Author: therawinformant

The LiveTiles Ltd (ASX: LVT) share price has come under pressure after the release of its fourth quarter update.

In morning trade the software company’s shares are down almost 4% to 26 cents.

How did LiveTiles perform in the fourth quarter?

During the fourth quarter of FY 2020, the intranet and workplace technology software provider delivered another quarter of record annualised recurring revenue (ARR) and cash receipts.

At the end of the period, the company’s ARR had grown to $58.2 million on a constant currency basis. This was an increase of 45% year on year. Whereas on a reported currency basis, ARR reached $53.8 million, representing year on year growth of 34%.

This was driven by a small quarterly increase in customer numbers to 1,092 and a 3% lift in average constant currency ARR per customer to $53,317. On a reported currency basis, its average ARR per customer grew 13% to $49,248.

Customer cash receipts came in at $11.2 million, which represents a third consecutive record quarter. It brought its trailing twelve-month (ttm) cash receipts to $41 million, up 9% quarter on quarter and 114% on the prior year.

LiveTiles finished the quarter with a cash balance of $37.8 million. This represents a rise of $4 million or 12% on third quarter cash levels.

Management advised that this strengthened financial position reflects its substantially improved operating cashflow, which is largely due to lower cash operating expenses to reduce cash burn, growth in customer cash receipts, and the receipt of government R&D refunds.

Management commentary.

LiveTiles’ Co-Founder and Chief Executive Officer, Karl Redenbach, was pleased with the company’s performance during the quarter.

He said: “We are very pleased with our overall Q4 results, particularly the significant step-change we have made on our operating expenditures and cash flow. We were recently named as Australia’s fastest growing technology company, but we’ve had to make some very difficult, deliberate decisions this quarter to balance this growth with sensible cost controls and expenditure.”

“Our team is hugely energised with the opportunity to help customers supporting their employees to communicate and collaborate in the new world of remote and work from home. We passionately believe LiveTiles is well positioned to flourish and as co-founders, shareholders, directors and executives we take a long-term view in building shareholder value,” he added.

Outlook.

While the company hasn’t provided any guidance for FY 2021, it has spoken about the current operating environment.

LiveTiles advised that the pandemic has created a challenging sales environment for enterprise software, which has led to the company seeking to lower its cash burn materially. It is aiming to be operating cash flow breakeven during calendar 2020, subject to market conditions.

It continues to review additional options to reduce cash burn, including short-term revenue and cost initiatives, in order to achieve this target.

Positively, management does believe there are strong medium and long-term tailwinds supporting the adoption of digital workplace software. As a result, there is no change in long-term strategy or market opportunity for LiveTiles.

Management also notes that the company’s pipeline has been building strongly throughout the last quarter through both direct and partner sales channels.

More reading

• 3 ASX tech shares to leverage the shift to remote working

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 LIVETILES FPO. The Motley Fool Australia has recommended LIVETILES FPO. 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 Afterpay Ltd (ASX: APT) share price seems unstoppable right now.

People have been calling Afterpay overpriced since before its share price even cracked double digits. That was still the case at $20 per share, $40 per share, $50 per share.

As it stands, the buy now, pay later company’s shares are trading at around $68 per share. That’s an impressive growth trajectory given it only listed in June 2017.

However, there’s one major hurdle facing ASX shares right now: the August earnings season.

Let’s take a look at what we can expect from Afterpay in its upcoming announcement.

What to expect from Afterpay’s full-year result?

Let’s do a quick recap before we look to the future. Afterpay’s last trading update was on July 7 and contained some impressive numbers.

Underlying sales came in at $11.1 billion for FY20, up 112% on the prior corresponding period.

The industry leader expects merchant revenue margins for FY20 to be in line or better than 1H FY20 and FY19.

Net transaction loss, a key metric for risk and default losses, is expected to be up 55 basis points for FY20.

Net transaction margin, a profitability measure, is expected to be “approximately 2%” while earnings before interest, tax, depreciation and amortisation is forecast to be $20 – $25 million.

Overall, these are some strong numbers from Afterpay. The release of that trading update earlier this month has taken some of the guesswork out of next month’s full-year result.

Since that announcement, the Afterpay share price has edged 0.8% higher. That says to me that despite strong growth expectations, Afterpay is continuing to match or exceed them.

So, where can we expect the Afterpay share price to finish in 2020?

Where will the Afterpay share price finish the year?

This is a really tough question to answer. I don’t think many in the market thought we would see the Afterpay share price hit over $75 per share let alone amid the coronavirus pandemic.

