The Monadelphous Group Limited (ASX: MND) share price is on the move today. This comes after the company released its interim report and financial results for the half-year ended 31 December 2021.

At the time of writing, Monadelphous shares are trading 8.15% higher at $10.75 apiece.

Monadelphous share price lurches forward as sales grow

Monadelphous is an engineering company that provides construction, maintenance, and industrial services to the resource, energy, and infrastructure sectors. Key takeouts from the company’s earnings results today include:

• Revenue came in at $1,065 million, up 12.% on the prior corresponding period (pcp)
• Record half-year maintenance and industrial services revenue
• Net profit after tax (NPAT) of $30.1 million, up 17.7% from the year prior
• Secured $860 million of new contracts and extensions
• 90%-owned Chilean business, Buildtek, continues to go “from strength-to-strength”
• Strategic focus on people attraction, retention, and wellbeing initiatives
• Interim dividend of 24 cents per share declared

What else happened this half for Monadelphous?

The Monadelphous share price is soaring today on the back of a positive result. A highlight from the company’s performance was that its maintenance and industrial services division achieved a record half-year of revenue.

Monadelphous says this result was underpinned by high demand for maintenance services and a surge in demand for services across both the resources and energy sectors.

The company also secured approximately $860 million of new contracts and contract extensions during the period. These contract wins were established across the resources, energy, infrastructure, and international markets.

Over in its Chile operations, Buildtek “continues to go from strength-to-strength”. As such, Monadelphous increased its shareholding in the business from 75% to 90% during the period in a vote of confidence.

Like its fellow ASX players, Monadelphous wasn’t immune to labour cost and supply chain headwinds observed throughout 2021.

“The Company continued to face labour cost and productivity pressures, with demand for labour in the industry remaining strong and COVID-19 restrictions constraining labour supply and mobility,” it remarked.

As a result of its strong NPAT of $30.1 million, the board declared a fully franked interim dividend of 24 cents per share.

Management commentary

Speaking on the result pushing up the Monadelphous share price today, managing director Rob Velletri said:

The resources sector will continue to provide opportunities, with the Australian iron ore industry remaining particularly buoyant. The demand for battery metals is forecast to remain strong and conditions in the energy sector are expected to continue to show an improving trend. The renewable energy market and developments in the hydrogen sector will also provide opportunities over the longer term.

The shortage of skilled labour will continue to be challenging. The increase in COVID-19 case numbers in Western Australia will also provide further challenges in the short-term. Monadelphous’ reputation and longstanding commitment to delivering safe, reliable and cost competitive solutions, puts it in a strong position to capitalise on these opportunities and navigate the challenging environment that lies ahead.

What’s next for Monadelphous?

According to the release, “the outlook for Monadelphous’ core markets is strong”.

“With the demand for battery metals forecast to remain strong, developments in lithium, copper, nickel, and rare earths will provide numerous prospects in the coming years,” the company said.

“These markets, along with the gold sector, will present opportunities for Monadelphous in Australia, South America, Mongolia, and Papua New Guinea.”

The level of construction activity in Australia is set to be a net positive for the company going forward, with a large number of projects having already been completed.

“Due to the timing of award and commencement of new major projects, construction activity is expected to decline in the second half of FY22, before increasing again in FY23,” Monadelphous said.

“As a result, Monadelphous’ full-year revenue for FY22 is expected to be approximately 5–10% lower than the previous year.”

Monadelphous share price snapshot

In the last 12 months, the Monadelphous share price has fallen 9%. However, since trading recommenced in 2022, it has climbed 11%.

Over the past month, it has soared another 15% and has spiked 21% in the past 5 days of trading.

The post ‘Strength to strength’: Monadelphous (ASX:MND) share price spikes 8% on strong earnings appeared first on The Motley Fool Australia.

More reading

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Motley Fool contributor Zach Bristow 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 Bruce Jackson.

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It’s a great day for the Woodside Petroleum Limited (ASX: WPL) share price despite the broader market’s struggles.

The oil and gas producer’s stock has hit yet another 52-week high today, surging 3% to $29.04.

Though, it has since backed off. At the time of writing, the Woodside share price is $28.89, 2.48% higher than its previous close.

For context, the S&P/ ASX 200 Index (ASX: XJO) has slipped 1.1% right now. Meanwhile, the All Ordinaries Index (ASX: XAO) is down 1.2%.

