Category: Stock Market

The Venturex Resources Ltd (ASX: VXR) share price is blasting off today. At the time of writing, it’s up 233% to trade at 35 cents a share.

Venturex is a base metal mining company focused on developing its flagship Copper Zinc Sulphur Springs Project in Western Australia. The company is also pursuing other assets in the Pilbara region.

We investigate why the Venturex share price is soaring today. 

Venturex share price goes crazy after capital placement

This afternoon, Venturex announced a new funding package and capital placement spearheaded by prominent mining executive Bill Beament.

The company advised that Mr Beament will subscribe for $8.9 million in a placement at 8 cents a share with a one-for-two attached option exercisable at 13.5 cents per share. There’s a two-year expiry date.

A $5.1 million allocation to institutional and professional investors is also included in the placement under the same conditions.

Existing Venturex shareholders are to receive a one-for-seven entitlement offer at 8 cents a share. The company advised that this will raise an additional $4.4 million.

Venturex will use the capital to position itself as a growing supplier of new-generation energy and technology materials. 

New executives to assume key Venturex roles

As of 1 July 2021, Mr Beament will assume the role of executive director with Venturex. He is currently executive chair and a founder of Northern Star Resources Ltd (ASX: NST).

Mick McMullen will be appointed as an executive director immediately and transition to the position of non-executive director once Mr Beament assumes his role.

Mr McMullen joins Venturex following time spent as CEO and president of Detour Gold and Stillwater Mining Company.

Venturex executive director Anthony Reilly commented on the capital raise and new appointments, saying:

This growth strategy is a game-changer for Venturex. The combination of the funding provided to the company and the exceptional talents of those joining the board will position Venturex to become a near term producer.

Snapshot of the Venturex share price

The Venturex share price was trading at 9 cents just 6 months ago and has gained 288% in that period.

At today’s price, the company has a market capitalisation of $40.68 million. There are currently 387.4 million shares outstanding.

More reading

• The IOUpay (ASX:IOU) share price is skyrocketing 30% today
• Credit Intelligence (ASX:CI1) share price takes a 19% nosedive
• Top brokers name 3 ASX shares to buy today
• Why the Wiseway (ASX:WWG) share price is storming 50% higher
• The Calix (ASX:CXL) share price rips 13% higher on revenue growth

Motley Fool contributor Gretchen Kennedy has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The IOUpay Ltd (ASX: IOU) share price is pushing higher this afternoon, breaking a 4-day streak of losses. The Malaysia-based buy now pay later (BNPL) provider’s shares were up 29% today on abnormally high volume.

At the time of writing IOU shares were rapidly being exchanged at 62 cents per share, up 24.5% — hitting a volume of 42.9 million shares traded.

Flying on the residual cap raise winds

With no news out from the speculative BNPL provider today, we turn to recent events for potential catalysts.

It certainly has been a rollercoaster month for IOUpay as the company entered February at 16 cents a share. By mid-month, the BNPL space had attracted more excitement, throttling IOUpay to an all-time high of 85 cents. However, the share price then appeared to lose its gusto, falling back to 49 cents by 23 February. Although, not before management took advantage of the excitement to announce a capital raise.

The capital raise adds a further $50 million to IOU’s balance sheet to aid in growth initiatives including digital payments and to accelerate new business development opportunities in the BNPL space within South East Asia. Sophisticated and institutional investors took up the offer of 100 million new shares at 50 cents per share.

IOU’s shares took a tumble over the last week, likely due to the steep 28.6% discount offered in the cap raise, to the last close price upon announcement. So now potentially investors are seeing the event in a new light — more money, more potential… maybe. Considering today’s volume is in excess of the company’s monthly average, investors are certainly excited about something.

IOUpay share price during BNPL selloff

IOUpay certainly wasn’t the only BNPL provider that suffered a fall in share price over the last week. Most of the space has flicked the switch around mid-month and began heading in the negative territory. For comparison, here are the returns for some notable BNPL stocks in the last 5 days:

• IOUpay Ltd (ASX: IOU) down 16.3%
• Afterpay Ltd (ASX: APT) down 13.1%
• Zip Co Ltd (ASX: Z1P) down 12.5%
• Splitit Payments Ltd (ASX: SPT) down 10.5%

IOUpay is breaking the trend today, with most other BNPL shares still trending downwards. The IOUpay share price has now gained 5,500% in the past 12 months, boosting its market capitalisation to $221 million.