Yet here we are. I certainly wouldn’t be willing to bet against the company’s growth this year.

If Afterpay posts strong numbers and demonstrates consistently low loss and default rates, I think we could see the Afterpay share price break its current 52-week high.

My ‘base case’ scenario has me thinking Afterpay shares will hover roughly between $60 to $80 for the rest of the year.

I think the big factors from here are unemployment levels, company loss rates and success of international expansion plans.

If Afterpay and the economy can tick those boxes, I think we could see the Afterpay share price edge towards $100 next year.

More reading

• Are ASX tech shares the only way to protect your portfolio against the coronavirus?
• WAAAX shares see mixed recovery from COVID-19
• Afterpay and Immuron were among the most traded shares on the ASX last week
• Latest ASX entrant mixes BNPL with eCommerce
• Is CommBank the BNPL killer?

Motley Fool contributor Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of AFTERPAY T FPO. 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 Australian Foundation Investment Co.Ltd. (ASX: AFI) share price good value right now?

Australian Foundation Investment Co (AFIC) is Australia’s oldest and largest investment manager, having been founded in 1928.

Many ASX share investors know AFIC as a reliable ASX dividend share. In fact, the Aussie fund manager did well during the global financial crisis and even maintained its distributions.

However, it doesn’t look so good this time around.

The AFIC share price climbed 0.7% on Monday and another 0.97% yesterday, despite announcing a 40.8% drop in profit.

So, what was driving AFIC’s full-year result and what does it mean for a keen-eyed investor?

What was in AFIC’s full-year result?

The investment group’s net profit came in down 40.8% to $240.4 million. It was a similar story with operating revenue which fell 40.1% to $264.3 million.

Net tangible assets per share before the final dividend came in at $5.96 per share. That’s down from $6.49 per share at 30 June 2020, representing an 8.2% year-on-year decline.

The AFIC share price is currently trading at $6.24 per share, down 13.11% in 2020.

AFIC announced a fully-franked final dividend of 14 cents per share. That’s on par with last year’s distribution, with AFIC shares to trade ex-dividend on 11 August.

A 40.8% drop in profit doesn’t sound like good news. However, there were a number of one-off items that were not repeated this year. That included participation in off-market share buybacks for Rio Tinto Limited (ASX: RIO) and BHP Group Ltd (ASX: BHP) as well as last year’s special dividend from Wesfarmers Ltd (ASX: WES).

What does this mean for ASX investors?

Clearly, shareholders weren’t too disappointed by the news. At the time of writing, the AFIC share price is up 1.8% since Monday and 29.5% since 24 March.

AFIC’s 10-year return now sits at 9.3% on an annualised basis compared to 9.4% for the S&P/ASX 200 Accumulation Index (ASX: XJOA).

I think investors will be keen to see where AFIC is looking for their own portfolios.

Key acquisitions during the year include Goodman Group (ASX: GMG) and Telstra Corporation Ltd (ASX: TLS).

There were several big disposals such as Treasury Wine Estates Ltd (ASX: TWE) and Scentre Group (ASX: SCG).

Among the new companies added to the portfolio were Altium Limited (ASX: ALU) and Netwealth Group Ltd (ASX: NWL).

It’s perhaps unsurprising that a lot of big names from the S&P/ASX 200 Index (ASX: XJO) are present in AFIC’s portfolio. I’ve included the portfolio’s top 25 holdings as at 30 June 2020 in the graph below.

These 25 ASX shares make up 76.3% of AFIC’s portfolio value. That means the performance of shares like CSL Limited (ASX: CSL) will be the key to where the AFIC share price will finish in 2020.

Foolish takeaway

Given the share price movement this week, investors didn’t mind the 40.8% profit drop from the Aussie listed investment company.

AFIC did report that the outlook “remains unclear”. In particular, the company said it was “difficult to reconcile the expansion of market valuations with the pressure on company profits, and dividends are likely to remain under.”

That’s pretty telling from the Aussie fund manager and a potentially ominous warning.

However, I wouldn’t be betting against the AFIC share price climbing higher in the next 12 months.

