Category: Stock Market

The Afterpay Ltd (ASX: APT) share price has hit a new, all time high of $76.98 before edging back to its current price of $76.05. This takes its gains since March to just under 765%. The high flying buy now, pay later (BNPL) provider is knocking on the door of the S&P/ASX 20 (ASX: XTL) with a market capitalisation of more than $21 billion. Investors are pushing the Afterpay share price higher ahead of the release of the company’s full year results on Thursday 27 August. 

How has Afterpay been performing? 

Afterpay has seen significant growth in volumes and customer numbers since the start of the pandemic. The adoption of online shopping has been accelerated by lockdowns and store closures, while the economic downturn has increased focus on budgeting. Afterpay’s solution is leveraged to both these shifts. Where customers use Afterpay’s solution, Afterpay pays the merchant for customer purchases (minus merchant fees) effectively lending customers the purchase price. Customers then pay Afterpay back over equal interest-free installments. 

BNPL customers boom 

Afterpay has seen a boom in customer numbers in 2020. The BNPL provider reported 9.9 million customers across the United States, United Kingdom, Australia and New Zealand at the end of June. This was a 116% increase year on year. Other BNPL providers have seen similar increases in customer numbers – competitor Zip Co Ltd (ASX: Z1P) reported a 63% increase in customers in F20, with 2.1 million customers at 30 June. 

BNPL share prices have followed customer numbers upward. Although the sector was heavily sold off in March, investors quickly realised its resilience and bought back in. The Afterpay share price fell 78% from a February high of $40.50 to a March low of $8.90. But by May, the Afterpay share price was trading above its previous high and has continued to climb ever since. 

Transaction volumes surging 

Afterpay is gaining customers at a record rate, and those customers are spending –  transaction volumes processed using Afterpay’s platform surged 127% in Q4 to $3.8 billion. This brought full year underlying sales to $11.1 billion, up 112% on FY19. Other BNPL providers such as Sezzle Inc (ASX: SZL) and Openpay Group Ltd (ASX: OPY) have also seen sales volumes surge. Sezzle reported a 57.5% increase in underlying sales in the June quarter while Openpay saw a 119% increase in the same quarter. 

Afterpay share price continues soaring

The Afterpay share price has hit yet another all time high today as the BNPL sector goes from strength to strength. Consumers were increasingly turning to BNPL solutions even prior to the pandemic. This shift has now accelerated, sending the Afterpay share price to new highs. 

More reading

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• If you invested $10,000 in Afterpay shares in March, this is how much you’d have now
• Are BNPL shares like Afterpay officially recession proof?

Kate O’Brien has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of ZIPCOLTD FPO. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends Sezzle Inc. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool Australia has recommended Sezzle Inc. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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In late morning trade the S&P/ASX 200 Index (ASX: XJO) is on course to record a solid gain. At the time of writing the benchmark index is up 0.8% to 6,173.9 points.

Four shares that have climbed more than most today are listed below. Here’s why they are storming higher:

The Corporate Travel Management Ltd (ASX: CTD) share price has jumped 9% to $13.26 following the release of its full year results. Although the corporate travel specialist reported a loss of $8.2 million, a better than expected performance in July caught the eye of investors. The company’s bookings in July were greater than in June. It feels this suggests a broad-based recovery in corporate travel activity is underway.

The CSL Limited (ASX: CSL) share price has jumped 6% to $310.91 after delivering a solid FY 2020 result. The biotherapeutics company delivered a 7.2% increase in reported sales revenue to US$8,797 million and a 9.6% lift in net profit after tax to US$2,103 million. This was driven by solid growth from both its CSL Behring and Seqirus vaccines businesses during the year. And while plasma collection difficulties will weigh on its performance next year, management still expects to deliver top and bottom line growth.

