The PSC Insurance Group Ltd (ASX: PSI) share price is on the rise, up 3.6% in morning trade. This comes after the company reported it has entered into agreements to acquire 2 commercial broking businesses based in the United Kingdom. At the time of writing, the PSC Insurance share price has retreated slightly to $3.35, up 2.1%. 

What did PSC Insurance report on its UK acquisitions?

The PSC Insurance share price is gaining in morning trade after it reported it had entered into an agreement to acquire 100% of the share capital of Trust Insurance Services Ltd. Exclusive of net assets, the base consideration for the acquisition is around 15.5 million pounds (AU$28 million).

The base consideration for PSC’s second acquisition, 100% of the share capital of Abaco Insurance Brokers Ltd, is 21 million pounds (AU$38 million). That figure is also exclusive of net assets.

Management commentary

Commenting on the 2 acquisitions, PSC’s Managing Director, Tony Robinson said:

These acquisitions are consistent with our goal of building a significant presence in the commercial broking market outside of London. It is an area we understand and believe we can help drive growth. Both businesses are excellent inclusions into PSC bringing both great people into the Group and generating strong returns…

Both businesses have strong expertise in particular areas that we believe we can help grow and that will benefit the wider PSC Group.

PSC forecasts that the 2 acquisitions together will deliver roughly 4.0 million pounds (AU$7.2 million) in earnings before interest, taxes, depreciation and amortisation (EBITDA) annually.

Share price snapshot

PSC’s shares lost 36% during the wider COVID-fuelled market selloff last February and March. Since the 15 March lows, shares have rebounded 56%. Over the past 12 months, the PSC Insurance share price is up 8%. That is right in line with the 8% gain on the All Ordinaries Index (ASX: XAO).

So far in 2021, the PSC Insurance share price is up 13%.

More reading

• What is the go with the Cirralto (ASX:CRO) share price?
• The Vulcan Energy (ASX:VUL) share price has fallen 17% in 2 weeks
• Up 330% in a year, Secos (ASX:SES) share price slides on results
• Why the WISR Ltd (ASX:WZR) share price is racing higher today
• Cryptocurrency, autonomous vehicles, and energy efficiency are key to NVIDIA’s growth

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 Cirralto Ltd (ASX: CRO) share price has been on a rollercoaster this past month. Being in the payment provider space with its business-to-business (B2B) solution, Cirralto has gained much attention recently.

It seems, due to the recent amplification of interest in buy now, pay later (BNPL), Cirralto has been busy. Let’s take a look at what has been going on.

Cirralto’s opportunistic capital raising

On 16 February, the Cirralto share price hit an intraday high of 21 cents, a mind-blowing 200% higher than its opening low of 6.8 cents. As per the responses to the ASX’s capital raising query, Kaai Capital called Cirralto CEO Adrian Floate and proposed a significant capital raising due to the increased interest.

On 18 February, Cirralto decided to halt the share trading ahead of the capital raise announcement. This would come only months after the company’s previous injection of funds.

The following week the company announced its $18 million placement with firm commitments, mostly from institutional investors. Cirralto outlined that the funds would be used to accelerate the development of its payments technology, specifically Spenda and SYNK’D. This would mark the last recent day in the green for the Cirralto share price.

Chairman sells as share price retreats

There are no particular issues with insiders selling shares in a company. There can be many reasons for selling including for personal reasons, funding other ventures, or simply to enjoy. However, depending on what the circumstances are, it can sometimes be bad optics.

In this situation, the Cirralto share price had been falling. On 26 February, Cirralto chair Peter Richards made an on-market sale of $375,000 worth of shares.

It is important to note that during this time, other members of the company’s management team had increased the number of shares held.

Cirralto share price today

At the time of writing, the Cirralto share price is up 4.76% to 8.8 cents. If the share price closes in the green today it would break the red streak that has persisted since 23 February.

