The Emeco Holdings Limited (ASX: EHL) share price opened 10% lower today after the company released its half-year report for the period ended 31 December 2020. 

At the time of writing, the Emeco share price is trading down 8.87% at $1.13.

Emeco provides a rental fleet of more than 1,000 machines to mining operations around Australia. The company uses big data to assess projects and provide the necessary machinery for its clients.

How did Emeco go during the first half of 2021?

Emeco reported an operating net profit before tax of $37.7 million for the first half of FY21. This is $3.8 million less than what the company delivered 1H FY20.

Rental revenue also slipped 4.8% to $199.8 million, predominantly due to weaker market conditions in the Eastern region.

The coronavirus pandemic also took a swing at the company’s earnings. 

Operating earnings before interest, tax, depreciation and amortisation (EBITDA) was down 3.5% to $117.9 million. However, this is still at the upper end of the guidance range of $115 to $118 million.

Emeco finalised its acquisition of Pit N Portal Mining Services Pty Ltd and Pit N Portal Equipment Hire Pty Ltd at the 31 December 2020 reporting date.

The company acquired Pit N Portal for $70,802,995 settled by an upfront cash payment of $62,000,000 and Emeco shares issued to the sellers of $9,178,744, less an additional cash payment of $375,749.

Group revenue hiked up 21.2% to $298.6 million for 1H FY21, with the company crediting the Pit N Portal acquisition as being a major player in the jump.

Outlook

The company believes that the flat rental earnings achieved in the first half FY21 will improve in the second half.

Emeco expects to report growth in FY22.

Supporting this growth will be an idle fleet of equipment in the east being placed into new projects and single shift projects in the west being converted to double shift projects.

Rental flexibility also exists with the company’s ability to relocate its assets as required.

Emeco notes that the company’s workforce is more than 1,000 strong. During the 2021 calendar year, the business will upgrade its employee recruitment, onboarding and training capability. 

The company intends to sustain an FY21 capital expenditure (CAPEX) of approximately $115 million. 

Emeco further advised that the company has been awarded fully maintained projects in coal, starting in the fourth quarter of FY21. A new metals project requiring a wide range of equipment and services for a 5-year contract will also start in late FY21.

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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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Investors are torn about the Scentre Group (ASX: SCG) share price following its latest dividend update today.

The Scentre Group share price is struggling to hold at breakeven this morning after management slashed its final dividend.

However, the Australian Westfield shopping centre operator said that business is rebounding from the COVID-19 shock.

Scentre restarts dividend with smaller payout

The pandemic has hit retail property hard as social restrictions have driven shoppers online. Tenants, including Premier Investments Limited (ASX: PMV), are pushing landlords to cut rents in the fact of this new paradigm.

It doesn’t come as a big surprise that Scentre Group announced today that it will cut its final dividend to 7 cents a share. That represents a 38% cut to the second half dividend it paid this time last year.

But supporters will point out that the payout is great news. After all, Scentre Group paid nothing in the six months before as COVID rocked markets.

Silver lining to Scentre’s update

Further, rent collection improved in the second half of 2020. Receipts in the course of operations during the period came in at $1.3 billion compared to $1.06 billion in the first half of last year.

The group’s earnings were also bolstered by cost reduction. Management reported that operating, finance and other expenses dipped to $788 million in the latest half compared to $798 million in 1HFY20.

The improved cash receipts include the continued improvement in cash rental collections. The group collected around $1.18 billion of rent in the second half of 2020 – a 35% increase over the first half.

Questions on dividends and earnings linger

Despite these positives, concerns about future earnings will not ease following the update. While Scentre Group will have the upper hand in negotiating rents with smaller retailers, the larger ones aren’t likely to give ground.

The pandemic has taught them that having a shop in a premium centre isn’t necessarily as great as what it used to be.

Not only is online shopping expected to capture a significantly larger slice of shoppers, retailers that want to offer “click and collect” know they don’t need to be in mega malls to offer this convenience.

Foolish takeaway

Retailers are probably looking at opening shops in smaller neighbourhood centres where rents are lower.

I suspect this will favour the Shopping Cntrs Austrls Prprty Gp Re Ltd (ASX: SCP) share price, which is gaining ground today on a positive update.

Scentre Group will release its full year results on 24 February.

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Motley Fool contributor Brendon Lau 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 Australia owns shares of Shopping Centres Australasia Property Group. 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 has been a very strong performer on Tuesday morning.

