Key points

• The Pinnacle share price is currently in the red despite launching 6% higher this morning
• The movement followed the release of the investment management firm’s results for the first half
• Within them, it boasted a 32% profit increase and a 50% dividend boost

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The Pinnacle Investment Management Group Ltd (ASX: PNI) share price opened in the green after the company released its results for the first half of financial year 2022 (FY22) after close yesterday.

Early morning trade saw its stock reaching $12.45 – representing a gain of 6%.

However, it quickly slumped. At the time of writing, the Pinnacle share price is $11.51, 1.96% lower than its previous close.

Pinnacle share price slips on 32% profit boost and 50% dividend growth

The Pinnacle share price is struggling today after the release of the company’s latest results. Highlights include:

• $40.1 million of profit – up 32% on the first half of FY21;
• Earnings per share (EPS) came to 17.5 cents – up 23%;
• Funds under management increased 5% to $93.6 billion; and
• Fully franked 17.5 cent dividend.

Over the 6 months ended 31 December, Pinnacle brought in a net profit after tax of $40.1 million, translating to EPS of 21.5 cents, or 21 cents fully diluted.

That’s compared to the first half of FY21’s EPS, which came to 17.5 cents or 16.7 cents fully diluted.

Additionally, its retail net inflows came to $2.9 billion during the half-year. That’s the largest they’ve been over a six-month period.

The investment management firm’s affiliates also generated $6.4 million of performance fees over the period. The prior comparable half brought $11 million of performance fees.

The company declared a fully franked interim dividend of 17.5 cents to be paid on 18 March. That’s 50% more than FY21’s 11.7 cents interim dividend and represents an 83% payout ratio.

The company’s 16 affiliates saw their aggregate funds under management (FUM) grow by 5% – or $4.2 billion – to $93.6 billion over the period. That’s 43% higher than it was on 31 December 2020.

If excluding the $3.9 billion outflow of the Omega ‘passive’ mandate on very modest fees during August, its FUM increased $8.1 billion, or 9%, during the half.

Further, if excluding the $1.1 billion Five V Capital FUM, Pinnacle’s aggregate affiliates’ FUM increased $7 billion, or 8%.

Its aggregate retail FUM came to $23.8 billion on 31 December – an increase of $3.5 billion, or 17%, over the six months.

Pinnacle’s total net outflows for the half-year were $1.7 billion. Excluding the Omega outflow, it recorded $2.2 billion of net inflows.

It held $176.4 million of cash and principal investments at 31 December, as well as a $100 million fully drawn debt facility deployed in liquid funds managed by its affiliates.

What else happened in the first half?

The Pinnacle share price was put in the freezer in November as the company prepared to announce its acquisition of a 25% interest in Five V Capital.

To pay for the purchase, the investment management firm underwent a $105 million placement.

The company’s stock slumped 5% when trading was resumed following the capital raise.

Additionally, Pinnacle made a joint decision to close the Reminiscent Capital business last half.

The value of its $1.8 million holding was written down and treated as an impairment expense, dropping Pinnacle’s net profit after tax to $40.1 million.

What did management say?

Within today’s release, the company provided a directors’ report. It stated:

Whilst we experienced institutional net outflows, we believe these reflect short-term factors including rebalancing, with the rate of gross inflows broadly consistent with the prior comparative half year — the institutional sales pipeline remains robust.

We have continually reminded investors that net institutional flows are ‘lumpy’ and volatile over reasonably short periods of time, and this was particularly evident during this half-year period…

Recent actual and anticipated changes in macroeconomic and geopolitical conditions have resulted in some increased turbulence and volatility in investment markets. Whilst not immune to such conditions, over the past few years we have increased the diversity of both asset classes under management and sources of revenue … with the objective of building enhanced resilience throughout the full cycle.

What’s next?

Those interested in the Pinnacle share price might want to keep an eye out for expansion activities as the fund manager looks to take advantage of offshore opportunities to “evolve into a global multi-affiliate”.

It also noted that times of volatility and turbulence have previously brought opportunities to “judicious and patient” shareholders and investors.

Pinnacle share price snapshot

The new year hasn’t been good to the Pinnacle share price so far. The investment management firm’s stock has tumbled 26% since the end of 2021.