Notably, the Cirralto share price has bagged more than 1600% returns for shareholders in the past 12 months. The company’s market capitalisation now resides at $145 million.

More reading

• Why the Cirralto (ASX:CRO) share price is in a trading halt
• What’s going on with the Cirralto (ASX:CRO) share price?
• The Cirralto (ASX:CRO) share price is hitting 52-week highs today

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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When the Vulcan Energy Resources Ltd (ASX: VUL) share price started to move recently, it put the returns of most shares to shame.

The lithium company’s shares were trading at less than 20 cents in late 2019 to early 2020 before running as high as $14.20 on 19 January 2021. 

But for investors with the fear of missing out or chasing highs, this has likely ended in tears as the Vulcan share price has started to give back some of its extraordinary returns. 

After hitting its all-time record high of $14.20, its shares have more than halved to close at $6.18 on Tuesday. Even in recent weeks, the Vulcan share price has fallen some 17%. 

Why is the Vulcan share price falling?

The timing of the Vulcan share price slump has coincided with broader weakness across ASX lithium shares. This includes the Orocobre Limited (ASX: ORE) and Pilbara Minerals Ltd (ASX: PLS) share prices experiencing a similar pattern. 

These ASX lithium shares have rallied in recent months following a recovery in lithium spot prices and a resurgence in investor interest in the renewables sector. By late January 2021, ASX lithium shares largely topped out and drifted lower by February. 

While Orocobre and Pilbara are established lithium producers, Vulcan is still in its early days with development work such as a definitive feasibility study to finish in the third quarter FY22 and production expected to start in Q3 FY24. 

Vulcan had also recently completed a $120 million capital raising at a placement price of $6.50 per share, a 17.1% discount to its last closing before the capital raising.

Capital raisings can weaken a company’s share price in the short-term as it dilutes existing shareholders. The discount also means that those who participated in the capital raising could sell their new shares at a profit. 

Looking ahead 

Despite the recent weakness in the Vulcan share price, there are exciting times ahead for the world’s first and only zero-carbon lithium project. 

The company cites that it possesses the largest resource size in Europe, with 15.85 million tones of lithium carbonate equivalent.

The company has planned to complete the development work by Q3 FY22, including pilot test work, a definitive feasibility study and project financing.

Its scheduled drilling will follow this in Q3 FY22 and plant construction in Q1 FY23. If all goes to plan, the company could hit producer status by 2024.

More reading

• Leading brokers name 3 ASX shares to sell today
• Orocobre (ASX:ORE) share price dives despite a recovery in lithium markets
• Are ASX lithium shares poised for the next leg up? 
• Here’s why the Pilbara Minerals (ASX:PLS) share price is dropping today
• Pilbara Minerals (ASX:PLS) share price jumps 6% on broker upgrades

Motley Fool contributor Kerry Sun 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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Secos Group Ltd (ASX: SES) shares are sliding today after the company released its financial results for the half-year ending 31 December (H1 FY21). At the time of writing, the Secos share price has slumped 1.64% to 30 cents. But over the last year, Secos shares have rocketed by nearly 330%. 

Let’s take a look at how the sustainable packaging manufacturer has been performing.

What did Secos report?

The Secos share price is on the slide today despite the company reporting a half-year net profit after tax (NPAT) of $66,000. That compares to a net loss of $1.1 million in the first half of the 2020 financial year.

The company’s gross profit margin increased to 18.2%, up from 14.2% in the prior corresponding period.

Revenue increased 30.5% year on year, driven by a 129% increase in the company’s biopolymer sales. In H1 FY20, Secos’ bio-based sales represented 39% of total sales. In the half-year just reported, bio-based sales made up 73% of total sales.

Earnings before interest, taxes, depreciation and amortisation (EBITDA) came in at $576,000. Secos reported it had $14.3 million in cash with no debt as at 31 December.

The company now boasts global sales to 20 countries, which it says are “protected by strong patents, technical knowhow and distribution channels”.