More reading

• What’s happening with ASX 200 tech shares today?
• ASX 200 goes higher, Afterpay sinks, Adbri impresses
• Why the Afterpay (ASX: APT) share price is down 8% today
• ASX investors watch out for a rise in interest rates in 2022
• Why the Austal (ASX:ASB) share price got torpedoed today

Mitchell Lawler owns shares of AFTERPAY T FPO. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of ZIPCOLTD FPO. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Credit Intelligence Ltd (ASX: CI1) share price is somewhat reminiscent of a Gamestop chart.

Its shares started to break out on Tuesday 16 February, closing 12% higher at 3.5 cents on the day with no news. In the following days, its shares climbed as much as 140% before finally, the company announced a new BNPL service for the small and medium-sized enterprise (SME) market this Tuesday.

Perhaps only the word ‘BNPL’ was needed, but the announcement sent its shares running as much as 75% higher to 13 cents on the day, before closing with a gain of just 3% at 7.8 cents. 

At its current level of 6.3 cents the Credit Intelligence share price is still 100% higher since its initial breakout last Tuesday. But its shares have halved from peak to trough. 

What’s driving the Credit Intelligence share price today?

Credit Intelligence’s core services are centered around debt-restructuring in Hong Kong and Singapore. On 17 December 2020, the company announced the acquisition of a 60% interest in Yozo Finance Pty Ltd and its leading fintech platform with its proprietary capabilities, including the BNPL service Yozo launched last week. 

Today, the company announced its half-year results, which highlight a 21% increase in revenue to $7.37 million and 25% increase in net profit to $1.58 million.

The company’s Hong Kong business results were in line with the prior year, notwithstanding the impact of COVID-19.

Its core bankruptcy and individual voluntary arrangement services continue to trade well, and the company expects that deferred revenue as a result of COVID-19 will show up in the year ahead. 

Its Singapore business results were mixed with government support for SMEs resulting in its subsidiary, ICS Funding, delivering a result well under the prior year, while its personal loans business, Hup Hoe Credit, performed strongly for the half year. The company indicated it expects the ICS business will grow strongly once government support is withdrawn in March 2021. 

The contribution from the group’s two new Australian acquisitions, Chapter Two in July 2020, and Yozo in December, are not yet material. 

More reading

• Here’s why the Credit Intelligence (ASX:CI1) share price is soaring 15%
• Yowza! The Credit Intelligence (ASX:CI1) share price is up 130% in 2 months

Motley Fool contributor Kerry Sun has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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Many of Australia’s top brokers have been busy adjusting their financial models again, leading to the release of a large number of broker notes this week.

Three broker buy ratings that have caught my eye are summarised below. Here’s why brokers think these ASX shares are in the buy zone:

Bank of Queensland Limited (ASX: BOQ)

According to a note out of Morgans, its analysts have upgraded this regional bank’s shares to an add rating with an improved price target of $10.00. The broker made the move after Bank of Queensland announced the acquisition of ME Bank for $1.325 billion. Morgans is forecasting the acquisition to be highly accretive to earnings. It also notes that a trading update reveals that the company is on course to deliver better than expected first half earnings. The Bank of Queensland share price is fetching $9.24 today.

Booktopia Group Ltd (ASX: BKG)

Another note out of Morgans reveals that its analysts have retained their add rating and lifted the price target on this online book retailer’s shares to $3.53. According to the note, the broker was impressed with the company’s half year results. And while Booktopia’s earnings guidance was a touch short of Morgans’ estimates due to softer margins, the broker believes its margins will improve in the future. It also feels Booktopia is well-placed to benefit from a growing online book market. The Booktopia share price is trading at $2.69 on Wednesday.

SEEK Limited (ASX: SEK)

Analysts at UBS have upgraded this job listings company’s shares to a buy rating with an improved price target of $32.00. According to the note, the broker has lifted its estimates to reflect a stronger than expected performance during the first half. It was also pleased to see the company upgrade its EBITDA guidance to $460 million but feels there could still be upside to this given current trading conditions. The SEEK share price is fetching $26.00 this afternoon.

