The worst performer on the S&P/ASX 200 Index (ASX: XJO) on Tuesday by some distance was the Corporate Travel Management Ltd (ASX: CTD) share price.

The corporate travel specialist’s shares fell almost 7.5% to $16.68.

Why did the Corporate Travel Management share price sink lower today?

As well as being caught up in the market selloff, investors were selling Corporate Travel Management’s shares following the release of its annual general meeting presentation.

At the meeting, the company released an update on its performance during the first quarter of FY 2021.

According to the release, during the first quarter, Corporate Travel Management averaged revenue of $9.6 million and an underlying earnings before interest, tax, depreciation and amortisation (EBITDA) loss of $2.4 million per month. This led to an average cash burn of $5 million per month for the period.

Pleasingly, trading conditions have been improving, with the month of September its best since COVID-19. During the month, the company’s underlying EBITDA loss reduced to $1.6 million and its cash burn lowered to $3.5 million. But judging by the share price reaction, investors may have been expecting an even stronger month.

How are its operations performing?

Management revealed that its Australian operations have been performing positively during FY 2021 and were profitable during the first quarter.

Elsewhere, the company’s European operations are close to breakeven now and its US operations are experiencing positive activity. 

Finally, its Asia operations have been struggling, but look set to be boosted by a Singapore-Hong Kong travel bubble in the near future.

Despite its cash burn, Corporate Travel Management’s balance sheet remains strong. It has $120 million net cash and an additional $181.8 million in an unused committed facility.

Travel and Transport acquisition.

The company also provided the market with an update on its acquisition of US-based Travel and Transport.

The A$274.5 million acquisition of the leading North American corporate travel business is expected to complete on 30 October.

Management continues to expect it to be earnings per share accretive on a pro-forma calendar year 2019 basis. Pre-synergies it expects 10% accretion, post-synergies it is forecasting 30% accretion.

Outlook.

No guidance was given at the event, but the company’s Chairman, Ewen Crouch AM, spoke positively about the future.

In his closing remarks, he commented: “This turbulent year has highlighted the benefits of CTM’s highly flexible and resilient business model. The period ahead will undoubtedly present many challenges and opportunities. We have a clear purpose and a sound strategy and we are well positioned to return to profitability with a modest recovery of domestic travel this year.”

More reading

• The ASX 200 sank almost 2% today
• 5 things to watch on the ASX 200 next week
• 3 reasons I like the Corporate Travel (ASX:CTD) share price today
• Brokers name 3 ASX shares to buy right now
• ASX 200 sinks 2%, Corporate Travel (ASX:CTD) soars 8%

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Corporate Travel Management Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The S&P/ASX 200 Index (ASX: XJO) dropped by around 2% today, falling by 1.7% to 6,051 points.

Here are some of the highlights from the ASX today:

Widespread selling

Overnight there was a selloff in international markets, seemingly on worries about a resurgence of global COVID-19 cases. The US election is also getting very close.

Investors sold off some ASX 200 shares quite heavily. The Avita Therapeutics Inc (ASX: AVH) share price dropped more than 4.5%, the Credit Corp Group Limited (ASX: CCP) share price fell more than 4.75% and the Regis Resources Limited (ASX: RRL) share price also dropped another 4.4%.

Some of the most popular buy now, pay later shares also got sold off. The Zip Co Ltd (ASX: Z1P) share price fell more than 5% and the Afterpay Ltd (ASX: APT) share price dropped more than 4.5%.

Corporate Travel Management Ltd (ASX: CTD)

At its AGM, the travel business announced a trading update for the first quarter of FY21.

It said that it had generated revenue of $9.6 million per month. Corporate Travel generated an underlying earnings before interest, tax, depreciation and amortisation (EBITDA) loss of $2.4 million per month. The company said that the cash burn was an average of $5 million per month.

However, September was the best month since the onset of COVID-19 with an underlying EBITDA loss of $1.6 million and the cash burn was down to $3.5 million.