During the half, Secos also completed the first phase of expansion in its China plant. The company noted strong growth in demand for its compostable bags in China, and the plant expansion is intended to open the door to an additional US$3 million in compostable bag sales annually.

Looking ahead, Secos stated, “The forward pipeline for the company is strong, with Secos seeing significant growth opportunities with major brands in various regions.” Secos added it “expects to further expand its retail branded MyEcoBag range via Woolworths and other retail chains”.

Secos share price snapshot

If you had bought Secos shares this time last year, you’d be sitting on a gain of 328%. By comparison, the All Ordinaries Index (ASX: XAO) is up 8% over the past 12 months.

Year to date, the Secos share price is up 42.86%.

Based on the current Secos share price, the company has a market capitalisation of around $163 million.

More reading

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• ASX 200 Weekly Wrap: Friday carnage ruins last week of ASX earnings
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Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of Woolworths 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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The WISR Ltd (ASX: WZR) share price is racing higher today following a substantial increase on its warehouse funding facility. During mid-morning trade, the neo-lender’s shares are up 5.2% to 20 cents.

Let’s take a closer look and see what Wisr updated the ASX market with.

More room for growth

The Wisr share price is on the move as investors appear upbeat about the company’s additional funding.

In its announcement, Wisr advised that it has been secured an increased warehouse funding facility of $350 million. This comes on the back of a strong second quarter for FY21 which the company delivered a surprise result in late January.

New loan originations grew to $83.8 million for the period (Q2 FY21). This represented a 35% rise on the prior quarter ($61.9 million) and a 165% jump over the same time last year ($31.6 million).

Revenue also surged, recording $5.9 million for the second quarter of FY20. This reflected a 43% lift on Q1 FY21 and a 350% improvement on the prior corresponding period.

Based on these metrics, Wisr’s incumbent senior bank advisors and mezzanine funders were pleased to provide additional support.

Subject to final legal documentation, the much larger funding facility will give Wisr more room to aggressively grow its market share.

What did the CFO say?

Wisr CFO Andrew Goodwin touched on the company’s performance, saying:

Through the strong support from our funders, in just over a year of the Wisr Warehouse going live, we have delivered an exceptional 350% growth in quarterly revenue (Q2FY21 compared to Q2FY20), rapidly scaled our personal loan originations quarter-on-quarter and entered the $51B vehicle finance market via our new secured vehicle product.

The outstanding performance of the Wisr loan book, and our market leading ability to attract Australia’s most creditworthy customers (as demonstrated by our 90+ day arrears of 0.79% at 31 December 2020), validates our lending model and risk governance. The superior loan unit economics underpinned by the Wisr Warehouse, is delivering significant operating leverage as revenue continues to grow strongly in-line with the growth of our loan book.

About the Wisr share price

The Wisr share price has gained more than 20% over the past 12 months. However, since the beginning of September 2020, the company’s shares have mostly stagnated around the 20-cent mark.

More reading

• Cryptocurrency, autonomous vehicles, and energy efficiency are key to NVIDIA’s growth
• 2 excellent ASX growth shares to buy in March
• ‘Deep regret’: Rio Tinto (ASX:RIO) share price climbs as chair quits
• AMP (ASX:AMP) share price on watch as second buyer for its asset could emerge
• Premier Investments (ASX:PMV) share price slides as JobKeeper investigation launched

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.

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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.

There was plenty to unpack (and a lot to like) from the NVIDIA (NASDAQ: NVDA) fourth-quarter earnings report. The company’s 61% year-over-year revenue growth that was driven by record video gaming and data center sales captured the headlines. But NVIDIA is benefiting from other trends in the economy too, namely cryptocurrencies, autonomous vehicles, and energy efficiency. Here’s why that matters.

