Author: therawinformant

The Centaurus Metals Limited (ASX: CTM) share price is up more than 6% after the company announced positive drilling results at its Jaguar deposit in Brazil.

What was in the announcement?

Centaurus Metals said it had identified significant thick semi-massive to massive nickel sulphide intercepts in recent drilling at the Jaguar Central deposit.

The company identified 33.7 metres at 2.23% nickel from 45.6 metres, 15 metres at 2.42% nickel and 8.2 metres at 1.22% nickel at the deposit.

New drilling at the Jaguar North deposit had also intersected semi-massive sulphides 100m beyond the current limits of the existing mineral resource, with assays currently pending.

Centaurus Metals said the company’s recent $25.5 million capital raising would accelerate drilling work significantly. At the time of the announcement, Centaurus Metals had a cash position of around $28 million.

How good is that?

Centaurus Metals managing director Darren Gordon said the latest results included “some of the best drilling results generated from the Jaguar Project to date”.

Mr Gordon said the results boosted confidence in the company’s potential to grow the mineral resource in line with a plan to establish a sustainable high-margin nickel sulphide mine in Brazil within the next 3-4 years.

“These results are now building on the impressive maiden resource estimate we announced in June, which already contains more than 500,000 tonnes of nickel at an average grade of over 1.0% nickel,” he said.

About the Centaurus Metals share price

Centaurus Metals is an exploration company with a focus on the Jaguar nickel project in Brazil. 

In the quarter to June 30, 2020, Centaurus Metals used $2,536,000 cash in operating activities. The company had cash at June 30 of $4,996,000, this was down from $7,539,000 at the end of the previous quarter. 

In July, the company announced a $25.5 million capital raising at $0.42 cents per share, including a cornerstone investment from Canadian-based Dundee Goodman Merchant Partners. The funds are allocated for drilling, a scoping study and a pre-feasability study for the Jaguar project.

The Centaurus Metals share price has skyrocketed 647% from its 52-week low of $0.075 cents. It has returned 211% since the beginning of the year. The Centaurus Metals share price is up more than 6% at the time of writing to $0.52 cents.

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

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Is the share price of Commonwealth Bank of Australia (ASX: CBA), Westpac Banking Corp (ASX: WBC), Australia and New Zealand Banking Group (ASX: ANZ) or National Australia Bank Ltd (ASX: NAB) a buy right now?

The big four ASX banks have taken a beating since COVID-19 impacted the share market and economy.

Since their February 2020 highs:

The CBA share price is still down 21%.

The Westpac share price has dropped 35%.

ANZ’s share price has fallen 35%.

NAB’s share price has declined 38%.

NAB was the only bank that did a capital raising during this period to strengthen its balance sheet. It raised $3 billion from institutional investors and $1.25 billion from retail investors at a discounted price of $14.15. I suppose it’s not surprising that NAB’s share price is down the most when the profit has to be shared among more shares

COVID-19 provisions

Each major bank has announced credit provisions due to COVID-19. Investors are expecting higher bad debts, it’s one of the main reasons why the share prices of CBA, Westpac, ANZ and NAB are down so much.

CBA provisioned $1.5 billion in relation to COVID-19 in its FY20 third quarter update.

Westpac announced a $1.9 billion of potential impacts from COVID-19 within its FY20 half-year result.

ANZ revealed that its COVID-19 credit provision was around $1 billion

NAB said in its FY20 half-year result that its COVID-19 provision was $807 million.

These provisions were made a few months ago, so we’ll have to see in the next update whether the provisions were too much or too little.

Several regions of Australia are now COVID-19 free – faster than many expected. New Zealand is also COVID-19 free. So that’s good news for the banks with economic activity able to get back to almost full levels.

However, Victoria in-particular is going to cause a hit to the economy, banks and confidence. Prime Minister Scott Morrison said this morning (as reported by the ABC) that the latest round of restrictions in Victoria will cost the economy by $7 billion to $9 billion. About 80% of the economic cost is expected to be caused from directly-affected businesses while the rest of the impact will be due to broader supply-chain effects and the impacts on national confidence. This could be bad news for the CBA share price.

Are the share prices of CBA, Westpac, ANZ or NAB a buy?