At the time of writing, the Malaysia-based buy now pay later (BNPL) provider’s shares are up a massive 30% to 26 cents.

This leaves the IOUpay share price trading within sight of its record high of 28 cents.

Why is the IOUpay share price rocketing higher?

Investors have been buying IOUpay shares today following the release of a positive announcement.

According to the release, the company has entered into a merchant referral agreement with EasyStore Commerce. This agreement will enable EasyStore’s merchants and end-user customers to utilise IOUpay’s BNPL payment services.

What is EasyStore?

The release explains that EasyStore was established in Malaysia in 2013 to capitalise on the fast-growing market needs for merchants and their customers to leverage smarter access to multiple ecommerce sales channels, social media, and payment platforms.

EasyStore has since expanded to service more than 7,000 merchants across the South East Asian (SEA) markets, which includes Malaysia, Singapore, Indonesia, Philippines, Thailand, Hong Kong and Taiwan.

In 2020, EasyStore merchants processed over 20 million transactions with a total transaction value (TTV) of approximately A$435 million.

IOUpay’s CEO, Khong Kok Loong, commented: “We are delighted to be partnering with online shopping specialist EasyStore to rollout our BNPL offering to merchants and consumers. EasyStore’s dedication to real value added merchant services and their SEA focus is an excellent fit with IOUpay’s positioning and objectives.”

This sentiment was echoed by EasyStore’s Co-Founder and Head of Business Development, Alan Kok Kim Lin.

He said: “We are looking forward to partnering with IOUpay to enable our merchants and their customers to have access to the clear benefits of their Buy Now Pay Later payment services. The BNPL service offering is a natural value add for our merchants to grow their businesses.”

More reading

• Why the IOUpay (ASX:IOU) share price jumped 11% higher today

Motley Fool contributor James Mickleboro 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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Furniture chain Nick Scali Limited (ASX: NCK) is giving back $3.6 million it received in COVID-19 government assistance.

Last week, the company reported record numbers across the board in its half-yearly results, ending up with a 99.5% boost to its net profit.

The positive numbers resulted in a 40% increase in dividends, which saw managing director and major shareholder Anthony Scali pocket $4.4 million.

This situation triggered political outrage as the retailer had pocketed about $7.7 million in JobKeeper over the 2020 calendar year.

“Nick Scali’s corporate social responsibility policy says the firm isn’t just there for the shareholders, so if they really believe that they’d hand the money back,” federal Labor politician Andrew Leigh told Nine newspapers at the time.

“The Scali family has done extremely well… They simply didn’t need taxpayer support and they should give it back to people who need it.”

Nick Scali agrees to hand back money — but not all of it

Nick Scali on Monday night relented to public pressure, although it didn’t cave all the way.

The furniture retailer announced after ASX close of trade that it would return $3.6 million of wage subsidies.

“The company fully recognises that it has benefited from the increased consumer confidence this program has created, which has resulted in record sales and net profit after tax,” stated the company.

“The company is very appreciative of the federal government’s JobKeeper policy, which was highly successful and of great assistance at the height of the pandemic.”

Nick Scali, which has a market capitalisation of $920 million, pointed out it needed the subsidy to counter government-enforced lockdowns.

“The JobKeeper scheme enabled the company to continue to pay employees throughout the state government-mandated closures in Melbourne throughout August, September and October,” it stated.

“And continue to pay employees in full during other temporary COVID-related store closures in South Australia and Western Australia as recently as last week.”

The Nick Scali share price was up 2.21% at the time of writing on Tuesday morning.

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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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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.

Amazon.com Inc (NASDAQ: AMZN)‘s crusade against climate change continues. In its latest move, the e-commerce giant has struck a deal to buy 380 megawatts (MW) of wind energy from Hollandse Kust Noord, a wind farm off the coast of Netherlands that’s being developed by The Crosswind, a consortium between oil major Royal Dutch Shell (NYSE: RDS.B) and Eneco, a Netherlands-based energy company owned by Japan’s Mitsubishi Corp (OTC: MSBHF).

Amazon says this project, called the Amazon-Shell HKN Offshore Wind Project, is also its “largest single-site renewable energy project” yet.

The wind farm is expected to be operational by 2023 with an installed capacity of 759 MW. That means Amazon will buy 50% of its total power starting in 2024 to power its operations in Europe, including 250 MW from Shell and 130 MW from Eneco.

This project takes Amazon one step closer to its goal of becoming a 100% renewable energy company by 2025, five years ahead of its original target announced in late 2019 under its Climate Pledge.

