Author: therawinformant

Now that the merger between TPG Telecom Ltd (ASX: TPM) and Vodafone is just about guaranteed, attention is turning to what that means for Telstra Corporation Ltd (ASX: TLS).

Our third largest mobile phone operator is bulked up and its new chief executive Iñaki Berroeta appears to be spoiling for a fight to win market share from Telstra.

However, the merger may be what the sector needs and may prove to be a positive for shareholders.

Will a new mobile war erupt?

Just don’t tell Berroeta that. He indicated in an interview with the Australian Financial Review that competition will be heating up as he needs to prove that the $15 billion merger was worth all the trouble.

The ACCC tried unsuccessfully to scuttle the marriage by arguing that competition will lessen with only three players in the field compared to four if TPG remained a separate entity.

The courts took TPG’s and Vodafone’s side, so the newlyweds can’t contradict themselves now.

Biggest winners are investors

But if you taught that customers will be the biggest beneficiaries from the new development, you are probably wrong. Investors may benefit more.

This is because the cut-throat pricing tactics used to take market share will probably take a backseat in the new world order for the sector.

“The last four years in Telco can been characterised as a lot of competitive tussle to achieve no meaningful change in market share and lower profits,” said Morgans.

“With the NBN nearing completion, 5G nearing mainstream launch, and TPG / Vodafone set to merge in July, the market is returning to more rational economics, in our view.”

Same war but different tactics

Other experts have said similar things. The new tactic to win market share is through bundling instead of outright price cuts.

UBS believes that the upside for the new TPG-Vodafone group, which should start trading on the ASX on Monday under the code “TPG”, will be from cross-selling of services.

The broker believes only 23% of Vodafone’s customers use a residential broadband service offered under the TPG umbrella and only 45% of TPG’s fixed broadband customers use mobile phone services that’s on the Vodafone network.

So, while competitive pressure will remain to the benefit of consumers, the change in tactics will not hurt margins in the same way as outright price cuts of the past.

Foolish takeaway

That leaves shareholders as the biggest winners, in my view.

And if you are wondering which stocks represent the best value in the telecoms sector, Morgans reckons its TPG and Superloop Ltd (ASX: SUL).

It’s also worth noting that TPG will spin out its Singapore operations into a newly listed company called Tuas. Existing TPG shareholders will get one share in each of the newly formed entities.

More reading

• These are the 4 cheapest ETFs on the ASX
• Why I think Telstra and these ASX dividend shares are strong buys
• Can 5G help push the Telstra share price higher by 2021?
• Australian businesses are running out of cash
• 3 robust ASX dividend shares you need to own

Brendon Lau owns shares of Telstra Limited and TPG Telecom Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of SUPERLOOP FPO. The Motley Fool Australia owns shares of and has recommended Telstra Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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American-based buy now, pay later provider Sezzle Inc (ASX: SZL) has seen its share price rise more than 1,000% since the March market meltdown this year. This rise comes as the rapidly growing company has achieved an increasing number of users on its payments platform, along with higher revenue and more merchants offering payment through Sezzle.

What’s behind the higher Sezzle share price?

It’s no secret that there has been a giant move toward online shopping as a result of coronavirus shutdowns. No doubt this has been a major contributor to Sezzle’s spectacular growth. Underlying merchant sales in April were $57.9 million, which was a record for the company. Additionally, Sezzle reported this month that the underlying merchant sales pace for May was higher than for April.

Another record reached in April was the number of customers who signed up to the Sezzle platform. In April, Sezzle added 114,400 active customers – more than the whole of the first quarter of 2020. The company also saw over 1,100 active merchants added in April. This means that Sezzle now has a total of almost 15,000 merchants offering payment through its platform. 

The record growth experienced by Sezzle means that it is getting closer to generating profits for shareholders. In the 2019 financial year, Sezzle had earnings before tax interest depreciation and amortisation of -US$10.7 million. However, earnings could turn positive as more users sign up to the platform and the margins gained from transactions grow. 

Sezzle as a public benefit corporation 

In addition to generating profits, Sezzle aims to appeal to ethical consumers and investors. It has officially become a public benefit corporation (PBC). A PBC is a type of corporation that includes working for the public benefit and supporting the community at large to be written into its charter, in addition to the traditional corporate goal of maximising profit for shareholders. This makes Sezzle the first PBC in the buy now, pay later industry.

Sezzle aims to benefit consumers by helping them to become financially empowered. It also undertakes additional initiatives by making donations to charity and supporting minority-owned businesses. Further, Sezzle is set to release a financial education portal, which could both help its existing customers and build awareness among new customers.

