The EROAD Ltd (ASX: ERD) share price is on the move on Friday morning.

At the time of writing, the transportation technology services company’s shares up 0.5% to $5.26.

Why is the EROAD share price edging higher?

Investors have been buying the company’s shares this morning following the release of its full year results.

According to the release, for the 12 months ended 31 March, EROAD reported a 13% increase in revenue to NZ$91.6 million and a 13% lift in earnings before interest, tax, depreciation and amortisation (EBITDA) to NZ$30.7 million.

Management advised that this was driven by growth in contracted units across all its markets and a stable average SaaS monthly revenue per unit (ARPU) of NZ$58.30 per month.

At the end of the period, the company’s Annualised Monthly Recurring Revenue metric (AMRR) had increased to NZ$88.4 million from NZ$84 million a year earlier.

EROAD’s Chief Executive Officer, Steven Newman, said: “In a year that presented challenging macro-economic conditions we continued to grow across all of our markets delivering a 13% increase in revenue and Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) year on year. In addition, we accelerated our growth strategies to take better advantage of opportunities that have emerged from the challenges of the last twelve months. EROAD is now stronger than ever before, better positioned to capture the increasing growth opportunities in telematics.”

Outlook

EROAD has reiterated the guidance it previously provided for FY 2022. Management explained: “It is anticipated that the percentage revenue growth in FY22 will strengthen from that delivered in FY21, but not be at the level experienced in FY20.”

In New Zealand, the company expects to add a similar number of units to that seen prior to FY 2021 (~9,000 p.a). Its New Zealand Ehubo sales will be complemented with Clarity Dashcam sales.

Whereas in North America, EROAD expects increased unit growth in FY 2022 as the economy returns to pre-COVID conditions. This should be supported by Clarity Dashcam sales.

In Australia, it expects growth during the next two years to come predominantly from an Enterprise pipeline of 15,000 to 20,000 vehicles.

Finally, management advised that it continues to accelerate new product delivery for future growth in FY 2023 and FY 2024. This will see the company spend 24% to 27% of revenue on research and development during FY 2022. Positively, despite this, EROAD anticipates that its EBITDA margin will be maintained for FY 2022 and improve at the end of the financial year.

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The Inghams Group Ltd (ASX: ING) share price is on course to finish the week with a very strong gain.

In early trade, the poultry producer’s shares are up 10% to $3.46.

Why is the Inghams share price racing higher?

Investors have been bidding the Inghams share price higher today following the release of a trading update and its guidance for FY 2021.

According to the release, based on its assessment of consensus estimates, and taking into account its current operating performance, management believes its forecast EBITDA may exceed, and forecast statutory NPAT may materially exceed, the market’s expectations in FY 2021.

This could be bad news for short sellers. The Inghams share price has consistently been among the most shorted list on the ASX this year. At the last count, 8% of its shares were held short.

What is Inghams forecasting?

For the 12 months ending 25 June, Inghams is forecasting statutory EBITDA of $438 million to $448 million and statutory net profit after tax of $80 million to $87 million. This is based on a post AASB16 basis.

On an underlying pre AASB16 basis, the company expects to report EBITDA of $203 million to $213 million and net profit after tax of $96 million to $103 million.

Management advised that this has been driven by the benefits derived from operational efficiencies implemented throughout the year. It also notes that trading conditions have improved since COVID-19 restrictions eased over the last six months.

However, it has warned about the consensus estimates that it is judging its performance against.

It advised: “The Company has formed its view on consensus based on a review of the most recently available analyst research. The Company also notes that analyst estimates available through recognised third-party data providers and systems appear to incorporate forecasts for the Company based on a mixture of both pre and post AASB16 estimates, and therefore may not be reliable indicators of market expectations.”

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Financial advisers assess the risk of an investment differently depending on external “noise” like their own mood that day or how hungry they are.

That’s according to the new report Under The Microscope: ‘Noise’ and Investment Advice, that technology firm Oxford Risk released this week.

Oxford’s research gave different financial advisers the same product to assess for an imaginary client.

Worryingly, they gave “remarkably different judgements” on the risk. Moreover, asset allocation advice was “scattershot”.

“Humans are wonderful at many things. But they are inefficient and unreliable decision makers, especially where many moving parts are involved – as in risk capacity,” said the report author Dr Greg Davies.

“Humans are prone to ‘noisy’ errors – unduly influenced by irrelevant factors, such as their current mood, the time since their last meal, and the weather.”