You can see that the big banks are going to be impacted at least over the next six to nine months by what’s going on. Maybe longer.

Banks are facing higher bad debts and lower net interest margins (NIM) for a number of financial years. The RBA has said that interest rates will stay lower for longer. Banks earn a lower return on their loans when the official interest rate is lower.

The CBA share price should priced for its medium to long-term earnings. I can’t see earnings getting back to its underlying FY19 profit figure (excluding the customer remediation) for at least 12 months. It may take two or three years.

Dividends were a big part of the returns before COVID-19. But due to the situation (and APRA’s guidance), dividends are going to be a lot lower in 2020 and probably 2021. CBA is going to cut its final dividend by at least 50%, perhaps a lot more, to retain capital. NAB implemented a major dividend cut in its half year result and the other two deferred their dividends.

Perhaps the CBA share price and others were buys during May – before we learned of the jobkeeper overestimation. Under $60 may have been a decent long-term buy price for CBA, but at above $70 I think I would prefer to be patient. But there are plenty of other shares I’d prefer to buy over CBA, even if it were a bit cheaper.

More reading

• Nick Scali share price bolstered by strong outlook and dividend upgrade
• Why I would buy CBA and this ASX dividend share
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• ASX 200 down 1.15%: NAB downgraded, Telstra asset sale, gold miners rocket

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

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The Corporate Travel Management Ltd (ASX: CTD) share price has been a very strong performer on the S&P/ASX 200 Index (ASX: XJO) on Thursday.

In afternoon trade the corporate travel specialist’s shares are up 6.5% to $9.13. At one stage they were up over 7.5% to $9.21.

Despite this, the Corporate Travel Management share price is down over 60% from its 52-week high.

Why is the Corporate Travel Management share price storming higher?

There appears to be a couple of catalysts for today’s strong gains.

The first is general buying in the travel sector today. As well as Corporate Travel Management, the likes of Flight Centre Travel Group Ltd (ASX: FLT), Helloworld Travel Ltd (ASX: HLO), and Webjet Limited (ASX: WEB) are all trading notably higher this afternoon.

This may be a sign that some investors believe their shares have been oversold in recent months and are now trading at very attractive levels.

One broker that believes Corporate Travel Management shares are a bargain buy is Morgans. I suspect a note out of the broker on Wednesday could be another catalyst for today’s gains.

What did Morgans say?

According to the note, the broker has upgraded the company’s shares to an add rating with a $12.85 price target. This price target implies potential upside of ~40% over the next 12 months.

Morgans made the move partly on valuation grounds after its share price fell materially lower than its valuation.

In addition to this, the broker’s industry research indicates that corporate travel markets have been stronger than expected recently. It believes this could mean that Corporate Travel Management surprises to the upside in FY 2021. Especially if it can win market share from its weakened competitors.

Another positive, according to Morgans, is the company’s liquidity. It estimates that Corporate Travel Management has sufficient liquidity to last it until the end of FY 2022.

Should you invest?

While I do think Morgans makes some great points and feel Corporate Travel Management’s shares look good value, I would prefer to wait until the crisis passes before investing in the travel sector.

More reading

• Why BHP, Corporate Travel, Harvey Norman, & Nick Scali shares are pushing higher
• Top brokers name 3 ASX 200 shares to buy today
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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, Helloworld Limited, and Webjet Ltd. 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 MotorCycle Holdings Ltd (ASX: MTO) share price is today pushing higher as the company provided a trading update regarding the effects of COVID-19. At the time of writing, the Motorcycle Holdings share price is up 1.52% to $1.67 on the news.

What does MotorCycle Holdings do?

Founded in 1989, MotorCycle Holdings is an Australian-based motorcycle dealership and accessories group. The company has 48 franchises and operates throughout locations in Queensland, New South Wales, Victoria, and the Australian Capital Territory.

While MotorCycle Holdings’ core business consists of the ownership and operation of motorcycle dealerships and retail accessories outlets, it also owns and operates a rider training school and a motorcycle repair business that performs smash repair work for insurers.

In October 2017, the group acquired Cassons Pty Ltd and now also operates a motorcycle accessories wholesaling business.