Should you invest in Sezzle?

At the time of writing, the Sezzle share price is $4.05, which is up 1,057% since its 52-week low of $0.35 reached in March. Since the beginning of January, the Sezzle share price has returned 144%.

Sezzle shows great promise as a buy now, pay later provider in the giant North American retail market. If its current growth trends continue, it could one day make huge profits. Additionally, the fact that Sezzle is a PBC may help it to avoid potential regulatory pitfalls that could trip up other industry players. For those looking to invest in the buy now, pay later industry, I think Sezzle could be a great choice.  

More reading

• Best growth shares to buy with $4,000
• Is the Afterpay share price a boom or a bubble?
• ASX share price winners and losers of last week
• Why Kogan, Sezzle, & Splitit shares just hit record highs
• Grow your wealth with these 3 ASX fintech shares

Motley Fool contributor Chris Chitty has no position in any of the stocks mentioned. 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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At lunch on Friday the S&P/ASX 200 Index (ASX: XJO) is on course to claw back some of yesterday’s declines. The benchmark index is currently up a sizeable 1.1% to 5,882.8 points.

Here’s what has been happening on the market today:

Big four banks jump.

Commonwealth Bank of Australia (ASX: CBA), Westpac Banking Corp (ASX: WBC), and the rest of the big four are helping to drive the ASX 200 higher on Friday. At lunch all four banks are pushing notably higher following strong gains by their U.S. counterparts overnight. The likes of Bank of America, JPMorgan, Citi, and Wells Fargo all climbed more than 3%. The Westpac share price is the best performer in the group at the time of writing with a 3% gain.

Qantas completes institutional placement.

The Qantas Airways Limited (ASX: QAN) share price has crashed lower after returning from its trading halt. This morning Qantas revealed that it has successfully completed its ~$1.4 billion placement through the issue of approximately 372.7 million new shares to institutional investors at a price of $3.65 per new share. This represents a 12.9% discount to its last close price. Qantas received high levels of interest from both existing institutional shareholders and new investors.

IOOF named as a buy.

The IOOF Holdings Limited (ASX: IFL) share price is zooming higher on Friday after Credit Suisse named the financial services company as a buy. According to a note out of the investment bank, it has retained its outperform rating and lifted the price target on its shares to $5.50. The broker made the move after increasing its earnings forecasts to reflect stronger than expected equity markets.

Best and worst ASX 200 shares.

The best performer on the ASX 200 on Friday has been the IOOF share price with a massive 11% gain. This follows Credit Suisse’s positive broker note. The worst performer has been the Qantas share price with a 7.5% decline after returning from its trading halt.

More reading

• Why Kogan, Myer, Orocobre, & Qantas shares are dropping lower
• Why AMP, IOOF, Redbubble, & Westpac shares are charging higher
• True economic cost of coronavirus revealed
• REA Group share price has charged 60% since the market bottomed
• Share price winners and losers of the pandemic

Motley Fool contributor James Mickleboro owns shares of Westpac Banking. 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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Believe it not, retailers have emerged as a top-performing sector amidst the coronavirus pandemic. Many retailers have leveraged the tailwinds of online shopping while traditional brick-and-mortar stores have also performed well. The recent strength of retailers could make it the best sector for ASX dividend shares.

With that in mind, here are 3 ASX dividend-paying retail shares that are worthy of a place on your watchlist.  

1. Shaver Shop Group Ltd (ASX: SSG) 

The Shaver Shop previously cancelled its proposed FY20 interim dividend of 2.1 cents per share following concerns over the impact of COVID-19. However, during this time the company has seen its online sales channel surge 164%. In 2H20, online sales now represent almost 32% of total sales. Its strong sales growth has given the company the confidence to announce a special dividend equivalent to the dividend previously announced and cancelled. This represents a dividend yield of approximately 6.20%.

2. Nick Scali Limited (ASX: NCK) 

Nick Scali responded to showroom closures by launching its first-ever digital offering, allowing customers the opportunity to purchase the entire range of its products via digital channels. To date, the company has experienced a significant rebound in customer activity in May and June. Given the strong trading, it expects sales orders for the months of May and June to be up 54% on prior corresponding periods, driven by the easing of government restrictions and a reallocation of discretionary consumer spending towards furnishings and homewares. The company currently pays a dividend yield of 6.73%.

