The Althea Group Holdings Ltd (ASX: AGH) share price is on the rise today. This follows an announcement that company’s subsidiary has entered into a cannabis beverage production agreement. Althea’s subsidiary, Peak Processing Solutions, has struck a deal with Collective Project Limited to manufacture canned, cannabis-infused beverages at its Ontario facility.

What does Althea do?

Althea is a supplier of medicinal cannabis. The company operates in the highly regulated medical cannabis markets across Australia, the United Kingdom, and Germany. It also has plans to expand into emerging markets throughout Asia and Europe. Althea’s Peak Processing Solutions subsidiary is an extraction and manufacturing business based in Canada. Work was recently completed on Peak Processing’s manufacturing facility and licensing of the facility with Health Canada is currently underway.

What does the new agreement mean?

The new agreement is an important milestone for Peak Processing Solutions and provides validation of the company’s industry-leading production capabilities. Manufacture under the agreement will commence once Peak Processing Solutions is granted its Health Canada Standard Processing Licence. Once licensed, Peak Processing Solutions will support clients with a suite of professional services including product and brand development, regulatory affairs, warehousing, and distribution.

Peak Processing Solutions aims to leverage Canada’s ‘Legalization 2.0’, which allows the sale of cannabis-infused edibles, drinks, nutraceuticals, and cosmetic products. The subsidiary is being positioned as a leading contract manufacturer for consumer brands looking to supply recreational cannabis and create cannabis infused products.

How are cannabis shares performing?

The Althea share price has more than doubled since March when it hit a low of 16 cents per share. In this respect, Althea has outperformed other ASX-listed cannabis companies. For example, Cann Group Ltd (ASX: CAN) has seen its share price increase 55% from its March low. Meanwhile, the Auscann Group Holdings Ltd (ASX: AC8) share price has increased 14% over the same period.

What is the outlook for the cannabis market?

Despite the coronavirus pandemic, the global medical marijuana market is predicted to grow by US$22.33 billion over the next four years, with a compound annual growth rate of 24%. In fact, cannabis sales in the United States surged in the wake of the pandemic. On 16 March, sales of recreational marijuana increased by 159% in California, 100% in Washington State, and 46% in Colorado, compared to the same day in 2019.

Australia’s cannabis market is forecast to grow from $52 million in 2018 to $1.2 billion in 2027. This would make it the fifth largest market in the world. The jump in value is the anticipated result of regulatory changes that have come into effect in recent years, lifting restrictions on the use of cannabis for certain purposes. Althea, Auscann, and Cann Group all stand to benefit from this burgeoning market.

More reading

• Why AusCann, Phoslock, Kogan, & Village Roadshow are dropping lower
• ASX cannabis shares see mixed recovery
• Why Cann, IAG, Monadelphous, & Webjet shares are storming higher

Motley Fool contributor Kate O’Brien 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 Althea share price lifts as cannabis market growth predicted appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/37WxI28

The Tyro Payments Ltd (ASX: TYR) share price is down by 4.17% this morning, after the payment solutions company released its latest transaction volumes. Data released by Tyro shows transaction volumes recovering in June, with volumes up 7% for the month to date compared to 2019.

Despite these numbers, the Tyro Payments share price has dropped to $3.68 in morning trade. 

What does Tyro Payments do?

Tyro Payments is a technology company that provides payment solutions and complementary business banking products. The company is Australia’s 5th largest merchant acquiring bank by number of terminals in the market (behind the four major banks). Used by more than 32,000 merchants in the first half of FY20, Tyro processed over $11.1 billion in transaction value, generating $117.3 million in revenue.

Tyro Payment’s technology platform enables debit and credit card payments. It can be integrated with point of sale systems and is capable of accepting alternative payment types such as Alipay. Traditionally focused on in-store payments, Tyro has recently expanded to eCommerce. Tyro Payments also offers loans in the form of merchant cash advances as well as merchant transaction accounts. In 1H FY20, Tyro Payments originated $37.4 million in loans and held merchant deposits totalling $9.7 million.

How has Tyro Payments been performing?