More reading

• What’s happening with ASX 200 tech shares today?
• SEEK (ASX:SEK) share price on watch after Zhaopin sell down update
• ASX 200 goes higher, Afterpay sinks, Adbri impresses
• Why the Afterpay (ASX: APT) share price is down 8% today
• Why the Bank of Queensland (ASX:BOQ) share price is up 10% to a 52-week high

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has recommended SEEK Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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Wiseway Group Ltd (ASX: WWG) shares are storming higher today following the company’s release of its half-year financial results for the period ending 31 December (H1 FY21). At the time of writing, the Wiseway share price is trading 52.38% higher at 32 cents.

Let’s take a look at what the integrated logistics provider reported.

What did Wiseway report?

The Wiseway share price is rocketing after the company reported a net profit after tax (NPAT) of $3.4 million, compared to a $4.9 million NPAT loss in H1 FY20.

Gross profit of $18.1 million represented an increase of 60% on the $11.3 million reported in the previous corresponding half.

Earnings before interest, taxes, depreciation and amortisation (EBITDA) leapt to $6.5 million from $100,000 in the prior corresponding period.

Revenue increased by 54% year on year to $69.7 million. Wiseway reported inbound and outbound airfreight increased its trading revenue by 25% to $45.4 million, up from $36.2 million in H1 FY20. Its new business divisions revenue leapt 182% to $24.0 million, up from $8.5 million.

Commenting on the half-year results, Wiseway CEO Roger Tong said:

The results are a turning point for Wiseway which, since the IPO, has successfully implemented its strategy of diversifying our business and our income streams. At IPO, only 5% of our trading revenue was from new business divisions. These divisions are now responsible for 34% of our trading revenue…

This is a direct result of our FY20 investment in infrastructure and in our operating platform including bonded warehouses, accreditation for perishable operations and obtaining operational licences across Australia and New Zealand.

While the company has had to adjust operations to allow for the pandemic, Tong said that COVID-19 has seen its Australian and Asian customers approach Wiseway to help find solutions to the challenges of importing and exporting between the two continents.

Looking ahead, Tong said:

To accommodate future growth, we have opened a Business Support Office in Guangzhou, China. This new office is in addition to our Shanghai office. After the end of the reporting period, we identified Los Angeles in the United States as a suitable location for the Wiseway’s next phase of expansion and establishing a presence in the United States…

Wiseway share price snapshot

With today’s intraday gains factored in, the Wiseway share price is up by around 118% over the past 12 months. That compares to a 0.4% loss on the All Ordinaries Index (ASX: XAO).

Year to date, the Wiseway share price has gained around 53%.

More reading

• The Calix (ASX:CXL) share price rips 13% higher on revenue growth
• Why the Integra (ASX:ITG) share price is zooming 15% higher
• How Tesla’s (NASDAQ:TSLA) Elon Musk just lost $19 billion
• Think Childcare (ASX:TNK) share price soars, beats FY20 guidance
• Why the Mayne Pharma (ASX:MYX) share price is dropping 5% today

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Calix Ltd (ASX: CXL) share price is rocketing 13% higher into all-time record territory today after the company released its first-half FY21 results.

This brings its year-to-date returns to an eye-watering 108%. At the time of writing, the Calix share price is trading up 13.1% at $2.15.

Calix share price soars on accelerating growth 

Calix’s core technology is being used to develop more environmentally friendly solutions for advanced batteries, crop protection, aquaculture, wastewater and carbon reduction. Despite COVID-19, the company continued to grow sales from its municipal and industrial customers which are considered an essential service. 

In HY21, the company’s total revenue increased 114% to $16.27 million while operating profits ticked positive to $3.06 million compared to the $245,000 loss in HY20. 

Overview of Calix technologies 

Calix is developing multiple environmental business opportunities, all from one core technology. These industries/sectors include: 

• Water: Water treatment, aquaculture
• CO₂ Migration: Cement, line
• Biotech: Crop protection, marine coatings
• Advanced batteries: Advanced cathode and anode materials 
• Sustainable processing: Mineral and chemical progressing 

How it works

Its core technology involves grinding minerals to between one hundredth and one-thousandth of a millimetre in size, and then flash heating them in an externally heated reactor in a very short time. As trapped gases in the minerals bubble out of the particles, they create highly permeable, honeycomb-like structures in the particles.

Calix’s technology allows for the direct separation of CO₂, enabling it to be used in traditionally carbon dioxide intensive industries.