3. JB Hi-Fi Limited (ASX: JBH) 

JB Hi-Fi is, by all means, a leader in the consumer electronics, white goods and appliances space. The business has seen strong sales growth in 2H20 in JB Hi-Fi Australia and the JB-owned The Good Guys, as customers spend more time working, learning and enjoying entertainment at home. Its New Zealand business was more significantly impacted by temporary closures and strict government restrictions. While the stores have resumed full trading, sales are still down year on year. The company estimates that after the New Zealand impairment, its net profit will grow between 20% to 22% on FY19. JB Hi-Fi shares are currently yielding 3.57%. 

Foolish takeaway

ASX retailers have recovered swiftly following the tailwinds created as a result of COVID-19. These businesses are seeing strong cash flows as consumer behaviour shifts to spending more time at home. With increasing concerns of a second wave in Australia, I believe this recent trend in consumer behaviour is likely to continue. While I wouldn’t consider retailers as a long-term ASX dividend share, they are doing all the right things today, making them a very solid short–medium-term investment for dividends. 

More reading

• Ready to invest $5,000? I’d buy these ASX dividend shares today
• These ASX retail shares are lockdown winners
• Leading brokers name 3 ASX shares to buy today
• Is there a better buy than JB Hi-Fi shares today?
• Here are 3 Australian share market trends to watch this week

Motley Fool contributor Lina Lim 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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In late morning trade the S&P/ASX 200 Index (ASX: XJO) has bounced back strongly from yesterday’s selloff. At the time of writing the benchmark index is up 0.95% to 5,873.1 points.

Four shares that are climbing more than most today are listed below. Here’s why they are charging higher:

The AMP Limited (ASX: AMP) share price is up almost 5% to $1.86. This gain appears to have been driven by a broker note out of Credit Suisse this morning. According to the note, the broker has retained its outperform rating and lifted the price target on the financial services company’s shares to $2.05. Credit Suisse has lifted its profit forecasts to reflect stronger equity markets.

The IOOF Holdings Limited (ASX: IFL) share price has jumped 9% to $5.13. The catalyst for this also appears to have been a broker note out of Credit Suisse. This morning the broker retained its outperform rating and lifted its price target on the company’s shares up to $5.50. Once again, it made the move after increasing its earnings forecasts to reflect stronger than expected equity markets.

The Redbubble Ltd (ASX: RBL) share price is up a further 2% to $2.01. Investors have been buying the ecommerce company’s shares after the release of a very strong trading update this week. That update revealed that its sales have been booming during the pandemic. Quarter to date, revenue is up 107% on the prior corresponding period. This has led to its operating profit for the 11 months to 31 May doubling to $11.9 million.

The Westpac Banking Corp (ASX: WBC) share price is up over 2.5% to $17.87. The big four banks have been strong performers on Friday and are helping drive the ASX 200 higher. Investors have been buying them after their U.S. counterparts jumped higher overnight.

More reading

• ASX 200 rebounds 1.1%: Big four banks charge higher, Qantas sinks after raising $1.4bn
• ASX 200 drops 2.5%, ASX travel shares dumped
• ASX retailers beware! Amazon.com is gearing up for its next major attack
• Redbubble share price rockets 40% on bumper Q4 sales growth
• Why Accent, CSL, Kogan, & Redbubble shares are pushing higher

Motley Fool contributor James Mickleboro owns shares of Westpac Banking. The Motley Fool Australia has recommended REDBUBBLE 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 Retail Food Group Limited (ASX: RFG) share price is flying today, up 19.67% at the time of writing to 7.3 cents.

Retail Food Group is the company behind several well-known food and beverage brands such as Gloria Jean’s, Donut King, Crust, Brumby’s, and Michel’s Patisserie.

Why is the Retail Food Group share price on the move?

The catalyst behind today’s surge appears to be a trading update from the company this morning. In the update, Retail Food Group shed light on recent trading conditions and provided full-year earnings guidance.

In regard to operating performance, the company revealed it has continued to observe an increase in customers within shopping centres as COVID-19 restrictions have been eased:

“Customer count has continued to improve, with recent trading data reflecting a weighted average decline amongst all brands of 13.76% versus the previous corresponding period, albeit this remained well below pre-pandemic levels,” said executive chair Peter George.

Mr George noted that only 17 outlets remain temporarily closed in Australia due to the pandemic. While the company is working with impacted franchisees to facilitate re-opening, it expects around 7 of these outlets to be permanently closed.

Additionally, Retail Food Group announced it has secured rent concessions for around 415 outlets. “This is a positive outcome for both franchisees and RFG which provides both cash-flow support and added certainty,” said Mr George.