More reading

• 5 things to watch on the ASX 200 on Wednesday
• ASX 200 down 0.4%, Credit Corp and Temple & Webster impress
• Will Rio Tinto pay a special dividend tomorrow?
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• a2 Milk and 1 other quality ASX 200 share to buy and hold beyond 2026

Ken Hall 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’s parent company Motley Fool Holdings Inc. owns shares of CSL Ltd. The Motley Fool Australia owns shares of and has recommended Telstra Limited and Treasury Wine Estates Limited. The Motley Fool Australia owns shares of Netwealth and Wesfarmers Limited. The Motley Fool Australia has recommended Scentre Group. 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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I believe some of the more interesting phenomena of the coronavirus shutdowns have been the cancellation of sporting events and the closing of clubs. In particular, what have all the bored sports betters been doing? I have seen two theories on this so far. The first one posits that these people are now trading in ASX shares. Personally, I can relate to this. Several people I know recently told me they have their ‘gambling money’ set aside and want to know which shares to buy.

The second theory, proposed by JP Morgan, is that bored gamblers have drifted to online lotteries. This includes new players entering the sector and current players buying more tickets. Moreover, JP Morgan believes JobKeeper payments are partly fueling this. I have suspected something like this has been going on for the past few months. In fact, I have been watching the two ASX shares below as I think they will benefit from this dynamic, and are likely to surprise on the upside during earnings season.

ASX shares for online lotto

The Jumbo Interactive Ltd (ASX: JIN) share price is currently down by 27.1% in year to date trading. Jumbo is an online lottery company which is very active in Australia and Germany. Prior to the pandemic, the company was expanding into the United States, Latin America, Asia and Europe. In the company’s H1 FY20 report, it disclosed a 25% increase in total transaction value. This resulted in a 14% net profit increase after taxes. 

Jumbo attributed this to a range of factors, however chief among them was customer engagement due to the company’s new software platform. In addition, the company credited its new software-as-a-service (SaaS) platform as contributing to the uptick. This targets charitable organisations and provides them with the means of selling online lottery tickets. At this time, Jumbo had three leading charity lotteries and had acquired a company in the United Kingdom dedicated to ethical lotteries for charities. A fourth SaaS client, MS Queensland (multiple sclerosis), was signed in February.

Something I found very interesting in the H1 report was that only 26.7% of all lottery sales were online. This means that the remainder are sold through newsagents and kiosks. As such, there is a high likelihood of increases in revenue for Jumbo due to the coronavirus lockdown. That doesn’t even take into account any increases from bored sports betters. 

Lastly, and most importantly, the company has re-signed a distribution deal with Tabcorp Holdings Limited (ASX: TAH). I believe this adds a level of security to any investment in this ASX share. The previous distribution agreement with Tabcorp finished in 2022, now it runs until 2030.

Shares for online gambling

Like a few other companies on the ASX, Aristocrat Leisure Limited (ASX: ALL) has an offset financial year. This means it starts in October and finishes in September. The company’s H1 FY20 finished in March 2020.

Although known as a company that manufactures and sells casino machines, Aristocrat today does so much more than that. Of course, it continues to provide casino machines and management systems, as well as digital games. However, the company also provides online gambling games and a range of standard games for PC, Mac, online and mobile devices.

In its H1 report Aristocrat declared a revenue increase of 7% against the previous corresponding period, but a decrease in underlying profit of 12.8%. This was due to the impact on what the company calls ‘land-based’ profits from the pandemic in late February through to the end of March.

This ASX share is in a very strong cash position with $1.8 billion in cash and equivalents on hand. Furthermore, it took a range of measure to ensure financial strength. These included a $100 million reduction in operating costs, and suspension of the interim dividend.

At present, Aristocrat is trading at a price-to-earnings (P/E) ratio of 9.88. This is less than half of the company’s 10 year average P/E of 23.7. Moreover, the company’s 10 year average return on equity (ROE) stands at 28.6%. I think this is a very good metric. It shows that the company buys the right assets and is very effective at using them to generate profits. 

Foolish takeaway

I think both of these companies are worth looking at a lot more closely. In particular, ahead of earnings season which starts in August. I believe Jumbo Interactive is likely to surprise investors and has been very resilient throughout this pandemic. Part of my reasoning for this is that the company did not try to raise capital through a placement or additional debt in any way.

Aristocrat, on the other hand, is a bit of a different story. I believe it is also likely to positively surprise investors at the end of the company’s financial year. However, it will still be down overall even though casinos are starting to open up again globally. The opportunity here is over the medium term as things begin to normalise further. I believe Aristocrat is one of the great value investing ASX shares right now. 

More reading

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Daryl Mather has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends Jumbo Interactive Limited. The Motley Fool Australia owns shares of and has recommended Jumbo Interactive 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 St Barbara Ltd (ASX: SBM) share price has come under pressure following the release of its fourth quarter update.

The gold miner’s shares are down 2.5% to $3.70 at the time of writing.

