Category: Stock Market

This Monday marks exactly one week until the start of July. That means there’s only one week left in June, as well as the 2024 financial year. It also means that from next Monday on, we’ll be able to lodge our tax returns for the financial year that is about to pass us by. So let’s talk about why you won’t want to forget your franking credits when you do your taxes.

Franking credits are an important component of the tax return for anyone who owns ASX shares. Overlooking them when you do your taxes would be a huge mistake.

But let’s explain why by looking at what franking credits are and why they’re worth paying attention to.

What are franking credits?

Franking credits are a unique feature of our Australian taxation system. They are paid out at the same time a company pays a fully or partially franked dividend.

Whenever a company pays out a dividend, it must do so from a pool of profits on which it has already paid corporate tax. When you or I receive this dividend, we must also declare it to the Australian Taxation Office (ATO) as taxable income and pay tax on this cash accordingly.

But you may notice a problem here. By the time this dividend cash makes its way into our bank accounts, it has theoretically been taxed twice. Once at the corporate level and once as personal income. That’s not exactly a fair outcome.

To account for this, companies include franking credits with any dividends funded from previously taxed profits. These credits can be thought of as a receipt of sorts that proves taxes have already been paid on this pool of cash.

Most ASX shares pay corporate taxes in Australia. If that’s the case, dividends from these companies usually come fully franked. But if a company makes profits and pays taxes offshore instead of in Australia, it might not generate franking credits. This is normally the case when a company pays a partially franked dividend or a dividend that is completely unfranked.

How does a franked dividend help us at tax time?

When we receive franking credits, we can use them to claim a tax deduction from the ATO up to the value of the taxes already paid. As such, franking credits reduce the income tax we might otherwise be required to pay to the ATO.

Thus, franking can form a big portion of the overall wealth-building benefits of investing in and owning ASX shares.

To illustrate, let’s take an ASX dividend share that has paid out a yield of 4% over FY2024. If these dividends were fully franked, that dividend yield would instead gross up to be worth 5.71%, with the value of those full franking credits included.

As you can see, franking is not something that should be ignored. It can help reduce your debt or assist you in getting a larger refund when you lodge your FY2024 tax return. So don’t forget about your franking this tax time. Doing so would be a huge own goal.

The post Don’t forget your franking credits this tax time appeared first on The Motley Fool Australia.

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Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. 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 Scott Phillips.

The S&P/ASX 200 Index (ASX: XJO) has started the week in a disappointing fashion. In afternoon trade, the benchmark index is down 0.65% to 7,746.1 points.

Four ASX shares that are not letting that hold them back today are listed below. Here’s why they are rising:

Cleanaway Waste Management Ltd (ASX: CWY)

The Cleanaway Waste Management share price is up 1.5% to $2.73. This follows news that the waste management company has agreed to acquire the waste and recycling business and assets of Citywide Service Solutions, Citywide Waste, for a total consideration of $110 million. Citywide Waste provides waste management services to approximately 1,500 municipal, commercial, and industrial customers in Melbourne. This includes Melbourne City Council. It generated EBITDA of $10.7 million and EBIT of $6.4 million in the twelve-month period ending February 2024.

IGO Ltd (ASX: IGO)

The IGO share price is up 2.5% to $5.71. This is despite South32 Ltd (ASX: S32) taking legal action claiming to be entitled to royalty payments from the Tropicana Gold Mine in Western Australia. IGO continues to deny that it has any liability to South32 on the basis that the pre-conditions to any entitlement to be paid a royalty have not been satisfied. This gain could have been driven by a broad rebound in the battery materials space on Monday.

Myer Holdings Ltd (ASX: MYR)

The Myer share price is up 17% to 75.5 cents. This has been driven by news that the department store operator is wanting to merge with the apparel brands of Premier Investments Limited (ASX: PMV). This comprises the Just Jeans, Jay Jays, Portmans, Jacqui E and Dotti brands. The combination would see the department store acquire Premier’s apparel brands business in exchange for the issue of new Myer shares. Premier Investments’ chair, Solomon Lew, has indicated that he would be prepared to take an active role as a non-executive director of Myer if the transaction proceeds.

Premier Investments

The Premier Investments share price is up 3.5% to $30.98. Investors also appear to believe that the aforementioned apparel brands merger with Myer would unlock value for Premier Investments shareholders. The company said: “The proposed combination has the potential to deliver a step change in Myer’s scale and market position, deliver synergies and drive sustainable earnings growth. Premier shareholders would benefit given Premier’s existing shareholding in Myer and because Premier shareholders would become shareholders in Myer.” However, it has warned that there is no certainty that the proposal will result in a binding offer or transaction.