The company also revealed it has completed the restructure of its wholesale coffee business. This has unlocked annualised cost savings of around $6 million per annum.

International franchising division

Shifting gears to its international operations, Retail Food Group stated its international franchise network has experienced a similar improvement in trading conditions as local government restrictions have been eased.

Accordingly, ~150 international outlets are now operating with limited dine-in, while a further ~230 outlets are operating on a takeaway-only basis. However, the company noted that ~138 outlets remain closed, 30 of which will be closed permanently.

FY20 guidance and outlook

Retail Food Group previously withdrew its FY20 earnings guidance in late March in response to the challenges posed by the pandemic.

This morning, however, the company reinstated guidance. Retail Food Group is expecting FY20 underlying earnings before interest, tax, depreciation and amortisation (EBITDA) of around $35 million. This compares to underlying EBITDA of $50.7 million in FY19, and pre-pandemic guidance of between $42 million and $46 million provided in October 2019.

RFG also expects its net debt position to stand at approximately $25 million as at 30 June 2020.

Commenting on the company’s near-term outlook, Mr George said, “RFG expects trading conditions to remain challenging in the foreseeable term and therefore anticipates a continuation of those measures implemented by the Group in response to the pandemic to support franchisees.”

“That said, there are a number of positive developments within the Group’s business that provide optimism for the future”, Mr George concluded.

Including today’s 19.67% jump (at the time of writing), the Retail Food Group share price is down just over 30% year-to-date.

More reading

• True economic cost of coronavirus revealed
• REA Group share price has charged 60% since the market bottomed
• Here’s everything you need to know about CSL’s latest acquisition
• Share price winners and losers of the pandemic
• Appen share price up 99% since March. Is it still in the buy zone?

Motley Fool contributor Cathryn Goh 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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There’s no doubt the coronavirus pandemic is a traumatic event which the world has been forced to endure. Hundreds of thousands of people globally have lost their lives to this terrible disease. Furthermore, the economies of almost every country are expected to suffer significant impacts of the virus for years to come.

The economic fallout from COVID-19 is already negatively affecting incomes and living standards across the world. It’s also being felt in the value of assets such as ASX shares.

But until now, much of this fallout has been more anecdotal than statistical.

According to reporting in yesterday’s Sydney Morning Herald (SMH), however, the coronavirus pandemic is set to cost the Australian economy alone at least $170 billion. This has the potential to become an albatross around the neck of our economy for many years to come. The SMH also reported that former Reserve Bank of Australia board member Warwick McKibbin has compiled modelling that shows the economic costs of the pandemic could reach $220 billion over the next 5 years. Or, a staggering $446 billion if there is a ‘second wave’ of the virus.

For some perspective, the federal government’s entire budget for the 2018-19 fiscal year was $482.7 billion.

The same modelling indicates the total hit to the global economy is set to come in at US$17.6 trillion if the virus is brought under control. And if it isn’t, the total cost is estimated to be an almost incomprehensible US$35.4 trillion.

Women set to bear the brunt of coronavirus costs

Also worrying for Australians is separate modelling commissioned by parliamentarian Clare O’Neil of the Australian Labor Party. The SMH reported that Ms O’Neil’s modelling (compiled by the Australian Bureau of Statistics) indicated ‘huge unmet demand for extra working hours among low-skilled women even before the pandemic’.

But since coronavirus struck, Ms O’Neil’s figures showed 457,500 women have lost work compared to 380,700 men. This suggests the brunt of the social and economic costs of the virus are being borne by women.

It’s also a stark reminder of the social disparity that still exists in our society.

In some good news to round out the report though, the SMH advised that Commonwealth Bank of Australia (ASX: CBA) senior economist Belinda Allen found that, ‘data from CBA bank accounts receiving the JobSeeker unemployment payments showed the labour market improving following a late-May peak in dole payments’.

“We do still think the unemployment rate will rise but we could get some improvement in hiring from here,” Ms Allen was quoted as stating.

Let’s keep our fingers crossed she’s right.

More reading

• These are the 4 cheapest ETFs on the ASX
• 5 things to watch on the ASX 200 on Friday
• ASX 200 drops 2.5%, ASX travel shares dumped
• Why I would buy CBA and these ASX dividend shares
• Australian businesses are running out of cash

Motley Fool contributor Sebastian Bowen 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 REA Group Limited (ASX: REA) share price has risen very strongly by over 53% since late March. It fell heavily during the early phase of the coronavirus pandemic, falling from $116.90 on 7 February to $65.02 on 23 March. That’s a decline of 44%.

