The Crown Resorts Ltd (ASX: CWN) share price will be under renewed interest from investors today. The company has garnered further attention after releasing new updates to the market. At the time of writing, the Crown share price was down 0.6% to $9.70.

Crown to resume operations in Melbourne

Crown’s most recent update informed investors that the company will resume operations at its Melbourne casino precinct from midnight tonight. The news follows the Victorian government rolling back restrictions following a snap, 5-day lockdown announced on the 12 February.

Despite relaxed restrictions, Crown’s gaming operations will have limitations. The company’s gaming floor is limited to 50% of maximum capacity. Similarly, each indoor space will be limited to 300 patrons.

Response to the WA independent inquiry

Earlier today Crown also provided a response to an independent inquiry initiated by the Western Australia (WA) government.

An urgent meeting of WA’s Gaming and Wagering Commission concluded that an independent inquiry be undertaken. The intention of this was to assess Crown’s suitability to hold the state’s only casino licence. According to the Commission, they are taking measures to ensure that the inquiry has the powers of a Royal Commission.

In a statement released earlier today, Crown noted that the company would “fully cooperate” with the inquiry and would “continue to engage with the WA Commission in relation to its reform agenda and any further remedial steps”.

What is driving interest in the Crown share price?

The Crown share price has faced scrutiny from investors following a scathing report from Commissioner Patricia Bergin. The report follows a public inquiry into the company, which uncovered allegations of money laundering.

Highlighting issues, the Bergin report deemed Crown unsuitable to operate a new Sydney casino at Barangaroo. Additionally, determining through an 800-page report that Crown needs to make sweeping cultural changes if it wants to be considered a suitable operator in the future.

The fallout continued, with Crown’s Chief Executive Officer and Managing Director stepping down last week amid the chaos.  

How has the share price responded?

The Crown share price has had a muted response despite the chaos. At the time of writing, shares in Crown are trading relatively flat for the day.

Over the past 52 weeks, the Crown share price has tanked more than 17%, with the COVID-19 pandemic weighing heavily on the company.

More reading

• Crown (ASX:CWN) loses its CEO as fallout continues
• ASX 200 falls, Melbourne lockdown bites, Baby Bunting drops
• ASX 200 down 0.3%: Crown CEO hasn’t resigned, Mirvac update, Nearmap remains halted
• 5 things to watch on the ASX 200 on Friday
• ASX 200 rises 0.5%, CBA reports, Crown deemed unsuitable for Sydney

Motley Fool contributor Nikhil Gangaram has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Crown Resorts 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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BHP Group Ltd (ASX: BHP) shares have just blasted into record territory. If the BHP share price can hold onto its 3.26% intraday gains for roughly another hour, the Australian iron ore and copper mining giant will close at new all-time highs.

BHP’s previous record high was $47.54 per share. Shares touched $49.30 in early morning trade today, before retracing some to currently trade at $48.47.

Why is the BHP share price hitting all-time highs?

After falling hard during the COVID-driven market rout last February and March, the BHP share price has come roaring back, up 92% since 16 March.

Much of the company’s success is attributable to the soaring price of iron ore and copper, the two dominant contributors to BHP’s earnings.

The iron ore price, above US$160 per tonne, remains near 8-year highs. Copper is also at 8-year highs, trading for US$8,405 per tonne.

That’s certainly spelled good news for BHP’s earnings. Yesterday the company reported its underlying earnings before interest, tax, depreciation and amortisation (EBITDA) came in at US$14.7 billion for the half-year ending 31 December 2020. That’s an increase of 21% from the prior corresponding half.

Of that US$14.7 billion, US$13.9 billion came from its iron ore and copper segments, with iron ore generating EBITDA of US$10.2 billion and copper generating EBITDA of US$3.7 billion.

Iron ore and copper demand

While iron ore prices are widely forecast to slowly retreat over the coming years, strong demand from China’s steel factories along with increased infrastructure spending from developed nations looking to kickstart their virus-addled economies should cushion any price falls. Indeed, the iron ore price may well surprise to the upside.

According to analysts at Commonwealth Bank of Australia (ASX: CBA), as quoted by The Australian Financial Review:

China’s Two Sessions in early March will prove crucial to China’s policy objectives. If policymakers favour growth again this year, particularly through another infrastructure-led stimulus, iron ore prices will track higher than we’re forecasting. Another key support for iron ore prices this quarter will be the risk that wet weather plays on iron ore shipments from Australia and Brazil.

