The 4DS Memory Ltd (ASX: 4DS) share price was rising against the tide of today’s negative ASX market trend. This followed the memory storage provider’s announcement of a renewed partnership agreement.

By the market’s close, 4DS Memory shares were trading at 14 cents a pop, up 7.7% for the day. In comparison, the All Ordinaries Index (ASX: XAO) ended the day sitting at 7,194 points, down 1.2%.

What does 4DS do?

4DS Memory is a semiconductor company that develops resistive random-access memory (ReRAM). With research facilities in Silicon Valley, the start-up tech is focused on commercialising its product to become a replacement for more traditional Flash memory storage.

Renewed agreement

Investors were buying up 4DS Memory shares today after the company announced a positive update to the ASX.

According to its release, 4DS Memory has signed a renewed joint development agreement (JDA) with Western Digital Corporation subsidiary, HGST. The partnership will see both companies work together for another 12 months, marking 8 consecutive years of partnership.

4DS Memory is currently developing its interface switching ReRAM technology with HGST as well as digital innovation hub, IMEC.

CEO and managing director of 4DS Memory Dr Guido Arnout welcomed the renewal, saying:

We are very pleased that Western Digital and HGST have renewed our joint development agreement following a review of our significant progress during the past twelve months. This progress includes the Second Platform Lot currently in the final fabrication stage at imec that we will receive in early June for analysis.

HGST signed the agreement well ahead of its initial due date of 30 June 2021.

4DS Memory share price review

It’s been a great 12 months for investors, with the 4DS Memory share price jumping by more than 200%. Year-to-date performance, however, has been less impressive, with the company’s shares rising by just 12%.

4DS Memory shares reached a multi-year high of 28 cents in January this year before retreating to their current level. 

The company commands a market capitalisation of roughly $170 million, with approximately 1.3 billion shares outstanding.

More reading

• Up 21%, why the Bod (ASX:BDA) share price is smoking the market today
• ASX 200 Weekly Wrap: Bank shares push ASX 200 towards all-time high
• Here’s why the QuickFee (ASX:QFE) share price is zooming 28% higher
• ASX 200 Weekly Wrap: Shares have average week but a great month
• Why the Prospa (ASX:PGL) share price has surged 7%

Motley Fool contributor Aaron Teboneras owns shares of 4DSMEMORY FPO. 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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Concerns about inflation, interest rates, and valuations have put a lot of pressure on the tech sector this year. While this is disappointing, it does appear to have dragged a good number of tech shares down to very attractive levels.

When the dust finally settles, here’s why these ASX tech shares could be the ones to buy:

Afterpay Ltd (ASX: APT)

The Afterpay share price is currently trading at $84.50. This means the buy now pay later (BNPL) focused payments company’s shares are now down 47% from their 52-week high of $160.05.

While the company’s shares are certainly at the high end of the risk scale due to the enormous amount of future growth that is already being priced in, Afterpay does appear well-placed to deliver on expectations.

This is due to the increasing popularity of BNPL with both consumers and merchants. In respect to the former, Afterpay has been growing its global customer numbers at a rapid rate over the last few years. This has been complemented by a significant increase in repeat usage.

The good news is that Afterpay looks well-placed to continue its growth for the foreseeable future. This is due to its ongoing international expansion and new product launches. The latter will see the company release banking products via the Afterpay Money app in the near future.

Last week Morgan Stanley put an overweight rating and $149.00 price target on the company’s shares.

Altium Limited (ASX: ALU)

Another ASX share to consider when the dust settles is this leading electronic design software provider. The Altium share price is currently trading at $23.99, which is down 40% from its 52-week high of $40.21.

This could be a buying opportunity for patient investors due to the company’s strong long term growth potential. This positive outlook is thanks to its exposure to the rapidly growing Internet of Things and artificial intelligence markets. As these markets are underpinning an explosion of electronic devices globally, demand for its key Altium Designer and 365 platforms look set to increase materially over the next decade.