Corporate Travel said that its Australia and New Zealand business was profitable for the quarter with positive signs of borders opening. In Europe the lockdowns are reducing activity but close to breakeven. The integration of Transport & Travel has started. In Asia the company pointed to the Singapore – Hong Kong travel bubble with more to come.

The ASX 200 travel business has zero drawn debt, with $120 million of net cash after the successful capital raising.

Corporate Travel’s share price dropped by around 7.5% today.

Bendigo and Adelaide Bank Ltd (ASX: BEN)

The share price of Bendigo Bank rose around 2% after giving an update for the first quarter of FY21.

Bendigo Bank said that its total lending continues to be a strength with year to date growth at 11% and residential lending at 16.1%, both of those rates being well above the system.

Management were pleased to report that the net interest margin (NIM) continues to be well managed, the bank saw the NIM rise by one basis point to 2.3%.

The regional bank also gave an update about its loan book. It said that 6,797 customer accounts remain on deferral, which was down 69% from the peak on 31 May 2020. The value of the accounts where repayments have been deferred is approximately $2.5 billion, down from the peak of $6.9 billion in June.

Customers transitioning away from deferral arrangements will continue to occur through the remainder of October and November as repayment deferral periods expire.

Blackmores Limited (ASX: BKL)

Blackmores also held its AGM today. One of the main bits of news from it was that Blackmores is going to divest its Global Therapeutics business for $27 million. It’s going to be sold to McPherson’s Ltd (ASX: MCP).

The business was only acquired in May 2016. Its product range draws upon traditional Chinese medicine in combination with contemporary herbal treatments.

Blackmores’ CEO Alastair Symington and his team has been reviewing Blackmores’ various brands to decide to what to divest. Global Therapeutics was deemed to be a non-core brand.

As part of the sale, the Fusion Health and Oriental Botanicals brands will also be sold. The transaction is scheduled for completion on 30 November 2020.

In reaction to the AGM update and the sale, the Blackmores share price rose 0.1%. 

More reading

• Do you have to pay tax on your ASX shares? – A common question answered
• Why the Probiotec (ASX:PBP) share price is trading higher
• Douugh and Ioupay were among the most traded shares on the ASX last week
• Will COVID-19’s second wave crash share markets a second time?
• Why Alcidion, Blackmores, Boral, & CogState shares are pushing higher

Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Avita Medical Limited and ZIPCOLTD FPO. The Motley Fool Australia owns shares of and has recommended Blackmores Limited and Corporate Travel Management Limited. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool Australia has recommended Avita Medical Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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Marking one of the largest Australian industrial transactions of the year, Singapore-listed ARA LOGOS Logistics Trust (SGX: K2LU) has acquired $418 million of logistics assets on Australia’s eastern seaboard. Sydney-based logistics specialist Logos, which runs the trust, managed the deal.

Why did ARA LOGOS Logistics invest in Australian facilities?

As the Australian Financial Review reports, the trust’s manager – ARA Logos Logistics Trust Management Limited (a subsidiary of Logos) is bullish on the outlook for Australia’s industrial and logistics markets:

Australian industrial and logistics market, especially the eastern seaboard cities, continues to be highly sought after by investors due to its strong market fundamentals, limited supply and favourable demographics.

Industrial and logistics investment volumes for the year-to-date ending August 2020 have exceeded $3.5 billion… and 83 per cent of these transactions had taken place during the COVID-19 period since mid-March.

The outlook for Australia’s industrial market remains stable over the long term, underpinned by the fundamental role of logistics in keeping basic day-to-day necessities of Australians in supply, unprecedented infrastructure investment and growth in defensive downstream industries such as e-commerce.

Advantage ASX logistics shares

There were no ASX listed shares involved in the Logos deal. But the $418 million transaction does highlight the strength of shares involved in the Australian logistics sector while many office, residential and retail property-related shares remain under pressure.