The Domino’s Pizza Enterprises Ltd (ASX: DMP) share price has stormed 8% higher to $82.83. This follows the release of a strong full year result in FY 2020. Domino’s delivered global sales of $3.27 billion, up 12.8% on the prior corresponding period. This was driven by strong online and same store sales growth. Digital sales were up 21.4% to $2.36 billion, which accounts for 72.1% of totals.

The WiseTech Global Ltd (ASX: WTC) share price has rocketed 22% higher to $25.47. Investors have been buying the logistics solutions company’s shares after it overcame COVID-19 headwinds to deliver a 23% increase in revenue and a 17% lift in EBITDA in FY 2020. Looking ahead, management provided FY 2021 guidance for EBITDA growth of 22% to 42%.

More reading

• The latest ASX stocks upgraded by brokers to “buy” today
• WiseTech share price jumps 12% on solid revenue growth and dividend
• Corporate Travel Management share price on watch
• The highest paid CEOs in the ASX 200
• Domino’s share price on watch as free cash flow surges 90%

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. and WiseTech Global. The Motley Fool Australia owns shares of and has recommended Corporate Travel Management Limited. The Motley Fool Australia has recommended Domino’s Pizza Enterprises 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 Mineral Resources Limited (ASX: MIN) share price has fallen this morning despite the mining services company revealing its best full year result to date. At the time of writing, the Mineral Resources share price had dropped 1.7% to $28.36. Mineral Resources reported a 41% increase in revenue and a 127% increase in full year dividends, but this was not enough for investors who have sold off Mineral Resources shares. 

What does Mineral Resources do? 

Mineral Resources provides long-term contract services to Australia’s blue chip mining companies. The company has a portfolio of subsidiary businesses which offer a range of general mine services, contract crushing, infrastructure provision and recovery of base metals concentrate for export. Targeting stranded tenements and junior miners, Mineral Resources develops operations and secures life-of-mine contracts for its mining services business. 

How did Mineral Resources perform? 

Mineral Resources reported revenue of $2.1 billion in FY20, a 41% increase on FY19. This was driven by record mining services growth, higher tonnes in existing external contracts, and new external contracts won during the year. Statutory earnings before interest, taxes, depreciation and amortisation (EBITDA) grew 420% to $2.01 billion with record iron ore sales and a strong achieved iron ore price. Underlying EBITDA grew by 63% to $334 million. This gave statutory NPAT of $1,002 million (up 507%) and underlying NPAT of $334 million (up 63%). 

Earnings per share increased 513% to 533 cents per share in FY20 and Mineral Resources will pay full year dividends of 100 cents per share, a 127% increase on FY19. Mineral Resources has demonstrated a strong financial performance since listing in 2006 at 90 cents per share. Over that time, earnings per share have grown at an annual rate of 30% per annum and total shareholder returns have grown at 27%  per annum. The Mineral Resources share price reflects this having gained more than 3000% over the past 14 years. 

What’s next for the Mineral Resources share price? 

Mineral Resource plans to double the mining services business over CY20 – CY22. Crushing and processing volumes are expected to increase with strong growth in contract mining and haulage thanks to new contracts signed in FY20. Mining services volumes are expected to increase 20% – 25% in FY21. In the commodity space, the company is developing mine operations with a 20 – 50 year life with a focus on iron ore. It is also working with the government to develop additional iron ore export capacity in the Pilbara. This would at least double current iron ore exports, with the first ore shipment planned in approximately 2 years.

More reading

• These record breaking ASX stocks just got downgraded by top brokers
• Here’s why the Mineral Resources share price rocketed 22% in July
• These were the best performing ASX 200 shares in July

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 market is holding up better than many feared during the reporting season, and these are the latest ASX stocks to be upgraded by brokers to “buy”.

The S&P/ASX 200 Index (Index:^AXJO) gained 0.4% in early trade as CSL Limited (ASX: CSL) and Domino’s Pizza Enterprises Ltd. (ASX: DMP) joined the ranks of stocks that beat profit expectations.