Tyro Payments was recording significant increases in transaction volumes in early calendar 2020, prior to the onset of the COVID-19 crisis. Transaction volumes increased 27% in January and 30% in February. With the onset of the pandemic in March, growth in transaction volumes fell to 3% as many merchants closed stores.

Transaction volumes fell 38% in April (to $0.911 billion from $1.468 billion) and 18% in May (to $1.285 billion from $1.562 billion) as the crisis took hold. More recent data, however, has shown strong signs of recovery. June volumes are up 7% to $1.016 billion from $0.946 billion over the same period in FY19. Thanks to early strong gains, Tyro Payments’ year-to-date transaction volumes are up 15% to $19.491 billion from $16.890 billion in FY19.

What is the outlook for Tyro Payments?

The company IPO’d last year at an issue price of $2.75 per share in the biggest float of 2019. The Tyro Payments share price dropped dramatically in the March correction, losing nearly 80% of its value from peak to trough.

Since then, however, the Tyro Payments share price has almost quadrupled from a low of 97 cents with shares currently trading at $3.68. This indicates investors are bullish on Tyro Payments’ prospects. As a result of the increase in share price, Tyro Payments entered the S&PASX 300 Index (ASX: XKO) in the latest rebalance.

More reading

• Consider these 2 ASX fintech shares before they take off
• The Tyro Payments share price was down 12% on Monday, here’s why
• Keep a watch on the Zip Co share price and 1 other ASX tech this June
• Why ASX, Domain, Tyro, & Wesfarmers shares are dropping lower
• Are Aussies still withdrawing cash like crazy?

Kate O’Brien has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Tyro Payments. 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 Tyro Payments share price slumps despite strong transaction volumes appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/3hRANEW

At lunch on Monday the S&P/ASX 200 Index (ASX: XJO) has recovered from a poor start and is trading roughly flat. The benchmark index is currently at 5,942.8 points.

Here’s what has been happening on the market today:

Altium update disappoints.

The Altium Limited (ASX: ALU) share price is sinking lower today after the electronic design software company warned that it was likely to fall short of analyst consensus estimates in FY 2020. This is because the pandemic is impacting its performance during the latter weeks of the financial year. This is historically a strong part of the year for Altium.

Metcash results.

The Metcash Limited (ASX: MTS) share price has edged lower today after releasing its full year results. In FY 2020 Metcash delivered a 2.9% increase in revenue to $13 billion and a 1.8% decline in underlying earnings before interest and tax (EBIT) to $324.2 million. On the bottom line, the company posted a reported loss after tax of $45.9 million due largely to non-cash impairment charges to goodwill. Excluding these charges, profit after tax would have been roughly flat at $209.7 million

SEEK’s encouraging update.

The SEEK Limited (ASX: SEK) share price is trading slightly higher after the release of a trading update. The job listings company’s update revealed that its weekly billings have been improving since falling heavily at the peak of the pandemic. It also provided its expectations for the full year. It expects revenue of approximately $1,575 million and earnings before interest, tax, depreciation, and amortisation (EBITDA) of ~$410 million in FY 2020.

Best and worst ASX 200 shares.

The Austal Limited (ASX: ASB) share price has been a standout performer on the ASX 200 on Monday. It is up 9% to $3.67 after revealing that the U.S. government will invest US$50 million into its U.S. business. The Altium share price is the worst performer on the ASX 200 today with a disappointing 10% decline after its update.

More reading

• Here are 3 ASX 200 shares with dividend yields over 8%
• Why Austal, James Hardie, Northern Star, & Ramelius are storming higher
• Is the Domino’s Pizza share price a good buy at $68?
• These 5 ASX shares saw the biggest losses last week
• A $73m boost sends the Austal share price to the top of the ASX 200 today

James Mickleboro owns shares of SEEK Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Altium and Austal Limited. The Motley Fool Australia has recommended SEEK 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.

The post ASX 200 flat: Altium update disappoints, Metcash posts full year loss appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/2V3N3Zx

The Domino’s Pizza Enterprises Ltd. (ASX: DMP) share price rocketed 9.0% to a new, 52-week high of $68.32 last week. This was before falling back slightly in morning trade today to $67.99 at the time of writing. 