Calix is currently targeting all the above industries, seeking to expand revenues, margins, project execution and deal flow across multiple geographies. 

Water is a key segment for the business, having completed 3 US plant upgrades and commenced construction of a fourth US plant. The company signed its first memorandum of understanding (MOU) with a European partner with paid trials underway.

The company remains poised to re-establish aquaculture sales in China and targeting new markets post-COVID. This segment generated a majority of the company’s revenues, with water treatment sales up 159% on pcp to $9.14 million. 

Outlook

The Calix share price has been riding the momentum behind the renewables industry. The company will continue working towards the FY21 targets across each segment.

More reading

• Here’s why the Calix (ASX:CXL) share price shot 15% higher today

Motley Fool contributor Kerry Sun has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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Integra Group Ltd (ASX: ITG) shares are one of the better performers on the ASX market today after the company released its half-year results for the 2021 financial year. At the time of writing, the Integra share price is surging 15.7% higher to 33 cents.

What were the financial highlights?

The Integra share price is flying today after the company delivered a mostly positive result, despite operating as an independent company for less than 18 months. The company demerged from Cardno Limited (ASX: CDD) in October 2019 to focus on its core business strategies and reduce overhead costs.

In its half-year result for the six months ending 31 December, Integra reported total gross revenue of $210.7 million. This reflected an 8.8% decline compared to the $231 million achieved in H1 FY20. Contributing to the fall, fee revenue also sank to $157 million, a 7.1% drop from the comparative period.

Projects were largely wound down in the Asia Pacific region as COVID-19 impacted market conditions. The company’s Americas segment remained relatively flat due to project delays in its oil and gas business. However, construction materials saw a boom in infrastructure spend.

Underlying earnings before interest, tax, depreciation and amortisation (EBITDA) increased over the period to $24.7 million. This represented a gain of 11.3% on a proforma basis. Not taking into account the tax and amortisation, EBIT grew to $9.6 million, up 21.5%. This was based on tighter cost controls and lower overhead expenses which helped offset the reduced fee revenue.

Net cash from operating activities soared to $17.9 million, a jump of 28.5% on the same time last year. The positive cash flow came from management’s focus on improving working capital management.

The company booked a net operating profit after tax of $5.6 million, a 55% advance on H1 FY20’s bottom line.

At the end of the calendar year, Integra had a cash balance of $22.5 million. Net debt excluding any accounting adjustments stood at $42.7 million.

In other news boosting the Integra share price, the board declared an unfranked interim dividend of 1 cent to be paid to eligible shareholders on 21 April 2021.

Outlook

Looking ahead, the company forecasts underlying EBITDA to be between $45 million to $49 million for the full year. Naturally, this is based on no unforeseen circumstances arising to affect current trading conditions, namely COVID-19 and currency exchange movements.

Integra anticipates rewarding shareholders with a final dividend of around 50% to 70% of total net profit after tax.

Furthermore, the board intends to pursue a capital management strategy which could include a share buy-back program. This would effectively reduce the number of shares on its registry, thus making each Integra share more valuable.

Integra share price and company snapshot

Established in 1968, Integra is an Australian-based engineering services company. The group is primarily a quality, testing and measurement business that provides an array of expertise. This includes construction materials testing, subsurface utility engineering services, and quality assurance for energy companies.

In the last 12 months, the Integra share price is down roughly 22% but is up 20% year to date. Integra shares took a turn for the worse during April last year, falling to a low of 16 cents. Since that time, its shares have gone on a rollercoaster ride all the way until the end of June. In recent months, the share price has stabilised around the 30-cent mark.

More reading

• How Tesla’s (NASDAQ:TSLA) Elon Musk just lost $19 billion
• Think Childcare (ASX:TNK) share price soars, beats FY20 guidance
• Why the Mayne Pharma (ASX:MYX) share price is dropping 5% today
• Why the Viva Energy (ASX:VEA) share price is up 5% today
• ASX cheats offered immunity… with one catch

Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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Elon Musk, CEO of Tesla Inc (NASDAQ: TSLA) and three other companies, is famous for many things. Flamethrowers, shooting rockets (and cars) into space, smoking cannabis on-air during a podcast, or just tweeting rather random things all the time… Mr. Musk certainly knows how to capture the spotlight.

