The Smartgroup Corporation Ltd (ASX: SIQ) share price has rocketed 7.6% higher in early trade this morning after the company released its latest earnings guidance.

Why is the Smartgroup share price on the move?

Smartgroup has provided an update on its earnings expectations for the full year ending 31 December 2020. The Aussie salary packaging and novated leasing company is reporting a strong second half of the year.

The Smartgroup share price rocketed more than 7% at the open following the update. Smartgroup shares are up 19.8% to $6.30 since 3 November, despite falling 6.9% in 2020.

In today’s release, Smartgroup advised it is expecting an adjusted net profit after tax of $65 million for the full calendar year. An improved operating earnings before interest, tax, depreciation and amortisation (EBITDA) margin has also benefitted Smartgroup’s earnings. The company is expecting an operating EBITDA margin of 44% for the second half, which is up just slightly from 43% in the first half of the year.

The company’s forecast operating EBITDA of $47 million for the second half is attributed to improved cost controls offsetting decreased novated leasing volumes from the first half.

Smartgroup is also forecasting a number of salary packages and novated leases under management in line with the first half of 2020.

Smartgroup Managing Director and CEO, Tim Looi, said Smartgroup remains “cautious”, but highlighted the company’s “encouraging” full year profit result and a “positive trend” in novated lease enquiries.

However, Mr Looi said the current environment is fragile, with potential further economic disruption. The coronavirus pandemic and public health responses continue to challenge consumer confidence and the Smartgroup business.

Foolish takeaway

The Smartgroup share price has been up and down throughout the year. At the time of writing, shares in the salary packaging group are trading at a price to earnings (P/E) ratio of 16.9 with an $836.8 million market capitalisation.

More reading

• Here’s how ASX 200 energy shares have performed in 2020 so far
• Here’s why the Bigtincan (ASX:BTH) share price is dropping lower
• Recce (ASX:RCE) share price charges higher on COVID-19 update
• ASX miners put on alert as the iron ore price crashes overnight
• 2 small cap ASX healthcare shares to watch

Motley Fool contributor Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia has recommended SMARTGROUP DEF SET. 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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Of all the sectors on the S&P/ASX 200 Index (ASX: XJO), few have disappointed investors more in 2020 than ASX energy shares.

2020 has delivered its fair share of challenges to be sure (as we all know), but the energy sector has not been well-placed to deal with them.

You only need to compare the performance of this sector against, say, tech shares, or consumer staples, to see this. In fact, out of all the companies in this sector, only one is actually above where it started the year, as you can see below:

ASX energy share	YTD share price gain (as of 22 December)	Market capitalisation
Oil Search Ltd (ASX: OSH)	(50.78%)	$7.23 billion
Origin Energy Ltd (ASX: ORG)	(44.33%)	$8.3 billion
Whitehaven Coal Ltd  (ASX: WHC)	(37.16%)	$1.67 billion
Woodside Petroleum Ltd (ASX: WPL)	(35.25%)	$21.48 billion
New Hope Corporation Limited (ASX: NHC)	(33.09%)	$1.15 billion
Beach Energy Ltd (ASX: BPT)	(28.97%)	$4.08 billion
Worley Ltd (ASX: WOR)	(26.99%)	$5.85 billion
Santos Ltd (ASX: STO)	(25.67%)	$12.73 billion
Ampol Ltd (ASX: ALD)	(18.14%)	$6.95 billion
Viva Energy Group Ltd (ASX: VEA)	(15.13%)	$3.11 billion
Washington H. Soul Pattinson & Co Ltd (ASX: SOL)	42.33%	$7.26 billion

All of these shares are in the ASX 200 Index, save for New Hope.

But why such a terrible year? We all need energy at the end of the day. It is an essential input into all other forms of economic activity. Even futuristic tech companies need energy to function.

Well, it comes down to how this sector functions. See, ‘energy’ usually means oil, crude oil to be specific. Also included is gas and coal of course, but gas, coal and oil are very closely interrelated when it comes to pricing dynamics and profitability. So let’s see what’s happened in the oil space this year.