Investors have been bullish on the Aussie food group in recent weeks but is there still good value in Domino’s shares?

Why the Domino’s Pizza share price hit a 52-week high

You’d have to be pretty happy as a long-term investor in this Aussie food group. The Domino’s Pizza share price has climbed 29.9% in 2020, 73.8% in the last 12 months and 88.0% over the last 5 years.

Given we’ve just seen a steep bear market followed by a slingshot recovery, those who bought and held Domino’s shares would be sitting on a tidy profit.

I think a strong delivery model has been a big factor in Domino’s being able to achieve a new, 52-week high. Even during the height of coronavirus restrictions, Domino’s was still able to maintain its operations through its delivery and takeaway options.

I feel communication has also been key, with Domino’s providing regular updates throughout COVID-19. The company has restaurants across Australia, New Zealand, Asia and Europe which were all subject to different trading restrictions.

In its last announcement on 24 April, Domino’s advised that all stores “continue to adapt to changes in customer behaviour, community expectations, various support measures and local trading conditions”. 

I think the Domino’s Pizza share price has benefitted greatly from consistent, same-store Australian sales over recent months. This has offset lower revenues from France and New Zealand where stores were forced to close temporarily.

There’s also the company’s strong balance sheet that is likely to be playing a part in its recent share price growth. Domino’s has no short-term debt, with its existing facilities due for renewal in the first half of FY 2023.

This leaves the company in an enviable position to remain focused on its strategy during these turbulent times.

I believe another strong factor behind the strong performance of the Domino’s Pizza share price has been the company reaffirming its medium-term outlook for new store openings, same-store sales and net capex.

Is Domino’s good value at $68?

The Domino’s share price closed at a new, 52-week high of $68.32 per share on Friday afternoon and is now trading at $67.99. 

Many investors are reluctant to buy companies at 52-week highs which is understandable. However, I think this reflects a short-term investing mindset.

If you really want to invest in Domino’s Pizza for the long term, then today’s share price or next week’s shouldn’t matter.

Instead, I think it’s preferable to consider the opportunities for the company’s expansion over the coming decades. Personally, I’m not bullish enough to be buying Domino’s shares at their current valuation.

Having said that, I don’t think a 52-week high should necessarily deter you from buying if you’re holding for the long term.

More reading

• Here are 3 ASX 200 shares with dividend yields over 8%
• ASX 200 flat: Altium update disappoints, Metcash posts full year loss
• These 5 ASX shares saw the biggest losses last week
• A $73m boost sends the Austal share price to the top of the ASX 200 today
• These 5 ASX shares were last week’s top performers

Motley Fool contributor Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Domino’s Pizza Enterprises 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.

The post Is the Domino’s Pizza share price a good buy at $68? appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/2V3N2Vt

The S&P/ASX 200 Index (ASX: XJO) has returned to its recent strong form, gaining 1.6% last week. Early sales data for May boosted the market on Friday, alongside positive sales results from retailers. According to the ABS, retail sales rose 16.3% in May, with large rises in spending on clothing, footwear, personal accessories, cafes and restaurants. 

The technology sector also contributed to gains with the All Technology Index (ASX: XTX) up 1.75%. The resources sector lost ground during the week, with gold miners suffering as investors adjusted risk appetites.

Here we take a look at the 5 ASX shares that sustained the biggest share price losses last week.

Pilbara Minerals Ltd (ASX: PLS)

The Pilbara Minerals share price fell 14.5% last week to close the week at 26.5 cents. The lithium miner was removed from the S&P/ASX 200 late the previous week as part of S&P’s quarterly rebalance. 

Lithium prices have continued their downward trend, hitting a fresh low in June as Chinese demand remained subdued despite domestic businesses returning to work. Lithium is an integral component of batteries for electric vehicles. Demand for lithium is expected to pick-up in the second half of 2020 as increased adoption of electric vehicles drives increased demand for battery components. 