The post Why Cleanaway, IGO, Myer, and Premier Investments shares are pushing higher appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Premier Investments. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The Commonwealth Bank of Australia (ASX: CBA) share price is outperforming the BHP Group Ltd (ASX: BHP) share price today, tightening the race that has some market watchers on the edge of their seats.

Shares in the S&P/ASX 200 Index (ASX: XJO) bank stock closed Friday trading for $127.68. At time of writing on Monday, shares are changing hands for $127.69 apiece, up a very slender 0.01%.

As for BHP, shares in the ASX 200 mining giant closed Friday at $42.78 and are currently trading for $42.485, down 0.69%.

For some context, the ASX 200 is down 0.6% at this same time as well.

Here’s why the relative performance between the two ASX 200 goliaths matters.

Soaring CBA share price could upend ASX leader

At the current CBA share price, Australia’s biggest bank has a market cap of approximately $214.0 billion.

Despite that very impressive figure, CommBank still comes in second to BHP. With a market cap of approximately $216.7 billion, the iron ore miner remains the biggest stock on the ASX.

BHP has held that crown since November 2021. That’s when it sailed past CBA as the iron ore price rocketed above US$200 per tonne.

But that could be about to change once more.

CBA has joined in the broader bank stock rally over the past year, defying a chorus of bearish analyst forecasts. That rally sees the CBA share price up more than 30% in 12 months.

The BHP share price, meanwhile, has gone the other direction. Investors have sold down the miner amid a retrace in iron ore prices and further weakness forecast in the year ahead as China’s economy continues to sputter along in low gear. This sees the BHP share price down more than 4% in 12 months.

Should CBA stock continue to outpace BHP stock in the days ahead, we could see CommBank retake the biggest ASX stock title for the first time in almost three years.

Expert commentary

Commenting on the blistering rally in the CBA share price, and bank stocks in general, UBS analyst John Storey said (quoted by The Australian Financial Review), “The reason and narrative behind the bank rally is now fundamentally different to what initially sparked it in November.”

Storey explained:

Overall, clients think the impending tax cuts will provide further relief to consumers, while low unemployment numbers, and rising property prices, mean the credit cycle is turning out to be far more benign than initially feared.

Clients see few catalysts on the horizon which could fundamentally derate these stocks from here, outside of valuation.

The post CBA share price outpacing BHP shares on Monday in the race for biggest ASX stock appeared first on The Motley Fool Australia.

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Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. 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 Scott Phillips.

Cleanaway Waste Management Ltd (ASX: CWY) shares are starting the week positively.

At the time of writing, the ASX 200 industrials stock is up 2% to $2.75.

Why is this ASX industrials stock rising?

The catalyst for today’s gain has been news that Cleanaway is making a new acquisition.

According to the release, the company has agreed to acquire the waste and recycling business and assets of Citywide Service Solutions, Citywide Waste, for a total consideration of $110 million.

In addition, Cleanaway will concurrently enter into a 35-year lease for the waste transfer station located at 391-395 Dynon Road in West Melbourne.

What is Citywide Waste?

Citywide Waste provides waste management services to approximately 1,500 municipal, commercial, and industrial customers in Melbourne. This includes Melbourne City Council.

It also operates the Dynon Road waste transfer station, Victoria’s second largest waste transfer station. It is located approximately five kilometres from the Melbourne central business district. Annually, the transfer station receives over 200,000 tonnes of waste and recycling material.

As part of the transaction, Cleanaway has committed to redevelop the Dynon Road waste transfer station into a larger, efficient, modern post collections facility. This is expected to cost the company approximately $35 million. An additional $10 million contribution will be made from the City of Melbourne over the first four years of Cleanaway’s ownership.

Citywide Waste generated EBITDA of $10.7 million and EBIT of $6.4 million in the twelve-month period ending February 2024.

‘Valuable efficiences’

The ASX industrial stock’s CEO, Mark Schubert, believes the acquisition represents an attractive expansion opportunity. He said:

This transaction represents an attractive opportunity to expand our Solid Waste Services business in metropolitan Melbourne. Integrating Citywide Waste into our network is expected to deliver valuable efficiencies, while facilitating growth through the broadening of our municipal and C&I collections capabilities. The re-development of Dynon Road will almost double its current operating capacity, unlocking attractive earnings growth for shareholders. It will also support future volume growth into our post collections infrastructure assets.