Though, it is 43% higher than it was this time last year.

The post Tough crowd: Why isn’t this impressing Pinnacle (ASX:PNI) shareholders? appeared first on The Motley Fool Australia.

More reading

• 2 top ASX growth shares with compelling potential
• 2 ASX growth shares to buy this month: experts

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. owns and has recommended PINNACLE FPO. The Motley Fool Australia owns and has recommended PINNACLE FPO. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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Key points

• These 2 ASX tech shares might be opportunities to consider in February 2022
• The ASIA ETF has some of Asia’s strongest tech players. China continues to see more digital services
• The Kogan share price has dropped heavily in recent months, Credit Suisse thinks it looks good value

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Lots of ASX tech shares are currently on sale after share market volatility in recent weeks and months.

Just because a business drops in value doesn’t automatically make it worth pursuing. However, if businesses are growing then they could be attractive opportunities.

With that in mind, here are two ASX tech shares to consider:

Betashares Asia Technology Tigers ETF (ASX: ASIA)

This is an Asia-focused exchange-traded fund (ETF) that gives investors exposure to many of the leading tech businesses outside of Japan.

We’re talking about names like Taiwan Semiconductor Manufacturing, Samsung, Tencent, Alibaba, Meituan, Infosys, JD.com, Pinduoduo and Netease.

Many of these businesses are the dominant players at what they do in China or the wider Asian region. Samsung is one of the global leaders of smartphones and other household appliances. The global tech supply chain relies heavily on Taiwan Semiconductor Manufacturing.

Specifically in China, the two companies of Tencent and Alibaba dominant industries like cloud computing, gaming, e-commerce, social media and communication.

Over the last year, the ASIA ETF has dropped more than 33%.

BetaShares says that due to its younger, tech-savvy population, Asia is surpassing the West in terms of technological adoption and the sector is anticipated to remain a growth sector.

The ASX tech share has an annual management fee of 0.67% per annum.  

Kogan.com Ltd (ASX: KGN)

Investors continue to punish the e-commerce business. The Kogan share price is down 28% this year and 64% over the last year.

The business is hurting from higher costs, such as its supply chain with increased logistics costs, and recent sales growth hasn’t been as much as some investors were hoping.

However, the broker Credit Suisse currently rates the ASX tech share as a buy, with a price target of $9.16. That’s a potential increase of more than 40% over the next 12 months. Credit Suisse thinks that the business is still a buy due to the drop in the share price.

On Credit Suisse’s latest numbers, the Kogan share price is now priced at 21x FY23’s estimated earnings.

Looking at the adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) for the first half of FY22, Kogan.com’s adjusted EBITDA was down 70.1% to $14.6 million whilst overall adjusted EBITDA was down 58% to $21.7 million thanks to the inclusion of Mighty Ape.

Kogan continues to invest heavily in marketing to grow the platform.

However, there was growth in several other areas. Kogan.com’s active customers increased 10% year on year to 3.3 million. Kogan First members went up 176% year on year to 274,000. Gross sales went up 9% year on year to $698 million. Kogan Marketplace gross sales rose 28.7% year on year to $221.1 million.

At 31 December 2021, the company had net cash of $39.7 million.

The post Are these 2 ASX tech shares good buys in February? appeared first on The Motley Fool Australia.

More reading

• 3 of the best ETFs for ASX investors this month
• How will ASX shares perform this earnings season? Experts explain what to look for
• These were the worst performing ASX 200 shares in January
• These are the 10 most shorted ASX shares
• 3 high quality ETFs for ASX investors in February

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. owns and has recommended Kogan.com ltd. The Motley Fool Australia owns and has recommended Kogan.com ltd. The Motley Fool Australia has recommended BetaShares Asia Technology Tigers 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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Key points

• Newcrest shares have come under pressure amid slipping gold prices
• Goldman Sachs offers bullish forecast on bullion
• Newcrest set to hit production guidance for FY22

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Newcrest Mining Ltd (ASX: NCM) shares are edging lower in early afternoon trade, down, 0.31%. 

That beats the broader index today, with the S&P/ASX 200 Index (ASX: XJO) down 0.27% at this same time.

Newcrest shares have been under pressure in recent months, as gold prices slumped from US$1,901 per ounce in early June to US$1,806 today.

