The Rhipe Ltd (ASX: RHP) share price is sliding in morning trade, down 3.61% to $1.74 at the time of writing.

This comes following the cloud and technology solutions provider released its results for the first half of the 2021 financial year (H1 FY21), and despite posting strong growth in sales.

What financial results did Rhipe report?

In this morning’s release, Rhipe reported group sales from its software products and services of $180 million. That’s an increase of 18% from the $153 million reported in H1 FY20.

Sales from its software products increased by 17% to $171 million. The company credited growth in its sales of Microsoft Office365 and Azure. Asia is a strong growth market, with Rhipe’s sales increasing 34% in the region year-on-year.

The half-year revenue increased by 15% to $30.5 million (up from $26.6 million).

Growth in the company’s licensing revenue of $21.6 million slowed to 7% year-on-year. Rhipe pointed to changes in its software vendor incentives and the impact of COVID-19 on its business partners for the lower revenue growth.

Revenue from its services and support activities grew more strongly, up 40% on the previous corresponding half year, to $9 million.

Earnings before income, taxes, depreciation and amortisation (EBITDA) of $8.2 million was up 17% from H1 FY20. Profit after tax also increased by 17% to $3.8 million, up from $3.2 million.

As of 31 December, the company had cash of $57.5 million, having paid $3.2 million in dividends and $4.3 million for its Parallo acquisition.

Rhipe announced an interim dividend of 1.5 cents per share (cps), fully franked, to be paid in March.

Looking ahead, Rhipe forecasts strong financial results for the second half of the 2021 financial year. The company stated it intends to increase investments in several areas of its business. Rhipe is aiming for full-year operating profit of $17.5 million for FY21, approximately 27% more than it delivered in FY20.

Rhipe share price snapshot

The Rhipe share price has yet to recover from the hit it took during last year’s viral selloff in February and March. Over the past 12 months, Rhipe’s shares are down 29%. Year-to-date the share price is down 7% (with today’s intraday losses factored in).

For comparison, the All Ordinaries Index (ASX: XAO) is up 3% so far in 2021.

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• Why is the Ecograf (ASX:EGR) share price on a wild ride today?
• Mesoblast (ASX:MSB) share price surges on new results
• Why the Optiscan (ASX:OIL) share price is going gangbusters
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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 Money3 Corp Ltd (ASX: MNY) share price is on the rise today, up 4% in morning trade. Shares are gaining today following the release of Money3’s results for the first half of the 2021 financial year (H1 FY21). At the time of writing, the Money3 share price is trading at $2.94, up 2.5%. 

What results did Money3 report for H1 FY21?

In this morning’s release, the financial services company reported it had achieved record results for the half-year and is turning its focus to growth.

Earnings before income, tax, depreciation, and amortisation (EBITDA) came in at $40.5 million. That’s up 32.8% from H1 FY20.

Net profit after tax (NPAT) also posted strong growth, up 26.8% to $19.9 million.

Money3’s revenue for the half-year grew by 8.3% to $67.9 million while its $151.1 million cash holdings increased by 9.3% over the previous corresponding period.

The company reported an 11.1% upturn in its gross loan book, reaching $474.0 million. And Money3 declared a 3 cent interim dividend, fully franked. The dividend will be paid on 8 April.

Statement from the Managing Director

Commenting on the results, Scott Baldwin, Money3’s Managing Director said:

We acquired AFS and GMFA, both settling early in 2021. AFS broadens the Australian product offering for the Group, increasing the leverage of the Group’s existing distribution channels, and expanding the addressable market into new vehicles and growing our presence in the commercial vehicle market. While GMFA provides us with a loan book of high credit quality customers.

Finally, securing the $250 million warehouse from Credit Suisse provides a cornerstone to the Group’s future growth, as does the Westpac funded $55 million warehouse facility supporting the AFS business. We are now very well placed with substantial bank funding at a lower cost of funding… The Group is now focused on growing the business toward $1 billion of receivables.

Looking ahead Money3 reported it is “cautiously optimistic” on its outlook for the second half of the 2021 financial year. It forecast NPAT of $36.0 million. The company expects to pay 9 cents in dividends for the full financial year, fully franked.

Share price snapshot

Money3’s shares hit a record high of $3.03 per share on 21 February last year. The share price then plunged 73% by 23 March. But it’s come back strongly since then. Shares are now up 268% from the 23 March lows and less than 2% below their all-time highs.