Schubert also highlights that the Dynon Road acquisition aligns with its BluePrint 2030 strategy. He adds:

Securing this site in inner-city Melbourne provides a strategic position in the densely populated Melbourne metropolitan area and aligns with our approach of using M&A to accelerate the delivery of our BluePrint 2030 strategy. We are confident that the acquisition of this unique asset will deliver attractive returns to shareholders over the life of the lease.

The acquisition remains subject to a range of conditions precedent including ACCC regulatory approval.

Cleanaway shares are up 8% over the last 12 months.

The post ASX industrial stock rallying amid $110 million acquisition with ‘valuable efficiencies’ appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. 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 Scott Phillips.

My favourite method for outperforming the market is to pinpoint ASX shares with strong profit growth potential that the market undervalues.

The ASX’s good technology businesses are capable of producing good profit growth, but they’re also valued with higher forward price/earnings (P/E) ratios than other sectors.

There are companies in other sectors that are just as capable of producing pleasing profits, but these businesses aren’t valued as highly.

Recently, I’ve invested in these two stocks because I’m optimistic about their earnings growth outlook.

Collins Foods Ltd (ASX: CKF)

Collins Foods is a franchisee operator of a large number of KFC restaurants in Australia and Europe.

I think KFC is a strong brand that can deliver long-term success in Collins Foods’ operational markets.

Collins Foods is growing by expanding its store networks and achieving same-store sales (SSS) growth.

In the FY24 first-half result, KFC Australia reported SSS growth of 6.6%, and KFC Europe saw SSS growth of 8.8%. If SSS growth continues to be healthy, this can help drive the business’ margins higher.

The HY24 result saw revenue rise 14.3%, underlying earnings before interest, tax, depreciation and amortisation (EBITDA) grow 16.7%, and underlying net profit after tax (NPAT) jump 28.7%. That’s a good growth rate for the ASX share and demonstrated operating leverage.

The estimates on Commsec suggest Collins Foods’ earnings per share (EPS) could rise 44% between FY24 and FY26. The forecast would put the current Collins Foods share price at under 13x FY26’s estimated earnings – that looks very cheap to me for a growing business.

Close The Loop Ltd (ASX: CLG)

Close The Loop’s core offering is to collect and repurpose products with takeback programs in the US, Australia, South Africa and Europe. The ASX share’s overall premise is for there to be “zero waste to landfill” with the products it deals with.

The company recovers a wide range of electronic products, print consumables, cosmetics, plastics, paper, and cartons. It also uses toner and post-consumer soft plastics as asphalt additives.

According to the company, another service that it provides is sustainable packaging products with its packaging division, which enables “greater recoverability and recyclability”.

The ASX share recently announced it was exploring IT refurbishment expansion opportunities in the US, EU and Middle East. Its print consumable takeback program has been expanded into Spain and Portugal, with HP joining the program. The company revealed a new IT refurbishment plant in Mexico will be operational by October 2024. It’s also constructing a second TonerPlas line after the awarding of $2.2 million in government funding.

The company’s FY24 first-half result saw revenue increase by 76% year over year to $103 million, the gross profit margin increase from 32.8% to 36.2%, EBITDA grow by 139% to $22.7 million, and underlying NPAT jump by 164%.

According to Commsec, the Close The Loop share price is valued at just 7x FY24’s estimated earnings and EPS is predicted to grow by 23% between FY24 and FY26.

The post Prediction: My 2 top ASX shares to beat the market in 2024 and beyond appeared first on The Motley Fool Australia.

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Motley Fool contributor Tristan Harrison has positions in Close The Loop and Collins Foods. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Close The Loop. The Motley Fool Australia has recommended Close The Loop and Collins Foods. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

As most investors would know, Guzman Y Gomez Ltd (ASX: GYG) shares are now trading on the ASX. However, some investors are questioning whether the Mexican fast-food company is expensive. Let’s see how it compares to the competition.

There aren’t too many fast-food companies trading on the ASX, but Domino’s Pizza Enterprises Ltd (ASX: DMP) is a good business to compare GYG to.

Both companies have comparable valuations. Guzman Y Gomez currently has a market capitalisation of $2.93 billion, and Domino’s has a market capitalisation of $3.31 billion.

Domino’s also has a long-term target of significantly growing its global store count, just like GYG.

However, there are other more helpful measures for comparing businesses. Let’s dig in.