More recently, Musk has managed to add another feather to his cap. The title of ‘world’s richest person’. As recently as a year ago, it was unthinkable that anyone could dislodge Amazon.com Inc‘s (NASDAQ: AMZN) Jeff Bezos from this perch. But due to a staggering surge in the Tesla stock price over the past year, Musk managed to topple Bezos last month.

However, Musk has just lost that coveted title once again.

Musk gets a Tesla-driven downgrade

According to reporting in the Australian Financial Review (AFR) today, Musk lost a staggering US$15.2 billion ($19.2 billion) in net worth… just this week. That was largely a result of Tesla’s stock price falling to its lowest level yet in 2021 so far. Tesla has fallen more than 10% over the past week. Tesla is now roughly 20% below the company’s 52-week high of US$900 a share that was hit back in late January.

The volatility we are seeing in the price of Bitcoin (CRYPTO: BTC) also isn’t helping. Tesla made headlines a few weeks ago by purchasing more than US$1.5 billion worth of cryptocurrency on its balance sheet. Bitcoin has fallen around 10% over the past week. Although it remains at a higher level than when Tesla announced its purchase.

Despite Musk’s new place as the ‘silver medallist’ of the world’s richest people, I’m sure he won’t be too bothered. The AFR reports that his net wealth is still sitting at around US$183.4 billion. Although that’s a ways away from his wealth peak of US$210 billion in January, it’s only a touch behind Mr Bezos at US$186.3 billion.

Also assisting Musk’s massive wealth accumulation over the past year has been the recent re-valuation of one of Musk’s other (private) companies – SpaceX. According to the AFR, SpaceX is now valued at roughly US$74 billion after a recent $850 million capital raise. That’s a 60% increase since last August.

In addition to Tesla and SpaceX, Elon Musk also heads The Boring Company, as well as Neuralink (both private). The Boring Company is aiming to develop futuristic solutions to traffic congestion, mostly in California. It’s also the company behind Musk’s flamethrower line. Neuralink is an artificial intelligence company that is aiming to develop ways to connect the human brain to computers.

More reading

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• Amazon buying AMC isn’t as crazy as you think
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• Bitcoin hits record high: Why Saxo says the cryptocurrency is here to stay
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John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Sebastian Bowen owns shares of Bitcoin and Tesla. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Amazon and Tesla. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends Bitcoin and recommends the following options: long January 2022 $1920 calls on Amazon and short January 2022 $1940 calls on Amazon. The Motley Fool Australia has recommended Amazon. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Think Childcare Ltd (ASX: TNK) share price is currently up 7% after the company announced its FY20 result and told investors that it had beaten its guidance.

Think Childcare is one of the largest childcare operators in the country.

FY20 result impresses

Think Childcare’s group underlying earnings before interest, tax, depreciation and amortisation (EBITDA) of $26.8 million was an increase of 89% compared to the prior corresponding period. It was actually 7% better than the guidance range it had previously given of $24 million to $25 million.

The company boasted that this result demonstrated significant momentum as it continues to execute on its strategy as Australia’s leading provider of premium childcare services to suburban families.

Management said that there has been a solid rebound in occupancy driven by recovery in existing enrolments and new enrolments. The enrolled occupancy peaked at 79%, with the attendance occupancy reaching 73%.

The business said that there has been a significant return from its marketing investment during the COVID-19 period with 43% of total enrolments being new at 31 December 2020.

Think Childcare said it recorded $30.1 million of underlying EBITDA in the 2020 calendar year, which was up 104% year on year, with an expected similar result in the 2021 year despite approximately $4 million of increased of corporate costs in the current year to support future growth.

The company finished with $22.9 million of cash at 31 December 2020.

Think Childcare dividend

The childcare business’ dividend for 2020 was 12 cents per share, representing a 30% cut compared to 2019.

Think Childcare share price

Over the last year, the Think Childcare share price is up 66% as it recovered from COVID-19 impacts. Since the start of September 2020, the Think Childcare share price is up 173%.

2021 Outlook

The childcare business said that the 2021 occupancy has started ahead of 2020 by 2%, driven largely by its incubation strategy. That’s a business called Think Childcare Development (TND) which is the largest developer of purpose-built leasehold childcare services to meet the Nido brand requirements.