Since then it recovered nearly all of those losses and closed yesterday at $103.95. That’s a massive rise of 60%.

Let’s take a look at what has been driving the REA Group share price higher in recent months.

Australian residential property sector gradually bounces back

The Australian residential property sector has held up surprisingly well during the coronavirus pandemic.

As indicated by Corelogic research, Australian national economic and housing market indicators have shown some improvement since April. This has been partly driven by an easing of COVID-19 restrictions which has seen the reintroduction of open for property inspections and on-site property auctions. There was a strong absorption of new property listings due to an increase in sales during May. During this time, clearance rates have improved and consumer confidence rose by 33% since its low point in May.

This is helping to see property listing volumes start to recover towards pre-COVID-19 levels.

Solid recent financials despite a challenging market

Despite challenging trading conditions due to the coronavirus crisis, REA Group still managed to deliver a 1% increase in revenue to $199.8 million in its Q3 FY20 results. The online real estate portal also managed to achieve 8% in earnings before interest, tax, depreciation and amortisation (EBITDA). Although national residential listings declined 7% for the quarter, they increased in Melbourne by 6% and in Sydney by 5%.

As already mentioned, since then, the property market has improved further in May and June. So, I wouldn’t be surprised if these listing figures have improved further.

Where to now for the REA share price?

Although the REA Group share price has soared since its March low, it’s still below its 12-month February high, pre-COVID-19. Residential property market conditions have improved over the past 2 months. However, overall economic conditions have remained fairly subdued. The national employment rates remain high, and there is still the potential for house prices to fall over the next 12 months.

Based on this, it is very difficult to predict what will happen to the REA share price over the short term. However, over the long term, I believe the REA Group share price is well placed to outperform the S&P/ASX 200 Index (INDEXASX: XJO). I believe this will be due to the growing Australian residential property market, driven by overseas migration. Due to growing international divisions, I also believe the company is better placed for long-term growth than its main Australia rival, Domain Holdings Australia Ltd (ASX: DHG), .

More reading

• Share price winners and losers of the pandemic
• Appen share price up 99% since March. Is it still in the buy zone?
• These are the 4 cheapest ETFs on the ASX
• Could Qube Holdings shares make you rich in 2020?
• 5 things to watch on the ASX 200 on Friday

Motley Fool contributor Phil Harpur owns shares of REA Group Limited. The Motley Fool Australia has recommended REA 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 CSL Limited (ASX: CSL) share price was a positive performer on Thursday despite the market selloff.

Investors were buying the biotherapeutics company’s shares after it announced another new acquisition.

What is CSL acquiring?

CSL has signed an agreement with Nasdaq-listed gene therapy company, uniQure, to acquire the exclusive global license rights to commercialise an adenoassociated virus (AAV) gene therapy program, AMT-061 (etranacogene dezaparvovec).

AMT-061, which is currently in Phase 3 clinical trials, could be one of the first gene therapies to provide potentially long-term benefits to patients with haemophilia B.

One dose of AMT-061 has been shown to increase Factor IX (FIX) plasma levels to a degree that reduces or eliminates the tendency for bleeding for many years. FIX is the blood clotting protein lacking in people with haemophilia B.

This means that should AMT-061’s trials be successful, appropriate candidate haemophilia B patients will be able to have a one-time treatment to restore FIX activity to functional levels which are capable of eliminating the need for frequent and ongoing replacement therapies.

While this therapy may ultimately cannibalise the sales of its Idelvion therapy for haemophilia B, purchasing it appears to be a smart move. This is because it should help defend CSL’s leadership position in the market in the future.

What are analysts saying?

A note out of Goldman Sachs this morning reveals that its analysts remain very positive on CSL after this acquisition. They have reaffirmed their buy rating and $336.00 price target.

Commenting on the new acquisition, Goldman said: “CSL generates >$1bn revenues in haemophilia and, although the current standard of care for Heme B (Idelvion) has been a significant growth/value driver since launch in 2016, the market is becoming increasingly competitive.”

“Furthermore, gene therapy has the potential to transform the treatment paradigm and, in EtranaDez [AMT-061], we believe CSL has acquired rights to the first-in-class and potentially best-in-class for this indication, which should serve to complement/expand the existing franchise and potentially extend its sustainability,” it added.