How to compare these ASX shares

Domino’s has been a listed ASX business for close to two decades, while GYG is newly-listed.

It may not be helpful to compare them based on how much net profit after tax (NPAT) they’re making because Guzman Y Gomez is investing heavily for growth, while Domino’s has been profitable for some time.

Revenue may not be the most useful comparison either because their business models are somewhat different.

Earnings before interest, tax, depreciation and amortisation (EBITDA) and earnings before interest and tax (EBIT) are not perfect profit measures, but they could help us compare these two businesses for the next two or three years until GYG starts generating sizeable NPAT.

For now, all we can go on is the GYG prospectus information. Then, in a few months, we’ll examine GYG’s FY24 statutory result.

Forecast Guzman Y Gomez profitability

Guzman Y Gomez has forecast that it can generate pro forma (underlying) EBITDA of $43 million and pro forma (underlying) EBIT of $12 million in FY24. GYG predicts that statutory EBITDA will be $25.4 million in FY24.

GYG’s FY25 statutory EBITDA and EBIT are projected to be $59.9 million and $19.7 million, respectively. Those numbers suggest that GYG could deliver good double-digit growth in FY25.

I think FY25 is a more useful year to look at because it reflects where the company could be in 12 months from now. Even then, a year is not long in investing terms.

At the current GYG share price and market capitalisation, it’s valued at 149x its FY25 estimated EBIT.

The broker UBS believes Domino’s profitability can materially recover in FY25 after its inflation and post-COVID difficulties.

UBS has forecast Domino’s can generate $244 million of EBIT in FY25 (a rise of $30 million compared to the estimate for FY24). At the current Domino’s share price, it’s valued at 13.5x FY25’s estimated EBIT.

Clearly, Domino’s is a lot cheaper than Guzman Y Gomez based on FY25’s predicted profitability. The Domino’s share price is down close to 40% this year, so it could be a contrarian opportunity at the current value.  

Of course, GYG’s EBIT is still at a low base. Adding $10 million, for example, of EBIT in FY26 wouldn’t be much in dollar terms, but it would represent a 50% increase in percentage terms and help normalise the Guzman Y Gomez EBIT multiple.  

Why GYG shares could still be worth it

GYG is still fairly early on in its growth journey. It plans to add dozens of locations every year in Australia, with expected growth in Asia and North America.

The Mexican fast-food business can benefit from global expansion, even through global franchisee sales, because it owns the brand. However, Domino’s can only expand in certain countries.

GYG may be able to deliver much better profit margins in the future because of its focus on drive-through locations, which can deliver good unit economics.

While GYG is starting at an expensive short-term valuation, it may be able to significantly grow its profitability over the next five or 10 years to justify the price today.

The post How does the Guzman Y Gomez ASX valuation compare to Domino’s? appeared first on The Motley Fool Australia.

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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Domino’s Pizza Enterprises. The Motley Fool Australia has recommended Domino’s Pizza Enterprises. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The Cettire Ltd (ASX: CTT) share price is under tremendous selling pressure today.

Shares in the All Ordinaries Index (ASX: XAO) retail stock closed on Friday trading at $2.24. In early morning trade on Monday, shares were swapping hands for just $1.29 apiece, down 42.4%.

The Cettire share price has since recovered a small part of those losses, trading for $1.34 at the time of writing, down 40.1%.

For some context, the All Ords is down 0.2% at this same time.

Here’s what’s happening.

Cettire share price plunges on profit warning

Investors are bidding down the Cettire share price after the online luxury goods retailer updated the market on its FY 2024 expectations.

On the plus side, Cettire noted that it had experienced “strong, broad-based revenue growth” in Q4 FY 2024.

And management said it expected to deliver “significant” year-on-year growth in active customers, sales revenue, adjusted earnings before interest, taxes, depreciation and amortisation (EBITDA) and cash.

Indeed, sales revenue is forecast to grow 77% to 99% from FY 2023 to $735 million–$745 million. And adjusted EBITDA is expected to fall in the range of $32 million to $35 million, up 24% to 36% year on year.

But the Cettire share price has nonetheless come under heavy pressure after the company reported that “the operating environment within global online luxury has become more challenging”.

The All Ords retail share said softening demand trends and increased promotional activity had crimped margins and impacted its Q4 financial performance.

Commenting on the FY 2024 growth figures, Cettire CEO Dean Mintz said:

With FY24 nearing completion, we are expecting to report considerable growth in revenue and Adjusted EBITDA for the year. Not only does this highlight the strong traction that our platform is gaining both on the supply and demand side, but it also illustrates our efficient cost structure.

