Talk about making hay while the sun shines! BNPL superstar of the ASX is capitalising on the record high Afterpay Ltd (ASX: APT) share price to launch an $800 million capital and issue a trading update.

The meteoric rise of Afterpay from March’s bear market trough and the structural shift towards online sales created a perfect time for the company to tap investors on the shoulder for cash.

It also gives its two co-founders, Anthony Eisen and Nicholas Molnar, a chance to off-load 4.1 million shares in the process to net them a cool $250 million plus cash pile.

Capital raise details

The new share offer is priced at $61.75 a pop, which is a relatively skinny 9.2% discount to yesterday’s closing price (the stock is in a trading halt this morning).

The cap raise is made up of $650 million fully-underwritten placement to institutional investors and a circa $150 million share purchase plan.

It’s always tricky to raise cash when key executives are not only not participating, but are selling part of their holdings.

But Afterpay is hoping investors won’t be spooked as it announced a very bullish trading update.

Should you worry about the drop in earnings?

Management is expecting FY20 revenue to surge 112% to $11.1 billion although underlying earnings before interest, tax, depreciation and amortisation (EBITDA) is expected to fall to between $20 million to $25 million.

That’s quite a fall given that Afterpay posted a proforma underlying EBITDA of $35.5 million in FY19.

But as long as investors are only watching the growth in active customers, who cares about profit right?

COVID-19 winner

On that front, active users on its platform jumped 116% to 9.9 million as the COVID-19 pandemic provided a windfall for the group.

Consumers are largely stuck at home and have seen wages fall. The BNPL industry couldn’t have designed a better environment to grow.

The question is whether investors should participate in this capital raise. History seems to favour the brave as those who ploughed money into every other cap raise undertaken by Afterpay are well in the money (assuming they hung on).

The BNPL bubble

There’s also little doubt that Afterpay is the industry leader with enviable scale and lots of room left to grow. And that’s what the new cash is meant to fund.

On the flipside, some have warned that the BNPL space looks like a bubble as Afterpay’s peers like the Zip Co Ltd (ASX: Z1P) share price and Splitit Ltd (ASX: SPT) share price have been on a wild ride.

I can’t help but to think of the pot stocks that went pop not that long ago.

Medicinal marijuana is a real business and we know at some point it is likely to become a significant industry. The question is how much are investors willing to pay for the promise land now.

Should you buy Afterpay shares?

The other thing to think about is first mover advantage and Afterpay has lots of that. But there’s nothing stopping a retailer on signing on several BNPL providers, and the same can be said for consumers.

Afterpay looks cheap if you believe it can build and maintain its leadership in this space. Just remember that history holds plenty of examples of companies that opened a category only to lose out to rivals (think Atari and IBM personal computers), and vice versa (Apple Inc.).

If you can work out why some succeed while others fail, you will have a strong advantage over other retail investors.

More reading

• Does Afterpay have a competitive advantage?
• Sezzle share price rockets 20% higher on record Q2 result
• The FlexiGroup share price is lagging its BNPL peers. Should you buy?
• Are Afterpay shares the next Visa?
• ASX 200 falls 0.7%, Qantas and Afterpay make a partnership

Brendon Lau has no position in any of the stocks mentioned. Connect with me on Twitter @brenlau.

The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of ZIPCOLTD FPO. The Motley Fool Australia owns shares of AFTERPAY T FPO. 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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Yesterday, the Xtek Ltd (ASX: XTE) share price was up 11.39% to $0.88 cents following the release of the company’s unaudited revenue guidance for the 2020 financial year.

What was in the announcement?

Xtek announced that it expects financial year 2020 revenue to be in excess of $42 million. This compares to financial year 2019 revenue of $37.9 million. According to the announcement, revenue growth was driven by strong performance by a company that was recently acquired by Xtek, HighCom Armour Solutions. Revenue was additionally boosted by the supply and support of small unmanned aircraft systems. 

The company also announced that margins are improving as it shifts toward the supply of proprietary products. According to the announcement, this trend of improving margins is set to continue going forward.

The company also announced that its manufacturing capabilities had been improved. This would allow it to produce a higher volume  of its products and increase revenue. According to the company, these capabilities have the potential to produce up to around $40 million per year in revenue, which is double previous forecasts. The enhanced capabilities in manufacturing by the company included optimisation of its XTclave body armour production. Xtek has added XTclave manufacturing equipment to its production facility in Adelaide and is also adding a second machine in the US.