Year-to-date the Money 3 share price is up 4.2%. By comparison, the All Ordinaries Index (ASX: XAO) is up 3.3%.

More reading

• Here’s why the Money3 (ASX:MNY) share price is racing higher

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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Brokers are constantly looking at ASX dividend shares to decide which ones look like good value to buy.

The brokers are looking at things like the profit expectations, the valuation, the operational performance and the outlook.

One broker might say that Australia and New Zealand Banking Group Ltd (ASX: ANZ) is a buy whilst another broker might decide that Telstra Corporation Ltd (ASX: TLS) shares have more growth potential. 

However, if there’s an ASX dividend share that multiple brokers like then it could be one to think about.

BHP Group Ltd (ASX: BHP)

The big resources business just reported its FY21 first-half result to investors. It’s liked by at least four different brokers.

In the report, BHP said that its profit from operations went up 17% to US$9.75 billion, underlying attributable profit rose 16% to US$6 billion, and net operating cashflow rose 26% to US$9.37 billion.

However, reported attributable profit fell 20% to US$3.9 billion. This number included an exceptional loss of US$2.2 billion predominately related to the impairments of New South Wales Energy Coal (NSWEC) and associated deferred tax assets and Cerrejon.

On the dividend front, BHP’s board decided to declare a 55% increase to the interim dividend to US$1.01 per share. Net debt reduced by 7% to US$11.8 billion.

The brokers at Macquarie Group Ltd (ASX: MQG) noted that iron ore made up 70% of the first half profit and copper contributed about a quarter of earnings. Petroleum and coal didn’t contribute much to earnings, they only made up around 5% of earnings.

The dividend declared by the ASX dividend share was 26% higher than Macquarie was expecting.

Looking ahead to the medium-term, Macquarie thinks that the strong price of iron ore will continue to help BHP’s profit in both FY21 and FY22.

Macquarie expects BHP to pay a dividend of just under $2.64 per share in FY21, representing a grossed-up dividend yield of 8%. The broker has a share price target of $50 for BHP.

Amcor CDI (ASX: AMC)

Amcor is one of the world’s largest flexibles and rigid packaging manufacturers. It’s currently rated as a buy by at least four brokers.

The ASX dividend share recently released its FY21 first half result which showed that adjusted earnings before interest and tax (EBIT) climbed 8% to $743 million and adjusted earnings per share (EPS) grew 16% to 33.3 cents in constant currency terms. Reported EPS shot higher by 71% to 26.5 cents.

One of the main highlights from the result was the ongoing synergies being achieved with the acquired Bemis acquisition. At the time, it had achieved $35 million of cost synergies and it’s expecting a total of $70 million of cost synergies over the current financial year.

Broker Morgans said that the half-year result was better than it was expecting, with the ‘flexibles’ division delivering EBIT growth of 9% and rigids EBIT growth of 10%.

Morgans pointed to Amcor’s improved profit expectations. Prior to the half-year report being released, management were expecting underlying EPS to rise between 7% to 12%, now the company thinks underlying EPS can rise between 10% to 14%.

The broker has forecast a total dividend for FY21 of $0.67, which translates to a dividend yield of 4.6%. It has a share price target of $17.10 for Amcor.

More reading

• ASX 200 up 0.5%: BHP impresses, NAB rises, Zip rockets
• Why BHP, Codan, Seven West Media, & Zip shares are charging higher
• BHP (ASX:BHP) share price higher after huge first half profit and dividend growth
• 5 things to watch on the ASX 200 on Tuesday
• Up 2%: Is the BHP (ASX:BHP) share price a buy?

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Amcor Limited, Macquarie Group Limited, and Telstra 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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At lunch on Tuesday the S&P/ASX 200 Index (ASX: XJO) is on course to build on yesterday’s solid gain. The benchmark index is currently up 0.5% to 6,904.8 points.

Here’s what is happening on the market today:

BHP half year result impresses

The BHP Group Ltd (ASX: BHP) share price is pushing higher today after investors responded positively to its half year results. The mining giant delivered a 15% increase in half year revenue to US$25.64 billion and a 21% jump in underlying EBITDA to US$14.7 billion. This was driven largely by strong profits from its iron ore and copper businesses. And thanks to its strong free cash flow generation, the BHP board declared an interim dividend of US$1.01 per share (~A$1.30 per share). This is up 55% on the prior corresponding period.