Amazon has made significant investments in renewable energy since. In 2020, it became the largest corporate purchaser of renewable energy, having announced 127 solar and wind energy projects with 6.5 gigawatts (GW) of capacity by Dec. 10, 2020.

With its latest offshore wind project, Amazon’s global wind and solar projects now total 187 with a capacity of 6.9 GW.

Lately, Amazon has been consistently hitting the headlines for its clean energy initiatives. The first of its three wind farms in Ireland came online earlier this month, and the company just ordered more than 1,000 natural-gas engines for its distribution fleet. These moves reflect Amazon’s commitment to becoming net-zero carbon by 2040.

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

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Neha Chamaria has no position in any of the stocks mentioned. John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Amazon and recommends the following options: long January 2022 $1920 calls on Amazon and short January 2022 $1940 calls on Amazon. The Motley Fool Australia has recommended Amazon. 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 Douugh Ltd (ASX: DOU) share price is pushing higher on Tuesday morning.

In early trade, the financial wellness app company’s shares are up 16% to 18 cents.

Why is the Douugh share price charging 16% higher?

The catalyst for the strong performance by the Douugh share price today has been the release of a product announcement.

According to the release, the company has now launched its Autopilot feature within its app. Douugh refers to Autopilot as a “self-driving” money management feature.

The release explains that the first function of the feature, Salary Sweeper, has been released to all users today. This service automatically allocates a customer’s paycheck to cover their upcoming expenditure needs for the period and contribute to savings goals.

Furthermore, it uses algorithms to make real-time decisions about how to allocate money, sweeping cash between “jars” to provision for bills, meet saving goals, and speed up debt repayments.

Founder and CEO, Andy Taylor, commented: “This is a hugely exciting moment for our customers, shareholders and team as we launch the first stage of automation that aims to make Douugh indispensable in people’s daily lives – changing the way people bank and invest.”

“We believe Autopilot is what will set Douugh apart from the competition who continue to devote resources to self-service offerings. Autopilot detects, tracks and predicts income and outgoings to calculate each individual’s optimal budgeting requirements,” he added.

Once again, one thing missing from its update was the number of users it has for its app. This could be a sign that the numbers are not strong enough to announce publicly.

It is worth noting that competition in this area of the financial world is intense and has low barriers to entry.

It also has competition from companies with deep pockets such Zip Co Ltd (ASX: Z1P). It is the company behind the hugely popular Pocketbook app, which has more than 800,000 users.

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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. 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.

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The Shopping Cntrs Austrls Prprty Gp Re Ltd (ASX: SCP) share price will be on watch this morning after it posted an increase in profits and dividends.

You might not have guessed that COVID-19 had hit retail landlords hard. But SCA Property Group’s focus on neighbourhood centres provided it some protection.

The group reported a 14.1% increase in interim net profit to $102.9 million compared with the same period last year.

Watch the cash not profit

But profits aren’t really the focus when it comes to property groups. It’s more the Funds from Operations (FFO) and Adjusted Funds from Operations (AFFO) that I watch.

On these two metrics, the group posted a weaker result compared to 1HFY20, which was before COVID.

However, management was quick to point out that FFO in the latest half improved by 8.2% to 6.77 cents per unit (cpu) compared with 2HFY20.

The increase would have been starker at 16.1% if not for the significant capital raise it undertook during the height of the pandemic.

SCA lifts dividends on improving AAFO

AAFO also improved in 1HFY21 over the previous six months. This measure, which deducts operating costs including maintenance capex climbed 7.4% to 5.8cpu.

Fund flows are more important to investors because that’s where dividends are paid from. On that front, investors would be pleased that SCA Property Group boosted its interim distribution by 14% over 2HFY20 to 5.7cpu.

While that’s still a big drop from last year’s interim dividend of 7.5cps, management is promising to keep increasing the dividend as long as the economy continues to recover.

Dividend and earnings outlook improving

As long as nothing comes out of left field, investors can count on another dividend upgrade in the second half as management is forecasting a full year AFFO of 12.2cpu. Assuming a 98% payout ratio, this should equate to a final distribution of ~6.25cps. This compares with the 5cps it paid in 2HFY20.

SCA Property Group’s earnings are probably more resilient than many other retail landlords, including the Vicinity Centres (ASX: VCX) share price and Scentre Group (ASX: SCG) share price.