The number of pleasing earnings results so far have exceeded my expectations and leading brokers have just upgraded the following ASX stocks.

Upgrade on big earnings beat

One of these is the Monadelphous Group Limited (ASX: MND) share price. Macquarie Group Ltd (ASX: MQG) lifted its recommendation on the engineering contractor to “outperform” from “neutral” in the wake of its better-than-expected results.

Management posted a FY20 net profit of $36.5 million yesterday. While that represents a decline of nearly 28% over the previous financial year, the result was a whopping 34% ahead of Macquarie’s expectation.

The big beat was driven largely be expanding profit margins and the company’s dividend and cash flow also beat the broker’s forecasts.

MND share price doesn’t reflect rising iron ore prices

“Iron ore is now 32% of revenue and we see a healthy pipeline of work particularly in relation to stay in business capex to maintain high iron ore production rates,” said the broker.

“[Monadelphous] share price has substantially decoupled from iron ore price.”

While Monadelphous’ legal stoush with Rio Tinto Limited (ASX: RIO) remains a big overhang on the stock, the broker isn’t too fussed. It believes both parties will eventually reach a settlement that will avoid the worst-case scenario for Monadelphous.

Macquarie believes Monadelphous will generate a 46% growth in earnings per share in FY21 and its price target is $11.57 a share.

Superpit triggers upgrade

Another stock that’s found favour is the Saracen Mineral Holdings Limited (ASX: SAR) share price. The gold miner was upgraded to “buy” from “neutral” by UBS after Saracen unveiled its Superpit mine plan.

The Superpit project, which is jointly owned by Saracen and Northern Star Resources Ltd (ASX: NST), may not sound so super to some. This is because the miners won’t get to the high-grade Golden Pike ore until later in the mine plan.

Short-term pain for long-term gain

“In aggregate this means lower near-term production and a slightly lower peak production of ~700kozpa from ~FY28e,” said the broker.

But this isn’t putting off UBS. The broker sees value in the stock given its trading below its price target of $6.75 a share.

There’s also room for Saracen to surprise on the upside as the miner drills two exploration holes at the project. Depending on the outcome, the miner could upgrade its production forecasts in FY25 to FY27 and extend the life mine.

More reading

• Why Corp Travel, CSL, Domino’s, & WiseTech Global shares are storming higher
• How the OZ Minerals share price is benefitting at Rio Tinto’s expense
• The highest paid CEOs in the ASX 200
• Domino’s share price on watch as free cash flow surges 90%
• CSL share price on watch after posting US$2.1 billion FY 2020 profit

Brendon Lau owns shares of Macquarie Group Limited and Rio Tinto Ltd. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of CSL Ltd. The Motley Fool Australia owns shares of and has recommended Macquarie Group Limited. The Motley Fool Australia has recommended Domino’s Pizza Enterprises 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 NRW Holdings Limited (ASX:NWH) share price has soared by more than 9% in early trade, following the release of the company’s FY20 results.

NRW Holdings provides a range of services to the Australian resources, civil infrastructure and urban development sectors. The company has 4 core operating segments: civil, mining, drill, and blast and mining technologies.

Impressive FY20 revenue and earnings growth

NRW delivered impressive FY20 revenue growth, up 83% to $2,062 million. Earnings before interest, taxes, depreciation and amortisation (EBITDA) growth was also very strong at 74%, coming in at $250 million for the full year. Meanwhile, normalised operating EBIT amounted to $140.9 million, which was up by a massive 120% on the prior year.

Normalised earnings per share was 21 cents for NRW, up significantly on 10.7 cents in FY 2019. Net earnings after tax increased 122% to $89.7 million, when normalised for acquisition intangibles.

NRW ended the 2020 financial year with a very strong balance sheet. Total cash amounted to $170 million on 30 June, up sharply from $105 million, 12 months prior.