Let’s take a closer look at what might be boosting the Woodside share price today.

What’s driving Woodside’s stock today?

The Woodside share price is one of just 3 gainers on the S&P/ASX 200 Energy Index (ASX: XEJ) on Monday.

It’s joined by that of fellow oil producer Beach Energy Ltd (ASX: BPT), which has gained 2.36%.

Yet another oil giant, Santos Ltd (ASX: STO) is also in the green. Its share price is up 2.33%.

With such a pattern having emerged, many readers will assume something is going on with oil prices today. And they would be correct.

The price of oil surged overnight and is continuing its gains through today’s session.

Why are oil prices gaining?

Right now, the Brent crude oil price is U$97.27 per barrel ­– a 1.9% increase – while West Texas Intermediate has surged 2.9% to trade at US$94.00 a barrel, according to data from CNBC.

Reuters is reporting the black liquid’s value is taking off due to rising tensions between Russia and Ukraine.

While most of Australia slept, the publication reported on claims from the Russian military stating it killed 5 saboteurs who crossed the border from Ukraine.

Ukraine reportedly responded by saying that the incident was fabricated, but some are concerned it could be used as a pretext for a Russian invasion.

As Russia is one of the world’s leading oil producers, a potential conflict could hamper supply of the commodity.

Additionally, United States President Joe Biden and Russian President Vladimir Putin have agreed “in principle” to attend a summit proposed by French President Emmanuel Macron where they would discuss the tensions.

The summit will be conditional on Russia not invading Ukraine. However, the Guardian has reported that the Kremlin believes such talk is premature.

Finally, over the weekend, OPEC+ nations once again decided against easing demand for oil by increasing production, reports Reuters.

Woodside share price snapshot

The Woodside share price’s intra-day high marks the seventh time the company’s stock has surpassed its 52-week high in February.

Right now, it is 27% higher than it was at the start of 2022 and 21% higher than it was this time last year.

And it might not stop here.

As The Motley Fool Australia recently reported, Morgans has slapped the Woodside share price with a target of $30.35 and an ‘add’ rating.

The broker was impressed by the company’s recently released full year results, detailing a 262% increase to underlying net profit after tax (NPAT).

The post In a sea of red, the Woodside (ASX:WPL) share price is again hitting new highs. Here’s why appeared first on The Motley Fool Australia.

More reading

• 5 things to watch on the ASX 200 on Tuesday
• Own ASX dividend shares? Here are some of the payouts that have surprised so far this earnings season
• 5 things to watch on the ASX 200 on Monday
• Broker says Woodside (ASX:WPL) share price can keep rising
• 5 things to watch on the ASX 200 on Friday

Motley Fool contributor Brooke Cooper 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 Bruce Jackson.

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The ASX share market certainly isn’t having a great day so far this Tuesday. At the time of writing, the All Ordinaries Index (ASX: XAO) has lost a depressing 1.27% and is sitting at 7,411 points. But that’s nothing compared to the Cettire Ltd (ASX: CTT) share price.

Cettire shares are currently trading at $2.00 each, down a nasty 13.79% so far today. So what could be behind this steep fall for the online luxury goods retailer?

Well, unfortunately, it’s not too clear. There hasn’t been any news or announcements out of the company today. Or indeed nothing of note since Cettire announced it was partnering with the Chinese e-commerce company JD.com Inc (NASDAQ: JD) earlier this month.

Before that, Cettire posted its half-year earnings on 3 February. These showed that the company was still growing revenue at a hefty clip (192% increase) but also showed a widening loss on the bottom line.

So let’s look at what the broader market is doing. Cettire’s sector, consumer discretionary shares, is currently the worst-performing sector on the ASX boards today. At the time of writing, the S&P/ASX 200 Consumer Discretionary Index (ASX: XDJ) is down by more than 2%. Most retailers in this sector have (as you would expect) seen steep falls today. Premier Investments Limited (ASX: PMV) shares have lost close to 3% while Temple & Webster Group Ltd (ASX: TPW) shares are down by more than 3%.

Cettire share price feels the burn…

But Cettire’s fall is far larger, so could there be anything else going on?

Well, looking at Cettire’s share price, we can see that this company has been on an incredible run in recent years. Cettire was trading at roughly 50 cents a share back in December 2020. Today’s share price of more than $2 means that this company is still up a very pleasing 302% since then. And Cettire shares remain up almost 100% over the past 12 months.