Copper demand is also predicted to remain strong, with JPMorgan analysts forecasting a new commodities supercycle is taking form. One that will support copper prices as the world increasingly shifts towards battery storage for power and electric vehicles for transport.

How that all plays out remains to be seen.

But for today, the record high BHP share price will be pleasant news to the company’s shareholders.

More reading

• 2 of the best ASX dividend shares to buy right now
• Here’s why the BHP (ASX:BHP) share price is closing in on its record high
• ASX 200 rises 0.7%, Redbubble sinks, BHP dividend jumps
• 2 ASX dividend shares rated as buys by brokers
• ASX 200 up 0.5%: BHP impresses, NAB rises, Zip rockets

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 Afterpay Ltd (ASX: APT) share price is falling in trade today, currently down 3.3% at $148.38. This is despite the recent buy now, pay later (BNPL) excitement in other shares including Zip Co Ltd (ASX: Z1P), Fatfish Group Ltd (ASX: FFG), and IOUpay Ltd (ASX: IOU).

With no news from the company today, we look at what other forces might be at play.

Catalysts for today’s Afterpay share price selling

Could recent run-ups in BNPL competitors stem from an interest in finding the next big player? Particularly in cases like Fatfish and IOUpay, as they target new developing markets for the sector in Southeast Asia. The potential returns from investing at an early stage might have Afterpay shareholders taking profit and reallocating to these opportunities.

Alternatively, the case could be made that the tech sector is looking a bit frothy. Technology shares have outperformed through COVID-19 and the global market rebound.

Many investors found solace in companies with limited exposure to physical forms of business – in addition to the large role technology had in handling the events of the pandemic. However, some may perceive evaluations as stretched at this point, even when accounting for growth.

This perception of overvalued in many tech shares, including Afterpay, might lead investors to turn to value investing. That means blue-chip shares that look undervalued based on their earnings, often reflected in the price-to-earnings (P/E) ratio.

Is the growth engine still chugging along?

In a short timeframe of nearly 4 years, Afterpay has managed to grow like wildflowers. Merchants, customers, revenue – all the metrics have been humming along like a fine-tuned engine. For instance, revenue has rocketed from $22.906 million in 2017 to $476.555 million in 2020.

However, 2021 is a world away from 2017. Indeed, Afterpay now has countless contenders all wanting a piece of the BNPL pie. This might have investors nervous considering the company still hasn’t turned a profit. The question weighing on the minds of some is, how much profit will be in it, given the saturation of competitors?

Afyterpay’s recent sales in the United States indicate strong sales are still occurring for the company. The announcement posted on 2 December 2020 highlighted the company exceeding $2 billion of global sales in a single month. Furthermore, the US made up $1 billion of these sales, increasing 186% from the prior year.

The growth story will be clarified on 25 February, when the company is slated to release its half-year results for FY21.

More reading

• What’s going on with the IOUpay (ASX:IOU) share price?
• Why the Zip (ASX:Z1P) share price is crashing 19% lower today
• Why the Fatfish (ASX:FFG) share price is diving 21% today
• Why Coles, Netwealth, Pro Medicus, & Zip shares are sinking
• ASX 200 down 0.5%: Domino’s delivers, Westpac impresses, Coles sinks

Mitchell Lawler owns shares of AFTERPAY T FPO. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of ZIPCOLTD FPO. The Motley Fool Australia owns shares of AFTERPAY T 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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The Betmakers Technology Group Ltd (ASX: BET) share price is up around 15%. It has announced a partnership with Matt Tripp.

Betmakers is currently engaged with a number of parties to leverage the company’s technology and data platform and is looking forward to his assistance with those initiatives. The company is looking at potential opportunities in the US.

What is happening with Betmakers?

Betmakers Technology has contracted Mr Tripp to be a strategic advisor to the company where he will pursue ‘strategic deals’ and ‘transformational deals’ for Betmakers. Mr Tripp will be looking for opportunities in both Australia and internationally.