That 5% drop in bullion prices has seen the Newcrest share price fall by 21% since 1 June.

But with inflation on the rise across the globe, some top analysts are forecasting a healthy lift for the yellow metal in the year ahead.

What rising inflation could mean for Newcrest shares

Inflation is ticking up almost everywhere.

That’s seen the world’s most influential central bank, the US Federal Reserve, signal that it’s likely to hike interest rates multiple times in 2022.

The Reserve Bank of Australia (RBA) sounded a more dovish tone during the bank’s monthly meeting on Tuesday. However, RBA governor Philip Lowe conceded that inflation was higher than the bank had forecast last year. And that rate rises could be on the cards here as well.

Now rising interest rates tend to work against the price of gold, and hence the Newcrest share price, as bullion doesn’t pay any yield.

But there’s another important side to this coin.

Namely, that gold also serves as a historic haven asset, with investors viewing it as a secure store of value.

So, when inflation begins to nibble away at cash holding – and rising rates see risk assets like crypto and high-flying tech shares, sold off – gold’s appeal as a store of value shines brighter.

Gazing into their crystal ball, Goldman Sachs’ analysts forecast a strong run for bullion in the year ahead.

In the wake of US Fed chair Jerome Powell’s comments detailing slowing global growth coupled with higher inflation, Goldman Sachs upped its 12-month outlook for bullion to US$2,150 (AU$3,025) per ounce from its previous forecast of US$2,000.

If Goldman is right, the 13.5% increase from today’s US$1,806 per ounce would offer some healthy tailwinds for Newcrest shares.

Commenting on the outlook for gold, Bloomberg analyst Mikhail Sprogis added, “This combination of slower growth and higher inflation should generate investment demand for gold, which we consider to be a defensive inflation hedge.”

How has Newcrest been performing?

Newcrest released its second quarter update last Friday.

The company reported solid gold production during the quarter with an all-in sustaining cost (AISC) of US$1,127 per ounce.

Management said the company should increase production in Q3 and is on track to meet guidance for the full 2022 financial year.

If the miner can keep AISC in the US$1,127 per ounce range while increasing production, a lift in the gold price to US$2,050 during the year could help boost Newcrest shares. 

The post What rising inflation could mean for Newcrest (ASX:NCM) shares appeared first on The Motley Fool Australia.

More reading

• What are you really getting when you buy Northern Star (ASX:NST) shares?
• Own ASX gold shares? World Gold Council reports big boost in demand
• 5 things to watch on the ASX 200 on Monday
• Why AnteoTech, Newcrest, Nitro, and ResMed shares are falling
• ASX 200 (ASX:XJO) midday update: ResMed and PointsBet disappoint

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 Insurance Australia Group Ltd (ASX: IAG) share price will be one to watch next week.

On 11 February, the insurance giant is scheduled to release its half year results.

Ahead of the release, let’s take a look to see what the market is expecting from IAG.

What should you expect from IAG’s first half results?

While IAG has not provided guidance for the first half, it has given the market guidance for FY 2022. In light of this, investors may want to look to see if this guidance remains achievable based on its first half performance.

According to its recent business update, IAG’s FY 2022 guidance is for a 10% to 12% reported insurance margin and low single-digit gross written premium (GWP) growth. This is based on estimated full year natural perils costs of $1,045 million.

What about its profits?

According to a note out of Morgans, at present the market consensus estimate is for a first half cash profit of $285 million and an interim dividend of 8 cents per share. However, it is worth noting that Morgans doesn’t expect the insurance giant to deliver a result that matches the market’s expectations.

The broker commented: “IAG’s 1H22 result will be heavily affected by a large level of natural hazard claims, with IAG disclosing A$535m in natural hazards for the first 4 months of the year versus an initial FY22 hazard budget of A$765m. We forecast 1H22 cash NPAT of A$210m (consensus = A$285m) and a dividend of ~A6cps (consensus = A8cps).”

Nevertheless, its analysts still see enough value in the IAG share price to recommend it as a buy. Morgans currently has an add rating and $5.32 price target on its shares. This compares to the latest IAG share price of $4.30.