But Altium isn’t a one trick pony. It also has other businesses with positive outlooks as well. These are its workflow solution platform NEXUS and electronic parts search engine Octopart. Both are supporting Altium’s growth and have sizeable market opportunities of their own. A testament to the quality of the NEXUS platform is that it counts Tesla and SpaceX as customers.

Management is positive on the future. Due to favourable industry tailwinds and its leadership position, it is targeting revenue of US$500 million by FY 2025/26. This will be more than double what it expects to achieve in FY 2021.

Analysts at Citi are positive on the company and have a buy rating and $33.50 price target on its shares.

More reading

• What’s driving the Afterpay (ASX:APT) share price to 8-month lows?
• Why are ASX tech shares like Afterpay (ASX:APT) crashing today?
• Will the Afterpay (ASX:APT) share price go up?
• Why Afterpay, CSR, Electro Optic Systems, & Estia Health are storming higher
• ASX 200 down 1%: CBA Q3 update, tech shares rise, Qantas update

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends Altium. The Motley Fool Australia owns shares of AFTERPAY T FPO and Altium. 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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Gone are the days of a surging Afterpay Ltd (ASX: APT) share price. Its shares slipped to an intraday low of $81.85 today, dragging its year-to-date return to a grim -28%. 

What’s been impacting the Afterpay share price? 

The BNPL sector can’t seem to keep it together

In theory, the Afterpay share price should move in tandem with its ASX-listed and overseas BNPL peers, despite competing against each other for market share. The same arguably takes place for the big four banks, insurers, miners etc. 

At the height of the BNPL craze last year, the Afterpay share price surged 30% in quick succession from $70 in July to $90 in August. During the same period, competitors including Splitit Payments Ltd (ASX: SPT), Sezzle Inc (ASX: SZL) and Zip Co Ltd (ASX: Z1P) were also quick to double in valuation.

This was during a time where it seemed like any announcement could warrant a surge in share price. For example, when Zip announced a partnership with Ebay and launched its Zip Business division on 26 August 2020, it triggered its share price to jump 25% on the day. 

Fast forward to today, it seems the opposite could be taking place. 

Take Openpay Ltd (ASX: OPY) for example. The company delivered a solid 3Q21 update last month, alongside an expansion into the US$55.8b US and UK veterinary markets in partnership with ezyVet.

The company said that it “continues to move with urgency to capture market opportunity and disrupt major payments markets with its highly relevant and transparent offering for merchants and consumers”. Despite the positive announcement, its shares edged 2.5% lower on the day. 

ASX-listed BNPL shares have been sharply sold off in recent weeks. Bigger players such as Sezzle and Zip have been able to stay in positive year-to-date territory. While smaller players such as Openpay, Splitit Ltd (ASX: SPT) and Humm Group Ltd (ASX: HUM) are fast approaching 6-12 month lows. 

Tech shares are falling out of favour 

The  S&P/ASX200 Info Tech (INDEXASX: XIJ) has slumped almost 20% year-to-date and is down a painful 4.87% at the time of writing.

This weakness might be understandable if the broader market was selling off. However, the S&P/ASX 200 Index (ASX: XJO) has pushed north of 5% since the start of the year.

US-listed BNPL giant dips 10% overnight 

To add further insult to injury, the US-listed Affirm Holdings Inc (NASDAQ: AFRM) share price dropped 10% lower on Wednesday night to a new all-time record low of US$49.82.

Foolish takeaway

The Afterpay share price is seemingly trapped between a rock and a hard place, with the broader tech sector selling off, BNPL peers sinking and its main US rival hitting record all-time lows. 

More reading

• Should you buy Afterpay (ASX:APT) and this ASX tech share following the selloff?
• Why are ASX tech shares like Afterpay (ASX:APT) crashing today?
• Why the Humm (ASX:HUM) share price just hit a 52-week low
• Is the Zip (ASX:Z1P) share price a beaten-down buy?
• Why Zip (ASX:Z1P) and these ASX growth shares are rated as buys

Kerry Sun has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of ZIPCOLTD FPO. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends Sezzle Inc. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool Australia has recommended Humm Group Limited and Sezzle 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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The IDP Education Ltd (ASX: IEL) share price has been a disappointing performer over the last 30 days.