But that doesn’t mean more recent times haven’t been unkind to the Cettire share price. This is a company that remains down 14.5% over the past 6 months and a horrible 44% year to date.

So perhaps investors see the Cettire share price as having more hot air than most, which might be why it has been losing so much steam in recent months. Or perhaps investors have just been supremely disappointed by Cettire’s recent earnings and are punishing the company for it. Whatever the reason, I’m sure Cettire shareholders are hoping that the next two months prove to be more successful than the last two.

At the current Cettire share price, this company has a market capitalisation of around $762 million.

The post The Cettire (ASX:CTT) share price is plunging 14% today. What’s going on? 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. owns and has recommended Cettire Limited and Temple & Webster Group Ltd. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended JD.com. The Motley Fool Australia has recommended Cettire Limited, JD.com, Premier Investments Limited, and Temple & Webster Group Ltd. 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 Altium Limited (ASX: ALU) share price has continued its slide on Tuesday.

In afternoon trade, the electronic design software provider’s shares are down over 3% to $31.35.

This means the Altium share price is now down approximately 10% since the release of its half year results.

Why is the Altium share price tumbling?

In case you missed it, on Monday Altium released its half year results. The company reported a 28% increase in half year revenue to US$102 million and a 38% lift in net profit after tax to US$23 million.

However, taking the shine off the result was management’s guidance for the full year.

Although it now expects to hit the high end of its revenue guidance range, it only expects to achieve the low end of its margin guidance range. This implied a miss for its full year earnings based on consensus forecasts at the time.

Is this a buying opportunity?

The team at Bell Potter appear to believe the weakness in the Altium share price could be a buying opportunity.

According to a note, the broker has retained its buy rating, albeit with a slightly trimmed price target of $38.75.

Based on the current Altium share price, this implies potential upside of almost 24% for investors over the next 12 months.

What did the broker say?

The broker has made some revisions to its estimates, but remains positive on its future.

Bell Potter said: “Altium provided a soft upgrade of its FY22 revenue guidance from US$209-217m to US$213-217m. The company also, however, said the EBITDA margin would be at the low end of the 34-36% range and this was due to pursuing “new cloud and enterprise sales roles in an increasingly competitive talent market”. Altium also reiterated its FY25/26 aspirational revenue target of US$500m and on the conference call CEO Aram Mirkazemi said this target was looking more achievable following the H1 result.”

“We have downgraded our EPS forecasts by 4%, 2% and 1% in FY22, FY23 and FY24. The downgrades have been driven by decreases in our margin estimates while our revenue forecasts are close to unchanged. Note our revenue growth forecasts in FY23 and FY24 are in the high teens whereas to achieve the $500m target in FY25/26 the annual growth rate needs to be >20% (so we are being more conservative),” it concludes.

The post Is the Altium (ASX:ALU) share price in the buy zone following its results? 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. owns and has recommended Altium. 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 Peter Warren Automotive Holdings Ltd (ASX: PWR) share price is advancing on Tuesday afternoon. This comes after the Australian automotive dealership group announced its first-half results for the 2022 financial year.

At the time of writing, Peter Warren shares are up 4.53% to $2.77. For comparison, the All Ordinaries Index (ASX: XAO) is down 1.19% to 7,417 points.

Peter Warren share price climbs amid strong H1 FY22 result

The Peter Warren share price is heading north today following the company’s performance for the 6 months ending 31 December 2021. Here are some of the key highlights:

• Total revenue of $779.2 million, up 4% on the prior corresponding period (H1 FY21 $749.6 million)
• Earnings before interest, taxes, depreciation and amortisation (EBITA) of $54 million, up 28% (H1 FY21 $42.3 million)
• Underlying EBITDA margin of 6.9%, up 130 basis points (H1 FY21 5.6%)
• Underlying profit before tax (PBT) of $36.2 million, up 35% (H1 FY21 $26.9 million)
• Fully franked inaugural interim dividend of 9 cents per share

How did Peter Warren perform in H1 FY22?

In the first half of FY22, Peter Warren recorded sales revenue of $778 million, up 4% on the prior corresponding period. This is despite government-mandated lockdowns which impacted volumes as well as Honda’s switch to an agency model in July, which is estimated to have cost $12 million.

Under an agency model, Peter Warren does not recognise revenue and the cost of goods associated with the sale of new vehicles. This has since been replaced by commission revenue for delivery.