NAB share price rises on Q1 update

The National Australia Bank Ltd (ASX: NAB) share price is pushing higher today following the release of its first quarter update. For the three months ended 31 December, NAB reported an unaudited statutory net profit of $1.7 billion and cash earnings of $1.65 billion. The latter was a 1% increase on the prior corresponding period. Another positive was that the bank’s credit impairment charges fell 98% compared with the quarterly second-half average of FY 2020.

Ansell half year update

The Ansell Limited (ASX: ANN) share price is edging lower today following the release of its half year results. For the six months ended 31 December, the personal protection safety solutions provider reported sales growth of 24.5% to US$937.8 million. Thanks to stronger margins, Ansell reported a 61.9% increase in net profit to US$106.5 million. In light of this strong half, the Ansell board raised its interim dividend by 52.6% to 33.2 US cents.

Best and worst ASX 200 performers

The best performer on the ASX 200 on Tuesday has been the Zip Co Ltd (ASX: Z1P) share price with a 12% gain on no news. The buy now pay later provider’s shares are now up 150% since the start of the year. The worst performer has been the Treasury Wine Estates Ltd (ASX: TWE) share price with a 6% decline. Investors appear nervous ahead of the wine company’s half year results tomorrow.

More reading

• 2 ASX dividend shares rated as buys by brokers
• Why BHP, Codan, Seven West Media, & Zip shares are charging higher
• Why the Ansell (ASX:ANN) share price is lifting this morning
• BHP (ASX:BHP) share price higher after huge first half profit and dividend growth
• NAB (ASX:NAB) share price on watch after Q1 update

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 owns shares of and has recommended Treasury Wine Estates Limited. The Motley Fool Australia has recommended Ansell Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post ASX 200 up 0.5%: BHP impresses, NAB rises, Zip rockets appeared first on The Motley Fool Australia.

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Tassal Group Limited (ASX: TGR) shares are on the rise this morning following the company’s release of its FY21 first-half (1H21) results. At the time of writing, the Tassal share price has jumped 1.51% to $3.37.

The salmon farming company has had a slow start to 2021 with the Tassel share price trading flat for the year to date. Let’s take a look at Tassal’s 6-month update.

What’s driving the Tassal share price?

The Tassal share price is edging higher in morning trade despite the company reporting statutory net profit after tax (NPAT) of $27.6 million for 1H21. This compares to a $40.8 million NPAT reported for 1H20.

According to Tassal’s update, its 1H21 cash flows were materially impacted by lower export market returns for salmon, with the price $2.19kg lower than in 1H20.

The company’s statutory earnings before interest, tax, depreciation and amortisation (EBITDA) was $77.5 million, a 4.3% drop compared to 1H20 EBITDA of $81 million.

However, in positive news, Tassal’s operating EBITDA jumped 18% to $78.4 million, compared to $66.5 million during 1H20.

An FY21 interim dividend of 7 cents per share, unfranked, will be paid on 30 March 2021. This is 22.2% less than the prior corresponding period’s interim dividend of 9 cents.

CEO comments

Commenting on 1H21 activities and what lies ahead, Tassal Managing Director & CEO Mark Ryan said:

Significant uncertainty caused by COVID-19 is expected to continue for the remainder of FY21. Tassal’s strategy of driving increased domestic per capita consumption is well positioned to align consumer needs both during and post-COVID-19.

While Tassal is not immune to global and local forces outside of its control, our key strengths that will assist us [to] mitigate this environment – our diversification strategies across customers and consumers, growing and processing areas, and species and products – combined with our focus on sustainability, position the Company as best it can to navigate the market issues that COVID-19 continues to present. 

Foolish takeaway

Over the past 12 months, the Tassal share price has shed more than 23% of its value. Tassal shares fell as low as $2.90 during the March 2020 bear market before rebounding to their current levels. However, the Tassal share price is still trading 28.3% lower than its 52-week high.

Based on the current share price, the company commands a market capitalisation of around $703 million.

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Motley Fool contributor Gretchen Kennedy 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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In late morning trade the S&P/ASX 200 Index (ASX: XJO) is on course to record another solid gain. At the time of writing, the benchmark index is up 0.5% to 6,904.2 points.