In per-share terms, strategic deals will be counted as ones that increase the company’s revenue by more than 10% on a pro forma basis and transformational deals will be counted as ones that increase revenue and earnings before interest, tax, depreciation and amortisation (EBITDA) by more than 100% on pro forma basis. Mr Tripp will be rewarded with unquoted performance rights if he’s successful at bringing in strategic deals, as well as unquoted options and performance rights for transformational deals.

Mr Tripp has agreed to provide business to business wagering service opportunities exclusively to Betmakers.  

The execution of any deals will ultimately be up to the board.

Strategic placement

Subject to shareholder approval, Mr Tripp will also invest $25 million at a Bookmakers share price of $0.70 – almost 30% lower than the current price, though Betmakers said it was a 1.6% discount to the 15-day average share price.

Betmakers has also received firm commitments of $50 million from several existing, supportive institutions.

All of these funds will be used to accelerate growth, specifically for pursuing and executing strategic opportunities. After competing the capital raising and the transaction with Sportech, the company will have approximately $110 million in cash on hand.

Matt Tripp’s positive comments

Mr Tripp said:

BetMakers has cemented itself with a compelling proposition in the global racing wagering market. They have built a formidable team with a highly trusted brand and established a global footprint with a large customer base. I am delighted to invest into the company and take on a role to assist in growing the business at scale globally. I see clear opportunities to support that growth through inorganic and organic deals both in Australia and internationally.

CEO signs on for another 3 years

Betmakers also announced that the CEO, Todd Buckingham, will remain as the CEO until 30 June 2024 after signing a new 3-year commitment.

The chair of Betmakers, Nick Chan, spoke of the positive contribution that Mr Buckingham has had for the company:

Todd has delivered outstanding growth and opportunity for the company through his leadership and vision and the board is delighted to have secured his commitment under agreeable terms going forward.

More reading

• Betmakers (ASX:BET) share price jumps 9% to touch 52-week high

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 Betmakers Technology Group 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 LiveTiles Ltd (ASX: LVT) share price is rocketing in mid-afternoon trade. This comes after the company announced it has signed a record multi-million deal with a Fortune 100 company.  At the time of writing, the LiveTiles share price is up an astonishing 16% to 30 cents.

What’s driving the LiveTiles share price higher?

The LiveTiles share price is one of the best performers today after reporting a significant contract win.

According to its release, LiveTiles entered a three-year multi-million agreement with a United States-based Fortune 100 healthcare company. The deal, effective immediately, will see LiveTiles deliver its broad suite of products including its mobile communications application, LiveTiles Reach.

The company credited this to its established products, compared to custom-built platforms. This is because it is readily available to assist in employee collaboration and communication.

LiveTiles revealed that the contract was closed much quicker than the average sales cycle for enterprise deals. A catalyst for this could be that the healthcare system is overwhelmed by COVID-19. Particularly in terms of patient volume, risk management, and work-from-home for non-essential staff.

This is the second major win in recent months for the company. Previously, LiveTiles secured a record licensing deal with a United States-based apparel retailer. The multi-year, multi-million contract was signed to support the high-profile global apparel retailer with its COVID-19 re-opening strategy.

Growth market

Since the beginning of 2021, LiveTiles has witnessed strong tailwinds as a result of the digital transition from Senior Executives. It noted that companies are buying software packages to enhance their employee experience platforms. In turn, it is hoped that this will drive business growth. Notably, it is estimated that the market for solutions that promote corporate culture, knowledge discovery, and on-the-job learning is around US$300 billion per annum.

In the announcement, Gartner, a leading technology researcher, stated that global healthcare IT spending is forecasted to recover this year. By 2024, the sector alone is projected to reach US$169.5 billion.

Furthermore, enterprise software is anticipated to lead the rebound in IT spending in 2021. An annual growth is predicted at 8.8% to US$505 billion.

What did management say?

LiveTiles Co-founder and CEO Karl Redenbach welcomed the milestone contract, saying:

To sign another record deal for the second time in less than four months is a real thrill. To do so with LiveTiles Reach being a key part of the deal, is further validation of our product diversification strategy and gives us confidence for the year ahead. It’s also further validation of the growing Employee Experience Platform product category that LiveTiles has helped pioneer.

