Author: therawinformant

The Sezzle Inc (ASX: SZL) share price is pushing higher on Monday after the release of its second quarter business update.

At the time of writing the buy now pay later provider’s shares are up 2% to $8.03.

How did Sezzle perform in the second quarter?

During the second quarter, the Afterpay Ltd (ASX: APT) rival delivered underlying merchant sales (UMS) of US$188 million. This was a 57.5% increase on the first quarter and a 348.6% lift on the prior corresponding period.

This was driven by a 28.4% quarterly increase in active consumers to 1,475,235 and a 26.7% quarterly rise in active merchants to 16,112. Both metrics were up over 200% compared to the second quarter of FY 2019.

Sezzle’s merchant fees rose 54.8% over the first quarter and 397.1% over the prior corresponding period to US$10.6 million. As a percentage of UMS, merchant fees improved 55bps year on year to 5.6%, but declined 10bps from the first quarter.

Sezzle’s Executive Chairman and CEO, Charlie Youakim, was pleased with the quarter.

He said: “Our strong 2Q20 performance, improving consumer profile, and successful capital raise, position us to achieve our annualized run rate target of US$1 billion in UMS by the end of 2020. The shift to online retail has positioned Sezzle as a key partner for merchants, as 2Q20 represented the top 3 periods of monthly UMS in the Company’s history.”

“The gains in frequency of purchases by cohorts and repeat customer usage are encouraging to see as our business matures. We are excited about the brand loyalty that is building, as each cohort is outpacing the previous cohort at a similar point in time,” Mr Youakim added.

Strong balance sheet.

Operating cash flows for the quarter were a positive US$4.3 million, leaving Sezzle with US$55.7 million of cash and cash equivalents.

The company’s CFO, Karen Hartje, commented: “Our strong balance sheet at 30 June coupled with our Capital Raise subsequent to quarter end, positions us well to pursue our growth strategies and weather the protracted effects of COVID-19.”

“Additionally, during the pandemic, we continue to see leading loss indicators improve and have been able to leverage our cost structure. These trends combined with our top-line growth are driving positive moves in our Net Transaction Margin,” Hartje concluded.

More reading

• These BNPL shares have blown up since their IPOs
• 3 ASX fintech shares with exciting growth prospects
• Why Nearmap and 2 other ASX tech shares are surging higher today
• Zip and Openpay were among the most traded shares on the ASX last week
• Buy these strong ASX shares for your retirement portfolio

James Mickleboro has no position in any of the stocks mentioned. 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 Bubs Australia Ltd (ASX: BUB) share price is sinking lower on Monday after the release its quarterly update.

At the time of writing the infant formula and baby food company’s shares are down almost 8% to 94 cents.

What did Bubs announce?

During the fourth quarter of FY 2020, Bub reported gross revenue of $13 million. This was a 5% decline on the prior corresponding period.

Management advised that this reduction was due to its strong sales in the third quarter during the height of the pandemic. This was driven by pantry stocking and pulled forward sales from the fourth quarter.

Nevertheless, infant nutrition sales grew 14% on the prior corresponding period during the quarter. These sales now represent 75% of gross sales and were largely driven by demand in China. Direct sales in this key market increased 26% on the same period last year.

This offset a 31% decline in Adult Goat Dairy segment sales, which now make up 24% of total sales. The remaining 1% of sales is attributable to its contract manufacturing business.

This ultimately led to Bubs reporting a 32% increase in FY 2020 gross revenue to $62 million.

What about its cash flow?

Unfortunately, the company wasn’t able to make it two consecutive quarters of positive operating cash flow.

Bubs reported an operating cash outflow of $6.9 million for the quarter which, combined with other costs, led to the company burning through $10.3 million of cash. This leaves Bubs with a cash balance of $26 million.

I suspect it is this cash burn that is weighing heavily on the Bubs share price today.

Vita Bubs launch.

In addition to its quarterly update, the company announced that it would be challenging Blackmores Limited (ASX: BKL) in the vitamin and mineral supplements market.