Its analysts commented: “IAG had a difficult FY21 and FY22 is set to be a weather affected year. However, we believe for the patient investor the stock is cheap trading on ~13x FY23F earnings, and we expect continuing insurance price increases, combined with management’s strategy to improve performance, to drive improved profitability over time.”

The post Own IAG (ASX:IAG) shares? Here’s what to expect when it reports next week appeared first on The Motley Fool Australia.

More reading

• Why did the IAG (ASX:IAG) share price slump to fresh, 9-year lows today?
• Here’s what 67% of brokers think of the current IAG (ASX:IAG) share price
• Own IAG (ASX:IAG) shares? Here’s what you’re really invested in
• Leading brokers name 3 ASX shares to sell today
• Could this help take pressure off IAG (ASX:IAG) shares in the future?

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 owns and has recommended Insurance Australia Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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Key Points

• Currently, the Serko share price is hovering near a 52-week low of $4.59
• Unfavourable trading conditions impacting business performance with business travel volumes down
• Adjusted FY22 revenue guidance of between NZ$18 million to NZ$20.5 million

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The Serko Ltd (ASX: SKO) share price is tumbling today following the company’s announcement of a trading update.

The online travel booking and expense management provider’s shares are down by 5.51% to $4.63.

Serko signals tough trading conditions

In its statement, Serko advised challenging trading conditions since the release of its FY22 half-year results on 24 November.

The company stated that the Omicron variant has continued to disrupt business travel volumes across the globe. This is expected to lead to reduced revenues that were previously forecasted for the full-year ending 31 March 2022.

However, to ensure enough liquidity on the company’s balance sheet, management undertook a capital raise in 2021. The funds are being used to innovate Serko’s global offering and expand its revenue base through the acquisition of new customers.

While business travel volumes are normally down during the holiday months of December and January, booking numbers have fallen even further due to COVID-19.

However, on a positive note, last week the booking.com for business has recovered to around 90% October 2021 levels. This is in particular for the Australian and New Zealand markets.

As a result of the ongoing volatility, Serko adjusted its FY22 revenue guidance range between NZ$18 million and NZ$20.5 million. In contrast, the company previously forecasted revenue guidance of NZ$21 million and NZ$25 million.

Management noted that the lower end of the range reflects a drop in revenue over last week’s volumes for February and March.

In addition, the higher end represents a gradual improvement in transaction numbers driven by normal seasonality.

The company is predicting an average monthly cash burn of almost $4 million in the six-month period to 31 March. This is in line with earlier guidance provided to investors in November 2021.

Serko share price snapshot

In the last 12 months, the Serko share price has fallen by 10%. Although, when looking at year to date, its shares are down by more than 25%.

Having reached an all-time high of $8.15 in September, Serko shares are now close to their 52-week low of $4.59 today.

The post Here’s why the Serko (ASX:SKO) share price is sinking 5% today appeared first on The Motley Fool Australia.

More reading

• 2 growing small cap ASX shares to watch

Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and has recommended Serko Ltd. The Motley Fool Australia has recommended Serko 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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At lunch on Thursday, the S&P/ASX 200 Index (ASX: XJO) out of form and in the red. The benchmark index is currently down 0.3% to 7,068.7 points.

Here’s what is happening on the ASX 200 today:

Westpac shares higher on Q1 update

The Westpac Banking Corp (ASX: WBC) share price is pushing higher following the release of its first quarter update. According to the release, the banking giant reported cash earnings of $1.58 billion for the three months. This was up 1% excluding notable items over the quarterly average during the second half of FY 2021. Westpac’s net interest margin was down 8 basis points to 1.91% and is expected to go lower during FY 2022. The bank also revealed some major cost cutting plans, which could be supporting its shares.

Nufarm jumps following trading update

The Nufarm Ltd (ASX: NUF) share price is surging higher today after the release of a trading update. According to the release, the agricultural chemicals company’s first quarter revenue grew 36% over the prior corresponding period. Management advised that this was supported by favourable weather conditions.

Tech shares sink

A number of tech shares are falling heavily on Thursday including Appen Ltd (ASX: APX) and WiseTech Global Ltd (ASX: WTC). This follows heavy selling on the Nasdaq index in after hours trade following the release of the Meta (Facebook) quarterly result. Its shares are down 23% after its update and guidance fell well short of expectations. The S&P/ASX All Technology Index is down over 4% at lunch.