Along with operating costs being well managed, management responded to the ever-changing conditions related to COVID-19.

As such, the group experienced strong levels of demand across the eastern seaboard, with its order book (for NSW and QLD) up 97%. The diversity of brands in Peter Warren’s portfolio has helped counter the uncertainty surrounding the supply of vehicles.

The company also secured a $96 million debt facility which leverages its property assets to support its growth strategy.

What did management say?

CEO Mark Weave commented on the results driving the Peter Warren share price today:

…Despite a challenging period impacted by COVID-19 lockdowns and supply constraints across our OEM partners, we have materially progressed our strategic geographic expansion and our omni-channel sales approach to great success.

We welcome the Penfold Motor Group and its experienced management team into our group and look forward to further expanding our operating footprint over time, as we deliver our auto mall concept to Victoria.

This result reflects the underlying strength of our business and is a credit to our teams who continue to adapt to the changing market conditions. Reflecting this, the Board has declared an interim dividend in line with our target payout ratio to provide a return to our shareholders.

What’s the outlook for Peter Warren?

Looking ahead, Peter Warren remains optimistic about the continuation of earnings for the full financial year.

A strong order book, anticipated improvement in new vehicle supply, and underlying demand are expected to underpin future performance.

However, limited downward pressures on new vehicle margins are forecasted in the period to 30 June 2022.

Nonetheless, the acquisition of the Penfold Motor Group in December 2021 will contribute to revenue in the second half.

The company refrained from providing earnings or profit guidance for the FY22 full year.

Peter Warren share price snapshot

The Peter Warren share price is down around 20% over the past 12 months. It has also fallen 6% this year to date and 4.5% over the past month.

The post ‘Great success’: Peter Warren (ASX:PWR) share price revs up on robust first-half results appeared first on The Motley Fool Australia.

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Shares in AVA Risk Group Ltd (ASX:AVA) are on the move today following a company announcement.

AVA says that it intends to return capital to shareholders as previously announced in August 2021. After securing a stockpile of cash, the company has deliberated and come to a decision on how best to reward its shareholders with these funds.

At the time of writing, the AVA share price is trading 3% higher at 41.5 cents apiece as investors respond positively to the company’s release.

AVA Risk Group to return capital to shareholders

Investors might recall that back in August last year, AVA announced that it wanted to redistribute ‘excess cash’ of around $39 million to shareholders.

The proposal to distribute the funds was contingent on receipt of a favourable class ruling from the Australian Tax Office (ATO) regarding the treatment of the funds, to see if they could be treated as capital or not.

AVA notes that the ATO has responded to its class ruling application, indicating that “it would be willing to treat $7.567 million of the proposed $39.2 million as capital in nature”.

The board considered all options of how to return the excess funds to shareholders and came to a final investment decision that sees AVA shareholders benefit from the company’s good fortune.

After careful consideration, it decided to make two distributions. The first is a special dividend of 13 cents per share, totalling a distribution of approximately $31.585 million.

Whereas the second payment is set to be a capital return of 3.114 cents per share for a sum of around $7.567 million.

On 28 February 2022 –the special dividend’s record date – investors will receive an unfranked dividend of 13 cents per share, to be paid on 10 March 2022, per the release.

With respect to the details of the capital return, AVA remarked:

The Company will seek shareholder approval to reduce the ordinary share capital of the Company by approximately $7,567,000 and such reduction in capital to be effected by the Company paying to each registered holder of a fully paid ordinary share the amount of $0.03114 per share. Shareholder approval will be sought at an Extraordinary General Meeting on 22 April 2022. Further details relating to Capital Return, Record Date and timetable will be provided within a Notice of Meeting which will be issued to shareholders in the near future.

AVA Risk Group share price snapshot

In the last 12 months, the AVA share price has faltered over 32%, however has spiked almost 3% since trading recommenced this year.

The post Payday! Here’s why the Ava Risk (ASX:AVA) share price is surging higher today appeared first on The Motley Fool Australia.

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• Here’s why the Strike Energy (ASX:STX) share price is 6% higher today
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Motley Fool contributor Zach Bristow 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 Bruce Jackson.

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The Strike Energy Ltd (ASX: STX) share price is in the green today amid an update on its drilling operations.

The company’s shares are currently trading at 28.2 cents each, a jump of 6.42%.

Let’s take a look at what could be impacting the Strike Energy share price today.