Four ASX shares that are climbing more than most today are listed below. Here’s why they are charging higher:

BHP Group Ltd (ASX: BHP)

The BHP share price is up 2.5% to $46.88 following the release of its half year results. For the six months ended 31 December, the Big Australian reported a 15% increase in revenue to US$25.64 billion and a 21% jump in underlying EBITDA to US$14.7 billion. This led to the mining giant declaring an interim dividend of US$1.01 per share (~A$1.30 per share), which was up 55% on the prior corresponding period.

Codan Limited (ASX: CDA)

The Codan share price has jumped 6.5% to $13.23. Investors have been buying the electronics products company’s shares following the announcement of an acquisition. Codan has entered into an agreement to acquire Domo Tactical Communications (DTC) from a private equity company. DTC is an established technology provider for high bandwidth wireless communications with specialist capabilities in MIMO Mesh networks. The company will pay US$88 million (A$114 million) upfront.

Seven West Media Ltd (ASX: SWM)

The Seven West Media share price has jumped 17% to 58.5 cents. Investors have been buying the media company’s shares after it announced a letter of understanding in relation to a long term partnership with Google. The agreement will see Seven West Media provide news content to the Google Showcase product which launched in Australia in early February.

Zip Co Ltd (ASX: Z1P)

The Zip share price has continued its incredible run and is up a further 12% to $14.17. This is despite there being no news out of the buy now pay later provider. Investors have been fighting to get hold of the company’s shares on the belief that they are undervalued in comparison to its peers. In addition, the prospect of a secondary listing in the United States has gone down well with investors.

More reading

• BHP (ASX:BHP) share price higher after huge first half profit and dividend growth
• 5 things to watch on the ASX 200 on Tuesday
• Up 2%: Is the BHP (ASX:BHP) share price a buy?
• The Novatti (ASX:NOV) share price rocketed 38% today
• Morgan Stanley: ASX earnings season is topping expectations

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 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 BHP, Codan, Seven West Media, & Zip shares are charging higher appeared first on The Motley Fool Australia.

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This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

Many restaurant chains and food companies got squashed by the pandemic in 2020. But their businesses — and their stock prices — could be headed for a comeback this year. Beyond Meat Inc (NASDAQ: BYND) was an initial public offering (IPO) darling in 2019, but its growth was undercut as the foodservice industry slumped amid the crisis. Shake Shack Inc (NYSE: SHAK) was also making progress until COVID-19 hit. But what investors need to think about now are their future prospects.

Modern takes on old classics

Beyond Meat, maker of plant-based patties and other meat alternatives, had a standout debut on the stock market in April 2019, gaining 250% in the first two months. Soon after, though, the stock traded down sharply, and is yet to reach its all-time highs.

The company has an exciting product line and strong partnerships with retailers such as Walmart and Target. Sales were strong before the pandemic, growing 212% in 2019’s fourth quarter.

Revenue slowed significantly in 2020, and it wasn’t just the closures of restaurants and catering facilities that put a dampener on its foodservice business. Its retail sales diminished as well. In the third quarter, revenue increased 2.7% driven by a 39% rise in retail sales. That was nothing to sneeze at, but was still a huge decline from pre-pandemic sales levels.

Shake Shack’s sales weren’t growing nearly as fast as Beyond Meat’s before the pandemic. While the burger chain’s revenue was growing by low double-digit percentages, comparable sales (what the company calls same-Shack sales) were growing at low-single-digit percentage rates.

Its store count remains fairly small, with 310 domestic locations and 120 international locations. Shake Shack typically opens 20 to 25 stores in a year, but it’s expecting to ramp up that rate and add 35 to 40 company-owned stores in 2021. Management sees plenty of opportunities to expand store count and move into different formats such as food courts.

Leaving the pandemic behind

Beyond Meat is busy developing new products and partnerships to move the sales needle. It recently announced a deal with PepsiCo Inc (NASDAQ: PEP) to create new plant-based snacks and beverages, and it announced a new burger recipe in November that it plans to launch early this year.

These efforts could pay off down the road. But the pandemic showed that in some ways, Beyond Meat’s plant-based products are not essential purchases. The company also faces strong competition from many challengers such as Impossible Foods and The Tattooed Chef (NASDAQ: TTCF). 

Shake Shack delivered an encouraging update in January, announcing that comps in the fourth quarter were only down 17%, a significant improvement from the 32% slump they experienced in the third quarter. And revenue in Q4 rose 4% year over year. Meanwhile, in suburban areas, same Shack sales were flat year over year.