Energy has a shocker of a year

According to Business Insider, Brent crude started the year at an approximate price of US$66.25 a barrel. But the onset of the coronavirus pandemic saw this change very abruptly.

Such a sudden, massive economic change played havoc with oil prices. That’s what happens when all of a sudden, people around the world stop flying on aeroplanes, going on cruises and driving to work.

By April, Brent crude prices had crashed to multi-year lows of under US$20 a barrel. At the same time, futures contracts for another type of crude oil, West Texas Intermediate (WTI) actually went negative for the first time in history. That means that back in April, investors were actually paying people to buy and store oil.

We saw this trend play out across all energy commodities, not just crude oil. At the start of the year, natural gas was priced at approximately US$2.19 per MMBtu. That had fallen to US$1.55 by April. Similarly, thermal coal was asking around US$45 a tonne at the start of the year. That was down to US$34 by April.

All of these wild price fluctuations would not have been welcome by the companies in the ASX energy sector. Most of these companies are price takers, meaning they have to accept the international market price for the commodities they extract. The only thing they can really control is their own cost of production. So an oil company that had a cost of extracting one barrel of crude of US$40 would have been comfortably profitable in January, only to be bleeding money by April.

What recovery?

At the time of writing, commodity prices have recovered and stabilised somewhat. But even today, Brent crude is still only trading at US$50.91 (at the time of writing). That’s a long way from the US$66 it was asking at the start of the year. And those margins make a big difference to the profitability of ASX energy shares for the reasons we’ve just discussed.

Another headwind ASX energy shares have been facing in 2020 is a rising Australian dollar. Since almost all commodities are priced in US dollars, a rising Aussie hurts these companies’ profitability. It means that they have to swap more Aussie dollars for each US dollar when they sell their commodities on international markets.

And right now, the Aussie is pretty close to a 3-year high against the greenback right now. That would have offset much of the recent gains in oil, coal and gas prices – another headache these companies have had to deal with.

It’s not all bad for ASX energy shares

Saying all of this, it’s important to note that, while these ASX energy shares are mostly still down year to date, many have had spectacular recoveries since finding their bottom. An occurrence that might have been taken advantage of by a few savvy investors.

For example, whilst Oil Search remains down more than 50% year to date, it is also up more than 90% since 23 March. Likewise, Beach shares are up more than 88% over the same period.

It is worth mentioning the elephant in the room before we go. Washington H. Soul Pattinson & Co (‘Soul Patts’ for short) has had a sector-defying 44% gain year to date and is currently trading pretty close to its all-time high.

But before you get carried away with this ‘energy wunderkind’, note that that Soul Patts is barely an energy company. It does hold a stake in New Hope Corporation. But in reality, Soul Patts is a massive conglomerate, with large stakes in a range of ASX shares. These include Brickworks Ltd (ASX: BKW), TPG Telecom Ltd (ASX: TPG) and Australian Pharmaceutical Industries Ltd (ASX: API).

So if you’re wondering why this company is an outlier, it’s likely because Soul Patts has little relative exposure to the energy sector compared to its peers.

More reading

• ASX miners put on alert as the iron ore price crashes overnight
• Why the Challenger (ASX:CGF) share price is one to watch today
• Experts pick the best ASX IPO of 2020
• 7 top ASX biomedical shares in 2020
• 3 ASX 200 shares that keep growing the dividend

Motley Fool contributor Sebastian Bowen owns shares of 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 has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Bigtincan Holdings Ltd (ASX: BTH) share price is on the move on Wednesday following the release of an announcement.

In early trade the sales enablement automation platform provider’s shares are down 1.5% to $1.09.

What did Bigtincan announce?

This morning Bigtincan announced that it has entered into a binding agreement to acquire unified sales enablement platform provider, ClearSlide.

According to the release, the company has agreed a purchase price of US$16.25 million (A$22.6 million) in cash with ClearSlide’s sole shareholder, Corel Inc.

This purchase price represents ~3.1x ClearSlide’s estimated calendar year 2021 sustainable annualised recurring revenue (ARR) of ~US$5.2 million.