It is launching a range of children’s vitamin and mineral supplements that will be ranged in 400 Chemist Warehouse stores across Australia from October.

Bubs Founder and CEO, Kristy Carr, explained: “The Vitamin and Mineral Supplements category provides Bubs with the opportunity to leverage our unique positioning as a Children’s Nutrition and Australian Goat Dairy specialist with the launch of a complementary brand extension into this material $2.3 billion category.”

Supporting this launch will be its new global brand ambassador, Jennifer Hawkins.

The CEO commented: “Jen is a much loved Australian icon with her work as a popular TV presenter, international model, and successful entrepreneur. As a new mum she is the perfect role model to represent the Bubs brand to new parents everywhere, including among her legion of nearly two million social media followers.”

More reading

• My 5-minute bull case for the Bubs share price
• How to become a millionaire with ASX shares starting with $0
• Why Alcidion, Bubs, IGO, & Next Science shares are pushing higher
• Where I’d invest $9,000 in ASX shares
• Got $1,000? You should buy 1 of these 6 ASX shares

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Blackmores Limited and BUBS AUST 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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Another week, another wild ride for ASX 200 shares.

The S&P/ASX 200 Index (ASX: XJO) edged 0.2% lower to 6,024 points despite strong gains from the tech sector.

Last week, I was watching Coles Group Ltd (ASX: COL), Mirvac Group (ASX: MGR) and Northern Star Resources Ltd (ASX: NST).

The continued volatility was good for global gold prices which saw the Northern Star share price close up 3.7% for the week. Coles shares slid 2.0% from an all-time high while Mirvac shares dropped 2.8% lower.

After another volatile week on the markets, find out why I’ve got my eye on HUB24 Ltd (ASX: HUB) and 2 more ASX 200 shares this week.

HUB24 and 2 more ASX 200 shares to watch this week

Any recent share gainer is worth watching in my books. That’s certainly the case for HUB24 shares which are up 46.9% in July alone.

Shares in the wealth management software platform surged after the company reported record annual inflows of $4.95 billion, up 27% from FY19, with funds under administration climbing 34% to $17.2 billion for the year.

I think those strong numbers make the ASX 200 finance share worth watching in the weeks ahead.

While on the subject of numbers, Thursday’s budget update has provided some food for thought.

In particular, I think ASX 200 bank shares are worth watching after the Federal Government announced an $85.8 billion budget deficit for the year. 

With net debt set to balloon to $488 billion by the end of June. That could be good or bad news depending on how that money is spent in 2020.

ASX bank shares like Commonwealth Bank of Australia (ASX: CBA) are so intertwined with the Aussie economy. That means strong government support could be good for the CommBank loan book and earnings quality.

Finally, the Orocobre Limited (ASX: ORE) share price is on my weekly watchlist. The ASX 200 lithium share rocketed 13.2% higher last week on renewed hopes of an electric vehicle boom.

Tesla Inc (NASDAQ: TSLA) shares have continued climbing recently on the back of strong earnings and closed out short positions. Strong production to fulfill demand could make lithium shares like Orocobre worth watching in the weeks ahead.

More reading

• 3 ASX dividend shares I like ahead of the August earnings season
• These are the 10 most shorted shares on the ASX
• These were the ASX 200’s biggest share gainers last week
• These shares were the ASX 200’s biggest losers last week
• ASX 200 Weekly Wrap: ASX has week of high volatility

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 Tesla. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Hub24 Ltd. The Motley Fool Australia owns shares of COLESGROUP DEF SET. 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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Good value ASX dividend shares are hard to find. With the August earnings season nearly upon us, let’s take a look at which ASX shares are worth considering right now.

3 ASX dividend shares I like in July

Right at the top of the list is Commonwealth Bank of Australia (ASX: CBA).

CommBank has long been a blue-chip ASX dividend share, churning out multi-billion-dollar profits and paying consistent dividends to shareholders.

All of that has changed thanks to the coronavirus pandemic in 2020.