While some of the group’s specialty retail tenants are facing ongoing pressure from COVID, its key anchor clients are Woolworths Group Ltd (ASX: WOW) and Coles Group Ltd (ASX: COL).

Foolish takeaway

Both the WOW share price and COL share price are trading at or close to record highs as they are “COVID winners”. Demand for their groceries and alcohol increased during the pandemic and are expected to remain strong.

As for the big profit jump reported by SCA Property Group, that is less exciting than it sounds, in my view.

This is because it was driven primarily by the higher valuations placed on it property portfolio. The main reason investors buy a property stock is for sustainable dividends and companies can’t pay dividends from property valuation increases.

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Motley Fool contributor Brendon Lau owns shares of Woolworths Limited. The Motley Fool Australia owns shares of COLESGROUP DEF SET, Shopping Centres Australasia Property Group, and 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 Macquarie Group Ltd (ASX: MQG) share price is surging higher on Tuesday following the release of its third quarter update.

At the time of writing, the investment bank’s shares are up 7% to $143.45.

How did Macquarie perform in the third quarter?

For the three months ended 31 December, Macquarie experienced an improvement in trading conditions across the company.

According to the release, Macquarie’s annuity-style businesses’ combined third quarter net profit contribution was up on the prior corresponding period.

However, year to date, this side of the business is broadly in line with the same period last year. This is due to base and performance fees being partially offset by margin pressures, increased credit impairment charges, and higher costs to support clients as a result of COVID-19.

Macquarie’s markets-facing businesses’ combined third quarter net profit contribution was significantly higher than the prior corresponding period. This was thanks to the partial sale of its interest in Nuix Ltd (ASX: NXL).

Once again, though, year to date its net profit contribution was broadly in line with the same period in FY 2020. This was due to stronger activity across the majority of its commodity and global markets businesses being partially offset by lower fee revenue and principal income in Macquarie Capital.

At the end of the period, Macquarie’s financial position comfortably exceeded APRA’s Basel III regulatory requirements. As of 31 December, it had a group capital surplus of $8.1 billion and a CET1 ratio of 12.1%. The latter was down from 13.5% at the end of September.

Outlook

Macquarie acknowledges that market conditions are likely to remain challenging, especially given the significant and unprecedented COVID-19 uncertainty.

As a result, it makes short-term forecasting extremely difficult. However, at this point, management advised that it anticipates the FY 2021 result to be slightly down on FY 2020.

Macquarie’s CEO, Ms Shemara Wikramanayake, commented: “Macquarie remains well-positioned to deliver superior performance in the medium term due to our deep expertise in major markets; strength in business and geographic diversity and ability to adapt our portfolio mix to changing market conditions; an ongoing program to identify cost saving initiatives and efficiency; our strong and conservative balance sheet; and a proven risk management framework and culture.”

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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 Nuix Pty Ltd. The Motley Fool Australia owns shares of and has recommended Macquarie Group Limited. The Motley Fool Australia has recommended Nuix Pty 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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The Challenger Ltd (ASX: CGF) share price has come under pressure following the release of its half year results.

In morning trade the annuities company’s shares are down 6% to $6.77.

How did Challenger perform in the first half?

For the six months ended 31 December, Challenger reported annuity sales of $2.2 billion and total life sales of $3.4 billion.

While this was a solid 12% and 10% increase, respectively, over the prior corresponding period and a mammoth 87% and 71% increase, respectively, over the second half of FY 2020.

Together with funds management net inflows of $6.4 billion for the half, Challenger ended the period with assets under management of $96 million. This was a 13% lift on the prior corresponding period.

Things weren’t quite as positive for its profits, with Challenger reporting a sizeable (but expected) decrease in half year earnings.

Normalised net profit before tax (NPBT) came in at $196 million, down 30% on the same period last year. This puts in on track to achieve its FY 2021 normalised NPBT guidance of $390 million to $440 million

This ultimately led to profit after tax falling 29% on a normalised basis to $137 million and rising 1% to $223 million on a statutory basis. The latter includes positive investment experience of $87 million.

Finally, Challenger is resuming its dividend payments after a brief hiatus and declared a fully franked interim dividend of 9.5 cents per share.

How does this compare to expectations?

According to a note out of Morgans, it expected the company to reveal that it was tracking in line with its guidance and was forecasting a half year underlying profit before tax of $204 million. Its analysts also pencilled in an interim dividend of 9.8 cents per share.

While Challenger is tracking in line with its guidance, it has fallen short of Morgans’ profit and dividend forecasts for the half.