Why ClearSide?

ClearSlide is a leading sales engagement company whose offerings help full cycle sales and service teams that want to smooth the friction between their buyers and sellers.

Management notes that it brings significant new technology that complements Bigtincan’s existing technology and supports Bigtincan’s long-term strategy to lead in optimising buyer seller engagements. It also brings hundreds of customers to Bigtincan, including NBC Universal, The Economist, Aflac, web.com, and Comcast Spotlight.

It advised that these customers use ClearSlide’s technology to connect with their customers using the built in remote connectivity platform and advanced engagement tools including sales campaign management. They also use its sophisticated analytics to better understand and connect with their customers.

Bigtincan’s Co-Founder and CEO, David Keane, commented: “As part of meeting our mission and vision of empowering every customer facing worker to be successful in the new digital and remote economy adding ClearSlide sales engagement technology and the customer base brings new opportunities for Bigtincan to extend our market space and continue our leadership position.”

Bigtincan also quoted Jim Lundy in its release. He is the founder and CEO of technology research firm, Aragon Research.

Mr Lundy said: “The Sales Enablement market continues to grow, and with market growth comes consolidation. The Bigtincan acquisition of ClearSlide brings together two market leaders in Sales Enablement that combined will make Bigtincan one of the largest providers in the market.”

Institutional Placement.

In order to fund the deal, the company launched and successfully completed a $35 million institutional placement.

These funds were raised at an issue price of $1.05 per new share, which represents a 5.8% discount to its last close price.

Management advised that the placement was well supported by new and existing institutional investors.

FY 2021 guidance.

In addition to the acquisition, management revealed that the company remains on track to achieve its guidance in FY 2021.

It continues to forecast ARR of $49 million to $53 million, revenue of $41 million to $44 million, and stable retention. It also revealed that both organic growth and acquisition-related growth is on track.

This compares to Bigtincan’s FY 2020 ARR of $35.8 million.

More reading

• 2 rapidly growing ASX tech shares to buy
• 2 rapidly-growing small cap ASX shares to buy
• Why the Bigtincan (ASX:BTH) share price charged 4% higher today
• 3 small cap ASX tech shares growing at a rapid rate

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

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The Recce Pharmaceuticals Ltd (ASX: RCE) share price is pushing higher on Wednesday after the release of an announcement.

In morning trade the pharmaceutical company’s shares are up 4% to $1.12.

Why is the Recce share price pushing higher?

Investors have been buying the company’s shares this morning after it announced results from its international SARS-CoV-2 (COVID-19) in-vivo studies.

According to the release, the results demonstrate positive activity of RECCE 327 (R327) and RECCE 529 (R529) against the SARS-CoV-2 virus in Syrian golden hamsters.

The release explains that the study consisted of five groups of eight hamsters, each receiving a different treatment. These were a placebo control of saline nasal wash, a low dose of R327, a high dose of R327, a low dose of R529, and a high dose of R529.

All animals were infected with SARS CoV-2 on day zero, with treatments administered twice daily on days one to five.

The results, in both R327 and R529, demonstrated a positive reduction in COVID-19 viral load compared to the placebo group. On day four the low R529 dose achieved a log reduction in the order of 1.5 logs and the high dose of R327 achieved a log reduction of 1.25 logs.

However, two of the five hamsters with COVID-19 infection on day six indicated adverse clinical symptoms in the high dose R529 group and were excluded from the study. Though, management believes this is a study specific anomaly, because R529 was routinely well tolerated at considerably higher intravascularly infused doses in-vivo.

What now?

Management believes this hamster study is the first indication of the potential for nasal administration of its anti-infective compounds, specifically when used against viruses.

A gold-standard ferret COVID-19 study is underway in the United States seeking to build upon this method of administration. This includes higher dose concentrations and two other forms of administration, only possible in larger species. The data from this study is expected in early 2021.

Though, management has warned investors to not get too excited just yet. It commented: “Whilst Recce is delighted by the results, further testing must be completed before R327 or R529 are confirmed as being safe or effective against the SARS-CoV-2 virus.”