The report, in fact, found the financial advice provided was “closer to totally random than totally consistent”.

Noises that influence investment advice

There were certain characteristics of advisers that correlated to the risk advice they gave. The report said these were the most influential:

• Married advisers recommend slightly lower risk levels than advisers who are single
• University-educated advisers have lower risk capacity assessments on average
• Salaried advisers give higher recommended risk levels than those on commission or fee-based

“Advisers who are single tend to recommend more cash,” read the report.

Remarkably, the number of years in the industry doesn’t have a measurable impact.

“Interestingly, how experienced the adviser is, or how many clients they serve seems to make no significant difference to the advice delivered.”

The research concluded the personality of the professional, understandably, also has an influence.

“Advisers who themselves are more tolerant to risk tend to pass it on to their clients.”

Even in instances in the study when multiple advisers came up with the same risk judgment, they didn’t agree on the asset allocations the client should have.

“Advisers who have higher composure do recommend significantly more equity for each risk level,” the report stated.

“This makes a lot of sense as these advisers are likely to be much less anxious about short-term volatility and more focussed on long-term risk vs return.”

Oxford Risk supplies software to financial advisers and institutional investors to help them override behavioural biases.

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A little-known ASX tech share is ripe for the picking currently, according to one analyst.

Totus Capital investment analyst Tim Warner conceded Dicker Data Ltd (ASX: DDR) is not a fashionable tech business — but that’s the appeal.

“Dicker Data is not the high-flying glamorous tech company that continuously burns cash with the future ‘promise’ of one day being profitable,” he posted on Livewire.

“It is quite the opposite. Dicker Data has been in business since 1978 (yes, that is before the first PC was even released)… Since listing on the ASX in 2011, revenues have grown circa 7 times to $2 billion, and profits by circa 13 times.”

The company is a distributor of hardware and software. It acts as the “middleman” between big global vendors and Australian technology retailers.

Dicker leads the distribution game in Australia with a 29% market share, according to Warner.

This ASX tech share jumped from a COVID-19 crash low of $4.40 in March 2020 to more than $12 in February.

“With the COVID-19 induced work from home phenomena, the demand for hardware and software from businesses to facilitate their employees to work from home surged through the first half of 2020,” said Warner.

Shares are trading at a 30% discount

However, the stock price has come off the boil in recent months as it’s been swept up in the general sell-off of ASX tech shares. Dicker Data was selling at $10.48 at market close on Thursday.

Totus Capital has jumped on this opportunity, buying more Dicker shares.

“At current, there is a period of flux in the perception of Dicker Data’s business value, due to the uncertainties around being a perceived COVID beneficiary as well as its supply chain suffering from global chip shortages,” he said.

“However, we believe this is creating an opportunity to buy a high quality business at an attractive price.”

Why Dicker Data shares are attractive

Warner listed 5 reasons why the distributor has excellent prospects: long-term past success, high return on equity, owner-operator culture, industry growth and an irresistible valuation.

Dicker Data has recorded 19% revenue growth per year and 26% profit before tax growth for the decade since June 2010, he said.

The Motley Fool reported last week that AIM chief investment officer Charlie Aitken thought return on capital is the best measure of business performance.

Dicker passes this test well, according to Warner.

“Dicker has consistently generated high returns on equity, averaging 38% over the last 10 years,” he said.

“DDR benefits from typical scale economies, allowing it to compete on price with other global distributors such as Ingram Micro and Synnex Corporation (NYSE: SNX). However, it differentiates against its competitors through its value-added service, driven by its technical expertise and performance-based culture.”

The co-founders, chief executive David Dicker and ex-wife Fiona Brown, are still on the board with substantial ownership. The other directors also have holdings that add up to about $14 million.

“A testament to their conviction in the long-term success of the business is that the key management personnel have not been issued shares or options — and have built their equity stakes by buying shares on-market (buying as recently as April 2021 at levels above $10 per share).”

At the time of Warner’s commentary earlier this week, Dicker Data shares were going for $9.40.

“You are buying a high-quality business on a forward PE multiple of less than 25 times that has a proven track record of success,” he said.

“You will get paid a 4% fully franked dividend whilst you back a shareholder-aligned management team to capitalise on multiple industry tailwinds.”

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There are some S&P/ASX 200 Index (ASX: XJO) shares that could be the right picks for income.