LiveTiles president Daniel Diefendorf went on to add:

Digital Transformation and employee experience in a post COVID-19 world is no longer a nice to have. Large enterprises are making the necessary investments to help their teams be more effective, but also connect in meaningful ways with their employees no matter where they work from. This win brings together the best of a forward-looking customer and the LiveTiles’ Employee Experience Platform to serve hundreds of thousands of employees.

Despite today’s meteoric rise, the LiveTiles share price is down 14% over the last 12 months.

Based on the current share price, the company commands a market capitalisation of around $261 million.

More reading

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• Why Bigtincan, Bubs, LiveTiles, & Treasury Wine shares are storming higher
• Why the LiveTiles (ASX:LVT) share price is avoiding the market selloff

Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of LIVETILES FPO. The Motley Fool Australia has recommended LIVETILES 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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The IOUpay Ltd (ASX: IOU) share price may be in a trading halt but that hasn’t stopped the company making announcements.

This afternoon the Malaysia-based buy now pay later (BNPL) provider responded to an ASX aware query.

Why is the IOUpay share price in a trading halt?

IOUpay requested a trading halt on Tuesday so that it could undertake its second capital raising in a little over three months.

As things stand, no details have been provided in respect to how much the company is aiming to raise and for what purpose. Based on what management has said today, it appears to be an opportunistic capital raising to take advantage of the recent surge in the IOUpay share price.

And what good timing, too! Had the IOUpay share price not been in a trading halt today, it would almost certainly have been sinking along with fellow BNPL shares Sezzle Inc (ASX: SZL) and Zip Co Ltd (ASX: Z1P) today.

At the time of writing, the Sezzle share price is down 11% and the Zip share price is down 12%.

What was today’s announcement?

Earlier today the ASX Ltd (ASX: ASX) contacted IOUpay to quiz it on its capital raising.

The stock exchange operator notes that it contacted the company initially on Monday to ask if there were a reason for the spike in the IOUpay share price. The company responded by saying there was nothing that it was aware of.

Whereas the very next morning its capital raising was announced, which caught the eye of the ASX.

IOUpay has provided its explanation for how everything unfolded, which appears to have appeased the ASX.

“To set out the relevant chronology, IOU notes that it received a letter from the ASX titled “Price – Query” on 15 February 2021, to which the Company responded by way of letter on the same day, with that response being released to market by the ASX at 1.03 pm that day (the ‘Price Query Response’).”

“Later in the afternoon of 15 February 2021, after the release to market of the Price Query Response, IOU received an unsolicited proposal to conduct a capital raising. This proposal was not considered by the Board until an emergency meeting of the Board was convened in the late afternoon of 15 February 2021, after market close. The time of the meeting was as soon as practicable at short notice given the relative locations and time zones of some Board members. At this meeting, the Board agreed to accept the proposal to conduct a capital raising and finalise the terms on which it would seek do so over that evening and prior to commencement of trade 16 February 2021.”

“Accordingly, it was not until after market close on 15 February 2021 that IOU had become aware that it was ‘considering capital raising initiatives and opportunities’ to the extent that would require disclosure to the ASX under Listing Rule 3.1.”

“For the avoidance of doubt, IOU confirms that at both the time at which IOU sent the Price Query Response to the ASX and at the time of its release to market by the ASX, IOU was not in possession of any information which would warrant disclosure under Listing Rule 3.1 with respect to any capital raising initiatives and opportunities.”

More reading

• Payright (ASX:PYR) shares get speeding ticket after 32% surge
• The Cirralto (ASX:CRO) share price is hitting 52-week highs today
• Why the IOUpay (ASX:IOU) share price is halted again today
• The Novatti (ASX:NOV) share price rocketed 38% today
• Why the Sezzle (ASX:SZL) share price is charging 7% higher today

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 ZIPCOLTD FPO. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends Sezzle Inc. The Motley Fool Australia has recommended 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 Province Resources Ltd (ASX: PRL) share price is going gangbusters right now, currently up by a whopping 253% to 9.2 cents a share.

The Province Resources share price caught fire this morning after the gold and nickel exploration company announced its intention to acquire Ozexco Pty Ltd. Ozexco has 7 exploration licences in the Gascoyne region in Western Australia for areas considered prospective for salt, potash and mineral sands.

Here’s what we know.

Province Resources share price soars on green hydrogen news

Earlier today, Province Resources announced that it has entered a conditional agreement to acquire all of the shares of Ozexco. 