The Australian Prudential Regulation Authority (APRA) wanted banks to reduce their dividend payments amid fears over liquidity and capital adequacy.

With APRA announcing a review of that advice, and the economy delicately poised for recovery, Commonwealth Bank could maintain its strong ASX dividend status.

If bad debts remain low and the bank can protect its net interest margin, we could see a small CommBank dividend announced in August.

Other than the ASX banks, I like the look of JB Hi-Fi Limited (ASX: JBH) right now. The JB Hi-Fi share price is up 16.5% this year despite challenging conditions for Aussie retailers.

Much of JB Hi-Fi’s share price growth has been due to strong sales in March and April.

With plenty of cash, and arguably limited internal reinvestment, JB Hi-Fi could be a strong ASX dividend share this year.

JB Hi-Fi shares are currently yielding 3.4% but I’d be keeping an eye on its 17 August results.

My final ASX dividend share to watch is Transurban Group (ASX: TCL). In my books, Transurban is more of a medium to long-term prospect.

Traffic numbers on its toll roads have been hit hard by coronavirus restrictions. However, that is starting to pick up again which could be good news for the Aussie infrastructure group.

Whilst we’ve seen a shift towards working from home, we’re also seeing a move away from public transport. This means FY2021 and FY2022 could be good ones for Transurban.

I’d tip Transurban’s distributions to dip lower this year. However, if you’re a buy and hold investor, I still think its a good long-term ASX dividend share.

More reading

• ASX 200 Weekly Wrap: ASX has week of high volatility
• 5 simple steps to financial independence
• A top ASX dividend share to buy next week
• Buffett buys more bank shares: Should you?
• 2 off the grid ASX retail shares for higher returns

Motley Fool contributor Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of Transurban 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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Every Monday I like to look at ASIC’s short position report to find out which shares are being targeted by short sellers.

This is because I believe it is well worth keeping a close eye on short interest levels as high levels can sometimes be a sign that something isn’t quite right with a company.

With that in mind, here are the 10 most shorted shares on the ASX this week according to ASIC:

• Myer Holdings Ltd (ASX: MYR) continues to be the most shorted share on the Australian share market despite its short interest easing slightly to 12.1%. Short sellers appear to believe the department store operator will struggle because of the accelerating shift to online shopping.
• Speedcast International Ltd (ASX: SDA) has short interest of 11.7% once again. Short sellers have done very well with this one. The communications satellite technology provider’s shares have been suspended for a few months as it finalises its bankruptcy.
• Webjet Limited (ASX: WEB) has seen its short interest fall week on week to 9.8%. Webjet shares have been among the worst performers on the ASX 200 in 2020 because of the pandemic. Some short sellers don’t appear to believe the worst is over for the company and its shares.
• Inghams Group Ltd (ASX: ING) has 9.5% of its shares held short, which is down slightly week on week. Last week the poultry company’s shares came under pressure after one of its processing plants in Victoria was closed after five employees tested positive for coronavirus. Outside this, there are concerns that its performance in FY 2020 could be impacted by an unfavourable sales mix.
• Nearmap Ltd (ASX: NEA) has seen its short interest rise slightly to 8.3%. Nearmap has come onto the radar of short sellers this year after large churn events led to a guidance downgrade. They may be expecting more churn events because of the pandemic.
• Zip Co Ltd (ASX: Z1P) has entered the top ten with 8.1% of its shares held short. Short sellers may be targeting the buy now pay later (BNPL) provider because of its lofty valuation and a recent rise in bad debts.
• Clinuvel Pharmaceuticals Limited (ASX: CUV) has seen its short interest remain flat at 8%. I suspect that the valuation of this biopharmaceutical company’s shares is the reason for high short interest.
• FlexiGroup Limited (ASX: FXL) has seen its short interest rise to 7.9%. The financial services company has been reporting strong BNPL growth, but there remain questions over the rest of its business.
• Bank of Queensland Limited (ASX: BOQ) has seen its short interest fall to 7.9%. Last week the regional bank lifted its coronavirus provisions and warned that there could be more to come.
• Orocobre Limited (ASX: ORE) has seen its short interest rise again week on week to 7.6%. Short sellers have been going after Orocobre due to ultra-low lithium prices.