Pilbara Minerals owns the Pilangoora Lithium-Tantalum project, which has a 23 year mine life. A multi-stage mine expansion is planned with stage 1 currently in production. The stage 2 phased expansion study is nearing completion. 

The company is currently moderating production in response to soft market conditions. An extension of China’s electric vehicle subsidy program is expected to boost the lithium-ion battery sector and improve market conditions in the medium to long term. 

Mayne Pharma Group Ltd (ASX: MYX)

The Mayne Pharma Group share price dropped 13.6% last week with shares finishing the week at 35 cents. This is the second week in a row that Mayne Pharma has been amongst the worst performers on the ASX. There was no news out of the pharmaceutical company last week to prompt the drop in price, however Mayne Pharma was removed from the ASX 200 late the previous week as part of the quarterly rebalance.

The pharmaceutical company had a disappointing first half performance which saw revenues decline 17%. Earnings before interest, tax, depreciation and amortisation (EBITDA) fell 47% to $34.6 million. A net loss after tax of $17.5 million was reported driven by lower earnings and restructuring costs. 

Mayne Pharma has faced strong competition on its key generic products. The US generic market has been challenging with aggressive contracting behaviours driving price deflation. The company has been focused on reducing its cost base and rationalising its generic portfolio. Annualised savings of $20 million have so far been recorded.

Fortescue Metals Group Limited (ASX: FMG)

The Fortescue Metals share price tumbled 6.9% last week to close the week at $13.79. Despite last week’s drop, the Fortescue Metals share price is up 93% from its March low. Last week Fortescue announced an emissions reduction goal to reach zero net operational emissions by 2040. This goal includes a reduction in emissions in existing operations by 26% from 2020 levels by 2030. 

The miner is a core supplier of iron ore to China, where steel production increased 1.3% year on year in the 4 months to 30 April 2020. Fortescue has reported strong demand for its products with steel inventories drawn down as economic activity recovers. The iron ore price has remained fairly resilient throughout the pandemic. 

As at 31 December 2019, Fortescue generated net profit after tax of (NPAT) of US$17 billion. The company used US$9 billion of capital for debt repayment and US$6 billion for dividends. Fortescue is targeting a gearing ratio of 30% to 40% of gross debt. Since FY16, the company has reduced its gross gearing ratio from 45% to 24%. 

Sydney Airport Holdings Pty Ltd (ASX: SYD)

The Sydney Airport share price dropped 6.3% last week to finish the week at $6.05. The price drop was at least partially prompted by the May air traffic performance numbers, which were released last Friday. Total passenger traffic in May was 92,000 passengers, down 97.4% on the prior corresponding period. 

Some 29,000 international passengers passed through Sydney Airport in May, down 97.7%. Domestic passengers totalled 62,000, a decrease of 97.2% on the prior corresponding period. The decrease in passenger traffic is expected to persist until government travel restrictions are eased. 

In April, Sydney Airport secured $850 million of additional bank debt facilities and announced no half year distribution would be paid. Sydney Airport has also implemented a range of cost reduction activities and is targeting a 35% reduction in operating costs for the 12 months from 1 April 2020. 

Star Entertainment Group Ltd (ASX: SGR)

The Star Entertainment Group share price fell 6.1% last week to close the week at 6.1%. The was no news out of Star Entertainment last week to prompt the fall, however fears around a second wave of COVID-19 infections may have spooked investors. 

Earlier this month, Star Entertainment announced the reopening of Star Sydney on a limited basis. Private gaming rooms have been reopened in addition to a number of food and beverage venues. The reopening is limited to up to 500 loyalty club members on an invitation only basis. Additional visitation is permitted across other areas including hotels and fine dining restaurants with up to 50 seated customers. 

Group operating expenses are expected to be around $20 million for the month of June. This is above the $10 million advised while restrictions remain in place. The incremental increase in costs is largely comprised of employee costs related to the staged reopening of Sydney and Queensland venues. 

Although venues are reopening, restrictions mean that business volumes will be significantly below normal levels. Star Entertainment is focused on conservatively managing the business as it prepares for a return to more normal conditions as restrictions unwind.