Separating gaming hardware from crypto hardware

Cryptocurrency prices have soared in the last year, along with a renewed interest in “mining” (simply, when a computer is used to create more of a cryptocurrency). NVIDIA’s graphics processing units (GPUs) are built for high-end video games, but they’re programmable and ideal for handling cryptocurrency work too. Thus, it seems many commercial miners have started picking up NVIDIA’s new RTX 30 series GPUs and have added to the massive demand the company has experienced since the new processors were announced last autumn.

Demand is good. But the last time there was a boom in digital currency prices like Bitcoin (CRYPTO: BTC) and Ethereum (CRYPTO: ETC) a few years ago, the ensuing downturn in crypto prices dragged NVIDIA’s stock along with it as its GPU sales slowed. Management wants to make sure its RTX 30 series GPUs end up in the hands of gamers, not crypto miners, so it reduced the hash rate (the processing power for a cryptocurrency network) on its RTX 3060 (the cheapest GPU in its 30 series) by half to discourage its use in this fashion. 

That’s not to say NVIDIA is leaving miners out in the cold, though. It simultaneously released a new chip specific for crypto miners: the CMP, or Cryptocurrency Mining Processor. This will help the millions of gamers around the world waiting in line for an RTX 30 series GPU and fulfill demand for commercial digital currency miners. As CFO Colette Kress explained on the earnings call:  

Since our GPUs are sold to graphics card manufacturers and then on to distribution, we don’t have the ability to accurately track or quantify their end-use. Analyst estimates suggest that crypto mining contributed $100 million to $300 million to our Q4 revenue, a relatively small portion of our Gaming revenue in Q4.  

CMPs will start shipping in March and will give NVIDIA some increased clarity on where their hardware is being used. Kress said CMPs could contribute about $50 million in revenue in Q1, a significant sum for a brand new chip launching two-thirds of the way into the new quarter. Digital currency is picking up steam and adoption is growing, so this move bodes well for NVIDIA long term. 

What gives with the automotive segment?

NVIDIA hit it out of the park with its Q4 report, but not everything was perfect. Its automotive segment revenue ($145 million, just shy of 3% of total sales) fell 11% compared to a year ago. What happened to NVIDIA, the leader in autonomous vehicles and advanced driver-assist systems?  

First, it’s important to bear in mind this segment is in decline because the company has chosen to sunset its legacy infotainment business. But its AI cockpit and self-driving software development is building momentum. Kress said on the call that NVIDIA is growing the list of electric vehicle makers that are signing on to its NVIDIA DRIVE platform for autonomous vehicles. Mercedes-Benz also signed a large deal last year to expand its use of AI cockpit tech. Kress explained: “We are in the early innings of a significant opportunity. We have built a multi-billion dollar design win pipeline for our self-driving AI cockpit solutions, which will drive a material inflection in revenue over the next few years.”  

Given the auto segment hauled in just $536 million in sales last year, that pipeline of new business will be significant. Investor patience will pay off here as electric and autonomous vehicle tech gradually picks up momentum.

Cloud computing equals energy efficiency

There has been much talk of the poor condition of the nation’s energy grid. Renewable energy and carbon footprint reduction is gaining traction, and it appears the Biden administration will support these endeavors. NVIDIA could be a beneficiary here.

Computing power is increasing, but with greater computational power comes greater energy consumption. However, NVIDIA’s data center hardware (which is being implemented at a rapid rate to handle AI and other data-intensive tasks) doesn’t just act as a computing accelerator. Its next-gen cloud computing devices are also energy efficient, and Kress said a growing list of companies are using NVIDIA to adopt cloud computing and meet climate change goals.

By way of example, Kress said the NVIDIA A100 (the GPU at the heart of its data center business) “performs AI computations with one-twentieth the power consumption of CPUs” — or central processing units, the old industry standard general computing chip. In this new age of cloud computing, the A100 puts NVIDIA at an advantage not just in terms of computing power, but also as an ancillary play on climate change and lower energy consumption. With a new upgrade cycle in data center hardware just getting underway, this division is expected to continue growing for the foreseeable future.