One of the shares that’s currently on my radar is the APN Industria REIT (ASX: ADI).

The Australian real estate investment trust (REIT) owns a portfolio of 32 industrial and business park assets in Sydney, Melbourne, Brisbane and Adelaide.

The APN Industria share price is up more than 52% since the 23 March post-panic selling lows but is still down nearly 9% year to date. That puts it right on par with the performance of the All Ordinaries Index (ASX: XAO). Although today, APN Industria outperformed, with the share price falling 0.76% compared to a 1.77% loss from the All Ords by market close.

Now, the APN Industria share price is highly unlikely to see another 51% gain over the next 6 to 7 months. But with the growth of e-commerce continuing to drive demand for well-positioned warehouse and logistics facilities, I believe this is one ASX share to keep an eye on.

APN Industria also pays a 6.5% annual dividend yield, unfranked.

More reading

• Why AREITs like this one stand to gain from the rapid growth of e-commerce
• Looking to invest in ASX real estate shares? Read this first
• Could industrial REITs be the best ASX shares to buy for dividends?

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. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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Some of the biggest misconceptions surrounding investing in ASX shares come from tax – and how much you have to pay. I once heard someone say they didn’t want to invest in shares because “then I’d have to pay tax on them”.

Like they say, along with death, tax is one of the inescapable facts of life, and the share market is not immune from this reality. But that doesn’t mean we shouldn’t invest at all, or else make silly investment decisions based on the tax ramifications alone.

So let’s answer a common question ASX investors (and potential investors) might have on tax.

Do you have to pay tax on ASX shares?

There are 2 types of taxes most people will normally have to pay in the course of investing in ASX shares: capital gains tax (CGT) and income tax.

Normally, income tax is only payable on any dividends you receive. These dividends are attached to any other income you make (such as your salary or wages) when you fill out your tax return. If a company pays no dividends, you normally don’t have to pay income tax. Further, if your dividend comes with franking credits, you can use those franking credits to reduce your taxable income (or receive a cash refund if you don’t pay tax).

In contrast, CGT is only payable if you sell your ASX shares. If you bought $1,000 worth of Afterpay Ltd (ASX: APT) shares back in March for around $8, you’d today be sitting on roughly $12,000 worth of Afterpay shares today, seeing as the Afterpay share price is currently $96.08 (at the time of writing).

If you haven’t sold any of these shares to date, then you won’t have a tax bill. Simple. However, if you do decide to sell these shares, you will have to pay CGT on the profit you’ve made (not the whole invested amount). That amount is simply added to your income tax bill at the end of the year. Further, if you sell shares for a loss, you can normally roll-over that loss to deduct against any future gains.

One more perk, under current tax laws, if you own a share or investment for longer than 12 months, you get a 50% discount on those gains for CGT tax purposes.

Foolish takeaway

We all have to pay tax, and the share market isn’t a free ticket to ride. However, you should never let the tax consequences of investing put you off. In fact, investments are often taxed at concessional rates (franking and the CGT discount) compared to other forms of income you can earn.

Of course, this is all general advice, and you should always seek the counsel of a licensed tax professional for your own affairs. But remember this: a wise investor once told me, “If you have a massive tax bill from your shares, you’re doing something right”. Wise words indeed!

More reading

• Why Afterpay, LiveTiles, PointsBet, & Santos shares are tumbling lower
• How did ASX buy now, pay later shares perform in the latest quarter? 
• ASX 200 Weekly Wrap: ASX snaps winning streak… just
• Top brokers name 3 ASX shares to buy next week
• The best time to invest may feel uncomfortable

Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of AFTERPAY T FPO. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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Atomo Diagnostics Ltd (ASX: AT1) provided a market update today in relation to its COVID-19 rapid antigen test.

During early morning trade, shares in the medical device company were relatively flat. However, since the release of the news, the Atomo share price has flown 9.68% higher to 34 cents at the time of writing.