Cash conversion reached a record high of 97% for NRW, while total debt repayments amounted to $82.4 million during the financial year.

Growth strategy progressing

NRW noted that the acquisition of BGC Contracting, which was finalised in December last year, had been successfully completed. BCG Contracting has now been fully integrated into the wider company.

Likewise, RCR Mining Technologies and DIAB Engineering have also been successfully integrated into the group. The latter 2 divisions are now on track to deliver combined annual revenues of $500 million. This is anticipated to be delivered via growth in maintenance, fabrication, shutdown and project works.

Commenting on the results, Jules Pemberton, NRW chief executive officer and managing director, said:

Growing record revenues to over two billion dollars during the year is a great achievement, however the highlight for me is the strong contributions made to that growth from all parts of the business. Doubling the earnings from last year also demonstrates that we can deliver work profitably and through our disciplined approach, produce outstanding cash conversion despite the magnitude of the challenges faced over the last 12 months.

Market outlook

NRW is confident that it is in a very strong position to tap in to a rising number of growth opportunities in the next 12 months. This will be underpinned by strong recent organic growth and the completion of a range of strategic acquisitions over the prior 3 years.

NRW reported its order pipeline is currently in a solid position. The group also highlighted the potential for additional infrastructure projects to be added to its pipeline as part of government initiatives to address the economic impact of of COVID-19.

The group’s pipeline of tenders and prospects for the 12 months has risen to $12.9 billion. NRW has forecast revenue for FY 2021 to be between $2.2 billion to $2.3 billion.

At the time of writing, the NRW share price is up by 9.28% to $2.12 per share.

More reading

• These were the best performing ASX 200 shares last week
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• ASX 200 Weekly Wrap: Surging commodity prices snap ASX 200’s losing streak
• These were the worst performing ASX 200 shares last week
• Latest ASX stocks upgraded by top brokers to “buy” today

Motley Fool contributor Phil Harpur 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 Tabcorp Holdings Limited (ASX: TAH) share price is in a trading halt this morning after launching a $600 million equity raise following a full-year $870 million loss.

Why the Tabcorp share price is one to watch

For the year ended 30 June 2020 (FY20), Tabcorp reported a 4.8% slump in group revenue to $5,224 million. Lotteries & Keno contributed 56% of revenue while Wagering & Media (40%) and Gaming Services (4%) made up the rest.

That flowed through to earnings before interest, tax, depreciation and amortisation (EBITDA) which fell 11.5% lower to $995 million.

The Lotteries & Keno segment was the only unit to report positive growth across revenues, EBITDA and EBIT during the year.

Tabcorp cited the coronavirus pandemic as a the major contributor while a non-cash goodwill impairment charge hit the company’s bottom line.

The Aussie wagering group reduced goodwill in its Wagering & Media segment by $905 million while Gaming Services goodwill took a $185 million hit.

Profit before significant items was down 31.6% to $271 million while the company booked a statutory $870 million loss after tax.

The Tabcorp share price is one to watch when it emerges from the current halt after reporting a 42.9 cents per share (cps) loss and paying no final dividend for FY20.

That means the full-year distribution totalled 11.0 cps, down 50% on FY19 dividend figures.

Positively, the group’s integration of Tabcorp and Tatts is now “substantially complete”. Tabcorp reported that cost synergies were on track with revenue synergies unable to be measured due to COVID-19.

Those impacts have been significant and forced a number of measures to be taken by the wagering group. The pandemic has seen the cancellation or postponement of many sports, although domestic racing has continued.

Capital management and equity raising

Tabcorp has looked to furlough staff and slash costs with a renewed focus on capital management reflected in its prudent dividend policy.

That has seen Tabcorp launch an entitlement offer to raise approximately $600 million of equity from shareholders. This comes as Tabcorp looks to strengthen its balance sheet and move towards a lower target gearing range.

Eligible shareholders are entitled to 1 new Tabcorp share for every 11 shares held on the record date of Monday 24 August.