Drilling operations update

Strike Energy is a low carbon energy and fertiliser company with access to the Perth basin in Western Australia.

Today, Strike Energy updated the market on drilling at its South Erregulla-1 (SE1) target.

Strike said the company has set, cemented, and pressure tested the SE1 well. It has also commenced drilling the final production section.

South Erregulla is located within an area known as EP503, close to Strike’s gas discovery at West Erregulla. The company describes West Erregulla as a “significant gas discovery” that was a major turning point in its history.

Strike said South Erregulla has significant resource potential in the Kingia sandstones with a great chance of success.

The main objective of drilling at SE1 and other wells is to secure the gas requirements for Project Haber. This is a fertiliser production facility in WA that was recently awarded major project status.

Management comment

In a statement signed off by the managing director and chief executive officer, Strike Energy said:

On confirmation of success at SE1, Strike will look to sanction additional detailed engineering, finalise the urea offtake, and progress the equity/debt processes for Project Haber and any subsequent appraisal wells in South Erregulla.

Strike Energy share price snapshot

The Strike Energy share price has fallen nearly 6% in the past year but is up 38% year to date.

In the past week alone, Strike shares have risen nearly 10%.

For perspective, the benchmark S&P/ASX 200 Index (ASX: XJO) has returned around 6% over the past year.

Strike Energy has a market capitalisation of $567 million, based on today’s share price

The post Here’s why the Strike Energy (ASX:STX) share price is 6% higher today appeared first on The Motley Fool Australia.

More reading

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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 Bruce Jackson.

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The A2 Milk Company Ltd (ASX: A2M) share price was among the best performers on the ASX 200 on Monday.

Investors were bidding the infant formula company’s shares higher following the release of its half year results.

What happened during the first half?

For the six months ended 31 December, A2 Milk reported a 2.5% decline in revenue over the prior corresponding period to NZ$661 million. Though, this figure is a bit misleading as it includes the Mataura Valley Milk (MVM) business, which was acquired in late FY 2021 and thus was not part of the prior period’s numbers.

A better reflection on its performance comes from its Infant Nutrition and Liquid Milk businesses, which reported a 10.5% decline in revenue to NZ$471 million and a 0.2% lift in revenue to NZ$125 million, respectively.

And, as was widely expected, on the bottom line A2 Milk’s net profit after tax more than halved to NZ$56 million.

So why did the A2 Milk share price storm higher?

Investors appeared to be more interested in what management was saying rather than its results.

It commented: “The Company’s outlook for 2H22 revenue has improved. It is still expected to be significantly higher than 2H21, and with growth now expected on 1H22 and for FY22, ahead of initial expectations due mainly to growth in China label and English label IMF.”

This appears to have sparked hopes that the worst could now be behind the former market darling.

Broker remains positive

In response to the result, the team at Bell Potter has retained its buy rating and $7.70 price target on the company’s shares.

Based on the current A2 Milk share price of $5.81, this implies potential upside of 32% for investors over the next 12 months.

Having reviewed the result, Bell Potter believes “the sleeper has awakened.”

It commented: “Our Buy rating remains unchanged. We saw plenty to like in this result: (1) growth in stage 1 market share in the MBS channel from 2.1% to 2.5% (indicative of new customer recruitment); (2) a beat in China direct channels sales in 1H22 and a closer alignment of sell-in and sell-out levels in 2Q22; (3) reinvestment of outperformance into marketing, to support FY23-24e revenue growth; and (4) progress on articulating a margin capture strategy at MVM.”

Time will tell whether this is the right call on the A2 Milk share price.

The post ‘The sleeper has awakened’: Top broker gives its verdict on the A2 Milk (ASX:A2M) share price 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 A2 Milk. 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 ASX’s most popular exchange-traded fund (ETF) to invest in is the Vanguard Australian Shares Index ETF (ASX: VAS). We know this because VAS currently has more than $10 billion in assets under management, far greater than its next rival with just over $5 billion.

But we also know that VAS was far from the best performing ETF in 2021. It didn’t even make the top five. Some of the ETFs that beat out VAS, such the BetaShares Crude Oil Index ETF (ASX: OOO) had stellar years last year, but don’t beat the Vanguard Australian Shares Index ETF over a longer period of time. But funds like those are not index funds; they instead cover specific corners of the market (in this case, oil futures).

But let’s look at some of the index funds that can shine a light on VAS over the past decade.