Trading update

Motorcycle Holdings has provided a trading update regarding the impact of the global COVID-19 pandemic on its operations. The company first experienced issues from the pandemic in March, which aided its qualification for the JobKeeper program alongside its reduced turnover in April.

However, the company reports that the recent stage 4 restrictions in Melbourne have impacted operations in 6 of their stores. Approximately 100 staff are affected, 70% of whom are covered by JobKeeper. In some good news, the stores will remain open to fulfil contactless ‘click and collect’ and online sales orders. However, the company advises that sales may be impacted by up to $9 million over the 6-week period. Furthermore, Cassons sales into Melbourne may also be impacted by up to $1 million.

Despite this news, stores in other states have reportedly continued to trade strongly and enjoy high levels of demand.

What now for MotorCycle Holdings

In spite of the news, the MotorCycle Holdings share price has pushed higher today, with the company’s shares up an impressive 180% from their lows in March this year. Shareholders of MotorCycle holdings will be hoping that the second wave of COVID-19 cases passes quickly and business is able to return to normal. The news of the restrictions saw the MotorCycle Holdings share price drop sharply at the beginning of the week.

Nevertheless, the company’s liquidity remains sound, with MotorCycle Holdings reporting its cash on hand exceeds $40 million, with its cash position improving thanks to strong trading in recent weeks.

More reading

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• Here’s why the intelliHR share price is up 170% today

Motley Fool contributor Daniel Ewing 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 Hub24 Ltd (ASX: HUB) share price rocketed 43.44% higher in July, placing the fintech company among the top earners on the All Ordinaries (INDEXASX: XAO). By comparison, the All Ords gained 0.9% in July. Like most ASX shares, the Hub24 share price took a big hit during the bear market resulting from the onset of COVID-19. The share price tumbled 41% from 26 February through to 16 March. From there, the Hub24 share price gained a stellar 108% by the time the closing bell rang on 31 July.

Year to date, the company’s share price is up nearly 27%, giving it a market capitalisation of $885 million.

What does Hub24 do?

Hub24 Ltd (formerly known as Investorfirst Limited) is an ASX-listed fintech company. It leverages technology to connect advisers and their clients through wealth management solutions. Hub24 is a fully-integrated solution for superannuation, investment, pension, insurance and margin lending. It’s used by advisers to unlock efficiency and add value for their clients.

The company’s history dates back to 2007. That’s the same year that Hub24 shares (as we know them today) first listed on the ASX. The company started out as Investorfirst, trading on the ASX under the ticker code INQ. In 2013, it made the move to rebrand as Hub24, in line with the name of its platform.

Why did the Hub24 share price soar in July?

The Hub24 share price took off in July despite Credit Suisse cutting its rating for the ASX fintech share at the start of the month. Credit Suisse’s rerating saw the Hub24 share price retreat by 1.3% the following day before recommencing its march higher.

Other brokers, like Morgans, retained their add rating.

The record performance indicated by company’s fourth quarter report, released on 20 July, saw the Hub24 share price continue to climb higher.

The report showed that the company continued to experience strong net inflows of $1.1 billion during the June quarter. Along with favourable market movements, this saw a 14% growth in its funds under administration (FUA), or $2.1 billion, bringing total FUA to $17.2 billion.

Average monthly net inflows during the 2020 financial year were up 26% from the previous year.

Management noted that net inflows were at record levels for a June quarter despite a weak start for the quarter.

HUB24’s market share has increased from 1.3% to 1.94% since March 2019. At the time of writing, the Hub24 share price is trading at $14.14.

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Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Hub24 Ltd. The Motley Fool Australia has recommended Hub24 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 Dubber Corp Ltd (ASX: DUB) share price could be facing a “buy the rumour, sell the fact” situation with the stock tanking this morning.

Shares in the call transcribing tech company slumped 4% to $1.22 during lunch time trade. In contrast, both the All Ordinaries (Index:^AORD) (ASX:XAO) and the S&P/ASX 200 Index (Index:^AXJO) are trading 0.3% higher.

The Dubber share price is underperforming even after management reported that its services are available to eligible to Telstra Corporation Ltd (ASX: TLS) customers.

The services were initially offered under a more limited early adopter program, although this failed to excite investors today.

