned approximately 18% for investors (at the time of writing). During the market crash in March this year, the ETF fell almost 30%. As this was a market-wide event, I’m more interested in the recovery. Whilst most companies are regaining lost ground, this ETF has exceeded previous highs by almost 5%. It’s an impressive recovery, rising close to 50% since its March lows of $40 to currently trade above $60. 

It should also be noted that this ETF has a dividend yield of around 1.5%.

Holdings and fees

A few of the top holdings in this ASX ETF include Samsung, Pilbara Minerals Ltd (ASX: PLS), Toshiba Corp and Renault. The holdings are also global, providing exposure to countries such as Australia, Germany, Japan, Switzerland and the United States among others. Management fees are 0.69% per year.

Foolish takeaway

Whilst the Battery Tech & Lithium ETF might not be the highest performing ETF on the ASX, I like the idea of investing in a brighter future. If I can make a reasonable return and support clean energy at the same time, it’s a win-win in my book. 

More reading

• Take a look at last week’s worst performing ASX shares
• Why the Pilbara Minerals share price surged 40% in July
• Are ASX lithium shares the next big thing?
• These were last week’s best performing ASX shares
• Here’s how to start investing with $5k

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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The Altium Limited (ASX: ALU) share price will be one to watch this morning following the release of its full year results for FY 2020.

How did Altium perform in FY 2020?

For the 12 months ended 30 June 2020, Altium achieved revenue growth of 10% to US$189 million. This was driven by growth across all core business units and key regions.

The company’s key Board and Systems segment posted a 4% increase in revenue to US$132.3 million. This follows record growth of 17% in its subscription base to 51,006 subscribers.

Whereas Octopart revenue rose 6% to US$18.98 million, NEXUS revenue jumped 133% to US$15.5 million, TASKING revenue was flat at US$19.8 million, and Manufacturing revenue rose 328% to US$2.55 million.

Thanks to the widening of its earnings before interest, tax, depreciation, and amortisation (EBITDA) margin to 40% following good cost control, Altium recorded a 13% lift in EBITDA to US$76.63 million.

Things weren’t quite as positive on the bottom line, with profit after tax falling 42% to US$30,9 million. However, it is worth noting that this was driven by a one-time accounting charge related to deferred taxes. On a pre-tax basis, net profit was up 12% to US$64.64 million.

Also of note was Altium’s operating cash flow, which fell 18% in FY 2020 to US$56.5 million. This was driven by the company providing customers with financial support (extended payment terms) during the pandemic.

Nevertheless, this didn’t stop the Altium board from growing its dividend by 15% to 39 Australian cents. At the end of the period, the company’s cash balance was 16% higher year on year at US$93.1 million.

Management commentary.

Altium’s CEO, Aram Mirkazemi, was pleased with the company’s performance in FY 2020 given the tough trading conditions.

He said: “Altium achieved a strong performance in fiscal 2020 having exceeded its 50,000 subscriber target and delivered solid revenue growth. While COVID-19 prevented us from achieving our long-held aspirational goal of US$200 million, it has been a catalyst for our pursuit of market dominance and transformation.”

“We have successfully launched Altium 365, our new cloud platform, which is causing excitement and gaining strong early adoption. This is most heartening and an early validation of our vision and strategy for this new digital platform to transform the electronics industry,” Mr Mirkazemi added.

Outlook.

No guidance has been provided for FY 2021 due to the pandemic. However, management remains committed to its 2025 targets for market dominance with US$500 million in revenue and 100,000 subscribers.

Though, it warned that “due to COVID19, the achievement of US$500 million may be delayed by 6-12 months.”

It also “remains committed to delivering to the Rule of 50 post-vaccine and will do its best to achieve in a COVID-19 environment pre-vaccine.” This relates to its revenue growth and EBITDA margin being greater than 50% combined.

Management also advised that the company will pursue merger and acquisition opportunities to support total address market expansion and the monetisation of its new digital platform Altium 365 for the electronics industry.

More reading

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James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Altium. 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 ASX recorded modest gains last week as reporting season continued. The S&P/ASX 200 (ASX: XJO) finished the week up 2%. Reporting season is laying bare the financial impact of the pandemic on revenues and profits. Although the economic downturn does not bode well for many ASX shares, some companies have been more resilient than expected while others have actually benefitted from pandemic-induced shifts in consumer behaviour.  

Resilient results from National Australia Bank Ltd (ASX: NAB) pushed the big banks higher last week. The NAB share price gained 7.4%, while Australia and New Zealand Banking Group Limited (ASX: ANZ) rose 5.6% and Westpac Banking Corp (ASX: WBC) gained 7.6%. Commonwealth Bank of Australia (ASX: CBA) saw only a 0.3% share price rise after slashing its dividend and revealing an 11.3% decline in cash profits. 