Best and worst ASX 200 performers

The best performer on the ASX 200 on Thursday has been the Nufarm share price with a 14% gain following its trading update. Going the other way, the worst performer has been the WiseTech share price with an 8% decline amid weakness in the tech sector.

The post ASX 200 (ASX:XJO) midday update: Westpac higher on Q1 update, tech shares sink appeared first on The Motley Fool Australia.

More reading

• Why is the Appen (ASX:APX) share price down 7% today?
• Westpac (ASX:WBC) share price on watch after reporting $1.58bn Q1 profit
• 5 things to watch on the ASX 200 on Thursday
• Here are the top 10 ASX shares today
• TechnologyOne (ASX:TNE) share price jumps on broker upgrade

Motley Fool contributor James Mickleboro owns Westpac Banking Corporation. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and has recommended Appen Ltd and WiseTech Global. The Motley Fool Australia owns and has recommended Appen Ltd and WiseTech Global. The Motley Fool Australia has recommended Westpac Banking Corporation. 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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Key points

• Qantas share price up 5% this week
• CEO Alan Joyce is calling for more tourists to be allowed to travel to Australia
• JP Morgan has included Qantas in a Super 7 list of shares to buy now

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The Qantas Airways Ltd (ASX: QAN) share price is lifting this week amid hopes that tourists could soon be welcomed back into Australia.

In the week to date, the airline’s shares have soared by 5.07%. However, in early trading today the Qantas share price is currently down 1%. For perspective, the S&P/ASX 200 Index (ASX: XJO) is also down 0.18% today.

Let’s take a look at what might be impacting the Qantas share price.

What’s happening at Qantas?

The Qantas share price is starting February in the green. In recent days, JP Morgan has listed Qantas in a ‘Super 7’ list of shares to buy now. My Foolish colleague Brendon noted the average return from ASX 200 shares on the Super 7 list is 30%, based on JP Morgan’s forecasts.

Looking at other ASX travel shares, the Webjet Limited (ASX: WEB) share price is up 6% so far this week. The Flight Centre Travel Group Ltd (ASX: FLT) share price has risen by 8%. Meanwhile, Regional Express Holdings Ltd (ASX: REX) has fallen 4%.

Qantas received attention from the highest levels of government on Wednesday, with Prime Minister Scott Morrison addressing the concerns of CEO Alan Joyce directly.

In a press conference at the Royal Australian Airforce Airbus facility in Richmond NSW, Morrison said:

We have had a very successful opening up already over the summer to backpackers and to those on the economic migration programs, and opening up to Singapore.

And we’ve already been open to New Zealand, Japan and South Korea. That has gone very well. And so the next step is opening up to international.

I totally empathise with the comments of Alan Joyce on this issue, and he knows my very strong commitment to getting to that point as quickly and as safely as we possibly can. So I’m looking forward to making progress on that issue.

The PM was referring to the Qantas CEO questioning why tourists are not allowed to come into Australia given there are more cases in Australia than in many overseas countries.

In comments aired by Sky News, Joyce said:

While we’re allowing Australians to come in and out it doesn’t make sense to me to not allow tourists.

It’s the same risk, so hopefully we will get there well before April and we can ease back on the testing requirements that are also there.

On Monday, Qantas launched a new pilot training centre at Brisbane Airport. The facility will train 900 pilots a year.

Qantas share price snapshot

The Qantas share price has gained about 6% in the past year. They have fallen 3.3% in the year to date.

In contrast, the broader ASX 200 index has returned about 3.6% in the past 52 weeks.

Qantas has a market capitalisation of roughly $9 billion based on its current share price.

The post Why is the Qantas (ASX:QAN) share price taking off this week? appeared first on The Motley Fool Australia.

More reading

• Are ASX travel shares finally emerging from the COVID storm?
• ASX 200 shares offer 12% upside after sell-off: JP Morgan
• What is green shorting and which ASX 200 shares are being targeted?
• Why is the Qantas (ASX:QAN) share price gaining altitude today?
• Is Qantas (ASX:QAN) poised to smash its rivals once travel recovers?