The below two businesses are amongst the market leaders in the country and have long-term growth plans to try to grow profit, whilst also paying dividends:

Premier Investments Limited (ASX: PMV)

Premier Investments operates a number of retail brands. Names like Smiggle, Peter Alexander, Just Jeans and Jay Jays are some of the names it runs. It also has a large investment in Breville Group Ltd (ASX: BRG).

The business has seen a lot of online and profit margin growth, which is what is driving the bottom line. In the first six months of FY21, global like for like sales went up 18.2% with the retail gross margin increased 286 basis points. Online sales surged 61.3%.

Retail earnings before interest and tax (EBIT) grew 88.5% to $237.8 million, with the EBIT margin increasing 1,308 basis points.

The business is focused on its profitability. The accelerated swing in customer preference to shopping online has meant that management are looking at each store’s profitability. It has closed around 50 stores over the last 12 months, showing that the company is willing to walk away from stores with high rents that deliver unprofitable sales. The business has been able to reduce its rent to sales ratio by 318 basis points to 12.7% of sales.

The ASX 200 share believes that Smiggle is a powerful global brand set to rebound and grow from the COVID-19 impacts as children return to school and stores open.

At the current Premier Investments share price, it has a projected grossed-up dividend yield of 4.3% according to Commsec.

Cleanaway Waste Management Ltd (ASX: CWY)

Cleanaway describes itself as Australia’s leading total waste management, industrial and environmental services company.

It has over 6,000 staff and over 5,000 specialist vehicles spread across more than 260 locations.

The business has been steadily growing its dividend over the past five years, including through the difficult COVID-19 year.

Cleanaway believes it has a positive future with a growing footprint of prized infrastructure assets that are making a sustainable future possible.

The business says that market growth is being driven by the emergence of energy from waste, increased resource recovery and value chain extension supported by rising levies and government policy.

The ASX 200 share recently announced an acquisition from Suez Australia, a portfolio of strategic post collection assets in Sydney. Those assets comprise two landfills and five transfer stations. They will be acquired for $501 million. It’s expected that these landfills will have more than 15 years of available airspace.

The brokers at Macquarie Group Ltd (ASX: MQG) rate Cleanaway as a buy with a price target of $3. The broker likes the long runway that Cleanaway has from the circular economy trend.

According to Macquarie, the Cleanaway share price is valued at 32x FY21’s estimated earnings.

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The Link Administration Holdings Ltd (ASX: LNK) share price could be one to watch on Friday.

This follows the release of an update on its PEXA business after the market close yesterday.

What did Link announce?

According to the release, Link has received a proposal for its 44.18% stake in the PEXA business from private equity firm Kohlberg Kravis Roberts (KKR). Property listings company Domain Holdings Australia Ltd (ASX: DHG) is expected to team up with KKR on the deal.

The release explains that KKR’s offer values the PEXA business at $3 billion plus cash on the balance sheet on a 100% basis. PEXA has $126 million of cash on its balance sheet at the end of March.

This would value Link’s stake at approximately $1.32 billion.

Proposal conditions

KKR’s offer comes with a number of conditions.

These include the agreement on transaction documentation, including a Sale and Purchase Agreement, Foreign Investment Review Board approval and relevant approvals from the State land registries, and an agreement by PEXA shareholders to a number of actions and waivers under the existing PEXA Shareholders’ Deed.

It is also conditional on the IPO of PEXA not proceeding.

What now?

KKR advised that the proposal remains open and is capable of acceptance until 5:00pm on Sunday 30 May 2021.

Link advised that it is considering the proposal and is obtaining advice from its financial and legal advisors. However, as no decision has been made, both the trade sale process and exploration of the viability of an IPO continue to proceed.

The Link Board advised that they will continue to act in the best interests of the company and seek to maximise the value of its PEXA investment.

It also intends to keep the market informed of any material developments in accordance with its continuous disclosure obligations.

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If you’re looking for some top ASX dividend shares to add to your income portfolio, then you might want to look at the ones listed below.

Here’s what income investors need to know about them:

Carsales.Com Ltd (ASX: CAR)

This auto listings company could be an ASX dividend share to consider buying.

Carsales is the dominant force in the ANZ market and has a number of growing operations across the world. It is also planning to expand into the US market with the acquisition of Trader Interactive.

This acquisition appears to have gone down well with analysts at Morgans. The broker has recently put an add rating and $20.82 price target on the company’s shares.

Morgans is also forecasting dividends of 56 cents per share in FY 2021 and 59 cents per share in FY 2022. Based on the current Carsales share price of $19.09, this will mean fully franked yields of 2.9% and 3.1%, respectively.