According to the release, the acquisition brings “potential for multiple projects and commodities focusing on Industrial Minerals and Renewable Green Hydrogen.”

Through the successful acquisition of Ozexco, Province Resources will inherit the company’s Gascoyne project and its HyEnergy renewable hydrogen project.

The Gascoyne project’s Carnarvon Basin project will produce salt and potash by using an “inexhaustible seawater resource” to be concentrated through solar and wind evaporation.

According to the announcement, the HyEnergy project is projected to generate 1GW (1,000MW) of renewable energy using wind and solar and to produce ~60,000t of green hydrogen or up to ~300,000t of green ammonia.

The company appointed Viaticus Capital to drive the strategy and execution of the deal.

Management commentary

Commenting on the acquisition and the strategic importance of the green hydrogen space, Viaticus Capital principal Gavin Rezos said:

I am very pleased to support the Company’s capital raise given their mission and stated objective is to be part of the solution for decarbonisation of the global economy. Western Australia has all the attributes required to be a world class producer of green hydrogen utilising renewable energy sources and Carnarvon is the most ideal area to make the best advantage of those attributes.

He added:

Green Hydrogen will be an increasingly important future energy source, developing alongside the Lithium industry. Rapid advances in Hydrogen Fuel Cells are now demonstrating that Green Hydrogen will have a major role to play in the areas of mass transport, shipping, trucking, and eventually in homes, helping the world reach targets of being net zero carbon by 2050.

The Province Resources share price was up approximately 160% just minutes after the opening bell this morning, demonstrating the news was well received by investors. 

Today’s gains put the Province Resources share price up 360% in the past month and 820% year to date.

More reading

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• You need an investing roadmap
• Why the Zip (ASX:Z1P) share price is crashing 19% lower today

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It has been a disappointing day of trade for the Coles Group Ltd (ASX: COL) share price on Wednesday.

At one stage today, the supermarket operator’s shares were down as much as 6% to $17.04.

The Coles share price has recovered slightly but remains 5% lower at $17.27 at the time of writing.

Why is the Coles share price deep in the red?

Investors have been selling Coles shares today following the release of its half year results.

For the six months ended 31 December, the supermarket giant delivered an 8% increase in revenue to $20,569 million and a 14.5% increase in net profit to $560 million. This was driven by solid growth across all segments.

Given that this result was largely ahead of the market’s expectations, investors may be wondering why the Coles share price is tumbling lower today.

Well, that appears to be down to management’s commentary regarding its outlook.

Coles’ cautious outlook

While the company has started the second half positively and delivered comparable store sales growth across both its Supermarket and Liquor segments, management’s outlook has spooked investors and put pressure on the Coles share price.

Coles warned: “Depending on COVID-19, vaccine roll out and efficacy, and other factors, sales in the supermarket sector may moderate significantly or even decline in the second half of FY21 and into FY22.”

The company also notes that it will soon be cycling elevated sales from COVID-19 late in the third quarter. This was a time when panic buying, pantry stocking, and toilet roll hoarding swept the nation. Given that these factors are (hopefully) unlikely to repeat, it will have a tough time outperforming those sales figures.

What about the future?

Looking beyond the short term headwinds that Coles is about to face, CEO Steven Cain remains very positive.

He commented: “Whilst COVID-19 will continue to present challenges it will also continue to present opportunities for change. With a strong balance sheet and team, Coles is well placed to continue delivering on our vision of becoming the most trusted retailer in Australia and grow long-term shareholder value.”  

As positive as Mr Cain is, that hasn’t been enough to stop the Coles share price from tumbling today. Though, tomorrow could be better depending on how brokers react to the result. Tune in on Thursday for that.

More reading

• Why Coles, Netwealth, Pro Medicus, & Zip shares are sinking
• ASX 200 down 0.5%: Domino’s delivers, Westpac impresses, Coles sinks
• Coles (ASX:COL) share price on watch following half year update
• 5 things to watch on the ASX 200 on Wednesday
• The latest ASX shares upgraded by brokers to “buy” during the reporting season

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of COLESGROUP DEF SET. 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 Moelis Australia Ltd (ASX: MOE) share price shot up 6.7% to $4.80 in strong trading this morning. This comes after the financial services company released its results for the full 2020 financial year.