How does VAS measure up against other ASX index funds?

As a benchmark, VAS has returned an average of 9.41% per annum over the past ten years (as of 31 January).

One index fund that has exceeded this return is the ASX’s second-most popular ETF by assets under management, the iShares S&P 500 ETF (ASX: IVV). This ETF tracks the S&P 500 Index, which is the conventional pick for US share exposure as well as being the most widely-tracked index in the world. Over the past decade, IVV has more than doubled VAS’s return, giving investors an average return of 20.07% per annum.

But that’s not the only index fund that has pipped VAS over the past decade.

The iShares Global Consumer Staples ETF (ASX: IXI) has averaged a return of 13.72% over the same period.

The iShares Asia 50 ETF (ASX: IAA) has given investors an average of 12.59%. The iShares Global 100 ETF (ASX: IOO) Tracking 100 of the largest companies in the world, this fund has averaged 17% per annum since 2012.

Even the iShares MSCI Japan ETF (ASX: IJP) has beaten out VAS, giving investors a return of 11.39% over the past ten years.

So VAS is certainly not infallible. But that doesn’t mean you shouldn’t invest in it. Perhaps Australian shares may outshine those other markets over the next decade. Past performance is no guarantee of future returns, after all. But ASX investors have voted with their wallets and VAS still remains king of the ASX index fund hill.

The post Think VAS is the best ASX index fund? These ETFs have beaten it over the past decade… 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 owns and has recommended iShares Global Consumer Staples ETF. The Motley Fool Australia has recommended iShares Trust – iShares Core S&P 500 ETF. 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 Judo Capital Holdings Ltd (ASX: JDO) share price is bucking the wider market selloff today and is currently up 0.4%.

Judo shares closed yesterday at $1.98 and are currently trading for $1.99.

The bank, focused on lending to Small and Medium Enterprises (SMEs), is a newcomer to the ASX, listing on 1 November 2021.

Below we look at its financial results for the half year ending 31 December (1H FY22).

Judo share price up amid bullish guidance

• Pro forma profit before tax of $3 million, up from a loss of $700,000 in 1H FY21
• Gross loans and advances increased 37.8% year-on-year to $4.85 billion
• Net interest income of $73.5 million up 48.5% from the prior corresponding period
• Underlying net interest margin of 2.73%, up from 2.65% in 1H FY21

What else happened during the half year?

While Judo’s pro forma profits for the half year handily beat the losses posted during 1H FY21, the bank reported a statutory net loss of $16.1 million. That compares to a statutory net profit of $1.9 million in the prior corresponding period.

Judo attributed that loss to one-off costs associated with its initial public offering (IPO).

The bank’s underlying net interest margin of 2.73% came in above prospectus guidance of 2.69%.

Term deposits remained a key funding source during the half year, and the bank received an investment grade credit rating from S&P. It said this rating enabled it to access new forms of wholesale funding and “a broader universe of term deposit investors”.

As at 31 December, Judo had drawn $2.9 billion from the RBA’s Term Funding Facility. This is expected to continue to be beneficial to its fundings costs for the full 2022 financial year. Judo said it’s “well positioned” to refinance the drawing before it expires in June 2024.

What did management say?

Commenting on the results, Judo’s CEO, Joseph Healy said:

Judo has delivered a strong first half result underpinned by growth in our loan book together with an improvement in underlying margins…

We are confident that we have the right strategy in place with a clear aim of expanding the reach of our banking services so that more SMEs across Australia have access to a relationship bank that listens, understands, and boldly backs business.

What’s next?

Looking ahead Healy said, “We are expecting 2022 to deliver the strongest business credit growth in 14 years.”

He added that Judo is targeting a lending portfolio of $15 billion to $20 billion, with net interest margins of more than 3%. Judo is also targeting a return on equity in the “mid-teens” and a cost-to-income ratio in the range of 30%.

The company said it “is confident of achieving its prospectus FY22 GLA forecast of $6 billion and of modestly exceeding revenue and profit forecasts”.

Judo share price snapshot

The Judo share price has struggled in the new year, down 8.1%. That compares to a year-to-date loss of 6.3% posted by the All Ordinaries Index (ASX: XAO).

The post Judo (ASX:JDO) share price lifts on bullish guidance appeared first on The Motley Fool Australia.

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The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and has recommended Judo Capital Holdings Limited. 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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