Since this time last month, the language testing and student placement company’s shares are down 15%.

This means the IDP Education share price is now trading broadly flat in 2021.

Why is the IDP Education share price down 15% in a month?

Investors have been selling the company’s shares over the last 30 days amid weakness in the tech sector and concerns about rising COVID-19 cases in India.

Given that the Indian market is the company’s largest market and contributes over a third of its revenue, the terrible situation unfolding in the country looks set to derail IDP Education’s recovery.

Is this a buying opportunity?

According to a note out of Morgans, its analysts believe the recent weakness in the IDP Education share price is a buying opportunity for investors.

This morning the broker retained its add rating but trimmed its price target slightly to $28.48.

Based on the current IDP Education share price of $20.85, this represents potential upside of almost 37% over the next 12 months.

What did the broker say?

Morgans said: “The recent COVID-19 outbreaks in India provide a headwind to the recovery. We estimate that India accounts for ~40% of IEL’s IELTS testing revenue, which assuming 115k tests per month would equate to ~A$11.8m revenue and ~A$5.2m GP/EBITDA per month.”

“Additionally, recent border shutdowns to Indian outbound immigrants (e.g. Canada/Australia) does have the potential to impact Student Placement volumes, however the estimated financial impact is more difficult to ascertain given online vs physical starts,” it added.

However, the broker feels it is worth sticking with the company. Especially as it believes IDP Education is well-placed for growth when trading conditions normalise. Morgans is anticipating market share gains and sees opportunities for M&A activities.

It explained: “We believe IEL is well-placed to capitalise on recovering international student demand via improved market share across IELTS/student placement. We note prior to COVID-19, IEL was delivering on its multi-destination student placement expansion well ahead of consensus estimates – a thematic we expect can return in time.”

Morgans concluded: “We continue to like IEL as a structural growth story with meaningful leverage to a global reopening. We believe earnings risk lies to the upside as pent-up demand levels are quantified, with M&A providing a potential further catalyst. ADD maintained.”

More reading

• 3 buy rated mid cap ASX shares for the long term
• 2 top ASX growth shares rated as buys
• Top brokers name 3 ASX shares to buy today
• IDP Education (ASX:IEL) share price sinks 5%: Time to buy?
• Brokers think these 2 top ASX shares are buys in May 2021

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Idp Education Pty Ltd. 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 Xero Limited (ASX: XRO) share price is down 11% at the time of writing. The sell-off could prove to be an opportunity for investors over the long-term.

Why is the Xero share price falling?

Not only is there a wide selldown of ASX growth share names, but Xero just released its FY21 result which wasn’t quite as strong as some investors were expecting.

Operating revenue grew by 18% to NZ$848.8 million, with total subscriber growth of 20% to 2.74 million. Annualised monthly recurring revenue (AMRR) grew 17% to NZ$963.6 million. Earnings before interest, tax, depreciation and amortisation (EBITDA) went up 39% to NZ$191.2 million and free cashflow rose 110% to NZ$56.95 million. Net profit after tax (NPAT) grew from NZ$3.3 million to NZ$19.77 million.

The total lifetime value of subscribers went up 38% to NZ$7.65 billion.  

Here’s why the Xero share price could be an opportunity

A lower share price can present a better time to buy shares. But there still have to be compelling reasons to believe there can be long-term growth of the business.

Continuing growth of the profit margin

One of Xero’s best selling points is how profitable it is. Not necessarily at the net profit line – it only made NZ$20 million of profit – but at the gross profit line. Xero has one of the highest gross profit margins on the ASX. This shows how low cost it is to deliver its exceptional cloud accounting software product to clients.

How high is the gross profit margin? A year ago in FY20 it was 85.2% and in FY21 it grew by another 0.8 percentage points to 86%. This means that most of the new revenue can fall to the next profit line without losing much to unavoidable variable costs.