JPMorgan Chase is an advertising partner of The Ascent, a Motley Fool company. 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 Flight Centre Travel Group Limited and Webjet 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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Key points

• Nick Scali shares climb omid mixed first-half FY22 results
• Revenue up 5.4% to $180.3 million, but NPAT down 6.6% to $35.6 million
• Interim dividend declared of 35 cents per share

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The Nick Scali Limited (ASX: NCK) share price has moved into the green this morning following the release of the company’s half-year results for 2022.

At the time of writing, the furniture retailer’s shares are up 3.54% to $14.91 apiece. This comes after they slumped to $13.80 at market open.

Let’s take a closer look at how the company performed for the period.

Nick Scali delivers mixed results for H1 FY22

The Nick Scali share price is climbing following the company’s result for the 6 months ending 31 December 2021. Here are some of the highlights:

• Revenue increased to $180.3 million, up 5.4% on the prior corresponding period (pcp) (H1 FY21 $171.1 million);
• Earnings before interest and tax (EBIT) fell to $55.1 million, down 3.7% on the pcp (H1 FY21 $57.2 million);
• Net profit after tax (NPAT) declined to $35.6 million, down 6.6% on the pcp (H1 FY21 $38.1 million);
• Earnings per share (EPS) backtracked to 44 cents, down 6.4% on the pcp (H1 FY21 47 cents per share); and
• Interim dividend dropped to 35 cents per share, down 12.5% on the pcp (H1 FY21 40 cents per share).

What happened in the first half for Nick Scali?

After a challenging 6 months, the group’s sales momentum continued despite revenue being down. This was attributed to widespread store closures and production delays, particularly in Vietnam.

Despite the hard lockdowns, Australia and New Zealand written sales orders exceeded sales revenue as supply chains peaked during H1 FY22.

The gross profit margin for Nick Scali was up 30 basis points to 64.3%. The gross profit margin for Plush was 54.8%, resulting in a combined margin for the group of 63.2%.

The online sales channel soared to $19 million in written sales orders. This comprised $13.7 million for Nick Scali and $2.4 million for Plush.

In addition, the company’s Plush acquisition added 46 showrooms to its network during the period. Nick Scali also opened up a new store in regional New Zealand, which was a first for the company.

What did management say?

Commenting on the result fuelling the Nick Scali share price, managing director Anthony Scali said:

Despite over half of our stores being closed between July and October, and the impact of international lockdowns on our key suppliers, we were still able to deliver a strong earnings result, which was 75% up on H1 FY20.

We are very excited about the recent Plush acquisition which is on track to provide significant sales and profit growth for the Company as we expand the store network and benefit from the synergies of a fully integrated business.

What’s next for Nick Scali?

Looking ahead, Nick Scali expects revenue growth to continue into the second half of FY22.

Last month, written sales orders increased by 31% on the pcp, and were up 92% compared to the first half of FY20. This was driven by a surge of store traffic as consumers adjusted to managing the pandemic.

Nick Scali noted the outstanding order bank at 31 January was 70% higher than in the previous year.

In addition, the company’s suppliers have since resumed normal lead times which should lead to revenue growth in H2 FY22.

However, shipping constraints due to COVID-19 remain a major obstacle in delivering the outstanding order bank. This may impact profitability in the coming months.

Nick Scali share price snapshot

The Nick Scali share price has fallen around 6% this year to date. However, it is up around 35% over the past 12 months.

It has also risen by more than 8% this week.

The post Nick Scali (ASX:NCK) share price rises on first-half revenue increase appeared first on The Motley Fool Australia.

More reading

• 2 ASX dividend shares that could be buys with yields above 5%

Motley Fool contributor Aaron Teboneras 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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Shares in private health insurer Medibank Private Ltd (ASX: MPL) are edging lower today and now trade at $3.15 apiece.

Medibank shares have taken a beating since we started the new year. After peaking at highs of $3.60 per share on 7 January, investors have melted more than 12% off the value of Medibank’s share price at the open of trade on Thursday.

So, when will the selling pressure begin to liftoff, and what does all of this mean for Medibank shareholders in the long run?

The team at JP Morgan have some interesting thoughts on the topic, seeing as the investment bank covers Medibank in its insurance and diversified financials universe.