Turning to the more challenging market conditions sending the Cettire share price tumbling today, Mintz added:

A softening demand environment and an increase in promotional activity has been visible across our footprint, particularly in the last several weeks as the market has entered the Spring Summer 24 sale period.

Additionally, we believe the market is currently being impacted by clearance activity as certain players exit parts of the market.

To continue to expand our market share, Cettire has selectively participated in the promotional activity, leading to an increase in marketing costs relative to sales and a decline in delivered margin percentage.

Offering some potential future tailwinds, Cettire launched its direct platform in China on Sunday. The company is already processing orders.

“The company continues to grow rapidly, is profitable and cash generative,” Mintz said.

Management will release Cettire’s full-year FY 2024 results in the second half of August.

With today’s big intraday losses factored in, the Cettire share price is down more than 50% over 12 months.

The post Why did the Cettire share price just crash 42%? appeared first on The Motley Fool Australia.

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Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Cettire. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

One of my best ASX stock investments within the last year has been Lovisa Holdings Ltd (ASX: LOV). The Lovisa share price has gone up almost 90% since I bought it in the last quarter of the year. I think it’s a very exciting ASX growth share with a lot of potential to keep expanding.

Investors generally consider an ASX stock by its present profit and its prospects for future profit. I am optimistic about the jewellery company’s potential for significant growth in the future.

I think there are few non-technology S&P/ASX 200 Index (ASX: XJO) shares that have the potential to grow revenue as much as Lovisa in the next several years.

Two things make me believe the company could deliver strong capital growth in the next five years.

Global store rollout plans to boost ASX stock’s sales

Over the last three years, five years or longer, Lovisa’s sales growth has largely tracked its store rollout and a bit of same-store sales growth in normal economic conditions.

For example, in the FY24 half-year result, Lovisa’s store count rose 19.4% to 854, and total sales went up by 18.2% to $373 million (despite the current challenging economic conditions harming same-store sales growth).

At the end of the FY24 first-half result, the ASX stock had 175 stores in Australia, a country of less than 30 million people.

I think there is excellent scope for the business to expand significantly in numerous markets. For example, in the USA, it has 207 stores (up from 155 stores in HY23), 47 stores in the UK, one store in China, one store in Vietnam, four stores in Mexico, and so on. These countries have much bigger populations than Australia, particularly the US and China.

In my opinion, the Lovisa store network could easily double in the next five years, and if its growth trend continues, Lovisa’s sales could double in that time too.

Scale benefits

When a business grows, profit margins often increase. This can enable the bottom line to grow faster than revenue. The profit can help push the Lovisa share price higher and fund larger dividends.

While Lovisa’s costs have accelerated during this inflationary period, I think inflation can slow down relatively soon, and the ASX stock’s growing scale will enable bigger profit margins.

Expansion into a new country comes with initial costs, but it doesn’t need to enter Mexico or Canada again; those one-off start-up costs won’t be repeated. It just needs to open more stores in those markets.

Becoming bigger will give Lovisa more buying power and give it other economies of scale.

The broker UBS has estimated that Lovisa can generate $709 million in revenue in FY24 and $81 million in net profit after tax (NPAT). By FY28, in four years, its revenue is expected to increase by 76% to $1.25 billion, and the net profit is projected to grow by 112% to $172 million.

According to those UBS estimates, the Lovisa share price is valued at 21x FY28’s estimated earnings.

The post This ASX stock has gained 89% since I bought it – but it could still be a bargain appeared first on The Motley Fool Australia.

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Motley Fool contributor Tristan Harrison has positions in Lovisa. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Lovisa. The Motley Fool Australia has recommended Lovisa. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The ResMed Inc. (ASX: RMD) share price is having a very disappointing start to the week.

In morning trade, the sleep disorder treatment company’s shares are down 13% to $27.88.

Why is the ResMed share price sinking?

Investors have been rushing to the exits this morning in response to the release of sleep apnoea trial results in the United States.

On Friday, global pharmaceutical giant Eli Lilly And Co (NYSE: LLY) released detailed results from the SURMOUNT-OSA phase 3 clinical trials. These are evaluating tirzepatide injection (10 mg or 15 mg) for the treatment of moderate-to-severe obstructive sleep apnoea (OSA) in adults with obesity, with and without positive airway pressure (PAP) therapy.