More reading

• A $73m boost sends the Austal share price to the top of the ASX 200 today
• These 5 ASX shares were last week’s top performers
• Is there a better buy than JB Hi-Fi shares today?
• Is the a2 Milk share price a buy after falling nearly 5% on Friday?
• The NAB share price has fallen 24%. Should you buy?

Motley Fool contributor Kate O’Brien owns shares of Mayne Pharma Group 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.

The post These 5 ASX shares saw the biggest losses last week appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/37OkzYN

The Austal Limited (ASX: ASB) share price surged after the US government agreed to pump US$50 million ($73 million) into the company’s US shipyard.

The Austal share price jumped 7.7% to $3.62 in morning trade and is the best performer on the S&P/ASX 200 Index (Index:^AXJO).

Gold miners are in distant second and third places. The Saracen Mineral Holdings Limited (ASX: SAR) share price jumped 4.9% to $4.95 and Northern Star Resources Ltd (ASX: NST) added 4.5% to $13.62.

ASX COVID-19 winners

While precious metals are in favour in this risk-off environment, Austal is the real standout as it is also a big COVID-19 beneficiary.

The US Department of Defence (DoD) signed a Defense Production Act Title III Agreement with Austal USA. The agreement is part of the US government’s national response to COVID-19 to maintain, protect and expand critical domestic shipbuilding and maintenance capacity.

Austal will likely match the DoD’s investment to take the total capex budget to around US$100 million.

Austal catches coronavirus stimulus

While details on how the cash will be spent is yet to be worked out with the DoD, management intends to “commence investment in the development of additional capacity for steel naval vessel construction”.

The US government funding is also aimed at protecting and creating jobs in Mobile, Alabama, where the local economy is hit hard by the coronavirus pandemic.

Austal is promising to release more details in the coming months, but it’s easy to see why investors are excited – and it’s not only because of the cash amount.

More than money

The large financial commitment by the US government shows how important Austal is to the US Navy. This is an important signal after Austal missed out on the Guided-Missile Frigates FFG(X) contract, which was awarded to a competitor.

Austal is one of my top picks in the industrials space as its earnings are more resilient to the global COVID-19 recession.

Another ASX stock to for your watchlist

Interestingly, Austal isn’t the only ASX stock that is likely to benefit from US government funding. I believe that rare earths miner Lynas Corporation Ltd (ASX: LYC) is in the box seat to get a cash injection from Uncle Sam.

There’s speculation that Lynas might be overlooked due to intense lobbying by Lynas’ US competitors for its government to back local companies.

But Lynas is the only non-Chinese miner that have rare-earths operations of any significance, and I think it will get a piece of the action.

The US is trying desperately to develop its own supply of rare earths to ease its dependence on China.

Rare earths are used in a range of critical equipment, including weapons and electronics.

More reading

• These 5 ASX shares saw the biggest losses last week
• These 5 ASX shares were last week’s top performers
• Is there a better buy than JB Hi-Fi shares today?
• Is the a2 Milk share price a buy after falling nearly 5% on Friday?
• The NAB share price has fallen 24%. Should you buy?

Brendon Lau owns shares of Austal Limited and Lynas Limited. Connect with me on Twitter @brenlau.

The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Austal 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.

The post A $73m boost sends the Austal share price to the top of the ASX 200 today appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/2B06w6i

While many have been looking the other way, a handful of ASX fintechs have been building the foundations of great companies. Payment processing is one area where consumer behaviour is changing and the trend has only been accelerated by COVID-19. Many places I shop at today are already cashless. Others have a stated preference for contactless payments. 

This is an area already crowded by the big banks. The Commonwealth Bank of Australia (ASX: CBA) prides itself on being the nation’s largest digital payments processor. Nonetheless, small Aussie fintech startups are carving out niches in these markets.

Why take on the banks?

Tyro Payments Ltd (ASX: TYR) is a very impressive payment processing fintech. It entered a market dominated by the banks and has become Australia’s largest EFTPOS provider of all authorised deposit-takings (ADI) outside of the big 4 banks.

From 25 March the company has reported their transactions weekly for transparency during the pandemic. Tyro’s Trading Update 7 showed April transactions were down by 38% against the prior comparable period (PCP), while  Trading Update 11 showed May down by 18%.