Westpac Banking Corp (ASX: WBC)

If you haven’t got exposure to the banking sector, then it could be worth considering Westpac.

Australia’s oldest bank has well and truly returned to form since the height of the pandemic. For example, during the first half of FY 2021, the bank reported cash earnings of $3,537 million. This was a 256% increase over the prior corresponding period and a 119% lift over the second half of FY 2020.

In light of its strong form, the Westpac board declared a fully franked interim dividend of 58 cents per share.

One broker that expects the dividends to continue to increase is Morgan Stanley. It is forecasting fully franked dividends per share of $1.18 and $1.25 over the next two years. Based on the latest Westpac share price of $26.09, this will mean yields of 4.5% and 4.8%.

Morgan Stanley has an overweight rating and $29.20 price target on the bank’s shares.

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On Thursday the S&P/ASX 200 Index (ASX: XJO) fought hard to record the smallest of gains. The benchmark index rose slightly to 7,094.9 points.

Will the market be able to build on this on Friday? Here are five things to watch:

ASX 200 expected to rise

The Australian share market looks set to end the week on a solid note. According to the latest SPI futures, the ASX 200 is expected to open the day 54 points or 0.75% this morning. This follows a reasonably positive night on Wall Street, which saw the Dow Jones rise 0.4%, the S&P 500 climb 0.1%, and the Nasdaq trade flat.

Oil prices rise

Energy producers including Santos Ltd (ASX: STO) and Woodside Petroleum Limited (ASX: WPL) could finish the week on a positive note after oil prices pushed higher. According to Bloomberg, the WTI crude oil price is up 0.9% to US$66.81 a barrel and the Brent crude oil price is up 0.7% to US$69.36 a barrel. Solid US economic data gave prices a lift.

Afterpay on watch

The Afterpay Ltd (ASX: APT) share price will be on watch today after its rival Klarna announced a major investment. According to CNBC, the buy now pay later provider is expected to secure new funding valuing it at US$40 billion. SoftBank is believed to be backing the deal. Commonwealth Bank of Australia (ASX: CBA) owns a stake in the company.

Link receives offer for PEXA

The Link Administration Holdings Ltd (ASX: LNK) share price could be on the move on Friday. This follows news that the company has received an offer for its PEXA business. Private equity firm KKR has tabled an offer that values PEXA at $3 billion on a 100% basis. Link owns 44.18% of the property settlement business. The Link Board is considering the proposal.

Gold price softens

Gold miners Newcrest Mining Ltd (ASX: NCM) and St Barbara Ltd (ASX: SBM) will be on watch today after the gold price softened. According to CNBC, the spot gold price is down 0.2% to US$1,897.50 an ounce. Strong economic data out of the United States weighed on demand for the safe haven asset.

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The S&P/ASX 200 Index (ASX: XJO) went up by 0.03% today to 7,095 points.

Here are some of the highlights from the ASX:

Fisher & Paykel Healthcare Corp Ltd (ASX: FPH)

The Fisher & Paykel Healthcare share price fell by 6% after the business reported its FY21 result and also gave some commentary about FY22.

FY21 total operating revenue rose 56% to $1.97 billion, with hospital operating revenue growing 87% to $1.5 billion. However, homecare operating revenue only went up 2%.

This led to net profit after tax going up 82% to $524.2 million. The ASX 200 share’s board decided to implement a 42% increase of the final dividend to 22 cents per share.

Given the wide range of scenarios and uncertainties, the company didn’t give guidance but instead made some observations. It said that a global vaccine rollout during FY22 is likely to reduce global hospitalisations requiring respiratory support for COVID-19 compared to FY21.

It also said that its customers’ stocking and de-stocking choices in response to the pandemic are likely to vary over time. The gross margin is likely to be impacted with freight costs likely to remain elevated and air freight a higher proportion of freight. Fisher & Paykel also said it expects to retain its COVID-19 safety practices on its manufacturing sites.

In the financial year so far, hospital revenue continues to remain variable with higher volume of hospital hardware and consumables to locations with hospitalisation surges and an ongoing shift towards Optiflow nasal high flow therapy. OSA shows signs of recovery after a slower fourth quarter.  

Costa Group Holdings Ltd (ASX: CGC)

The Costa share price was smashed by around 24% today after giving a trading update about its different operating segments.