More reading

• These were the ASX 200’s biggest share gainers last week
• ASX 200 Weekly Wrap: ASX has week of high volatility
• 3 stellar ASX tech shares I would buy in August
• Here are easy ways to diversify your ASX portfolio
• These were the best performing ASX 200 shares last week

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 Nearmap Ltd. and ZIPCOLTD FPO. The Motley Fool Australia owns shares of and has recommended Webjet Ltd. The Motley Fool Australia has recommended FlexiGroup Limited 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 Australian share market hit a four month high on Tuesday but slid lower towards the end of the week, with the S&P/ASX 200 (ASX:XJO) ending the week down 0.2%. The market was buoyed early in the week on news around a potential COVID-19 vaccine, but economic data put a dampener on exuberance later in the week. The government announced the extension of its stimulus payments which gave the market continued support, but ongoing increases in COVID-19 cases in Victoria is giving rise to caution. 

The information technology sector finished the week marginally higher with the S&P/ASX All Technology Index (ASX: XTX) up just under 2%. The energy sector also performed well, however industrials and healthcare were down. A number of blue chip shares dropped last week, including CSL Limited (ASX: CSL), which fell 2.3%. But Afterpay Ltd (ASX: APT) was up 3.6% and Newcrest Mining Limited (ASX: NCM) was up 5.6%. So now let’s take a look at last week’s biggest ASX 200 share price gainers. 

Resolute Mining Limited (ASX: RSG)

The Resolute Mining share price gained 17.2% last week to finish the week at $1.36. The gold miner released its June quarterly report and the gold price was also on the rise, closing the week at $2680 per ounce. Resolute poured 107,183 ounces of gold in the June quarter at an all-in sustaining cost (AISC) of US$1,033 per ounce. 

The miner sold 110,660 ounces of gold during the quarter at an average price of US$1,446 per ounce. Resolute Mining had US$88 million cash and bullion at 30 June 2020 and net debt of US$220 million. The company has provided FY20 guidance of 430,000 ounces of gold at an AISC of US$980 per ounce. 

AP Eagers Ltd (ASX: APE)

The AP Eagers share price rose 16.8% last week to close the week at $7.23. AP Eagers is Australia’s oldest listed automotive group. The company represents a diversified portfolio of brands including 19 of the top 20 selling car brands in Australia and 9 of the top 10 selling luxury car brands. The company operates dealerships, many of which are on land it owns, with the balance leased. 

AP Eagers own $332 million of prime real estate in high profile, main road locations across Brisbane, Sydney, Melbourne, Adelaide, and Perth. It sold off an ancillary refrigeration business in June for $75 million, allowing it to focus on its core automotive retailing business. The company has engaged with its landlords in an effort to share the economic burden of Covid-19 and taken action to reduce its cost base. There was no news out of the automotive group last week to prompt the price rise, however the extension in the government’s stimulus program and resulting uplift to the economic outlook no doubt contributed. 

Orocobre Limited (ASX: ORE) 

The Orocobre share price lifted 13.2% last week to finish the week at $3.17.  Lithium prices are at record lows this year but are expected to rally in coming years as demand for electric vehicles increases. Orocobre shares have been rallying since the start of the month, having been slow to recover from the March market correction. Orocobre shares actually hit their low for the year of $1.84 in May, but have since recovered 72%.

Sales in the June quarter were impacted by coronavirus restrictions which hindered the ability of the company to complete sales. Total sales volume for the June quarter was approximately 1,600 tonnes of lithium carbonate at US$4,015 per tonne FOB. While most logistical issues have now been addressed, demand has yet to return to normal as customers delay shipments due to lower production and excess inventory. 

Electric vehicle manufacturers are taking a cautious approach to production given the uncertain economic impacts of COVID-19. Nonetheless, the pandemic has accelerated investment in some jurisdictions which will have medium to long-term benefits with many European countries implementing programs to support the manufacture and use of electric vehicles. 