Let’s take a closer look at Atomo’s product and what was announced.

What is the COVID-19 rapid antigen test?

The nasopharyngeal swab test is designed to screen for antigens produced in response to COVID-19 infections at the point of testing. This differs to the current nasal swab testing in Australia, which uses molecular PCR assays to test for coronavirus.

Atomo’s rapid test provides results after 10 minutes, as opposed to the general test kit, which is sent to a central laboratory for processing. The company said that the early identification is a breakthrough in controlling outbreaks.

In addition, Atomo noted that its rapid antigen test has the potential to work alongside its COVID-19 rapid antibody test. The latter detects whether a patient has developed antibodies to the virus, most accurately after 15 days of exposure.

Atomo receives approval stamp

According to the release, Atomo advised that the Therapeutic Goods Administration (TGA) has approved its rapid SARS-CoV-2 antigen blood test. The milestone achievement will allow Atomo to commence supplying the test kit to medical professionals across Australia.

The new registration of the COVID-19 rapid antigen test will require Atomo to submit additional evidence in the following 12 months. TGA requires all approved distributors to provide evidence of ongoing safety and performance. The Peter Doherty Institute for Infection and Immunity (Doherty Institute) has been selected to assist in the post-market validation.

In addition, Atomo secured a partnership with Health Solutions Group Australia to provide rapid antigen and antibody test kits. The deal will see Atomo’s combined products used to detect COVID-19 at point of care.

What did management say?

Commenting on the test, Atomo co-founder and managing director Mr John Kelly stated:

Atomo can now offer, in a single 15-minute window, rapid testing for both COVID-19 antigen and antibody responses. This comprehensive rapid screen will help determine acute active infection and also indicate those patients who may have had prior exposure to the virus and built up an antibody response.

Up to 20% of infections are asymptomatic and this has led to many countries now establishing regular, proactive testing regimes. Antigen tests have been proven to provide good detection of COVID-19 infection in the early stages of exposure.

He added:

We are delighted to be partnering with Health Solutions for the provision of COVID-19 screening services to our clients. Having a large national service provider with experience in professional testing to help rollout this service is very important.

More reading

• Top ASX growth shares to buy in October 2020
• Why the Atomo (ASX:AT1) share price is moving higher today

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. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The FBR Ltd (ASX: FBR) share price is trading flat today despite a positive announcement released to the market today.

At the time of writing, shares in the robotics company are flat at 5.6 cents. In comparison, the All Ordinaries Index (ASX: XAO) is 1.8% lower at 6,244 points.

So, what does FBR do and what did it update the market with?

FBR overview

FBR is a robotic technology company that builds robotic arms to assemble structure walls. It is considered faster, safer, more accurate and with less wastage than traditional bricklaying methods.

Its flagship product, the Hadrian X is an automated bricklaying system that can lay an estimated 1,000 bricks per hour as opposed to the output of two human bricklayers for the whole day.

The Hadrian X also provides a ‘wall as a service’ and can adapt quickly to builder demands.

Completed construction

FBR advised it has completed construction of its first two-storey structure using its flagship Hadrian X robot.

The structure was built within the premises of FBR, in a building format similar to key markets that the company is developing. Regions include the Middle East and North Africa, the Gulf region, Asia, and Mexico.

In addition to building the two-storey structure, the crane also worked with other design elements complementing the foundations. This included steel reinforced concrete columns, suspended concentre slabs and rebar.

FBR said that in large greenfields developments, the Hadrian X would complete first levels buildings while secondary slabs were formed. This would optimise efficiency and allow cost saving measures.

What did management say?

FBR managing director and CEO Mike Pivac said completing the company’s first two-storey build was a significant step in commercialising its robotic construction technology:

In many parts of the world our customers want to be able to build two-storey structures safely, quickly and efficiently, and we have now demonstrated that the Hadrian X can deliver on those customer needs.