Overall, the 2021 first half performance is expected to be marginally ahead of the comparable period in 2020, with strong international operations offset by challenges in domestic produce conditions.

In its international segment it’s well progressed with its harvests in both China and Morocco. The ASX 200 share said performance has been very positive versus the previous year and expectations.

In China, although volumes were initially slightly down due to late flowering, the yield is expected to finish in line with the company’s expectations. Management said there has been strong pricing and demand over the season.

Costa said that in Morocco, early season plantings in Agadir as well as earlier season higher volumes across its northern farms together with “generally strong” pricing has seen the business perform well, although ongoing supply chain and COVID-19 related costs have had an impact.

However, the ASX 200 share’s international segment is going to be impacted in the reported result by the higher Australian dollar.

Domestically, there is a mixed performance. Overall mushroom demand remains strong, but mushroom production at Monarto has been impacted by short-term labour constraints.

Avocado volumes and quality have been pleasing and export volumes continue to grow. However, it has seen recent pricing pressure due to increased haas variety production across the sector resulting in reduced pricing compared to last year. It is likely this pricing trend will continue into the second half of the year as increased volume is expected to be delivered across the industry.

Current half performance has been impacted by hail damage and fruit fly restrictions. Costa explained that the 2021 calendar year is an ‘on year’ in terms of yield and it is expected that results in the second half of the year, where the bulk of harvest occurs, will benefit from strong yields.

In tomatoes, whilst it has seen some short-term pricing pressure arising from increased tomato supply, this currently abating and pricing is improving.

It was the worst performer in the ASX 200.

Gentrack Group Ltd (ASX: GTK)

The Gentrack share price went up around 15% today in response to the company releasing its FY21 half-year result.

It said that revenue increased 0.7% year on year to $51 million. Earnings before interest, tax, depreciation and amortisation (EBITDA) increased 63.2% to $7 million. However, the business reported a statutory net loss of $1.1 billion.

Revenue was down in the airport business by $2.1 million due to the industry downturn, but annual recurring revenue (ARR) rose 5.8%.

The business reduced costs by 5% due to cost saving measures. That assisted in the $5.6 million cash generation for the period. It ended with net cash of $22.4 million.

It’s now expecting FY21 EBITDA to be around $5 million and revenue to be similar to FY20 of $100.5 million. Gentrack is expecting to be net cashflow positive.

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The Next Science Ltd (ASX: NXS) share price has closed today well in the green.

This comes after the company announced its patented wound-healing product has been approved for sale in Australia.

Next Science shares rose to an intraday high of $1.93 at market open, before profit takers swooped in.

At market close, the medical technology company’s shares were trading at $1.87, up 3.31%.

What did Next Science announce?

Investors have been buying up Next Science shares today after the company was given the go-ahead to commercialise its BlastX product in Australia.

According to its announcement, the Therapeutic Goods Administration (TGA) has approved the company’s wound gel for sale in Australia.

It has been sold in the United States since 2017 and has been cleared for sale in the European Union and the UK.

BlastX is an antimicrobial gel for the treatment of open wounds. It uses the company’s patented Xbio technology that breaks down bacterial biofilm on wounds and prevents further bacteria from growing. The product then maintains a moist wound environment which allows the body’s healing process to begin.

In addition, BlastX can be used in operating theatre environments to help prevent infections in acute and surgical wounds.

According to Next Science, the TGA approval clears the way for the company “to sell BlastX in Australia for use as a hydrogel wound dressing on all open wounds”.

The company also highlighted the efficacy the product has shown in the treatment of chronic wounds such as diabetic foot ulcers, bedsores (pressure ulcers) and venous leg ulcers.

Chronic wounds such as ulcers continue to be a major health issue for patients across the world. They are considered difficult to treat, cause pain at the wound site and increase mortality rates.

A 2015 independent study found combining BlastX with antibiotics increased chronic wound closures by 40% in 4 weeks. This was based on a randomised and controlled trial of 45 patients.

Next Science managing director Judith Mitchell said:

I am delighted that we can offer this proven product to healthcare professionals and patients in Australia as we continue to pursue our mission to heal patients and save lives worldwide by reducing the impacts of biofilms on human health.

The company is expecting its first sales in Australia to occur from next month.

About the Next Science share price

Next Science shares have performed strongly so far this year and are up by almost 50%. The company’s share price is now edging closer to its 52-week high of $2.06.

Next Science has a market capitalisation of roughly $366 million, with approximately 197 million shares outstanding.

More reading

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