But Xero can use a lot of that new revenue to re-invest for better products and win over even more customers.

Large international growth

Australia and New Zealand are great countries. However, they have relatively small populations and that means the addressable markets are quite small. But when a high-quality ASX share can expand significantly overseas, then it means that company has a very long growth runway.

The local markets are still seeing very strong growth for. New Zealand subscribers rose by 14% – this was the best year for net subscriber growth in three years. Australian subscribers went up 22% to 1.11 million – this was the best ever year of growth.

Internationally, Xero is also doing very well. UK subscribers grew 17% to 720,000 – there was a good recovery in the second half of the year, leading to the second strongest half period. North American subscribers went up by 18% in the year to 285,000.

There was particularly strong growth in the rest of the world with a 40% increase of subscribers. The largest contributors to subscriber growth here was South Africa and Singapore.

Long-term focus

Xero is focused on the long-term for shareholders. During the year it made acquisitions (called Planday, Tickstar and Waddle) to improve the overall offering for subscribers.

The company said:

Xero will continue to focus on growing its global small business platform and maintain a preference for reinvesting cash generated, subject to investment criteria and market conditions, to drive long-term shareholder value.

Xero plans that its total operating expenses (excluding acquisition integration costs) as a percentage of operating revenue in FY22 will be in the range of 80% to 85%, which is consistent with levels seen in the second half of FY21 and the pre-pandemic period.

As the business invests to win higher market share, it aims to increase the underlying value of the entity to shareholders.

More reading

• Why American Pacific Borates, NAB, Perenti, & Xero are tumbling lower
• Is the 11% drop in the Xero (ASX:XRO) share price a buying opportunity?
• Why are ASX tech shares like Afterpay (ASX:APT) crashing today?
• ASX 200 down 0.4%: Xero sinks, Telstra hit with $50m fine
• Xero (ASX:XRO) share price on watch after delivering strong growth in FY 2021

Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Xero. 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 is sliding again today. It looks to be shaping up for the third straight day of losses.

At the time of writing, the All Ordinaries Index (ASX: XAO) is down 0.8%. That brings the All Ords down more than 2.5% from the all-time highs it reached on Monday.

Now, these types of price swings are quite ordinary. But that won’t stop some investors from wondering if the market will keep falling and whether now could be the time to sell some shareholdings. At the same time, other investors are sure to ponder if this week’s retrace might not represent a good time to buy the dip.

Lacking a crystal ball, I can’t tell you which way the ASX will move over the coming days.

The best I, or anyone, can do is make an educated guess.

Which, according to Shane Oliver, head of investment strategy and chief economist at AMP Capital – is often a mistake.

Five essential lessons for ASX investors

Yesterday, I sat in on AMP Capital’s Webinar, where Oliver offered his analysis of the Federal Budget and provided an outlook for the ASX and global share markets.

One of the key takeaways was the 5 lessons investors should learn from the past COVID-focused year.

A question of timing

First, timing markets is hard.

As difficult as it is to call a near market high, it’s just as hard to call the near market low. Which means trying to time the markets correctly is largely a function of luck.

Oliver said:

You may have got out in January or February last year when markets were at record highs. Maybe you saw the pandemic coming. But the question is, did you get back in in March? And I reckon most investors [who sold out] didn’t. Then you end up getting in 6 or 12 months later when the market is very much higher.

Central banks rule, okay

The second essential lesson for ASX investors is: don’t fight the central banks.

You’ve likely heard the investor adage, “Don’t fight the Fed.” But following the outbreak of COVID-19, it wasn’t just the US Federal Reserve moving in to support markets. It’s been a concerted effort from the Fed, the Reserve Bank of Australia (RBA), the People’s Bank of China (PBoC), the European Central Bank (ECB), and more. Not a team you want to bet against.

No time for depression

Which brings us to Oliver’s third essential lesson ASX investors should take aboard from the past year: depressions can be avoided.