How did St Barbara perform in the fourth quarter?

During the fourth quarter of FY 2020, St Barbara delivered an 18.6% quarter on quarter increase in gold production to 108,612 ounces. This was achieved at an all-in sustaining cost (AISC) of A$1,301 per ounce, which was a reduction from A$1,405 per ounce during the third quarter.

This led to the gold miner reporting a big lift in its quarterly operational cash contribution to A$126 million, up from A$86 million in the third quarter.

As a result of this strong finish to the financial year, St Barbara’s full year consolidated gold production came to 381,887 ounces. This was in line with its guidance of 370,000 to 400,000 ounces.

Also in line with guidance was its costs. St Barbara reported an AISC of A$1,369 per ounce in FY 2020, compared to its guidance range of A$1,330 to A$1,420 per ounce.

And with an average realised gold price of A$2,127 per ounce for FY 2020 (up 20.7% from A$1,762 in FY 2019), St Barbara’s cash balance is growing nicely.

At the end of the financial year the company had cash at the bank and term deposits of A$405 million. Total debt stood at A$316 million, with A$200 million to be repaid at the end of July.

What to expect in FY 2021.

Management expects its FY 2021 production to be broadly in line with what it achieved in FY 2020.

It has provided consolidated gold production guidance of between 370,000 to 410,000 ounces with an AISC of between A$1,360 and A$1,510 per ounce.

It also revealed that its sustaining capex is expected to be between A$97 million and A$115 million, with growth capex of between A$49 million and A$57 million. It also intends to spend between A$30 million and A$35 million on exploration activities.

St Barbara’s Managing Director and CEO, Craig Jetson, notes that FY 2021 will be an important year for the company.

He explained: “The year ahead is an important one for our business. Our mature operations, Leonora and Simberi, are entering new phases and Atlantic Gold has a strong project pipeline that we intend to realise.”

“We are reviewing our operating model to improve productivity and margins, supported by an enhanced technical expertise. For us, that means being in command of our value chain, optimising operations and, all the while, prioritising safety and ensuring the wellbeing of our people and communities.”

The chief executive also revealed that it is looking at expansion projects and acquisition opportunities.

“We will improve our business and how we work so we can embark on our growth agenda. This includes delivering on current brownfield expansion projects, maintaining a prospective exploration pipeline and identifying suitable assets for future acquisition where it adds shareholder value,” he concluded.

More reading

• ASX 200 rises 0.3%, Perpetual reveals large US acquisition
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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.

The post St Barbara share price tumbles lower on Q4 update and FY 2021 guidance appeared first on Motley Fool Australia.

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Analysts from notable stockbroking firm, Lodge Partners, yesterday released a bullish research note on the archTIS Ltd (ASX: AR9) share price.

Why are analysts backing the archTIS share price?

Analysts from Lodge Partners backed their bullish outlook for archTIS by citing the company’s recent quarterly update, board restructuring, fully developed product offering and commercialisation prospects. According to analysts, archTIS has made strong progress over the past 6 months and is well positioned to benefit from a range of domestic and international tailwinds such as the growing focus on cyber security.

The research report noted that the appointment of Dr Miles Jakeman to the archTIS board will provide the company with added experience and strong networks. Analysts also acknowledged the commercial performance of the company and its ability to renew key contracts with government clients as validation of it services. Also highlighted was the diverse applications of the company’s services as well its achievement of a new contract with defence company, Norththrop Grumman.

What does archTIS do?

archTIS is an Australian based cyber security technology company that specialises in the safe and secure sharing of classified information. Since its establishment in 2006, the company has provided cyber security consulting and infrastructure and software development services to Australian Government clients. In a bid to commercialise its services, archTIS launched its software-as-a-service (SaaS) Kojensi platform last year to service government, defence and commercial clients.

How has the archTIS share price performed?

Yesterday, archTIS released an update for the fourth quarter of FY20, which noted the company’s strong progress in commercialising its Kojensi platform. A highlight of the quarterly update included a renewed contract with the Commonwealth Government worth $400,000.

Additional highlights included archTIS securing its first commercial contract with the defence industry, reflecting the company’s growing sales momentum. The company also acknowledged the successful completion of a $2.26 million capital raise in early June, which is designed to help archTIS accelerate the growth of its Kojensi platform to new markets.

Analysts from Lodge Partners also noted the federal government’s $1.35 billion Cyber Enhanced Situational Awareness and Response (CESAR) package as a potential tailwind for archTIS given the recent cyber attacks from overseas operators.