More reading

• Here’s why the Bigtincan (ASX:BTH) share price is dropping lower
• ASX miners put on alert as the iron ore price crashes overnight
• 2 small cap ASX healthcare shares to watch
• Why the Althea (ASX:AGH) share price will be on watch today
• Why a2 Milk and these ASX shares have been smashed in 2020

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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The S&P/ASX 200 Index (Index:^AXJO) is expected to open strongly this morning but our best loved miners may not join the party after the iron ore price tumbled.

The price of the steel making ingredient on the Singapore Exchange crashed 6.9% to US$162.83 a tonne last night. It hit a record high of $176.20 a tonne only the day before.

This will put the Rio Tinto Limited (ASX: RIO) share price, BHP Group Ltd (ASX: BHP) share price and Fortescue Metals Group Limited (ASX: FMG) share price under a cloud.

Regulatory screws tightening on iron ore futures

The dramatic turnaround is blamed on Chinese market regulators. China is trying to control the speculative fervour gripping the iron ore market and is stepping up efforts to limit trading positions, reported Reuters.

The iron ore price on China’s Dalian exchange fell 4.8% to 1,055 yuan a tonne (US$161.23) on the news.

The Dalian Commodity Exchange moved to curb non-futures company members’ single-day position openings for iron ore futures to 2,000 lots from Tuesday’s session, according to Reuters.

The exchange operator is also proposing to reduce the limits on some iron ore trading accounts by more than half to better control risks.

Is iron ore driven by hot air or fundamentals?

Many experts believe the recent spike in the iron ore price is driven by speculators and not market fundamentals. China’s economy is outperforming the world as the country has about fully recovered from the COVID‐19 pandemic.

The Chinese government is using steel-intensive infrastructure construction projects to stimulate its domestic economy.

Dwindling supply helps ASX iron ore miners

Meanwhile, iron ore supply is under pressure as Brazilian mining giant Vale SA downgraded its production guidance for 2021 and 2022.

The approaching wet weather in Brazil and Australia could further hamper supply at a time when demand is picking up.

Steel makers have been calling for a regulatory probe into the iron ore price as their raw material costs have risen dramatically.

They will be happy with the new curbs, although it remains to be seen if the regulatory reigns can tame the commodity price for long.

Foolish takeaway

What’s interesting is that steel producers still seem to be making very good profits. This appears especially so for hot rolled coil (HRC). HRC is the predominant finished steel product and is the basis for many steel-based industrial products.

Citigroup commented in a note issued on Monday that HRC margins for steel mills are also high. This implies “a level of cost push that was not expected just a quarter ago”.

If iron ore prices were to fall dramatically, it will be interesting to see if other Chinese industries demand that steel mill operators cut prices as well.

More reading

• Why the Challenger (ASX:CGF) share price is one to watch today
• Experts pick the best ASX IPO of 2020
• 7 top ASX biomedical shares in 2020
• 3 ASX 200 shares that keep growing the dividend
• These ASX shares have more than doubled in 2020

Motley Fool contributor Brendon Lau owns shares of BHP Billiton Limited and Rio Tinto Ltd. Connect with me on Twitter @brenlau.

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 Australian share market is home to a number of world class healthcare companies with long, proud histories like CSL Limited (ASX: CSL).

In addition to this, it is home to a number of exciting healthcare companies that are just beginning to write their stories.

While there certainly is still a lot of work to do, two that have been tipped for big things are listed below. Here’s what you need to know about them:

Mach7 Technologies Ltd (ASX: M7T)

The first small cap healthcare share to look at is Mach7. It is a medical imaging data management solutions provider which uses software to create a clear and complete view of the patient. This helps inform diagnosis, reduce care delivery delays and costs, and ultimately improves patient outcomes. The company has also expanded its offering this year with the acquisition of Client Outlook. It is a leading provider of an enterprise image viewing technology. This acquisition increases Mach7’s total addressable market from US$0.75 billion to US$2.75 billion.