The 0ffer price of $3.25 per new share represents a 10.6% discount to its theoretical ex-rights price and an 11.4% discount on the Tabcorp share price at yesterday’s close.

The Tabcorp share price will be worth watching when it returns to the boards in coming days.

July update

Investors will react to the latest results once Tabcorp shares resume trading this week. Despite reporting some softer numbers, it has been a strong start to FY21 for the wagering group.

Lotteries & Keno revenue is up 4.7% in July with strong ACT digital growth a primary driver. Wagering & Media revenue has increased thanks to many sports now having resumed.

However, Gaming Services has seen revenue drop 52.2% in July largely thanks to venue closures in Victoria.

More reading

• Why Tabcorp is the latest “conviction buy” recommendation from this top broker
• Why Cochlear, NAB, Tabcorp, & Telstra shares are tumbling lower
• ASX 200 edges lower, Melbourne enters stage 4 lockdown
• ASX 200 up 0.1%: Big four banks tumble, Flight Centre sinks, SEEK cancels final dividend
• Why ANZ, Flight Centre, SEEK, & Tabcorp shares are dropping lower

Motley Fool contributor Ken Hall 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 Bigtincan Holdings Ltd (ASX: BTH) share price has climbed steadily after the ASX software company reported a big jump in annualised recurring revenues over the June quarter.

Since crashing in mid-March to a 52-week low of just $0.265, the Bigtincan share price has surged more than 230% to $0.89 in mid-morning trade today.

What does the company do?

Bigtincan develops software to streamline and automate sales and marketing functions for its business clients.

Bigtincan’s flagship sales enablement automation platform is a centralised, integrated software solution designed to support businesses throughout their entire sales and marketing lifecycle. That’s from onboarding and training new staff, to engaging new customers and providing accurate reporting.

How is Bigtincan performing?

Despite the challenges of operating during COVID-19, results for the June quarter were strong across just about all key financial metrics. Quarterly customer cash receipts were up 89% against the prior comparative period to $10.4 million, while annualised recurring revenues were up 53% year-on-year to $35.8 million. The company reiterated its FY20 guidance for organic revenue growth of between 30% and 40%.

The software company’s balance sheet was also healthy with $71.9 million in cash and equivalents as at June 30. This had been strengthened by an oversubscribed $35 million institutional placement and $7.5 million share purchase plan, both of which occurred within the June quarter.

Bigtincan says it will use these funds to invest in its technology and pursue potential M&A opportunities, which means some exciting announcements could be on the horizon.

Should you invest?

Bigtincan isn’t quite the same growth company it was last year. In 2019, the Bigtincan share price soared more than 160%. So far this year – after all the share market volatility stemming from COVID-19 – its share price has only managed to gain 29%. This is still well short of its January high of $1.08.

However, the company’s underlying results have remained strong, and it has built a solid foundation for future growth despite tough market conditions. It anticipates customer retention rates to remain stable during FY20, and even reported some significant new customer wins in the most recent quarter – including one of the largest technology companies in the world.

There is even the potential for the ongoing impacts from COVID-19 to continue to drive growth. With people continuing to work remotely, there could be sustained high demand for digital solutions for activities such as staff training, coaching and ongoing development.

There are obvious risks to an investment as well. Bigtincan is still a small company with a market cap of only $335 million. With most economic indicators pointing to a severe downturn lurking on the horizon, small-cap growth stocks aren’t quite the exciting investment opportunity they were 12 to 18 months ago.

However, Bigtincan joins a growing list of junior ASX tech companies, like internet communications company MNF Group Ltd (ASX: MNF) and software developer Objective Corporation Limited (ASX: OCL), that are showing their ability to adapt – and even thrive – in the challenging conditions created out of the COVID-19 global pandemic.

More reading

• 4 exciting small cap ASX shares to watch closely
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• 2 exciting ASX tech shares to buy and hold till 2025
• Are these small cap ASX shares future stars?