“Twelve months ago, everyone was talking about a depression. Not just a recession but a depression. And we avoided that,” Oliver said. He added that the government’s temporary support measures worked. Despite dire unemployment predictions, a lot of people didn’t lose their jobs thanks to measures like JobKeeper.

Though things still looked bleak on the ground on 23 March 2020, share markets look ahead. And hence the ASX surged from the 23 March lows, with the All Ords now up more than 49% since then.

Don’t overlook interest rates

Oliver’s fourth essential lesson for ASX investors is not to lose sight of the impact of record low interest rates.

You may have read some rather frightening figures on valuations on the ASX in terms of price to earnings (P/E) ratios. But it would help if you kept those in the context of the low rates.

According to Oliver, investment valuations need to be assessed relative to interest rates.

Even when you look at the forward P/E, in Australia we’re at 19-times, which sounds high, but you’ve got to allow that the yield you’re getting out of the share market is still much higher than the level of interest rates.

And that higher yield, he said, is what’s keeping money flowing into the ASX.

Noise-cancelling headphones, anyone?

Finally, Oliver’s fifth lesson for ASX investors is to turn down the noise.

“This is very important,” he said. “I reckon if you focus on the long-term rather than all the short-term noise, you’ll actually do reasonably well with your investments.”

Oliver pointed to the long-term trend of the value of the Aussie share market, which is strongly higher.

“The way to take advantage of that is to take a long-term strategy, make the most of compound interest… But don’t get thrown off by the cycle. In other words, try and turn down the noise.”

More reading

• 3 reasons why the Xero (ASX:XRO) share price selloff could be an opportunity
• Why the Immuron (ASX:IMC) share price is surging 8% higher
• Lynas (ASX:LYC) share price slides following Malaysian update
• Pure Foods (ASX:PFT) share price surges on major revenue deal
• The Perenti (ASX:PRN) share price is collapsing 29%. Here’s why

Motley Fool contributor Bernd Struben 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 Immuron Ltd (ASX: IMC) share price is a strong performer on the ASX today. This follows the biotechnology company’s update on the anti-viral activity of its drug candidate, IMM124E.

At the time of writing, Immuron shares are swapping hands for 18.5 cents, up 8.8%

What did Immuron announce?

Investors are buying up Immuron shares after the company provided a positive result on its SARS-CoV-2 (COVID-19) program.

According to its release, Immuron advised that Monash University scientists have conducted two tests using IMM124E against SARS-CoV-2. The immunologically-based assays were developed with two recombinant reagents, the SARS-CoV-2 spike protein and a receptor protein. The latter was obtained from Melbourne’s Peter Doherty Institute for Infection and Immunity.

Initial findings indicate that IMM124E neutralises activity in which the SARS-CoV-2 virus does not bind with the spike protein or receptor. Essentially, this means that when the virus comes into contact with IMM124E, it cannot latch and infect cells.

Pleasingly, the research team will now look into identifying the inhibitory molecule in IMM124E which causes the reaction.

Deputy director of the Monash Biomedicine Discovery Institute, Professor Lyras commented:

Our initial results suggest the inhibitory substance/s in the products are binding to other antigens present on the SARS-CoV-2 virus which interfere with the mechanism the virus uses to gain entry and infect human cells. We do not yet know which compound/s in the products are responsible for this interference. However, we are excited to try and identify them.

He went on to say, “it does not matter whether antagonists to the SARS-CoV-2 virus block the binding of the spike protein directly or indirectly as long as they can prevent or reduce infection”

In addition to the encouraging announcement, Immuron will appoint Dr Dan Peres as its chief medical officer. Dr Peres will oversee the company’s clinical development programs, predominately focusing on COVID-19.

Immuron share price snapshot

Since the beginning of the year, Immuron shares have recorded a loss of almost 20%, despite clinical progress. Over the last 12 months, however, the company’s shares have soared to register a gain of more than 110%.

Immuron has a market capitalisation of roughly $42 million, with approximately 227 million shares on issue.