According to the announcement, improved manufacturing facilities will assist the company in achieving its goal of becoming a $100 million dollar business in the medium term.

Xtech also included in its announcement that it is well placed to serve a growing interest in its ballistic solutions. It expected to receive further orders in the near to medium term which underpin future revenue expectations.

About the Xtech share price

Xtech provides products for use by governments, law enforcement agencies, military, the space sector and other commercial sectors. Its products include composites, small aerial unmanned aircraft, body armour and real time contextual video. Its products are in use by Western military forces and other government agencies. 

This year has seen Xtech reach significant milestones with the opening of a production facility, initial orders received for some of its products and a grant received for work on a satellite launch by the Australian Space Agency.

The Xtech share price is up 131.6% from its 52 week low of $0.38 cents. It has risen 15.8% since the beginning of the year. The Xtech share price is up 100% since this time last year.

More reading

• 3 ASX dividend shares to grow and diversify your income
• The Nyrada share price rocketed 34% yesterday on promising preclinical trial results
• Why did the QuickFee share price push 33% higher yesterday?
• The FlexiGroup share price is lagging its BNPL peers. Should you buy?
• 3 of the best ASX tech shares to buy in July

Motley Fool contributor Chris Chitty 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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It’s getting harder to find good sources of income these days. I think ASX dividend shares could be the answer to grow and diversify your investment income stream.

I believe that businesses can provide investors with the best source of reliable income.

Here are three great income options to consider:

Brickworks Limited (ASX: BKW)

Brickworks is one of Australia’s largest building product businesses. It’s actually the leading brickmaker across the country. It also sells a number of other products including roofing, masonry and precast.

The Brickworks share price has fallen by 20% since the beginning of the COVID-19 share market declines. I don’t think that should be too surprising considering Australian building product revenue was down 10% for the four months to May 2020 and the American building product division is seeing negative earnings in recent months.

However, the ASX dividend share has had some good news recently as well. Amazon recently signed on to be a tenant at the Oakdale West site. Amazon has signed a lease pre-commitment for 20 years. Brickworks owns 50% of the industrial property trust along with Goodman Group (ASX: GMG). Once the Amazon and Coles Group Limited (ASX: COL) distribution facilities are completed the gross assets of the trust are expected to rise above $3 billion. The rental income of the trust has been unaffected by COVID-19.

Brickworks still owns a large amount of Washington H. Soul Pattinson and Co. Ltd (ASX: SOL) shares. This investment provides reliable dividends to Brickworks. Soul Patts’ biggest investment position, TPG Telecom Ltd (ASX: TPG), was finally successful at merging with Vodafone Australia.

As for Brickworks’ ASX dividend share credentials, it hasn’t cut its dividend for more than four decades. At the current Brickworks share price it offers a grossed-up dividend yield of 5.25%.

Future Generation Investment Company Ltd (ASX: FGX)

Future Generation is a listed investment company (LIC) with a big difference to most other LICs. It doesn’t charge shareholders management fees or performance fees. Instead, it donates 1% of net assets to youth charities each year. You can feel good owning this share.

What does the ASX dividend share invest in? It invests its capital into the funds of the best fund managers which invest in ASX shares. Some of those fund managers are: Bennelong, Paradice, Regal, Eley Griffiths and Cooper.

At the end of May 2020, Future Generation reported that its portfolio’s gross performance had outperformed the S&P/ASX All Ordinaries Accumulation Index by 2.2% per annum.

The ASX dividend share has grown its dividend each year since 2015 when it started paying a dividend. At the current Future Generation Investment Company share price it offers investors a grossed-up dividend yield of 7.1%. It’s currently trading at a 12% discount to the May 2020 net tangible assets (NTA).

Duxton Water Ltd (ASX: D2O)

This business purely owns water entitlements and leases them out to farmers.

Water is obviously an important part of the agricultural cycle, so in drier periods water becomes particularly valuable as it did during 2019. The drought seems to be lifting a little, which has pushed down water prices a bit over the past few months.

But I think lower water prices is a buying opportunity, assuming the upcoming ACCC water report doesn’t fundamentally change things for Duxton Water.

The ASX dividend share has been entering into leases to lock in water certainty for farmers and it also locks in income for Duxton Water. The current weighted average lease expiry (WALE) is 2.8 years.

Duxton Water has guided that its bi-annual dividend can steadily increase every six months to a 3.2 cents per share dividend which will be paid in March 2022. The next 12 months of dividends is expected to be 5.9 cents per share. At the current Duxton Water share price this amounts to a grossed-up dividend yield of 6.1%.