Analysts at Morgans are very positive on the company’s prospects and have been pleased with the acquisition and integration of Client Outlook. Morgans notes that the company’s solutions are well-placed in the current environment where demand for telehealth is growing fast. The broker has an add rating and $1.49 price target on the company’s shares.

Volpara Health Technologies Ltd (ASX: VHT)

Volpara Health Technologies is a growing healthcare technology company that offers cost-effective, mission-critical software that help radiologists deliver the highest-quality breast imaging services. Volpara’s software uses artificial intelligence imaging algorithms to assist with the early detection of breast cancer. According to management, the company currently has a US$750 million annual recurring revenue (ARR) opportunity in breast cancer screening. This compares to the ARR of NZ$19.9 million it recorded in the first half of FY 2021.

Morgans is also positive on Volpara. It has an add rating and $1.71 price target on the company’s shares. The broker has been pleased with its market share gains, growing SaaS revenue, and high gross margins.

More reading

• ASX 200 drops over 1%
• Why a2 Milk, Doctor Care Anywhere, McPherson’s, & Volpara are pushing higher
• Volpara (ASX:VHT) share price jumps 5% in morning trading. Here’s why
• The Volpara (ASX:VHT) share price is flat today despite announcement
• 2 exciting small cap ASX shares to watch closely in 2021

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 and recommends CSL, MACH7 FPO and VOLPARA FPO NZ. The Motley Fool Australia has recommended MACH7 FPO and VOLPARA FPO NZ. 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 Althea Group Holdings Ltd (ASX: AGH) share price will be on watch this morning. This comes after the company announced that it signed a supply and distribution agreement with a UK medical cannabis supplier.

At yesterday’s close of market, the Althea share price finished the day at 43 cents.

New agreement

Althea advised it has entered a contract with medicinal cannabis supplier Lyphe Group to supply and distribute its products in the United Kingdom, and the nearby island Jersey.

Under the terms, Althea will supply Lyphe with its medicinal cannabis products for non-exclusive distribution rights across the United Kingdom. Patients will have access to the products through The Medical Cannabis Clinics (TMCC). This will be dispensed through Lyphe’s own pharmacy, Dispensary Green.

In Jersey, TMCC recently opened up, thus allowing Lyphe to establish a new distribution structure. Althea will grant Lyphe exclusive distribution rights for Jersey, where it seeks to support thousands of medicinal cannabis patients.

Subject to customary conditions, the deal is set for an initial 12 months, with the option to extend further.

What did both parties say?

Althea CEO Mr Josh Fegan commented on the new partnership:

The supply and distribution agreement with Lyphe Group is an important milestone in Althea’s UK strategy, as the Company continues to increase its market share in the rapidly growing territory. The agreement with Lyphe Group creates supplementary growth for the Company, whilst further enhancing our brand awareness and standing in the marketplace. We look forward to the Althea brand continuing to have strong representation on Lyphe Group’s formulary in the UK and Jersey.

Lyphe Group CEO, Mr Dean Friday added to Mr Fegan’s comments:

It’s hard to believe that a few months ago none of the patients in Jersey were able to obtain critical medical cannabis treatments, instead they were driven to the black market. Now, not only does LYPHE Group have an operating clinic on the island, TMCC Jersey, it also has a fantastic pharmacy partner in Reid’s Pharmacy chain. We are pleased that Althea has come onboard with us as we work to ensure every patient has a consistent and affordable supply of medical cannabis.

About the Althea share price

The Althea share price has performed well over the past 12 months, rising by 22%.

The company’s shares reached a multi-year low of 15 cents in March, and a 52-week high of 67 cents in September.

More reading

• 5 top ASX cannabis shares in 2020
• Why the Althea (ASX:AGH) share price is sinking 6% lower today
• Althea (ASX:AGH) share price drops lower despite major announcement
• Cannabis share Althea (ASX:AGH) sinks 11% on capital raising and Aphria selldown
• Why Althea, Altium, Fortescue, & Retail Food Group are dropping lower

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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Earlier today I looked at a few shares that have more than doubled in value in 2020.

Unfortunately, not all shares have fared as well as these and some are nursing heavy declines this year.