However, for the financial year to date, the company is up by 16% on the PCP. In addition, the company reported a compound annual growth rate (CAGR) of transactions of 27% in its H1 FY20 presentation.

Alternate revenue streams

As a fintech, Tyro provides a business banking service including fee-free, interest-paying accounts. Moreover, the company provides merchant financing in the form of small business loans with a simple fee structure.  Although it has yet to report full-year earnings, its H1  FY20 earnings report was very impressive.

I think this fintech is undervalued on the market today and could be one of the 10 baggers of the next decade. 

Profitable charity 

Pushpay Holdings Ltd (ASX: PPH) saw its share price rise by around 18% last week. The company provides simplified digital payment processing for non-profit organisations, faith-based communities and education providers. Its software-as-a-service (SaaS) donor management system includes donor tools, finance tools and a custom community app.

Approximately 98% of its customers are in the USA. Which means it is an integral player in one of the world’s biggest faith-based markets. Although only listed since 2016 the company has already shown significant growth. Its gross sales have increased by 41.8% per year, on average, over the past 4 years. In addition, it has produced a return on equity of over 30% for the past 2 years. 

I think this is a great niche fintech addressing the problem of taking donations digitally. While this company has a significant price-to-earnings (P/E) ratio I believe it is a great company at a reasonable price. 

Foolish takeaway

The ASX fintech sector is one of the most vibrant in the world. I think these 2 companies are likely to enjoy share price growth in the near to medium term. They also lack the level of inflation that we see in the buy now pay later market.

More reading

• The NAB share price has fallen 24%. Should you buy?
• Where to invest $10,000 into ASX shares right now
• ASX share price winners and losers of last week
• ASX 200 Weekly Wrap: ASX back in the green
• Top brokers name 3 ASX 200 shares to sell next week

Daryl Mather has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Tyro Payments. The Motley Fool Australia owns shares of and has recommended PUSHPAY FPO NZX. 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 Consider these 2 ASX fintech shares before they take off appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/3eqkzAS

The A2 Milk Company Ltd (ASX: A2M) share price is trading lower today after responding to media speculation.

At the time of writing the infant formula and fresh milk company’s shares are down 2% to $18.19.

What is the speculation?

Over the weekend, The Australian speculated that a2 Milk might be looking to put its hefty cash balance to use with an acquisition.

According to the report, the company could be a frontrunner in the competition to buy New Zealand-based Mataura Valley Milk for NZ$400 million.

Mataura Valley Milk is a nutritional company which sources its produce from one of the finest grass-producing regions in the world – Southland, New Zealand.

Its products include infant and toddler nutritional powders, skim and whole milk powders, and instant fortified whole milk powders. Importantly, it holds a China Food and Drug Administration (CFDA) registration.

Is a2 Milk Company acquiring Mataura Valley Milk?

During the first half, a2 Milk generated operating cash flow of NZ$160.6 million. This left it with a closing cash balance of NZ$618.4 million.

Although some of these funds have since been spent increasing its stake in Synlait Milk Ltd (ASX: SM1), I suspect it will still have well over NZ$700 million of cash on its balance sheet at the end of FY 2020. Which is more than enough to fund this potential acquisition.

However, this morning the company’s CEO, Geoffrey Babidge, was remaining tight-lipped on the speculation.

He responded to the report by confirming that a2 Milk “has had, and continues to have, various discussions with a number of parties in relation to potential strategic options relating to participation in manufacturing capacity and capability.”

The company will continue to keep the market informed in accordance with its disclosure obligations. This includes if and when any such discussions were to reach a conclusion.

More reading

• Is the a2 Milk share price a buy after falling nearly 5% on Friday?
• Where to invest $10,000 into ASX shares right now
• My ASX share for the week
• Top brokers name 3 ASX 200 shares to buy next week
• How to become a millionaire in 25 years with $20 a day

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of A2 Milk. 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 Is A2 Milk Company going to acquire another infant formula company? appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/37RcuCt

The S&P/ASX 200 Index (ASX: XJO) gained 1.6% last week, returning to its recent strong form. Early sales data for May boosted the market on Friday, alongside positive sales results from retailers. According to the ABS, retail sales rose 16.3% in May, with large rises in spending on clothing, footwear, personal accessories, cafes and restaurants. 