Foolish takeaway

I think each of these ASX dividend shares can help diversify your income stream. Each of them should be capable of increasing dividends over the long-term.

At the current share prices it’s hard to pick between Brickworks and Future Generation. Brickworks’ dividend is probably more robust, but Future Generation offers more diversification and a bigger dividend yield.

More reading

• Are ASX 200 retail shares like JB Hi-Fi overvalued?
• ASX 200 Weekly Wrap: Afterpay, Tech push ASX 200 back above 6,000
• Top brokers name 3 ASX shares to buy next week
• 5 ASX shares rated as strong buys by brokers
• 3 very reliable dividend shares I plan to pay for my retirement

Motley Fool contributor Tristan Harrison owns shares of DUXTON FPO, FUTURE GEN FPO, and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia owns shares of and has recommended Brickworks and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia owns shares of COLESGROUP DEF SET. The Motley Fool Australia has recommended DUXTON 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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The Nyrada Inc (ASX: NYR) share price hit its highest ever price of 37 cents yesterday before settling to 24 cents, which put it up 34.29% for the day.

The soaring gains are welcome news for the biotechnology company which, since listing in January this year, has seen its share price steadily fall.

What did Nyrada announce?

Yesterday morning Nyrada’s share price was sent flying as it announced encouraging preclinical results from its cholesterol-lowering drug study.

The company reported that its Nyrada PCSK9 inhibitor demonstrated equivalency to 2 already approved monoclonal antibodies in healthy white blood cells. The results confirmed that the drug had potential to be used with and without statin. It is encouraging news for Nyrada as it seeks to replace expensive ongoing injections for patients with high cholesterol with the first ever oral pill.

Nyrada also announced that sales for current drugs in this field, Amgen Repatha and Rengeneron/Sanofi Praluent were in excess of US$900 million in FY2019, suggesting a potential market size.

The study that used healthy donor white blood cells treated with Nyrada’s PCSK9 inhibitor NYX-PCSK9i showed an increase in LDL receptor levels and demonstrated that it was as efficient as the current injectables in the market.

Commenting on the results, CEO James Bonnar stated:

Having a drug candidate that works as well as the two market-leading monoclonal PSCK9 antibodies in a human cell model is a huge achievement. It represents a big step forward in our mission to develop the first-ever small molecule PCSK9 inhibitor to treat high cholesterol and provide a compelling cost-competitive and convenient treatment alternative to Repatha and Praluent.

What does Nyrada do?

Nyrada is a new US biotech located in Delaware, USA. It is a preclinical stage, drug discovery, and development company, specialising in novel small molecule drugs to treat cardiovascular, neurological, and inflammatory diseases. Apart from the drug mentioned above, Nyrada is also researching a drug to treat brain injury, specifically traumatic brain injury and stroke.

Nyrada maintains a solid cash position, with $6.1 million in the bank as of the end of March 2020. Nyrada reports it is also largely unaffected by the impact of COVID-19, although the company is taking precautionary steps to help quarantine its business from any global fallout.

With yesterday’s gains, the Nyrada share price now sits at 24 cents per share.

More reading

• Xtek share price rises 11% on FY20 revenue guidance
• 3 ASX dividend shares to grow and diversify your income
• Why did the QuickFee share price push 33% higher yesterday?
• The FlexiGroup share price is lagging its BNPL peers. Should you buy?
• 3 of the best ASX tech shares to buy in July

Motley Fool contributor Daniel Ewing 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 QuickFee Ltd (ASX: QFE) share price rocketed to all-time highs of 93 cents yesterday. Despite not releasing any news to market yesterday, QuickFee shares finished the day 33% higher at 86 cents per share.

Yesterday was the third consecutive day of strong growth for the payments company, which also saw 6% and 18% gains on Thursday and Friday, respectively. 

So what?

Given the lack of notable announcements, QuickFee was issued a speeding ticket by the ASX around 2pm yesterday afternoon. Despite there being no obvious answer to the recent trading in its securities, in its response, QuickFee stated it “observed that several other buy now, pay later (BNPL) entities listed on the ASX have experienced large securities price increases in recent weeks.”  

As recently as last Tuesday, QuickFee announced it was extending its lending facilities in the US and Australia, in an effort to cater for growing demand in its payment plans. QuickFee’s current lender, Global Credit Investments, has executed agreements to double the company’s existing US$5 million debt facility. It also agreed to increase QuickFee’s borrowing ratio from 80% to 85%.