Silver Lake Resources Limited (ASX: SLR) 

The Silver Lake Resources share price gained 11.6% last week to close the week at $2.59. Another beneficiary of the rising gold price, Silver Lake Resources also revealed record quarterly gold production last week. During the June quarter, Silver Lake Resources produced 71,291 ounces of gold and 494 tonnes of copper. It sold 64,593 ounces of gold and 416 tonnes of copper. 

Annual group sales were a record 255,533 ounces of gold and 2,175 tonnes of copper, exceeding upgraded sales guidance. The miner reported it held cash and bullion of $269 million at the end of the quarter, an increase of $42 million or 19%, plus no debt. Silver Lake Resources has provided sales guidance for FY21 of 240,000 to 250,000 ounces of gold and 1,100 tonnes of copper. 

QBE Insurance Group Ltd (ASX: QBE)

The QBE share price rose 11% last week to close the week at $10.40. The share price rose throughout the week after QBE released a better than expected update on the impact of COVID-19 and its 1H20 result. Covid-19 is expected to have a $335 million underwriting impact over the half. This includes ~$150 million of net incurred claims, ~$115 million of additional risk margin, and ~$50 million of premium concessions. 

While the landscape remains uncertain, QBE expects total Covid-19 related costs to be around $600 million pre-tax. QBE expects to report a 1H20 net statutory loss after tax of $750 million, reflecting the impact of Covid-19, bushfires, and investment market volatility. CEO Pat Regan said, “despite the impact of Covid-19, I am encouraged by the strong underlying trends evident in the result. Our greatly strengthened capital base positions us well to capitalise on accelerating pricing momentum and emerging organic growth opportunities.”

More reading

• These are the 10 most shorted shares on the ASX
• Why the gold price just stormed to a record high
• ASX 200 Weekly Wrap: ASX has week of high volatility
• 5 things to watch on the ASX 200 on Monday
• These were the best 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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The Perpetual Limited (ASX: PPT) share price won’t be going anywhere today after the fund manager requested a trading halt.

Why is the Perpetual share price in a trading halt?

Perpetual requested a trading halt this morning while it undertakes an equity raising to fund a major acquisition.

According to the release, Perpetual has entered into an agreement with BrightSphere Investment Group to acquire its 75% interest in Barrow Hanley for US$319 million (A$465 million).

Barrow Hanley is a diversified investment manager based in Dallas, Texas with funds under management (FUM) of approximately US$44.1 billion (A$63.9 billion) across 21 key strategies.

Its team invests with a value orientation across US equities, global equities, global emerging markets equities, and fixed income strategies.

Management notes that the acquisition is consistent with its strategy to build world-class investment and distribution capability and brings together two complementary investment management brands.

It is expected to more than triple Perpetual’s FUM from A$28.4 billion to A$92.3 billion and add 21 key new strategies across asset classes, strategies, and geographies.

On a pro forma basis, post the acquisitions of Barrow Hanley and Trillium (which completed on 30 June), Perpetual’s FUM will be comprised of 14% Australian equities, 48% US equities, 11% global equities, and 27% cash & fixed income.

Perpetual Chief Executive Officer and Managing Director, Rob Adams, commented: “This is a compelling acquisition. It provides Perpetual with world-class investment teams, diversifies our client base by sector and geography, and presents us with significant growth opportunities in the Australian market and a formidable platform to scale our business internationally.”

How is Perpetual funding the deal?

To fund the acquisition, Perpetual is launching a fully underwritten institutional placement of A$225 million at a fixed price of A$30.30 per share. This represents a 9.8% discount to its last close price.

It is also aiming to raise a further $40 million via an underwritten share purchase plan and has agreed a new debt facility of A$284 million (US$195 million) to cover the balance.

More reading

• Why Alumina, BWX, Life360, & Perpetual shares are charging higher
• 10 FY21 ASX share picks revealed by Bell Potter

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

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