The chain has also been improving its digital options, adding curbside pickup, drive-thru, and testing delivery in certain markets. Its digital strategy clearly wasn’t fully deployed prior to the pandemic, but it has made strides: digital orders accounted for 59% of total orders in the fourth quarter.

The restaurant chain’s comps growth is typically positive but low, and it’s looking to harness digital capabilities and innovate its menu offerings to accelerate that growth. I like that the company is taking it slow and figuring out its next steps while it’s still small enough to significantly boost sales through new store openings. And it has a strong cash position.  

The better buy

Beyond Meat has demonstrated that it has many ways to keep growing. Its sales chart may not be as impressive as it was when the company was younger, but new products and partnerships — though unpredictable — hold the key to future gains. In addition, the company’s greatest challenge is competition.  

Shake Shack is also still working out how to grow. But it’s made excellent progress since the early months of the pandemic, and it has the cash to keep going as it works on improving its menu and figures out how to bolster its digital sales. The market thinks so too, since the burger chain’s share price surged in January. At this point, I think Shake Shack has better long term growth options than Beyond Meat.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

More reading

• Why the IOUpay (ASX:IOU) share price is halted again today
• 5G Networks (ASX:5GN) share price rises 6%. Here’s why
• Why the Adairs (ASX:ADH) share price just raced to a record high
• Why the Ansell (ASX:ANN) share price is lifting this morning
• Redbubble (ASX:RBL) share price sinks 13% despite strong H1 FY21 results

Jennifer Saibil has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Beyond Meat, Inc. 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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This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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The IOUpay Ltd (ASX: IOU) share price has found itself motionless again this morning. The company’s shares have been placed into a trading halt pending the release of an announcement and a capital raising.

Let’s take a closer look at the announcement and what this means for the IOUpay share price. 

Trading halt again?

This trading halt is the second in as many days this week. Yesterday, IOUpay halted its shares less than an hour into trade following a meteoric share price rise. Shares in the Malaysia-based buy now, pay later (BNPL) provider flew from 44 cents to 82 cents on no news.

In response to the price query, the IOU Board indicated their belief that the dramatic price action was due to “price-factoring” of the major partnership for BNPL services announced on 9 February.

Following the response yesterday the trading halt was lifted. The shares traded hands once more. By the end of the day, IOU shares closed at 70 cents, down from the intraday peak of 82 cents.

Today’s halt, however, is not in relation to the share price. Rather, it appears the company being opportunistic and raising further capital while the shares are trading at these elevated prices.

IOUpay is cash hungry

For newer investors in IOUpay, it is worth knowing the company completed a capital raise of $10.5 million via a placement to investors on 9 November 2020. These funds were nominated to be used for salaries, professional services, product development, marketing, etc.

In the company’s December activity report the cash balance at the end of December was reported to be $8.54 million, with an operational cash outflow of $834,000. IOUpay relayed that its cash reserves and balance sheet were to be further strengthened by operating and financing activities in the following quarter. Well, it is the following quarter and today marks the financing activity.

Given the business is new in breaking into the BNPL market in Malaysia, receipts from customers are fairly low. Hence, IOUpay is reliant on capital raises currently to assist the company’s push into the market.

When will shares trade again?

IOUpay has requested the halt to remain in place until the earlier of trading on Thursday, or when the announcement is released to the market.

More reading

• The Novatti (ASX:NOV) share price rocketed 38% today
• Why the Sezzle (ASX:SZL) share price is charging 7% higher today
• 98% surge in IOUpay (ASX:IOU) share price triggers speeding ticket
• Ioupay (ASX:IOU) share price rallies another 54% to new 52-week high
• Here’s why the IOUpay (ASX:IOU) share price is rocketing 30% higher

Motley Fool contributor Mitchell Lawler 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 5G Networks Ltd (ASX:5GN) share price is running higher today. This comes after the company announced its selection by a South Australian government panel to provide IT infrastructure services.

During mid-morning trade, shares in the telecommunications carrier are up 5.82% to $1.46.

What did 5G Networks announce?

In today’s release, 5G Networks advised that it will become the strategic supplier to the South Australian government managed platform services panel. This in-turn allows state government agencies to buy key infrastructure and cloud services from 5G Networks.