Tirzepatide, sold under the brand names Mounjaro and Zepbound, is an antidiabetic medication used for the treatment of type 2 diabetes and for weight loss.

According to the release, in both studies, tirzepatide achieved all primary and key secondary endpoints for both the efficacy and treatment-regimen estimands and demonstrated a mean reduction of up to 62.8% on the apnoea-hypopnea index (AHI), or about 30 fewer events restricting or blocking a person’s airflow per hour of sleep, compared to placebo.

It also notes that in a key secondary endpoint, the efficacy estimand showed that 43% (Study 1) and 51.5% (Study 2) of participants treated with tirzepatide at the highest dose met the criteria for disease resolution.

Management highlights that this means achieving an AHI of fewer than 5 events per hour, or an AHI of 5-14 events per hour and an Epworth Sleepiness Scale (ESS) score of ≤10. It notes that ESS is a standard questionnaire designed to assess excessive daytime sleepiness.

‘A complex disease’

Commenting on the results, Dr Atul Malhotra said:

In the trials, patients with moderate-to-severe obstructive sleep apnea and obesity treated with tirzepatide experienced about 30 fewer disruptive events every hour of sleep and nearly half achieved disease resolution.

Senior vice president, product development, Jeff Emmick, MD, Ph.D, added:

There are currently no pharmaceutical treatment options to address the underlying cause of OSA, a complex disease that disrupts the daily lives of 80 million people in the U.S. alone and is linked to serious health complications. The SURMOUNT-OSA results showed a significant proportion of patients with moderate-to-severe OSA and obesity treated with tirzepatide achieved disease resolution based on predetermined AHI and ESS measures, at which point PAP therapy may not be recommended.

Based on the ResMed share price weakness today, it appears that some investors are concerned that tirzepatide could weigh on the company’s growth in the coming years by reducing its addressable market.

Time will tell if that is the case and whether today’s selling has been yet another overreaction.

The post ResMed share price plunges 13% as weight-loss results reawaken worries appeared first on The Motley Fool Australia.

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S&P/ASX 200 Index (ASX: XJO) travel share Webjet Ltd (ASX: WEB) is in the red today.

The Webjet share price closed on Friday at $8.88. In morning trade on Monday, shares are changing hands for $8.83 apiece, down 0.6%.

For some context, the ASX 200 is down 0.2% at this same time.

This comes after the company updated the market on its demerger plans.

ASX 200 travel share aims to split in two

The Webjet share price is edging lower after the ASX 200 travel share reported that it continues to progress with the potential separation of its two leading travel divisions, WebBeds and Webjet B2C, via a demerger.

The company originally informed investors of its demerger plan on 22 May. At the time, managing director John Guscic said:

Having carefully weighed up the arguments for and against a demerger, the board sees significant value enhancement through a potential separation of our two industry leading businesses and brands.

Our B2C businesses will continue to deliver organic growth through the shift to online, while separation will support our WebBeds business in its relentless focus on achieving scale in all markets, in a post pandemic landscape characterised by a reduced number of smaller competitors.

In pursuing the demerger, the board noted today it expected the process would “strengthen both businesses’ ability to respond to the continuously evolving travel industry, streamline capital allocation decisions and build long-term value for shareholders”.

How will all this work?

If the demerger goes through, Webjet Limited shareholders will receive one Webjet B2C share for every Webjet Limited share they own, and they’ll retain their shareholding in Webjet.

After the demerger, the board expects Webjet Limited (Webjet B2B), will be renamed to match its global bedbanks business, WebBeds.

Should things progress to plan, Webjet B2C will be listed on the ASX alongside Webjet B2B. The two standalone ASX-listed companies will have their own leadership positions within their respective industries.

In line with that, the ASX 200 travel share announced the appointment of Katrina Barry as CEO of Webjet B2C. An experienced technology executive, Barry has served as non-executive director of the company since 2022. She starts in her new role today.

Webjet B2B, comprising the WebBeds business post-demerger, will continue to be led by Roger Sharp as chair and John Guscic as managing director.

Management expects that both Webjet B2B and Webjet B2C will maintain net cash positions, “reflecting capital structures that provide each business with adequate funding flexibility to pursue their respective growth initiatives”.

If it gains the necessary shareholder and regulatory approvals, the company expects to complete the demerger in calendar year 2024.

With today’s intraday moves factored in, the Webjet share price remains up 31%% in 12 months.

The post ASX 200 travel share slips on latest demerger news appeared first on The Motley Fool Australia.

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Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. 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 Scott Phillips.