More reading

• 3 reasons why the Xero (ASX:XRO) share price selloff could be an opportunity
• Five essential lessons for ASX investors from the year gone by
• Lynas (ASX:LYC) share price slides following Malaysian update
• Pure Foods (ASX:PFT) share price surges on major revenue deal
• The Perenti (ASX:PRN) share price is collapsing 29%. Here’s why

Motley Fool contributor Aaron Teboneras 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.

The post Why the Immuron (ASX:IMC) share price is surging 8% higher appeared first on The Motley Fool Australia.

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Lynas Rare Earths Ltd (ASX: LYC) shares are slumping today after the company provided an update to investors on its Malaysia operations. At the time of writing, the Lynas share price is trading 1.38% lower at $5.70.   

Lynas is the world’s second-largest producer of rare earths and the only significant producer outside China. Rare earth materials are key components in the production of renewable energy technologies. 

Lynas Malaysian operations 

Lynas operates the Lynas Advanced Materials Plant in Pahang, Malaysia. It first built the facility in 2012 to process rare earth material at a lower cost than it could in its home of Western Australia.

Late yesterday, the company provided an update on how the latest coronavirus lockdown regulations in Malaysia are likely to affect its rare earth processing plant there. The Malaysian Government also announced yesterday that the movement control order (MCO) it had implemented last year in response to the pandemic is being extended until early next month. An MCO is a national governmental restriction on public and business behaviour to help curtail the spread of the virus.

The country is currently experiencing a third wave of infections and has placed restrictions on social gatherings as well businesses and the education system. 

While Lynas was quick to provide some reassurance to investors regarding its operation in Malaysia, judging by today’s share price movements, it seems some investors are a little concerned. 

In a market update yesterday, the company insisted that the plant will continue to operate with “standard procedures”:

The MCO, which is in effect for the period from 12 May 2021 until 7 June 2021, permits all economic sectors to continue to operate during the period of the MCO. Consistent with the MCO and previous updates, the Lynas Malaysia plant continues to operate with Standard Operating Procedures (SOPs) in place.

Lynas Malaysia has already implemented strict health and hygiene protocols that meet and exceed the Ministry of Health’s requirements. Products produced at the Lynas Malaysia plant are essential to the manufacturing supply chains for critical industries including automotive, medical devices, oil refining and machinery & equipment.

Lynas share price snapshot

The Lynas share price has lost around 8% over the past month and also fell by 11% in April. Lynas shares are, however, still up by around by more than 40% year to date and over 200% in the past year. 

More reading

• Why has the Lynas (ASX:LYC) share price fallen 11% in April?
• Why is Australian Strategic Materials (ASX:ASM) share price higher today?
• Province Resources and Zip were among the most traded ASX shares last week
• Why some of your favourite ASX growth shares are free-falling this week
• How the Lynas share price (ASX:LYC) sunk 90% last time this happened 

Motley Fool contributor Lucas Radbourne-Pugh 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 Pure Foods Tasmania Ltd (ASX: PFT) share price went nuts earlier today after the company released a sterling customer update.

After reaching an intraday high of 72 cents in mid-afternoon trade, the Pure Foods share price lost its beans and has since retreated to 65 cents apiece, up 3.17%.

Let’s see why the smoked salmon and trout producer is performing so well today.

Pure Foods’ new distribution deal

Pure Foods advised its subsidiary Woodbridge Smokehouse has just signed a new distribution deal with international food distribution company Monde Nissin Australia. 

The distribution deal makes Woodbridge the sole supplier of trout and salmon products for Monde Nissin, which sells its foodstuffs to independent grocers in 45 countries.

Pure Foods reports that the deal is expected to increase Woodbridge’s total revenue by 50% in FY22 against the previous year, and increase Pure Foods’ total group revenue by 15%. 

The deal will include four new Woodbridge products the company recently brought to market. Monde Nissin is currently also in the process of expanding its market into Queensland, which has the potential to further increase revenue from the deal.