The extended relationship with South Australia is expected to boost the company’s coffers to more than $300 million. In return, 5G Networks will deliver managed platforms and public cloud management services such as Infrastructure-as-a-Service (IaaS) and Platform-as-a-Service (PaaS).

Previously, the company provided managed hosting and infrastructure services to the South Australia government for several years.

Management commentary

5G Networks general manager of sales, Joe Gillett, welcomed the new agreement, saying:

We are delighted to continue our relationship with the SA Government as a strategic supplier for critical infrastructure services. In working closely with SA agencies for many years, we now look forward to the next phase in the journey by enabling new innovative models of service delivery.

The panel will also benefit from our direct investment in South Australia as we further develop our managed infrastructure platforms. This includes the continued development of the 5GN Cloud platform in Adelaide, which provides hybrid cloud services across both private and public clouds.

5G Network share price performance

Over the past 12 months, the 5G Network share price has lifted 34%. Its shares hit a low of 54 cents in March, before climbing to an all-time high of $2.44 in August.

Based on the current share price, 5G Network commands a market capitalisation of around $167 million.

More reading

• Why is the Webcentral (ASX:WCG) share price on a rollercoaster today?
• Why the 5G Networks (ASX:5GN) share price is charging higher

Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends 5G NETWORK 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.

The post 5G Networks (ASX:5GN) share price rises 6%. Here’s why appeared first on The Motley Fool Australia.

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The Adairs Ltd (ASX: ADH) share price is shooting higher on Tuesday.

In morning trade the furniture retailer’s shares are up 5% to a record high of $4.33.

Why is the Adairs share price shooting higher?

Investors have been buying Adairs shares today after the release of a strong half year result.

For the six months ended 31 December, the company reported a 34.8% increase in group sales to $243 million. This was driven by a 20.9% increase in Adairs sales, a 44.4% jump in Mocka sales, and strong online sales growth.

Thanks to a significant expansion in its gross margin, Adairs reported a 166% increase in underlying earnings before interest and tax (EBIT) to $60.2 million. This doesn’t include a $6.1 million JobKeeper benefit which the company plans to return to the government.

On the bottom line, Adairs reported an underlying net profit after tax of $41.9 million, up 174% over the prior corresponding period.

In light of this strong profit growth, the Adairs board declared a fully franked interim dividend of 13 cents per share. Last year’s interim dividend was cancelled due to COVID-19.

At the end of the period, the company had cash of $22.1 million. This compares to net debt of $1 million at the end of June.

How did its segments perform?

Both its Adairs and Mocka businesses performed very positively during the first half.

The Adairs business delivered total sales of $215 million, up 20.9% on the prior corresponding period. This was driven by a 95.2% increase in online sales to $62.2 million and a 4.6% lift in store sales to $152.8 million. The latter was achieved despite 43 Greater Melbourne stores being closed for ~82 trading days. This represents 45% of their total trading days in the first half.

The Mocka business reported sales of $28 million for the six months. This compares to a four-week contribution of $2.4 million in the prior corresponding period. While not a true comparison, if you were to extrapolate that $2.4 million over a 26-week period, it would come to $15.6 million. Based on this, Mocka would have achieved sales growth of 79.5%.

Also growing strongly was the company’s Linen Lover loyalty program. Its membership numbers now exceed 900,000. Management notes that this is a big positive as members are highly engaged, visit more often, and spend more each visit than non-members. Linen Lover members now account for 75% of Adairs sales.

Outlook

Adairs has started the second half strongly. It advised that sales during the first seven weeks of the half are well ahead of the prior year.

Adairs online sales were +65.9%, Mocka +48.6%, and like-for-like store sales were +12.4%. Positively, gross margins in both businesses remain elevated and in line with the first half.

Management commented: “COVID-19 continues to encourage strong spending in home improvement and home decoration, and we expect this behaviour to persist whilst COVID-19 uncertainty continues. While current trading remains strong, due to the ongoing uncertainty relating to COVID-19 the Board does not consider it appropriate to provide guidance for the FY21 full year at this time.”

It also explained: “Stock flow from China and South East Asia remains inconsistent due to international shipping disruptions across the region. However, our plans have been adapted to accommodate delays without a significant impact on our ranging or customer experience.”

Following today’s gain, the Adairs share price is up 30% since the start of the year.

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James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends ADAIRS FPO. The Motley Fool Australia has recommended ADAIRS 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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