NVIDIA is quickly emerging as the leader in next-gen semiconductors and compute systems, and the Q4 report reinforces this. The company is helping pioneer tech advances on many fronts as a new era dominated by cloud computing and AI gets underway. The reasons for staying invested for the long haul keep growing.

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

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• Here’s why the Raiz (ASX:RZI) share price is soaring today
• ASX 200 Weekly Wrap: Friday carnage ruins last week of ASX earnings
• Aussie investors are now buying more Bitcoin than gold

The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends NVIDIA. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends Bitcoin. The Motley Fool Australia has recommended NVIDIA. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

Nicholas Rossolillo owns shares of NVIDIA. His clients may own shares of the companies or cryptocurrencies mentioned. The Motley Fool owns shares of and recommends NVIDIA. The Motley Fool recommends Bitcoin. The Motley Fool has a disclosure policy.

The post Cryptocurrency, autonomous vehicles, and energy efficiency are key to NVIDIA’s growth appeared first on The Motley Fool Australia.

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

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If you’re looking to boost your portfolio with some growth shares, then you might want to look at the ones listed below.

Here’s why these quality ASX growth shares have been tipped as ones to buy right now:

IDP Education Ltd (ASX: IEL)

The first ASX growth share to look at is IDP Education. It is a provider of international student placement and English language testing services.

Due to the pandemic bringing international student travel to a standstill, IDP Education has been hit very hard. This led to the company reporting sizeable declines in both its revenue and earnings during the first half of FY 2021.

For the six months ended 31 December, the company posted a 29% decline in revenue to $269 million and a 46% decline in EBIT to $47.3 million.

While this is disappointing on paper, trading conditions are improving and the company looks well-positioned to win a greater share of the market when the pandemic passes.

One broker that is positive on the company is Goldman Sachs. Last week it put a buy rating and $29.90 price target on its shares. Goldman expects IDP Education’s revenue to almost double and its earnings per share to almost triple between FY 2021 and FY 2023.

Kogan.com Ltd (ASX: KGN)

Another ASX growth share to consider is Kogan. Unlike IDP Education, it has been a big winner from the pandemic. This led to the company reporting very strong growth during the first half of FY 2021.

For the six months ended 31 December, the leading ecommerce company reported a 97.4% increase in gross sales to $638.2 million and a 250.2% lift in adjusted net profit after tax to $36.5 million.

Management advised that this strong result was driven by a 76.8% increase in Kogan active customers to 3 million, its acquisition of Mighty Ape, and growth in the Kogan Marketplace and Exclusive Brands segments. The latter segment has higher margins, which helped drive margin expansion.

This result went down well with analysts at Credit Suisse. In response to it, the broker put an outperform rating and $20.85 price target on its shares.

More reading

• Is the Kogan (ASX:KGN) share price sinking back to reality?
• 2 ASX shares rated as strong buys by brokers
• ASX 200 up 1.5%: Afterpay & Zip jump, Fortescue tumbles
• The Kogan.com (ASX:KGN) share price sank 22% in February: Time to buy?
• These were the worst performing ASX 200 shares in February

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

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Rio Tinto Limited (ASX: RIO) shares are on the rise following news the company’s chair Simon Thompson will leave the board at this year’s annual general meetings. At the time of writing, the Rio Tinto share price has climbed 2.09% to $129.84.

The mining giant revealed the move before market open on Wednesday, with the senior directors of Rio Tinto Limited and Rio Tinto plc (LON: RIO) to lead a search for a new chair.

Thompson had faced a torrent of public and shareholder pressure over the past eight months for his handling of the Juukan Gorge disaster.

Rio Tinto destroyed the historically and culturally significant Western Australia site in May, despite protests from Indigenous groups and archaeologists.

The company later defended the explosion, citing that it had not acted illegally and was not blaming any individuals for the decision.