These expansions should give QuickFee added flexibility following the increased demand for its payment plans in the US market. The company’s Australian debt facility was also increased by $5 million to $25 million dollars to fund anticipated growth in the Australian market. 

QuickFee also recently completed a successful placement of $7.5 million in order to fund growth opportunities. This was as a result of COVID-19 driving unprecedented US transaction volumes as firms switch to electronic payments. The company reported its US transaction volumes had doubled since February, leading to its highest ever US revenues.

About the QuickFee share price

QuickFee provides professional service companies such as accounting and law firms a payment gateway solution for their clients.

Coming up to its one-year anniversary of listing on the ASX, the QuickFee share price has been surging higher recently with highs of up to 93 cents. Since listing, QuickFee shares have returned 73% and the company’s market capitalisation now sits at $161.9 million.

More reading

• Xtek share price rises 11% on FY20 revenue guidance
• 3 ASX dividend shares to grow and diversify your income
• The Nyrada share price rocketed 34% yesterday on promising preclinical trial results
• The FlexiGroup share price is lagging its BNPL peers. Should you buy?
• 3 of the best ASX tech shares to buy in July

Motley Fool contributor Daniel Ewing 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.

The post Why did the QuickFee share price push 33% higher yesterday? appeared first on Motley Fool Australia.

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As you are no doubt already aware, the buy now, pay later (BNPL) sector has tremendously outperformed the market this year. Industry leaders Afterpay Ltd (ASX: APT) and Zip Co Ltd (ASX: Z1P) have surged around 750% and 460% respectively from their lows in March and are currently trading near all-time highs.

Despite the huge interest in these BNPL service providers, the FlexiGroup Limited (ASX: FXL) share price is actually trading just over 30% lower for the year. So, given it is the sector’s oldest and most profitable player, why is the FlexiGroup share price lagging its peers and should you buy?

Positive trading update

In a recent trading update, FlexiGroup reported that the company had exceeded 2.1 million customers after adding 380,000 new users in the past 11 months. In comparison, Afterpay had 3.2 million customers on 31 March and Zip had 2.1 million on 31 May.

Over the past 11 months, FlexiGroup also reported that $2 billion in transactions were processed through its ‘humm’ platform, with a 282% surge in online volumes for the 5 months to May 2020. The company attributed this growth to the transformation of its digital offering which has seen over 600,000 app downloads.

Flexigroup also cited the continued expansion of humm and the company’s strategic partnership with Mastercard as key growth drivers. FlexiGroup’s platform now boasts more than 55,000 retailers, including notable brands such as IKEA, Myer Holdings Ltd (ASX: MYR), National Dental Plan and Smiggle.

Has the coronoavirus pandemic impacted operations?

Unlike Afterpay and Zip, Fleixgroup’s platform differentiates itself by offering BNPL services for larger expenses such as home renovations, dental treatment and fertility services. The company provides interest-free repayment options for transactions up to $30,000 over 10 weeks to 60 months.

In late April, FlexiGroup provided a trading update on its operations during the coronavirus pandemic. The company assured investors that 75% of its customers were over the age of 35 with many being homeowners. In addition, Flexigroup highlighted that consolidating over 20 of its brands into 3 offerings has provided the company with additional strength and flexibility.

Flexigroup noted that although BNPL volumes were reduced for discretionary spending, there was a shift towards spending on solar, health and furniture during the lockdown period.

Foolish takeaway

FlexiGroup has operated in the BNPL sector for the past two decades under the brands Ezi-Pay and Oxipay. Last year the company rebranded and consolidated its various platforms into one brand (humm). The strategy behind the rebranding aims to lift the company’s visibility in the sector and increase its accessibility to customers and partners.

In my opinion, despite pioneering the BNPL space, the Flexigroup share price is lagging behind the likes of Afterpay and Zip because it will take time to rebrand and refocus its operations. However, I think there could be long-term value for investors in the company if its focus on larger purchases and new strategic direction prompts a re-rating of the share price.

More reading

• Are Afterpay shares the next Visa?
• ASX 200 falls 0.7%, Qantas and Afterpay make a partnership
• 2 ASX shares I would buy for growth and income
• Afterpay share price pushes higher on Qantas partnership
• ASX 200 edges higher: Afterpay and Qantas join forces, big four banks push higher

Nikhil Gangaram has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of ZIPCOLTD FPO. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool Australia has recommended FlexiGroup 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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