Three beaten down ASX shares are listed below. Here’s why they are down in the dumps:

A2 Milk Company Ltd (ASX: A2M)

The a2 Milk share price has lost 24.7% of its value since the start of the year. Though, that really only tells you half of the story. The a2 Milk share price was a very strong performer for much of the year and was trading at an all-time high of $20.05 in July. Since then, it has fallen almost 50% to $10.77. This has been driven by weakness in the daigou channel, which is weighing heavily on its infant formula sales in FY 2021. So much so, the former market darling is expecting to post a notable reduction in both sales and earnings this year.

Bravura Solutions Ltd (ASX: BVS)

The Bravura share price has fallen 38.7% in 2020. Investors have been selling the shares of the provider of financial software products and services after COVID and Brexit headwinds impacted its performance negatively. While management is forecasting flat earnings in FY 2021, the market appears concerned by the significant weighting to the second half. Bravura’s chief executive officer, Tony Klim, explained: “…second wave UK lockdowns and stalling Brexit negotiations have increased uncertainty and are slowing the progress of pipeline opportunities in the UK. As a result, Bravura expects FY21 NPAT to be weighted approximately 80% to the second half of FY21.”

Treasury Wine Estates Ltd (ASX: TWE)

The Treasury Wine share price has sunk 43.6% since the start of 2020. The wine company’s shares have been sold off this year after it became a victim of the Australia-China trade war. Treasury Wine revealed that the Chinese tariffs on its wine exports are expected to hit its sales in the country hard. Given that China contributed 30% of its earnings in FY 2020, management is acting fast to limit the damage. This includes the reallocation of its Penfolds Bin and Icon range from China to other key luxury growth market. Though, it has warned that it could take upwards of three years for this plan to reach its full potential.

More reading

• Leading brokers name 3 ASX shares to sell today
• Why a2 Milk, Doctor Care Anywhere, McPherson’s, & Volpara are pushing higher
• ASX 200 down 0.85%: ANZ CFO resigns, tech shares tumble, iron ore jumps
• Why brokers slashed their A2 Milk (ASX:A2M) share price target
• What does China have to do with the a2 Milk (ASX:A2M) share price?

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended A2 Milk, Bravura Solutions Ltd, and Treasury Wine Estates 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 Zip Co Limited (ASX: Z1P) share price is on watch this morning as the buy now, pay later (BNPL) leader continues its capital raising spree.

Why is the Zip share price on watch?

Zip has now conducted a fully underwritten placement of new fully paid ordinary shares to institutional, sophisticated and professional investors.

The Aussie BNPL group managed to raise $120 million before costs at an issue price of $5.34 per share. That compares to a closing Zip share price of $5.11 after falling 1.2% lower in yesterday’s trade.

Eligible shareholders are being given the opportunity to participate in a Share Purchase Plan (SPP) and subscribe for up to $30,000 of new shares. The SPP shares will be on offer at the lesser of $5.34 and the volume-weighted average price in the five trading days up to and including 13 January 2021.

The Zip share price is one to watch as the group seeks to raise $30 million before costs under the SPP. The SPP is not underwritten and Zip may decide to increase this cap and accept oversubscriptions and/or scale back applications.

How is Zip looking to spend the money?

Zip has advised that 58% of its successful capital raising will be used to continue the company’s growth in the United States (US). The US represents an addressable retail market of $5 trillion with significant market share on offer.

It also advised that 10% of the capital, or $15 million, will be deployed in the UK to scale Zip’s operation and establish further infrastructure. An additional 24% of the raise, or $35 million, is set to support the company’s newly established New Markets division, which is focused on further acquisitions and growth initiatives.

It’s been a good year for BNPL shareholders in 2020, and Zip is no exception. The Zip share price is up 44.4% since the start of the year and 1,088.4% in the last 5 years.

Foolish takeaway

The Zip share price is one to watch in early trade as the BNPL continues with its capital raising plans. Zip currently has a market capitalisation of $2.8 billion, second in the ASX-listed BNPL companies behind the $32.3 billion Afterpay Ltd (ASX: APT).