Following shareholder lobbying, the chief executive and two senior executives departed Rio Tinto, albeit with golden handshakes so large they would never need to work again.

Many shareholders and commentators also called for Thompson’s head, but he had resisted until now.

The outgoing chair on Wednesday acknowledged the events of the past few months.

“The tragic events at Juukan Gorge are a source of personal sadness and deep regret, as well as being a clear breach of our values as a company,” Thompson said.

“Successes were overshadowed by the destruction of the Juukan Gorge rock shelters at the Brockman 4 operations in Australia and, as chairman, I am ultimately accountable for the failings that led to this tragic event.”

Rio share price has gone gangbusters

Thanks to rising commodity prices, The ASX Rio Tinto share price has risen by more than 46% in the past year. In London, the stock has gained in excess of 68%.

Overnight, London Rio shares were up 2.11%.

The company also announced Wednesday that board member Michael L’Estrange would retire at the AGMs, citing health reasons.

“I wish [CEO] Jakob and the new executive well for the future as they build on Rio Tinto’s many strengths and continue to implement the critical changes aimed at ensuring that an occurrence such as the destruction of the Juukan Gorge rock shelters never happens again,” he said.

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• ASX shares on watch: Chinese investment in Australia has dropped 61%
• ASX 200 Weekly Wrap: Friday carnage ruins last week of ASX earnings
• What does Citi think about ASX reporting season so far? 
• 3 ASX blue chip shares that just raised their dividends

Motley Fool contributor Tony Yoo 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 AMP Ltd (ASX: AMP) share price could find support on rumours that it has attracted another buyer for its assets.

The AMP share price dipped 0.4% to $1.44 this morning when peers like the Magellan Financial Group Ltd (ASX: MFG) share price and Janus Henderson Group CDI (ASX: JHG) share price tumbled by more than 2% each.

The word is that Challenger Ltd (ASX: CGF) is sniffing around the assets that Ares Management Corp Class A (NYSE: ARES) doesn’t want, reported the Australian Financial Review.

Challenger’s interest could support AMP’s share price

Ares and AMP are looking at striking a $2.25 billion joint venture agreement that would contain AMP Capital’s private markets businesses.

AMP is looking at options for its public markets businesses, and that’s where Challenger comes in.

Challenger is speculated to be running the ruler over AMP’s global equities and fixed income units, reported the AFR without citing sources.

Bolt-on acquisition

Swallowing these divisions would give Challenger a quick way to bulk up and to cement its industry leadership position.

Challenger had $96.1 billion in assets under management (AUM) at the end of December last year. AMP public markets businesses reported having $135 billion under management at the same period.

But AMP’s AUM figure included its ASX shares, fixed interests and multi asset group businesses too.

Competitive tension could lift AMP’s valuation

If the rumours are right that Challenger is keen, the AFR believes that Perpetual Limited (ASX: PPT) would also be watching AMP closely.

Nothing like having a bit of competitive tension to get AMP shareholders’ blood pumping!

Analysts estimate that AMP’s public markets businesses could be worth between $500 million and $1 billion.

Patience needed

However, any bids for AMP’s public markets assets are only likely to emerge after Ares makes a decision on the JV.

If the marriage is consummated, AMP will get a $1.55 billion cash injection from the US group, which will control 60% of the JV.

The JV will include AMP’s infrastructure equity and infrastructure debt, real estate and other minority investments.

Investors will have to wait till end of this month to find out what happens next as both have signed an exclusive 30-day deal to test the waters.

Foolish takeaway

Ares has left AMP standing at the alter before when it walked away from a proposal to acquire the entire wealth manager.

Securing the JV could also help AMP strengthen its position when negotiating the sale of its public market assets.

Hopefully it will be second time lucky for the embattled AMP share price.

More reading

• ASX 200 sinks 2.4%, Afterpay plunges, AMP jumps
• ASX 200 down 2.3%: Afterpay & Kogan sold off, Orica smashed, AMP pushes higher
• Why AMP, Bubs, BWX, & Lynas shares are pushing higher
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Motley Fool contributor Brendon Lau owns shares of AMP Limited. Connect with me on Twitter @brenlau.