Consolidating after a rally

Perhaps its because the stock has rallied by over 200% since the market’s COVID-19 low point in March.

That’s better than other small cap tech stocks like the Nearmap Ltd (ASX: NEA) share price and Audinate Group Ltd (ASX: AD8) share price.

Dubber’s platform allows conversations to be automatically transcribed and stored in the cloud. The technology can also generate alerts on critical conversation elements such as sentiment, tone and keyword mentions.

What Dubber platform does

The company claims that its affordable services will enable Telstra customers to get recordings and insights in situations that would be difficult or impossible. For instance, from mobile recording to address compliance mandates.

“Dubber is recognised globally as a cloud platform designed to provide call recording in the same scale as a telecommunications carrier provides its services,” said Dubber’s chief executive Steve McGovern.

“For businesses, the platform delivers flexible use cases which suit the end user, for example, enabling recording of all calls for compliance or for individual calls on demand for convenience.”

On the right path

The company reported a 22% increase in annual recurring revenue to $16.1 million at 30 June. It also added more than 40,000 new subscribers to take it total user base to 192,544 in the latest quarter.

Dubber recently completed a $9 million capital raise and is holding around $18 million in the bank.

If you are looking for stocks that can outperform during this reporting season, the experts at the Motley Fool have picked their favourites for FY21.

Follow the link below to find out that these stocks are.

More reading

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Brendon Lau owns shares of AUDINATEGL FPO, Nearmap Ltd., and Telstra Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of AUDINATEGL FPO and Nearmap Ltd. The Motley Fool Australia owns shares of and has recommended Telstra Limited. The Motley Fool Australia has recommended AUDINATEGL FPO and Nearmap 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 buy now, pay later (BNPL) method of payment is taking the world by storm. It allows customers to pay for their purchases over installments and has rapidly shifted from being unheard of to commonplace.

The ASX tech shares behind BNPL have seen their market capitalisations soar as the coronavirus pandemic set in, with more and more customers choosing this payment method.

Let’s look at how each of the major BNPL companies have grown. 

Afterpay Ltd (ASX: APT)

Australia’s largest BNPL provider by market capitalisation, Afterpay has expanded globally.

Originally launched in Australia and New Zealand, Afterpay expanded to the US and UK in search of new markets. The company launched in the US in 2018 and now boasts more than 5 million customers in this market. Last year, Afterpay launched in the UK as Clearpay, with more than 1 million customers signing up in the first 12 months. 

Active merchant numbers have increased from 6000 in FY17 to over 50,000 in FY20. Afterpay has seen underlying sales grow from $560 million to $11.1 billion over the same period.

The BNPL provider had been aided by the shift to e-commerce prompted by the coronavirus pandemic – 4Q FY20 was its highest quarterly performance ever with underlying sales of $3.8 billion, a 127% increase of Q4 FY19. The Afterpay share price has reflected its success, increasing 133% this year.

Afterpay’s next step is expansion into Canada and the roll out of in-store services in the US. 

Splitit Ltd (ASX SPT)

Splitit operates a slightly different business model to Afterpay. Rather than extending credit to customers, as Afterpay does, Splitit allows customers to pay using their existing cards, with purchases split into monthly installments.

The company has partnered with Mastercard, Visa, and Stripe to improve its offering and reach. Splitit processed its first transaction in 2017.  In  the June quarter, Splitit recorded merchant sales volumes of US$65.4 million, up 260% year-on year. 

Splitit earns revenue from transaction fees on orders placed through the Splitit platform, charging on average 4% per transaction. Splitit reported gross revenue of US$2.4 million in the June quarter, up 460% year-on-year.

The Splitit share price has grown similarly, and is up 123%  so far this year. Splitit is focused on the acquisition of large merchants in target verticals to underpin sales volumes and revenue growth. Its strategic partnerships are expected to accelerate growth in future quarters. 

Sezzle Inc (ASX: SZL) 

Sezzle operates in the North American market and reports it has seen very little negative impact from the coronavirus pandemic.

Instead, the shift to online shopping prompted by the pandemic has positioned Sezzle as a key partner for merchants looking to offer more flexible payment options.

The June quarter saw record additions to active customer numbers, which grew to 326k, and active merchant numbers, which grew to 3.4k. Active customer repeat usage reached a new high of 87.5%.