More reading

• How to get the best out of the 2021 mining boom
• In a record-breaking year, here are some of the world’s most popular shares
• ASX 200 down 0.85%: ANZ CFO resigns, tech shares tumble, iron ore jumps
• Is the Zip (ASX:Z1P) share price a buy yet?
• Why shares are less risky now than 30 years ago

Ken Hall 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 has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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Respected fund manager Wilson Asset Management (WAM) has recently identified two ASX shares that it owns in its portfolio.

WAM operates several listed investment companies (LICs). Two of those LICs are WAM Capital Limited (ASX: WAM) and WAM Leaders Ltd (ASX: WLE).

There’s also one called WAM Research Limited (ASX: WAX) which looks at smaller businesses on the ASX.

WAM says WAM Research invests in the most compelling undervalued growth opportunities in the Australian market.

The WAM Research portfolio has delivered gross returns (that’s before fees, expenses and taxes) of 15.8% per annum since the strategy changed in July 2010, which is superior to the S&P/ASX All Ordinaries Accumulation Index return of 8.8% per annum.

These are the two ASX shares that WAM outlined in its most recent monthly update:

Infomedia Limited (ASX: IFM)

According to the ASX, Infomedia has a market capitalisation of $719 million.

WAM describes Infomedia as a leading provider of parts, services and data insights to the global automotive industry.

During November, the Infomedia secured a strategic contract with Ford Europe which had a value of $14 million over five years. The contract is for providing the next generation of Ford’s electronic parts catalogue in the European region. The fund manager explained the contract allows the ASX share to continue to focus on the parts and services element of the value chain, expanding usage of its integrated parts selling platform and taking advantage of the trend towards innovative technology solutions in the automotive industry.

Infomedia management has provided an aspirational target to grow revenue by more than 100% over the next five years, and the fund manager is positive about Infomedia’s ability to increase its current 0.5% market share in the global automotive dealership software market in the future. 

Looking at Commsec earnings projections and the Infomedia share price, it’s valued at 25x FY23’s estimated earnings.

Corporate Travel Management Ltd (ASX: CTD)

Corporate Travel has a market capitalisation of $2.3 billion.

WAM Research describes Corporate Travel as a business that provides customer service and business travel management solutions for companies.

In November, the company completed its acquisition of Travel & Transport, a US travel firm based in Nebraska for US$200 million. It was founded in 1946.

According to Corporate Travel, in the 2019 calendar year Transport & Travel generated US$2.8 billion of total transaction value (TTV) with pro-forma earnings before interest, tax, depreciation and amortisation (EBITDA) of US$29 million. Over 90% of the 2019 TTV was generated by Travel & Transport’s US business, with its European business contributing the balance. Over 60% of the 2019 calendar year TTV was generated from corporate air travel and approximately 30% from hotels.

In terms of clients, Travel & Transport’s customer mix has a focus on professional services and healthcare clients. The business has low customer concentration, with the largest customer representing only 2.5% of the 2019 calendar year’s air volumes and top 50 customers representing less than 45% of the air volumes.

The acquisition also comes with a business called Radius Travel, which operates a large hotel program. Corporate Travel said that Radius is one of the leading programs of its kind globally, with partnerships with prominent global hotel brands in 160 countries.

Management said that the acquisition has compelling strategic rationale, with scope for material combination benefits. It’s expected to add approximately 10% to earnings per share (EPS) on a pro-forma 2019 calendar year basis excluding synergies, and add approximately 30% to EPS including synergies.  

The fund manager said that Corporate Travel has employed an effective cost savings program, providing ample liquidity to navigate effects of the COVID-19 pandemic over the next two years.

WAM Research said that it’s positive on the outlook for Corporate Travel as recent vaccine developments have pulled forward the company’s future revenue profile.

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• Wilson Asset Management (WAM) thinks these 2 ASX shares are a buy
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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 Infomedia. The Motley Fool Australia owns shares of and has recommended Corporate Travel Management Limited. The Motley Fool Australia has recommended Infomedia. 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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