TND builds up a childcare business before selling it to Think Childcare at a 75% occupancy rate at a valuation of around 4 times EBITDA. It has a pipeline of 26 leasehold sites to be developed over the next two to two and a half years. There are currently 10 new services that are in ‘trade-up’. Management believe this unique model eliminates business transition risk. This pipeline will generate $25 million of service-based EBITDA within three years.

Enrolments for the first eight weeks of 2021 are ahead of the same time as last year.

It expects to generate $26 million of underlying EBITDA in the current financial year.  That includes an investment of $2.4 million in new roles and the $1.6 million in the annualised impact of roles added in the 2020 calendar year to support future growth which will be subject to ongoing monitoring of trading performance.

More reading

• Why the Mayne Pharma (ASX:MYX) share price is dropping 5% today
• Why the Viva Energy (ASX:VEA) share price is up 5% today
• ASX cheats offered immunity… with one catch
• Here’s why the SeaLink (ASX:SLK) share price is shooting 17% higher
• Clinuvel (ASX:CUV) share price down despite recording 10th consecutive net profit

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Mayne Pharma Group Ltd (ASX: MYX) share price is falling today after the specialty pharmaceutical company provided its slumping half-year results.

Despite the company launching new products and expanding its portfolio, Mayne Pharma’s revenue fell slightly, and losses increased. Shareholders are clearly disappointed today with the result, as the shares are down 5% to 29.5 cents a share.

What’s moving the Mayne Pharma share price?

It was very much a mixed bag of results for the pharmaceutical company. This was the case for all Mayne Pharma’s various operating divisions, including the Speciality Products Division (SPD), Metrics Contract Services (MCS), Generic Products Division (GPD), and Mayne Pharma International (MPI).

Specialty product sales were down 6% on the first half of FY20 but improved by 32% compared to the last half. The company’s generic product division suffered falling sales in the half. Gross profit for the GPD segment came in at US$27.5 million, a decline of 12% from last year. GPD performance was impacted by a continuation in price competitiveness across the portfolio.

On a more positive note, Mayne benefitted from an increase in its MPI segment. Sales increased by 10% compared to FY19, equating to $21.3 million. Gross profit for the segment also greatly improved to $6.9 million, an increase of 38% on the prior corresponding period (pcp). This improvement is a result of additional contract development projects and an increase in manufacturing revenues.

Mayne Pharma’s total revenue came in at A$209 million (down 8%) while underlying earnings before interest, tax, depreciation, and amortisation (EBITDA) finished at $39.9 million (down 16%) for the half. Net loss after tax crumpled to a stark $181.3 million, compared to a loss of $18.2 million the prior year.

Impacts and accounting

Mayne Pharma’s CEO, Scott Richards, provided further details for the impacted results. A continued weakening of the US dollar and lingering challenges of COVID-19 are partly to blame for softer generic sales. Mr Richards further stated:

We continued to deliver substantial cost savings across the business with operating and gross development spend down $19m versus the pcp and have delivered a solid cashflow result that enabled net debt to be reduced by $40m. At the bottom line, the net loss after tax was impacted by a non-cash intangible asset impairment of the generic portfolio.

Mayne Pharma’s non-cash intangible impairments realised consisted of the following:

• An increase of $2.6m for capitalised development costs
• An increase of $3.3m for other intangible asset additions
• A decrease of $23.4m for specific impairments
• Notably, a decrease of $191.1m for CGU impairments
• A decrease of $28.3m for amortisation
• A decrease of $82.0m due to foreign currency translation with the AUD / USD exchange rate decreasing from 0.6877 on 30 June 2020to 0.7708at31 December 2020.

Mayne has several pharmaceutical products awaiting approvals from the FDA, TGA, etc. Management advised that future performance would depend on influential factors such as the US dollar, approvals, and competitors.

The Mayne Pharma share price has fallen 9.2% in the last 12 months. Placing the pharmaceutical company at a market capitalisation of $520 million.

More reading

• Why the Viva Energy (ASX:VEA) share price is up 5% today
• ASX cheats offered immunity… with one catch
• Here’s why the SeaLink (ASX:SLK) share price is shooting 17% higher
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Motley Fool contributor Mitchell Lawler has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post Why the Mayne Pharma (ASX:MYX) share price is dropping 5% today appeared first on The Motley Fool Australia.

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