This appears to be why the Challenger share price is under pressure today.

Outlook

As mentioned above, management expects its normalised net profit before tax in FY 2021 to be in the range of $390 million to $440 million.

It notes that earnings are expected to be weighted to the second half, reflecting the gradual deployment of excess cash and liquid investments over the year.

Managing Director and Chief Executive Officer, Richard Howes, commented: “Our strategy of diversifying revenue is working with strong book growth in our Life business and industry leading organic flows in Funds Management.”

“We remain strongly capitalised with prudent portfolio settings which are appropriate given our growing customer franchise. The investment portfolio is in good shape, with no significant credit defaults and stable property valuations during the half year. We are gradually deploying our excess cash and liquidity to enhance future returns.”

“Challenger enters the second half of the 2021 financial year in good shape, having withstood industry and COVID-19 related disruption of recent years. Our strong performance in funds management, building momentum in annuities, and new opportunities in banking mean Challenger is well placed to achieve our vision of providing customers with financial security for retirement,” he concluded.

More reading

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. 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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There are some ASX small cap shares worth owning according to fund manager Naos Asset Management.

What is Naos Asset Management’s investment approach?

Naos is led by chief investment officer (CIO) Sebastian Evans. NAOS Small Cap Opportunities Company Ltd (ASX: NSC) is one of the listed investment companies (LIC) operated by Naos.

That particular LIC looks at businesses with market capitalisations between $100 million and $1 billion.

The fund manager has a number of investment focuses. It looks for businesses that are good value with long term growth potential. With its portfolio, Naos believes it’s better to have a quality portfolio rather than numerous holdings. That’s why it only holds around 10 positions in each fund, with each ASX share representing a high-conviction position.

Naos invests in the small cap ASX shares for the long-term. It considers the performance and the liquidity of its positions whilst ignoring the index. Performance can sometimes be quite variable when compared to the index.

It looks to invest purely in industrial companies whilst also considering the ESG factors (environmental, social and governance).

COG Financial Services Ltd (ASX: COG)

COG was the only business in the Naos Small Cap Opportunities portfolio to give a meaningful update during January.

This small cap ASX share, as the name suggests, provides a number of financial services including finance, broking, aggregation and it also owns a stake of a debenture issuer.

Naos explained that COG revealed its FY21 half-year net profit after tax and amortisation (NPATA) would be $10.1 million, which would be an increase of 140% compared to the prior corresponding period.

The fund manager was pleased that the profit growth is translating into strong free cash flow with unrestricted cash and term deposits of $53 million (not including the $17 million investment in Earlypay Ltd (ASX: EPY)), compared to a market capitalisation of $149 million with minimal gross debt.

Naos said the small cap ASX share’s profit growth was driven by two main factors, the first of these being the finance, broking and aggregation division, where margins have increased as the business continues to improve efficiencies through automation as well as offering complementary services to their clients such as insurance broking.

The other key driver, according to the fund manager, was the increased ownership of debenture issuer Westlawn Finance. Naos believes that Westlawn has continued to be a beneficiary in the growth of the debenture book, as well as the growth of its insurance broking arm.

COG said that it will be rolling out a ‘hub and spoke’ insurance broking model to all their owned and aggregated broker members in the coming months.

BSA Limited (ASX: BSA)

Naos describes BSA as a solutions-focused technology services small cap ASX share.

BSA assists clients in implementing their physical assets, needs and goals in the areas of building services, infrastructure and telecommunications. BSA clients include the National Broadband Network (NBN), Aldi Supermarkets, Foxtel and the Fiona Stanley Hospital.

The fund manager outlined the investment case for BSA. Even though the company had an eventful 2020, Naos thinks there are some significant catalysts.

The first relates to the $4.5 billion that the NBN is looking to spend over the next three years to continue to upgrade specific parts of the network. Naos believes that the small cap ASX share is well positioned to secure part of this work as it continues to deepen its relationship with the NBN, as demonstrated through its recent contract win.

Secondly, Naos thinks the recent acquisition of Catalyst One provides an opportunity to potentially transform a $15 million revenue business into a $100 million business over the next three to five years if BSA can successfully combine the Catalyst One offering with the existing skillset of the business to offer a one-stop solution for customers around both their current and future wireless capability needs.

The fund manager also said that BSA could be more aggressive with an active buyback and a higher payout ratio could be achieved given the large cash balance on the balance sheet.

More reading

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Motley Fool contributor Tristan Harrison owns shares of NSC. 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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