The archTIS share price closed trading Tuesday around 4% higher and has rallied more than 380% since mid-June.

More reading

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• Why the WhiteHawk share price leapt 70% higher on Tuesday
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• 3 ASX dividend shares with yields over 5%
• Are ASX tech shares the only way to protect your portfolio against the coronavirus?

Motley Fool contributor Nikhil Gangaram 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 a2 Milk Company Ltd (ASX: A2M) share price has been a strong performer this year.

Since the start of the year the infant formula and fresh milk company’s shares have generated a staggering return of 38%.

In fact, the performance of the a2 Milk share price has been so strong, the company has grown to a size that saw it added to the illustrious ASX 50 index.

It joined the index during the June quarterly rebalance at the expense of embattled financial services company AMP Limited (ASX: AMP).

A2 Milk’s meteoric rise.

It is incredible to think that just five years ago a2 Milk was a small cap and loss-making company flying largely under the radar. Whereas today it is one of the top 50 companies on the ASX and highly profitable.

This meteoric rise has been driven by the insatiable demand for its infant formula products in the Australia and China markets and its expanding fresh milk footprint.

The good news is that I believe there I still a lot more growth in its tank. This is particularly the case in China for its infant formula. Despite its incredible sales growth in the lucrative market, it still only has a consumption market share of 6.6%.

In addition to this, it is worth noting that the company is sitting on a hefty cash balance. At the end of the first half the company had NZ$618.4 million in cash. Given how profitable its operations are, this is likely to have increased even further during the second half.

This is a big positive in my opinion. Because I suspect these funds will be used in the near future to fund potential value accretive acquisitions and new product launches.

In respect to the latter, earlier this week its smaller rival Bubs Australia Ltd (ASX: BUB) demonstrated how an infant formula company can expand into new markets with relative ease. It is launching a range of children’s vitamin products later this year and has secured ranging in hundreds of Chemist Warehouse stores.

Should you invest?

While the a2 Milk share price has been a very strong performer this year, I don’t believe it is too late to invest.

I think a2 Milk remains one of the best growth shares to buy on the Australian share market and believe it is well-positioned to deliver above-average earnings growth throughout the 2020s.

More reading

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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 BUBS AUST FPO. The Motley Fool Australia owns shares of A2 Milk. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The WhiteHawk Ltd (ASX: WHK) share price soared 70.21% higher to 16 cents on Tuesday after the company announced that it had secured a United States government contract.

What are the details of the contract?

The contract between WhiteHawk and the US government has an annual base of US$580,000 per year with a contract option for an additional $600,000 in services each year. The contract will run for 5 years with the option for additional services included each year. It is the first time WhiteHawk has won a primary US federal government contract, previously providing services as a subcontractor.

WhiteHawk will operate a cyber risk radar which will monitor cyber risks and business risks for the supply chain vendors of a key US federal government IT team. The company will provide cyber risk score cards for over 150 vendors, via an integrated risk management dashboard.

WhiteHawk stated that its software-as-a-service (Saas) approach will allow for rapid implementation and scaling across over 150 vendors virtually and remotely, it also stated that this was the optimal approach due to the current coronavirus pandemic.

The company suggested that supply chain vendor cyber risks remained at high levels globally and that cyber risk solutions are currently in high demand.

 Executive chair of WhiteHawk, Terry Roberts commented on the contract, stating;

“After a very successful proof of value early last year, now we are putting in place our first 5-year cyber risk radar contract with a sophisticated U.S. government CIO,  who will work with us to take the capabilities of our platform and virtual services to the next level.”

About the WhiteHawk share price

WhiteHawk is a Saas company that was founded in 2016. WhiteHawk helps its clients to identify cyber security risks and to choose solutions providers that can meet client needs.

In the first quarter of 2020, Whitehawk collected US$561,000 in sales receipts from customers. Of the funds received, US$263,000 were renewable SaaS subscriptions. The company had accrued revenue in the first quarter of 2020 of US$516,000, compared to US$333,000 in the previous quarter. Cash held by the company was reduced from US$1,527,000 in the previous quarter to US$1,471,000 at the end of the first quarter of 2020.

The WhiteHawk share price is up 540% since its 52-week low of 2.5 cents. It is up 78% since the beginning of the year. The WhiteHawk share price has returned 60% since this time last year.

More reading

• Analysts back archTIS share price to outperform
• Should you buy a2 Milk Company shares right now?
• Is Bubs Australia the next Blackmores?
• 3 ASX dividend shares with yields over 5%
• Are ASX tech shares the only way to protect your portfolio against the coronavirus?

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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