Rhys Brock 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 BIGTINCAN FPO. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Objective Limited. The Motley Fool Australia owns shares of and has recommended MNF Group Limited. The Motley Fool Australia has recommended BIGTINCAN 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 Crown Resorts Ltd (ASX: CWN) share price has been resilient this morning after the company released its annual result for the year to 30 June 2020. At the time of writing, the Crown share price was down just 0.53% to $9.44 following the release.

What was in the announcement?

Crown reported earnings before, interest, tax, depreciation and amortisation (EBITDA) of $504.6 million, these were down 40.6% compared to the prior year.

Reported net profit after tax was $79.5 million, a drop of 80.2%. According to Crown’s CEO, Ken Barton, the company was directed to close its gaming activities and a significant part of its non-gaming operations at Crown Melbourne and Crown Perth for a significant amount of the financial year. Mr Barton stated that these closures were reflected in the company’s financial results.

Crown incurred costs related to its government mandated closures of $81.6 million which affected its results. It also recorded significant items of $78.7 million after tax which it stated were related to the impairment of Crown Aspinalls and Nobu, Crown Sydney pre-opening costs and costs related to a reassessment of DGN contingent consideration.

The company announced that the construction of Crown Sydney remained on track and it expects the asset to open to the public in December as scheduled.

Crown determined that, although its dividend policy is to pay 60 cents per share on a full year basis subject to the company’s financial position, that it would not pay a final dividend for the period. The company stated that this was due to the impact of mandatory closures on Crown’s business and uncertainty surrounding the resumption of trading at Crown Melbourne. It stated that future dividends would be subject to Crown’s financial position at the time. 

About the Crown share price

Crown is one of Australia’s largest entertainment groups. It operates resorts, casinos, bars, restaurants and online betting facilities. Crown has been listed on the ASX since 2007.

The Crown share price is up 67.38% from its 52-week low of $5.64, however, it is down 21.46% since the beginning of the year. The Crown share price is down 16.97% since this time last year.

More reading

• 5 things to watch on the ASX 200 next week
• Why Tabcorp is the latest “conviction buy” recommendation from this top broker
• Earnings preview: What to expect from the Crown Resorts FY 2020 result
• Village Roadshow locked in a capital raise as it secures new $70m facility
• Why Crown, Fortescue, Kogan, & Nearmap shares are storming higher

Motley Fool contributor Chris Chitty has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Crown Resorts 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 EML Payments Ltd (ASX: EML) share price surged more than 8% in early trade after the company released its financial report for FY20. The EML share price has since pulled back slightly and is trading for $3.43 at the time of writing.

How has EML performed in FY20?

Earlier today EML released its annual report and results for FY20.

The company’s report was highlighted by record revenue for the financial year of $121.6 million, a 25% increase from the year prior. Record revenue helped fuel a 17% surge in EML’s net profit after tax and amortisation (NPAT) for FY20 of $24.0 million.

Other highlights from the company’s report included a 10% increase in earnings before interest, taxes, depreciation and amortisation (EBITDA) for FY20. EML also noted a 57% surge in gross debit volume (GDV) of $13.9 billion, indicating growing demand for the company’s services.

For FY20, the company’s underlying operating cash inflows surged 63% on the year prior to $35.8 million. EML also completed a $264.8 million upfront acquisition of Irish payments group Prepaid Financial Services (PFS) during the financial year.

Despite the headline figures, on a statutory basis EML reported a net loss of $5.8 million for FY20. The company cited the unprecedented challenges of the COVID-19 pandemic as having an impact.

EML’s management noted that prior to the pandemic the company was performing strongly. The company’s gift and incentive segment contributed approximately 65% to group revenue in the first half of FY20. According to EML, gift and incentive GDV declined by 26% in March, 53% in April and 39% in May, with signs of recovery in June.