The gold price declined last week sending mining shares lower. The Northern Star Resources Ltd (ASX: NST) share price fell 10.38% over the week while the Resolute Mining Limited (ASX: RSG) share price fell 7.33%. Here, we take a look at five of the worst performing ASX shares over the last week. 

IVE Group Ltd (ASX: IGL)

The IVE Group share price dropped 24.34% last week to close the week at 58 cents. The share price dropped sharply on Tuesday when Coles Group Ltd (ASX: COL) announced it would cease distributing weekly catalogues to households. These catalogues are printed and distributed by IVE Group to approximately 7 million Australian households weekly via around 14,000 walkers nationally. IVE Group expects this will reduce its revenue by approximately $35 – $40 million per annum. The full impact of the reduction in revenue, including any potential goodwill impairment, will be revealed in full year results on 25 August 2020. 

IVE Group says it moved quickly at the onset of the coronavirus pandemic to respond to revenue volatility. These initiatives place the company in a stronger position to mitigate the impacts of revenue declines. IVE Group says it remains committed to supporting the continued strength of the printed catalogue as an important component of an integrated communications mix. 

Alacer Gold Corp (ASX: AQG) 

The Alacer Gold share price fell 14.56% last week to finish the week at $8.98. As the name suggests, Alacer is a gold producer whose cornerstone asset, the Copler Gold Mine, is located in Turkey. The mine is currently processing ore through two producing plants with 2020 production guidance of 310 – 360Koz. Alacer Gold’s primary listing is on the Toronto Stock Exchange, with CDIs (CHESS Depositary Interests) trading on the ASX. 

Alacer Gold’s proposed merger with SSR Mining Inc (NASDAQ: SSRM) was recently approved by the Supreme Court of Yukon. The merger of equals is expected to provide shareholders with a diversified portfolio of operating assets across four jurisdictions and enhanced trading liquidity across multiple global exchanges. Alacer is continuing targeted exploration work in other regions of Turkey with a number of highly prospective targets. 

Pilbara Minerals Ltd (ASX: PLS) 

The Pilbara Minerals share price dropped 13.41% last week to close the week at 36 cents. The share price had risen strongly the previous week, so last week’s drop reversed those gains. The lithium price has remained at near record lows of late as demand remains subdued in China’s lithium market. The metal is a key component of batteries used in electric vehicles, so longer term prices are tied to this market. 

Pilbara Minerals has an optimistic outlook for the price of lithium over the longer term. Post-COVID-19 stimulus packages introduced by governments in a number of jurisdictions have focused on the electric vehicle and renewable energy sectors. The miner believes market signalling indicates lithium prices may be approaching the bottom, with some analysts forecasting a demand surge and price turnaround in 2021. 

Ramelius Resources Limited (ASX: RMS) 

The Ramelius Resources share price fell 12.67% last week to finish the week at $1.93. The Western Australian gold producer saw the share price dive as gold prices fell. Gold hit a high of nearly $2850 per ounce in the first week of August but has since pulled back to around $2700 per ounce. Ramelius produced a record 86,517 ounces of gold in the June quarter at an all-in sustaining cost (AISC) of $1,041 per ounce. This was above guidance of 65,000 – 70,000 ounces at an AISC of $1,000 – $1,100 per ounce. 

Over FY20, Ramelius Resources produced 230,426 ounces of gold at an AISC of $1,164 per ounce. Production in FY21 is expected to set a new record of between 260,000 – 280,000 ounces at an AISC of $1,230 – $1,330 per ounce. Gold production in the September quarter is expected to be between 65,000 and 70,000 ounces at an AISC of $1,250 – $1,350 per ounce. 

Ioneer Ltd (ASX: INR) 

The Ioneer share price dropped 12.5% last week to close the week at 10 cents. Ioneer is an emerging lithium and boron producer. The company is currently advancing its 100% owned Rhyolite Ridge project in Nevada in the United States. The aim is for the project to be in production by mid 2021, with engineering works continuing and plans and permit applications submitted to relevant authorities. 

A recent feasibility study showed compelling project economics, giving an after-tax net present value of US$1.265 billion. Total ore reserves at Rhyolite Ridge are estimated at 60.5 million metric tonnes over a 26-year mine life. Plans are for a large, long-life, low-cost operation with an all-in sustaining cash cost of US$2,510 per metric tonne. This would place the project at the bottom of the global lithium cost curve. Discussions are progressing with a range of strategic funding partners. Distribution and offtake agreements are in place which cover 100% of Ioneer’s first year of production and 85% of years two and three.

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

The post Take a look at last week’s worst performing ASX shares appeared first on Motley Fool Australia.

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