However, the broker has warned that the deal may not be a foregone conclusion and notes that it will be subject to regulatory review in the US, UK and Australia. It points out that the review of Roche’s acquisition of Spark (gene therapy) became a protracted process, eventually completing within 10 months.

Goldman commented: “In our view, that transaction has similarities to this, in that the company with the leading drug in Heme A (Roche, Hemlibra) sought to complement its portfolio with a promising gene therapy candidate targeting the same market. In this case CSL’s Idelvion is the leading drug in Heme B, whilst uniQure is potentially both first and best-in-class with a gene therapy in this space.”

What is the potential of AMT-061?

AMT-061 certainly could have a bright future ahead of it. According to Goldman’s analysts, it currently ascribes an 85% probability of success for the AMT-061 program.

If successfully developed and commercialised, the broker is modelling US$932 million in global peak sales in 2027. This is based on a biologics license application submission in 2021, US launch in 2022, and an EU and Rest of the World launch in 2023.

As a comparison, Idelvion is expected to generate sales of US$460 million in FY 2020.

More reading

• These are the 4 cheapest ETFs on the ASX
• ASX 200 drops 2.5%, ASX travel shares dumped
• ASX 200 down 1.8%: CSL announces new acquisition, Qantas to raise $1.9bn
• Why Accent, CSL, Kogan, & Redbubble shares are pushing higher
• CSL share price on watch after US$450 million acquisition news

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 CSL Ltd. 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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Up and down the S&P/ASX 200 Index (INDEXASX: XJO) the winners and losers from the pandemic are becoming clear. There are also still a few companies where the future remains uncertain.

Share price winners

The Kogan.com Ltd (ASX: KGN) share price has risen by ~265% since the market low on 23 March. The pandemic and lockdown hastened a trend towards online shopping that was already underway. In a 5 June report, the company announced a 100% increase in sales for the Q4 FY20 to date and a 130% growth in profit.  

The same could be said for City Chic Collective Ltd (ASX: CCX). This share price is up by ~263% from 23 March. City Chic declared that two-thirds of its sales came from online channels. Moreover, it announced a 57% increase in online sales during the company’s store closures versus the same period last year.

The grey zone

There is a range of companies that I am not certain about, even now. For example, Aristocrat Leisure Limited (ASX: ALL) sells machines, platforms, software and online gaming. In its Q3F20 report, it showed a decrease of 14.2% in net profit after tax (NPAT). However, the company is rapidly expanding its digital business. The company enjoyed double-digit growth in revenue and profits over the period compared to the previous corresponding period. 

Personally, I do not think the Crown Resorts Ltd (ASX: CWN) share price can return to prior levels without full international tourism. Nonetheless, I am not sure that the same goes for Aristocrat. Partly because of the diversified revenue streams, partly due to the international footprint. 

Even more so, I think that embattled cinema and theme park companies such as Village Roadshow Ltd (ASX: VRL), or Event Hospitality and Entertainment Ltd (ASX: EVT) are too close to call. Even without full international tourism, these companies can make profits. Unfortunately, most of the movies due for release by the end of this year have been moved into 2021. I do not see a good medium-term future for the share price of these companies. 

Jumbo Interactive Ltd (ASX: JIN) is surrounded by speculation in relation to a mysterious trading halt. Media sources seem to think there is a conflict occurring due to negotiation with LotteryWest, sparking a high-level discussion with 11% stakeholder and licensor, Tabcorp Holdings Limited (ASX: TAH). Nevertheless, the company forecast an FY20 NPAT just under that of FY19. It seems even the company is unsure whether the lockdowns will drive sales up or down. 

The hardest hit

There is a strong chance that Qantas Airways Limited (ASX: QAN) share price will take another hit during today’s trading. It announced a combination of cost-cutting, layoffs and restructuring that highlights how different the world will be. The Qantas share price is already depressed. 

I find this company to be well managed. It has a 10-year average return on equity (ROE) of 17.5% which is impressive. However, personally I find it hard to envisage a world where governments allow us to travel internationally as freely as we used to. At least not yet.

Aside from Qantas, there are a number of other companies that will likely not be the same again for 3–5 years. Most of these are in the international travel space. Flight Centre Travel Group Ltd (ASX: FLT) and Webjet Limited (ASX: WEB) need to open international borders. Sydney Airport Holdings Pty Ltd (ASX: SYD) also needs full international tourism to see the level of footfall it had in January. 

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. owns shares of Kogan.com ltd. 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 and Webjet Ltd. The Motley Fool Australia has recommended Crown Resorts Limited, Flight Centre Travel Group Limited, and 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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