Management comments

Pure Foods managing director Michael Cooper said:

We are very excited to be further strengthening our relationship with Monde Nissin Australia. MNA has strong customer relationships covering the Australian FMCG network. The position of PFT as the sole supplier of Atlantic Salmon and Trout products to the Monde Nissan distribution network will provide significant growth opportunities for our Woodbridge Smokehouse brand.

The agreement with MNA further supports the large growth that WBSH has been able to deliver over recent quarters. With forecasted growth for WBSH of over 50% versus last year, it is great to see continued demand and increased availability of our premium brands nationally.

Pure Foods share price snapshot

The Pure Foods share price rose significantly in 2020 – up 220% for the past 12 months – but hasn’t performed nearly as well this year-to-date, down 32%.

It has, however, been bolstered with its diversifying news of plant-based food brand acquisitions, such as its buyout of Cashew Creamery in March.

More reading

• The Perenti (ASX:PRN) share price is collapsing 29%. Here’s why
• Is the NAB (ASX:NAB) share price a buy at $26?
• Why the Harmoney (ASX:HMY) share price is storming 10% higher today
• Why American Pacific Borates, NAB, Perenti, & Xero are tumbling lower
• Why AMP Capital’s chief economist is optimistic on the Federal Budget

Motley Fool contributor Lucas Radbourne-Pugh 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 Perenti Global Ltd (ASX: PRN) share price is taking a shellacking on the trading floor today. At the time of writing, shares in the diversified mining company are down an astonishing 28.72% to 69.5 cents each.

The Perenti freefall comes after the company downgraded revenue and earnings guidance for the rest of this financial year and into the next.

Let’s take a closer look at today’s update.

Perenti share price plunges

In a statement to the ASX, Perenti Global said it expects revenue and earnings for the second half of this financial year and into FY22 to be lower than anticipated. No specific percentages or figures were provided in terms of the scale of the lower revision.

The company said the reason for its financial difficulties are threefold: the ongoing impacts of COVID-19, a tightening labour market, and a strengthening Aussie dollar. Investors are not taking the news well, judging by today’s Perenti share price sell-off.

Perenti also said today its underground operations will be more significantly impacted by these factors than its surface operations. The company’s investment outlook, while affected by the changing labour market, remains the same as it was in its half-year update.

COVID-19

In its update, Perenti says restrictions resulting from the pandemic have had an adverse impact on productivity. Specifically, quarantining rules, travel restrictions, and an operational shut-down due to an outbreak at a worksite, were all cited as factors dragging on the company’s productivity. Direct costs related to the pandemic, however, were recoverable from clients.

Tighter labour market

Perenti claims it has become apparent to the business that demand for domestic labour is increasing at a faster rate than supply. As a result, wages are increasing and this is affecting the company’s bottom line, according to the statement.

Stronger Aussie dollar

Between its half-year update and today, Perenti says the value of the Australian dollar against the US dollar has increased by an average of 1 cent to 77 US cents. The miner believes this small increase will result in a $1.4 million hit to earnings before interest and taxes (EBIT) per year.

Positive update

Surprisingly, given the devastation of the Perenti share price today, there were some positive announcements in today’s statement.

Since 31 December 2020, $700 million of contracts have been awarded to Perenti. Furthermore, there is around $320 million worth of letters of intent in the pipeline. Perenti also says it increased the growth pipeline for the business by 20%, mostly related to gold and nickel opportunities in Australia and North America.

Risks to its African surface operations have improved “significantly”, according to the company. It believes there is some potential for the surface business to also improve further from the last estimate.

Finally, Perenti received a $7 million payment from the finalisation of work at one of the African projects. Total funds received from the sale of two African projects has totalled $87 million.

Perenti share price snapshot

Over the past 12 months, the Perenti share price has fallen by around 30% – most of that occurring today. Today’s losses have also resulted in the company’s shares trading almost 50% lower year to date. 

Given today’s current market price and 704.3 million shares outstanding, Perenti has a market capitalisation of $496.5 million. Yesterday this was $686.7 million.

More reading

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• Perenti (ASX:PRN) share price climbs on North American expansion plans

Motley Fool contributor Marc Sidarous 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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