The Moelis share price has retreated somewhat this afternoon and is trading at $4.70 at the time of writing, up 2.84%. Let’s take a look.

What did Moelis Australia report?

In today’s ASX release, Moelis Australia announced a 4.7% decrease in its underlying earnings before interest, tax, depreciation and amortisation (EBITDA) to $60.5 million.

The company incurred a 5% increase in expenses, including $3 million in one-off costs due to the impacts of COVID-19, and investment in platform capabilities.

Assets under management (AUM) grew by 11% to $5.4 billion, supporting asset management revenue growth of 10%.

Underlying revenue of $161.1 million represented an increase of 1.1% over the 2019 financial year. Underlying earnings per share (EPS) were 25.1 cents, down 5.3% from the 26.5 cents reported in the previous year.

The company reported it had $112 million in operating cash and $200 million in investment assets available.

Moelis will pay a dividend of 10 cents per share (cps), fully franked. That’s the same dividend it paid in 2019.

Commenting on the results, Moelis’ joint CEOs Julian Biggins and Chris Wyke said:

The operating performance of the business strengthened appreciably as the year progressed and this momentum has been carried into a strong start to 2021.

Going forward, our strategy remains unchanged as we continue to look to scale our investment strategies, expand our distribution channels and leverage our specialised capabilities in corporate advisory and equities.

The company said it was in a strong position heading into 2021. It forecasts a 10-20% increase in underlying EPS from the 2020 financial year.

Moelis share price snapshot

After getting hammered during the wider COVID-fuelled market panic last year – falling 79% from 21 February to 25 March –the Moelis share price has recovered strongly, up 277% from the March low.

Over the past 12 months, its shares are still down 18%. Year-to-date the Moelis share price is up 3%. That’s right in line with the gains on the All Ordinaries Index (ASX: XAO).

More reading

• All eyes on the Reject Shop (ASX: TRS) share price
• You need an investing roadmap
• Why the Zip (ASX:Z1P) share price is crashing 19% lower today
• Why the Fatfish (ASX:FFG) share price is diving 21% today
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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 Reject Shop Ltd (ASX: TRS) could be poised to fly after releasing a promising half-year report for FY21. At the time of writing, the Reject Shop share price is trading slightly higher for the day at $7.55, up 1.9%. 

What did the Reject Shop announce?

Earlier today, Reject Shop released its financial report for the first half of FY21.

The report was highlighted by a 46.5% increase in net profit after tax (NPAT) of $16.3 million. In addition, Reject Shop reported a 20.8% increase in Earnings Before Interest, Taxes, Depreciation and Amortisation (EBITA) of $31.1 million for the half-year.

Despite a surging net profit, the company reported sluggish sales for the first half. Consequently, for the 6 months to 31 December 2020, Reject Shop reported a 0.3% dip in sales of $434.3 million.

Reject Shop also acknowledged the company’s strong balance sheet, boasting $107.6 million in cash on hand. In addition, the company highlighted that no JobKeeper wage subsidies were received by the company despite pandemic restrictions.

Reject Shop cited the company’s strong cash position was driven by prudent cost reduction, business simplification, and operational efficiency. Despite a strong cash position, Reject Shop did not declare an interim dividend.

What is the outlook for the Reject Shop?

The company highlighted that performance in the first half of FY21 should not be used as an indicator for the second half. Reject Shop acknowledged that a higher proportion of sales are generated in the first half. Historically, the company has reported EBIT losses in the second half over the past 2 financial years.

Despite the dour outlook, Reject Shop noted that management will continue to focus on cost reduction, business simplification, and operational efficiency.

Reject Shop also noted that stores in CBD locations and large shopping centres could suffer from reduced foot traffic. In addition, the company highlighted further challenges to its international supply chain which could impact stock availability and increase costs.

Reject Shop Chief Executive Officer, Andre Reich, noted that:

Once the cost base is optimised, we expect to be well-place to pursue longer-term growth via store network expansion and by growing our online presence.

Reject Shop Share Price Outlook

With 354 stores, Reject Shop is Australia’s largest discount variety store. Despite uncertainty over short term growth, the company maintains that it is well-positioned to capture a growing market share.

This optimism has been reflected in the Reject Shop share price which has surged more than 78% in the last year.

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Motley Fool contributor Nikhil Gangaram 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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