According to Sezzle, a return to instore shopping has not meant a move away from online – between 29 June and 11 July retail online spend in the US was up 80.5% year on year. 

Underlying merchant sales improved 57.5% quarter-on-quarter and 348% year-on-year in the June quarter. Sezzle ended the quarter with $55.7 million in cash and subsequently conducted  an $80 million equity raising. This positions the company well to pursue its growth strategies. Investors have big expectations for the company with the Sezzle share price up 327% this year. 

Sezzle management is aiming for an annualised run rate for underlying merchant sales of over US$1 billion per annum by the end of 2020. 

Zip Co Ltd (ASX: Z1P) 

Zip targets defensive industry verticals and a slightly older, more financially savvy customer segment. Focused on the retail, home, health, automotive, and travel industries, Zip launched a “shop everywhere” product earlier this year which allows Australian app users to pay with Zip at any online store.

This allows customers to pay for everyday needs such as groceries and bills and smooth repayments over time. Zip reported $570.7 million in transaction volumes in the June quarter. This gave annualised transaction volumes of $2.3 billion for FY20. 

The economic downturn has raised some concerns over consumers’ ability to make repayments, but Zip reports it has seen a strong credit performance with net bad debts of 2.24%.

According to Zip, this is in line with expectations and significantly outperforming the market. Monthly arrears, which are a forward indicator of future losses, actually reduced between March and June, an outstanding result in the current climate.

Zip reported full year revenue of $161.2 million (up 91% on FY19) with record quarterly revenue in the June quarter of $46.4 million (up 72% year on year). The Zip share price has risen in a similar fashion, up 74% this year.  

Openpay Group Ltd (ASX: OPY)

Openpay is the most recent BNPL provider to list, debuting on the ASX last year at an offer price of $1.60 a share. Shares traded below that level until June, when they started climbing. The Openpay share price is now up 200% this year.

The increasing share price reflects Openpay’s record growth in the June quarter when active customers grew 141% and active merchants grew 52%. Total transaction value grew to a record $192.8 million for the full year, up 98.2% compared to FY19. Growth accelerated in the June quarter which saw total transaction value grow 119% over the prior corresponding period. 

Openpay operates in Australia and the UK where business surged. A major UK agreement with JD Sports was launched in May with initial trading above expectation. Openpay is set to debut its Openpay for business solution with Woolworths Group Ltd (ASX: WOW) shortly with integration well progressed. Revenue from this stream should start to flow in 1H FY21. 

Foolish takeaway

The BNPL ASX tech shares differ somewhat in their target industries, customer segments, and geographies.

What they all have in common, however, is strong growth in customer numbers and transaction values. This has driven the growth in share prices as investors anticipate accelerating revenues. 

More reading

• Top broker warns Afterpay and these ASX stocks could disappoint on profit results
• Why Mesoblast, Northern Star, PointsBet, & Splitit shares are racing higher
• Why the Splitit share price is zooming 20% higher today
• ASX 200 jumps 2% higher, Afterpay soars
• Openpay share price up 16% on partnership with MSL Solutions

Kate O’Brien 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’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 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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The Tubi Ltd (ASX: 2BE) share price has fallen more than 4% today despite the pipe manufacturer reporting its largest monthly volume to date. Tubi saw month-on-month billable production volume increase 21% in July to exceed 2.8 million billable pounds. 

What does Tubi do? 

Tubi is a manufacturer of specialised, large diameter high density polyethylene (HDPE) pressure piping. This pipe is used in industrial, irrigation, agricultural, mining, and oil and gas industries. The company’s first mobile pipe plant was completed in 2014. By 2017, the company had produced 14,000 tonnes of pipe. In May Tubi opened its third production plant, located side-by-side with its existing plant in Florida USA. Another plant is located in Odessa, Texas.   

How has the Tubi share price been performing? 

The company listed on the ASX last year at 20 cents a share. Tubi shares were trading as high as 35 cents last August, but dropped sharply at the start of November when the company revised earnings forecasts downward. Prospectus forecasts were for statutory earnings before interest, tax, depreciation and amortisation (EBITDA) of $9.467 million and EBIT of $6.09 million for FY20. The company revised these downwards to $1.775 million and $0.01 million, respectively. 