We have also taken this opportunity to demonstrate our ability to work a range of design elements like steel reinforced concrete columns, which may be required in certain geographies due to factors such as seismic activity, weather patterns or custom.

More reading

• Why the Evans Dixon (ASX:ED1) share price is up 7% as the All Ords slides
• Is the Wesfarmers (ASX:WES) share price a buy for growth or dividends?
• Why the Probiotec (ASX:PBP) share price is trading higher
• Why investors should keep an eye on Alliance Aviation (ASX:AQZ) shares
• Douugh and Ioupay were among the most traded shares on the ASX last week

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. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Evans Dixon Ltd (ASX: ED1) share price is bucking the wider selling trend on the All Ordinaries Index (ASX: XAO) today. Evans Dixon’s share price is up more than 7% while the All Ords is down almost 2%.

This comes following this morning’s announcement of a takeover offer from 360 Capital Group Ltd (ASX: TGP).

Today’s rise will come as welcome news to Evans Dixon shareholders, who’ve watched the share price fall 37% year-to-date. That’s despite a 20% share price gain since 17 March.

Meanwhile, 360 Capital Group’s shares are trading flat in late afternoon trading, after posting gains of more than 1% earlier today. Year-to-date, 360 Capital Group’s share price is down 25%.

What do Evans Dixon and 360 Capital do?

Evans Dixon is a financial adviser providing advice to private and institutional clients, as well as corporates. The company employs over 475 staff across Sydney, Melbourne, Canberra, Brisbane and New Jersey.

360 Capital Group is an investment and funds management group. The company is predominantly focused on the strategic and active investment management of alternative assets. It invests in real estate, credit strategies, and public and private equity in Australia and around the world.

Why is the Evans Dixon share price up on the takeover offer?

This morning’s takeover announcement from 360 Capital Group – made via its wholly owned subsidiary, 360 Capital ED1 Pty Limited – stated its intent to acquire via off-market takeover all of the shares in Evans Dixon that it does not already own.

As of this morning, 360 Capital ED1 owned 19.55% of Evans Dixon’s shares.

The takeover offer price amounts to 61 cents per share. That’s just under the share price Evans Dixon is currently trading for. The current Evans Dixon share price represents a 7.83% gain from the opening bell.

360 Capital noted it has the available cash as well as the ability to issue its securities to finance the acquisition. It stated that its offer is not subject to a minimum number of acceptances.

360 Capital also highlighted that its 61 cent per share offer price represents a 54% premium to Evans Dixon’s share price after it had disclosed ASIC was taking corporate action against one of its subsidiaries, Dixon Advisory.

More reading

• Why the Probiotec (ASX:PBP) share price is trading higher
• Why the Danakali (ASX:DNK) share price is down 7% today
• Why the Adairs (ASX:ADH) share price is swinging lower today
• ASX 200 Weekly Wrap: ASX snaps winning streak… just
• Why the Laneway Resources (ASX:LNY) share price popped 14% higher today

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. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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Wesfarmers Ltd (ASX: WES) shares are having a pretty slow day, along with the rest of the S&P/ASX 200 Index (ASX: XJO). The Wesfarmers share price is, at the time of writing, down 1.45% to $46.23.

Even so, Wesfarmers has been a great ASX share to own in 2020. Despite the coronavirus pandemic, and the massive share market crash we saw in March and April, the Wesfarmers share price is up more than 11% year to date, and up 48.5% since 23 March.

But at the current share price, is Wesfarmers still a buy, either for growth or dividend income (or perhaps both)? Let’s take a look.

What does Wesfarmers do?

Wesfarmers is one of the largest retailers in the country and one of the largest companies on the ASX. It’s a massively diversified conglomerate. Most of its earnings come from the company’s retail chains like Bunnings Warehouse, Kmart, Officeworks and Target. But Wesfarmers also owns an almost dizzying array of other ventures, including mines, industrial and chemical manufacturing plants and a clothing line.