The Motley Fool Australia owns shares of and has recommended Challenger 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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Premier Investments Limited (ASX: PMV) shares are edging lower as the retailer is investigated over JobKeeper payments. In the opening minutes of trade, the Premier Investments share price has inched 0.37% lower to $21.55.

Why is Premier Investments being investigated?

According to a report in yesterday’s The Sydney Morning Herald (SMH), the Fair Work Ombudsmen has launched an investigation into Premier Investments-owned Just Group.

Just Group’s brands include Just Jeans, Peter Alexander, Portmans, and Smiggle, among others.

While the regulator’s spokesperson did not advise SMH of the specific purpose of the investigation, it did direct the paper to “online resources covering employers’ obligations when participating in the JobKeeper program.”

In its final report for FY20, Premier Investments advised that it was eligible to receive $68.7 million in wage subsidies from seven countries. As at 25 July 2020, $49 million of the $68.7 million had been received. For the 2020 financial year, the company’s net profit after tax jumped 29% to $137.75 million – more than double the amount it received in wage subsidies.

According to the Fair Work website, employees must receive the greater of either the full JobKeeper payment, or the employee’s usual pay, including penalty rates, leave, and public holiday pay per fortnight.

The JobKeeper wage subsidy constituted $1,500 per fortnight in its first iteration (full-time). The federal government later scaled the payment down to $1,200 by October 2020.

The Treasury lists penalties for JobKeeper misappropriation as anywhere from a $55,500 fine to up to 10 years imprisonment.

Motley Fool Australia is not alleging any wrongdoing by Premier Investments.

Responses

Motley Fool Australia reached out to Premier Investments for comment and, as at the time of publication, has not received a response. 

A spokesperson for the Shop, Distributive and Allied (SDA) Employee’s Association confirmed to Motley Fool Australia the union first became aware of the investigation when reached for comment by the SMH. The spokesperson also stated the union did not initiate the complaint to Fair Work Australia.

In SMH’s report – and confirmed to Motley Fool Australia, the newspaper cites SDA concerns as “the amount paid to stand down workers [on JobKeeper] on public holidays” and “[re-crediting] leave taken by workers in March 2020, after the company closed its stores but prior to the announcement of JobKeeper.”

In a statement to SMH, Just Group said:

On 26 March 2020, Just Group made the very difficult decision to close over 1200 of its stores globally and stand down over 9000 team members due to the devastating impact of the COVID-19 health crisis.

Just Group’s priority has been to support our team members, keep them in jobs and connected to the business during this once in a century health crisis.

Over and above any obligations, and despite not being eligible for ‘JobKeeper 2’, Just Group has continued to pay over 1,500 of its full time and part-time Australian team members their contracted hours whilst those teams were unable to work due to various state government-enforced temporary store closures in October, November, December 2020, January and February 2021.

Labor MP Andrew Leigh has been putting constant pressure on Premier Investments chair Solomon Lew to repay the company’s JobKeeper subsidies. In a tweet responding to the SMH report, Mr Leigh stated

However this investigation turns out, Solomon Lew’s Premier Investments should repay the millions they got in JobKeeper. If they’re profitable enough to afford to pay a $2m CEO bonus & $57m dividend, they don’t need a govt handout.

Premier Investments share price snapshot

Over the past twelve months, the Premier Investments share price has increased by more than 30%, During the initial stages of the COVID-19 pandemic, Premier Investments shares crashed to a low of $8.13. Since then, the retailer’s share price has skyrocketed by more than 165%. In January 2021, the Premier share price hit an all-time high of $26.70.

Based on its current share price, Premier Investments has a market capitalisation of $3.44 billion.

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Motley Fool contributor Marc Sidarous has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Premier Investments 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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