In a recent note, analysts at JP Morgan Securities Australia, led by Siddharth Parameswaran, downgraded the broker’s recommendation, urging its clients to sell Medibank shares. Here are the details.

Brokers now underweight on Medibank

The team at JP Morgan turned bearish on the health insurance giant following its detailed assessment of key issues going into the first half of FY22.

In the short run, the broker says that Medibank will benefit from a winding back of COVID-19 claims, but profits “may not materially benefit” because of obligations to policyholders.

Not only that, but the firm is far less constructive on the entire insurance sector, given the foreseeable challenges to profitability moving forward.

“In the medium term, material increases in capital requirements, only a partial return to prior profits in IIHI and travel, even lower rate increases that could be below underlying inflation trends, uncertainties arising from the federal election, and relative valuation differences with other stocks in our sector make us cautious on the sector outlook” the broker noted.

Medibank should see modest earnings growth in FY22 according to the firm – but with even more benefits next year as premium activity normalises.

Long-term, the broker notes there is a risk that “claims utilization returns to long-run trends, making holding margins difficult following ever-lower premium increases”.

It forecasts premium revenue of $6,983 million for FY22 and $7,256.2 million in FY23, which carries down to statutory NPAT of $408 million and $422.5 million respectively in the broker’s model.

This would lead to operating margins of 7.8% in FY22 and an adjusted return on equity (ROE) of 21.2% this year should JP Morgan’s thesis come to light.

As a result of its most recent assessment, the broker downgraded its valuation on the company to $3 per share, from $3.30 per share previously.

It notes the change in price target reflects “earnings changes post our MTM and valuation roll forward”, including franking credits valued at 70% of face value.

Medibank share price snapshot

In the last 12 months, the Medibank share price has held gains and is now up almost 5% in that time.

Since 2022 however, things have turned sour and shares are now down 8% after faltering in early January. As such, Medibank leads the benchmark indices in losses so far this year.

The post When might Medibank (ASX:MPL) shareholders ‘feel better’? appeared first on The Motley Fool Australia.

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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 Appen Ltd (ASX: APX) share price is out of form on Thursday.

In morning trade, the artificial intelligence data services company’s shares are down 7.5% to $9.33.

Why is the Appen share price sinking?

The Appen share price has come under significant selling pressure this morning despite there being no news out of the company.

However, the likely cause for this share price weakness is the release of the quarterly results of one of its biggest customers – Meta (Facebook).

In after hours trade, the social media giant’s shares have crashed 23%, wiping over US$200 billion off its market capitalisation.

Wall Street has been selling off Meta’s shares after its quarterly revenue and guidance fell well short of expectations. Meta’s CEO, Mark Zuckerberg, blamed this partly on inflation and supply chain issues that are impacting advertisers’ budgets.

This is where Appen comes into the equation. Meta has traditionally been one of Appen’s largest customers along with Google, Microsoft, and Amazon. Facebook uses Appen’s services to support its advertising operations. The company’s team essentially help teach machines to predict which advertisements will resonate with which users.

So this softer advertising demand could have an impact on Appen’s revenues in FY 2022.

In fact, you only need to look at its half year results to see how it can impact its performance. For the six months ended 31 June, Appen posted a 2% reduction in revenue and a 14.3% decline in EBITDA.

At the time, Appen’s Chief Executive Officer, Mark Brayan, said: “As expected, our first half results were impacted by our global technology customers’ focus on new AI products and applications, as they broaden their revenue base outside of digital advertising and respond to data privacy changes. This resulted in lower ad-related services revenue.”

This will make Appen’s results for FY 2021 and guidance for FY 2022 later this month worth watching very closely.

The post Why is the Appen (ASX:APX) share price down 7% today? appeared first on The Motley Fool Australia.

More reading

• Why did these tech shares lead the ASX 200 today?
• These are the 10 most shorted ASX shares
• Down 77%! Is the Appen (ASX:APX) share price a buy today?
• 5 things to watch on the ASX 200 on Thursday
• What happened to ASX tech shares today?

Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. 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 Appen Ltd and Meta Platforms, Inc. The Motley Fool Australia owns and has recommended Appen Ltd. The Motley Fool Australia has recommended Meta Platforms, Inc. 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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