How is Tubi’s business performing? 

Tubi was able to continue production throughout the pandemic as production of HDPE pipe is considered an essential service in Florida. Having 2 plants located side-by-side allows for lower electricity and labour costs and reduced plant maintenance. With the opening of the new plant, Tubi saw production increase 55% from Q3 to Q4. The production results were in line with Tubi’s strategy of moving from 1 plant to 3 across the US, with each servicing different markets. 

The company says the uplift in production proves the competitive advantage of its mobile technology and ability to produce on-site, long length pipe. Production orders for July and August have been confirmed for the Florida plants, underpinning the first quarter of FY21. CEO Marcello Russo noted, “significant orders from key clients are increasing in frequency, product diversity and volumes. With the third manufacturing plant commissioned and operating, Tubi is well positioned to service these orders.” 

What’s next for Tubi? 

Tubi’s latest production update, revealing July’s 21% increase in production, demonstrated the benefits of the new plant. Russo commented: “The two plants situated in Florida have been producing consistently, efficiently, at high rates of volume, and producing at a high standard of quality. Our customers are benefitting from our operations, our competitiveness, and our product differentiators.”

Investors will be hoping this flows through to an uplift in earnings.

At the time of writing, the Tubi share price is sitting at 11 cents per share, down 4.35% on yesterday’s close.

More reading

• Motorcycle Holdings share price gets a rev up despite COVID-19 impact
• The Hub24 share price rocketed 43% higher in July. Here’s why…
• Deepening partnership with Telstra fails to excite the Dubber share price
• Why these ASX tech shares are skyrocketing
• Here’s why the intelliHR share price is up 170% today

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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At the time of writing, the intelliHR Ltd (ASX: IHR) share price is up 173.97% to 20 cents in today’s trade after the company emerged from a trading halt. The surge in the intelliHR share price came after the company released a business update and announced a capital raising before the ASX open.

What was in the the intelliHR business update?

The intelliHR business update came in the form of a presentation and gave investors an update about how the company has been performing. 

In FY 2020, intelliHR had 18,433 subscribers. This was an increase of 92% on subscriber numbers in 2019. Cash receipts from customers increased 126% on the prior financial year to $1,501,000.

Annual recurring revenue was up 62% in FY 2020 to $1,955,000. Revenue from professional services was $322,000 which represented a 153% increase on the prior year.

The number of customers on the intelliHR platform increased to 153 in FY 2020 which is a year-on-year increase of 162%.

What are the details of the intelliHR capital raising?

The company announced that it intends to raise $5.5 million through a strategic placement and rights issue. The strategic placement will include issuing up to 33,333,333 ordinary shares to famous technology entrepreneur, Bevan Slattery. Mr Slattery, along with the company’s largest shareholder, Colinton Capital Partners, will underwrite the entitlement offer.

The issue price of intelliHR shares purchased under the rights issue is 7.5 cents and existing shareholders will be able to purchase one share for every five shares held on the ex date of 10 August, 2020. The rights issue is expected to raise $3 million.

Senior partner at Colinton Partners, Simon Moore, commented on the capital raising, stating;

“We are very pleased to continue our support of intelliHR and welcome the involvement of one of Australia’s leading technology entrepreneurs, Bevan Slattery, as a major shareholder in the company. The intelliHR business has demonstrated robust growth through the period of COVID-19, with strong growth in subscriber numbers, positive net revenue retention and the rapid launch of the COVID-19 Essentials platform.”

According to Mr Moore, the capital raising will allow the company to accelerate its global growth and further invest in its capabilities.

About the intelliHR share price

intelliHR is a software-as-a-service (SaaS) provider that develops and sells cloud-based HR management software. The company has active users in Australia, New Zealand, Europe, North America, Asia and Africa.

In the quarter to 30 June 2020, the company used $637,000 cash in operations and had $2,791,000 cash at 30 June. This compared to cash of $3,428,000 at the end of the previous quarter.

The intelliHR share price is up 567% since its 52 week low of 3 cents and has returned 100% since the beginning of the year. The intelliHR share price is up 150% since this time last year. 

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Motley Fool contributor Chris Chitty 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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