In recent years, Wesfarmers is probably most well-known for its 2018 blockbuster spin-off of Coles Group Ltd (ASX: COL), which it used to own in its own right. Today, Coles is independently listed on the ASX, but Wesfarmers still owns a 4.9% stake.

Growth or dividends?

Wesfarmers does have a reputation as a solid, ASX 200 blue-chip dividend payer. But on current prices, it offers a decent, if uninspiring, 3.3% dividend. This also comes fully franked (giving Wesfarmers a grossed-up yield of 4.71%).

That’s based on Wesfarmers’ last two dividends (interim and final), which came in at 75 and 77 cents per share (cps) respectively. Those dividends were down from the 100 cps and 78 cps interim and final dividends in 2019. However, Wesfarmers also paid out an 18 cps special dividend alongside its final dividend in August 2020. If we factor this in, Wesfarmers’ trailing dividend yield instead becomes 3.69% (or 5.27% grossed-up).

This, to me, says that Wesfarmers is a decent, if not exactly market-leading, income share to own.

But what of growth?

Wesfarmers has always been a company that is looking for the ‘next big thing’. And it’s been up to some interesting stuff in recent years. In 2019, Wesfarmers completed the acquisition of Catch Group – an online e-commerce company that has seen significant growth. Also in 2019, the company acquired lithium producer, Kidman Resources.

I like that Wesfarmers is pursuing these ventures and isn’t just sitting on its laurels. Although ventures like these would have to substantially grow to make a meaningful impact on Wesfarmers’ $52 billion market capitalisation, it’s still a good thing to see in an established ASX blue chip in my view.

Foolish takeaway

I believe Wesfarmers is one of the highest calibre ASX blue chip shares, which I think any investor could own in their portfolio. I think the company offers a healthy mix of future growth opportunities together with reasonable dividend income. A top all-rounder share, Wesfarmers is a solid company in which to place your capital today in my opinion.

More reading

• Are Coles (ASX:COL) or Woolworths (ASX:WOW) shares a better ASX dividend buy today?
• Buy these ASX dividend shares in November
• What zero COVID-19 cases in Victoria means for ASX 200 shares
• ASX 200 Weekly Wrap: ASX snaps winning streak… just
• Why it makes sense to invest in ASX shares

Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of COLESGROUP DEF SET and Wesfarmers Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Probiotec Limited (ASX: PBP) share price is shooting higher as the company presented its annual general meeting. The Probiotec share price is rising despite today’s 1.9% decline in the All Ordinaries Index (ASX: XAO). Shares are currently trading 3.17% higher as the company reaches a price of $1.79.

What Probiotec does

Probiotec is a manufacturer, marketer and distributor of a range of prescription and over-the-counter (OTC) pharmaceuticals, complementary medicines and consumer health products.

It owns 4 manufacturing facilities in Australia and counts a number of major international pharmaceutical companies as customers. As such, it distributes products both domestically and internationally.

How are the financials?

The company highlighted its strong year of growth, telling the AGM:

2020 was a highly successful year for Probiotec in which we successfully met our objectives and achieved strong financial results for shareholders.

The company reported revenue growth of 46% from the year before, bringing in $107.2 million. It was the first time Probiotec has reached more than $100 million in revenue. Furthermore, the company reported earnings before interest, tax, depreciation and amortisation (EBITDA) of $16.9 million, up 79% on FY19. This was towards the upper end of its guidance ($16 to $17 million).

Probiotec’s strong financial performance was driven by impressive organic growth and solid acquisitions. This was performed in the face of the coronavirus pandemic that has driven the S&P/ASX 200 Index (ASX: XJO) down 10.5% from this time a year ago.

What’s next for the Probiotec share price?

The company did not provide guidance due to the ongoing uncertainty surrounding COVID-19. However, Probiotec reported that its Q1 FY21 trading performance was ahead of budget. The company announced that sales were up 6.5% with each of its operations performing above expectations.