EML also noted that the company $118.4 million cash on hand and will not be paying a final dividend.

What is the outlook for EML?

EML Payments is an Australian fintech company that provides the technology solutions for payouts, gifts, rewards and supplier payments. The company has a large presence in Australia, North America and Europe, issuing mobile, virtual and physical card solutions.

In its investor presentation, EML highlighted that the company continues to sign new contract with customers in each segment. Despite hints of a recovery, the company expects impacts of the COVID-19 pandemic to continue into 2021.

The company has cited various headwinds including lower foot traffic in retail centres and social distancing measures to impact retail sales. As a result, EML has refreshed its strategy in order to drive growth over the next 3 years.

In order to fuel growth, EML has launched its ‘Project Accelerator’ strategy, which is designed to expand the company’s presence in the tech space. EML also cited its strong capital position which will help the company withstand further impacts of the pandemic.

Foolish takeaway

At the time of writing, the EML share price is trading more than 4% higher for the day. Shares in the company were up more than 8% earlier after hitting an intraday high of $3.55. The EML share price is trading more than 25% lower in 2020.

More reading

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• 3 ASX fintech shares with exciting growth prospects

Nikhil Gangaram has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Emerchants Limited. The Motley Fool Australia has recommended Emerchants 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 Carsales.com Ltd (ASX: CAR) share price is on the rise this morning after the online classifieds business revealed growth in revenue and profits despite the impacts of COVID-19. At the time of writing, the Carsales share price is trading at $19.88, 2.37% up from yesterday’s closing price. Carsales.com delivered a robust set of results in a challenging environment demonstrating the strength of its Australian business and growth potential of international markets. 

What does Carsales.com do? 

Carsales.com operates the largest online automotive, motorcycle, and marine online classifieds business in Australia. Regarded as one of Australia’s original disruptors, the company has expanded into South Korea and Brazil. COVID-19 has created uncertainty in Carsales.com’s operating markets, but the trends coming out of the pandemic including continued digital adoption and increased propensity for car ownership are a positive for the business. 

How did Carsales.com perform? 

Carsales.com reported adjusted revenue of $423 million for FY20, a 1% increase on FY19. This was a strong outcome given the impact of COVID-19 and reflects good growth in the domestic and South Korean segments. This growth was partly offset by revenue declines in the domestic private and media businesses largely due to the impacts of COVID-19 in H2. 

Adjusted earnings before interest, taxes, depreciation and amortisation (EBITDA) grew 6% to $237 million, with EBITDA margins of 55% reflecting good operating leverage and strong cost control in both domestic and international businesses. Results were underpinned by earnings growth across domestic and international portfolios, including an excellent performance from South Korea which delivered 18% EBITDA growth. Diversification across product and geography is continuing with international now representing 24% of look-through revenue. 

Carsales.com ended FY20 with adjusted NPAT up 6% to $138 million. Reported NPAT declined 9% to $120 million, primarily due to a $28 million COVID-19 dealer support package. A final dividend of 25 cents per share was declared, on par with the previous year. CEO, Cameron McIntyre, said, “this is a pleasing full year result given the impact of COVID-19 on our business in the second half…..our long standing strategy to grow and diversify our business by geography and product positions us well even in a challenging operating environment.” 

What’s next for Carsales.com? 

The company says it has seen a strong rebound in demand for vehicles across multiple international markets as customers have emerged from lockdown. People have continued to migrate to digital platforms and an aversion to public transport (due to COVID-19 concerns) has increased the propensity for car ownership. While Carsales.com is not providing FY21 guidance due to uncertainty, it has observed that Australian private listing volumes have largely recovered to pre-COVID levels and lead volumes grew strongly in July. 

The Carsales share price has risen 89.9% since its March low and is up 18.4% in year-to-date trading.

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Motley Fool contributor Kate O’Brien has no position in any of the stocks mentioned. The Motley Fool Australia has recommended carsales.com 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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