The Probiotec share price is currently trading 3.75% higher as it looks to bounce of its 52-week low of $1.55.

More reading

• Will COVID-19’s second wave crash share markets a second time?
• ASX 200 down 1.2%: Blackmores jumps, Bendigo and Adelaide Bank’s update, Zip sinks
• Boral (ASX:BLD) share price surges after announcing a US$1bn transaction
• ASX 200 slumps as second COVID-19 wave takes over US and Europe
• 5 things to watch on the ASX 200 on Tuesday

Daniel Ewing has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Probiotec Limited. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The COVID-19 pandemic has upended the airline industry, halting international and domestic travel. Despite this, one aviation services stock has increased in value by more than 200% since March.

Alliance Aviation Services Ltd (ASX: AQZ) generates income by providing contract, charter and allied aviation services to the mining, energy, tourism and government sectors, both locally and internationally. It is one of the few aviation companies that delivered a profit before tax of $47.7 million in FY20 (+24.1% compared to the previous year).

In recent weeks, the airline industry has been in survival mode. Listed companies such as Air New Zealand Limited (ASX: AIZ) and Cathay Pacific Airways Ltd are being placed under scrutiny. However, while the aviation industry faces unprecedented challenges, long-term investors have enjoyed a 5-year investment return of more than 470% in the Alliance Aviation share price.

Let’s take a closer look at Alliance Aviation.

Strong return on capital employed

Return on capital employed (ROCE) is one of the most popular metrics used to assess how well a capital intensive company is generating profit from its capital. The formula for ROCE is:

Earnings before interest and tax (EBIT) divided by capital employed = ROCE.

(Capital employed is the difference between total assets and current liabilities)

Using this formula, Alliance’s ROCE is $43.4 million/($435.9 million − $70.8 million) = 11.9 cents (based on its FY20 results presentation). This means for every $1 of worth of capital deployed by Alliance Aviation, the company was able to earn 11.9 cents in profit as of June 2020.

On the other hand, Cathay Pacific has a ROCE of −HKD10,913 million (equivalent to −A$1,978 million) /HKD143,455 million (equivalent to A$26,001 million) = −7.6 cents (data sourced from the Hong Kong Stock Exchange as of 22 Oct 2020)

Air New Zealand’s ROCE is −$87 million/($391 million − $44 million) = −25.1 cents (data sourced from FY20 annual financial results).

So, Alliance Aviation’s ROCE is 11.9 cents per capital dollar, versus −7.6 cents per capital dollar for Cathay Pacific, and −25.1 cents per capital dollar for Air New Zealand.  

The calculations above show that Cathay Pacific and Air New Zealand are larger businesses than Alliance Aviation in terms of EBIT. However, when using the ROCE metric, investors can see that Alliance Aviation is generating profit more efficiently from its capital than the other two. 

Reliance on the commodities industry

In addition to the ROCE, Alliance Aviation’s total FY20 revenue grew to $298.2 million, (+7.8% compared to FY19). It also recorded a strong cash flow of $98.8 million (+929.2% compared to FY19). The growth is due to an increase in additional flights from its clients and the equity raising for fleet expansion.

Unlike other aviation and airport businesses, Alliance Aviation has provided aviation services to mainly iron ore, gold, copper and uranium sectors, with the commodities industry representing 53% of its total contract value in FY20. 

I think the earnings outlook of Alliance Aviation remains positive in the near term. Based on data released by the Department of Industry, Science, Energy and Resources (DISER) in March, Australia has a resources and energy export market of $299 billion in 2020, which I think Alliance Aviation looks to be well positioned to benefit from. 

Foolish takeaway

From a financial perspective, Alliance Aviation has a relatively strong industry ROCE. It means that the company has been utilising its capital well amid the pandemic.

Even though the aviation industry is currently facing acute danger, I’d argue that Alliance’s most valuable assets are its strong business fundamentals, which have contributed to the Alliance Aviation’s impressive share price return over the past 5 years.

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