The technology sector also contributed to gains with the All Technology Index (ASX: XTX) up 1.75%. Afterpay Ltd (ASX: APT) hit new heights, climbing another 12% over the week, while Altium Limited (ASX: ALU) shares were up 10%.

Here we take a look at last week’s top 5 performers. 

Clinuvel Pharmaceuticals Limited (ASX: CUV)

The Clinuvel Pharmaceuticals share price climbed 21.3% last week to finish the week at $27.30. Shares in the healthcare company have more than doubled in value since March, far exceeding broader market gains – by comparison, the ASX 200 is up around 30% since its March low. 

Clinuvel has spent 15 years developing its product, Scenesse, the world’s first systematic photoprotective drug. The drug is used to treat Erythropoietic Protoporphyria (EPP), a metabolic genetic disorder which causes an intolerance to light. Clinuvel’s drug Scenesse provides EPP patients with photoprotection, providing them with the ability to lead a “normal” life.

Clinuvel had its first full year of commercial operations and first year of profits in FY17. Profits rose in FY18 and FY19, with Clinuvel recording its 8th consecutive half year profit in the period ending December 2019. Earnings per share increased from 18 cents in 2017 to above 30 cents in 2019. 

The company is debt free and has cash and equivalents of over $60 million, providing it with an attractive balance sheet. Clinuvel’s strategy is to specialise in treatments for unmet needs in rare genetic indications. Beyond 2020, it is seeking to evolve into a diversified pharmaceutical company providing treatments for multiple indications.

Orora Ltd (ASX: ORA)

The Orora share price rose 20.7% last week to close the week at $2.31. Orora provides packaging and visual communication solutions, designing and manufacturing products such as bottles, cans, boxes, paper and signage. 

Orora completed the sale of its Australasian Fibre business for $1.73 billion in April. Net proceeds after tax and costs are approximately $1.55 billion. The sale has prompted a strategy review of the continuing businesses, with an update expected later this calendar year. 

As a result of the sale, Orora has surplus capital, which is being returned to shareholders – $600 million will be paid out via a special dividend of $450 million and a $150 million capital return. 

Thanks to the proceeds from the Fibre sale, Orora is operating with little to no debt, giving it a strong position in the current economic environment. The company will pursue potential growth investment opportunities should the right opportunity present. In the absence of such an opportunity, the company will consider a further return of excess capital to shareholders. 

Healius Ltd (ASX: HLS)

Healius shares gained 19.8% last week, finishing the week at $3.03, as the healthcare company announced the sale of its medical centres business. The sale will take place at an enterprise value of $500 million, with proceeds used to reduce net debt and free up capital for investment. 

The medical centres sale is consistent with Healius’ strategy of simplifying its portfolio and focusing on its diagnostics and day hospital business. Healius will continue to operate pathology collection centres and imaging centres located within the medical centres under long term leases. 

In April, Healius noted early signs of recovery and stabilisation in its revenues following an initial downturn resulting from COVID-19. Since then, Healius has experienced good growth in its diagnostics business, supported in part by increased COVID-19 testing. As business returns to normal levels, Healius is looking to reset its cost base by entrenching a number of short-term cost reductions undertaken as a result of COVID-19. 

Appen Ltd (ASX: APX)

The Appen share price climbed 14.7% over the week to close at $33.83. Appen shares are now up 97% from their March low. There was no news out of Appen to prompt the rise in share price, however the artificial intelligence company has been a favourite of investors over the past couple of years, in which time its share price has tripled. 

Appen develops human-annotated training data for machine learning and artificial intelligence. The high growth artificial intelligence market relies on high-quality training data. Obtaining this data is identified as a major challenge. Appen’s leading technology and track record of quality and reliability position it strongly in this market. 

Appen has a strong record of revenue and earnings growth. Revenue increased by a compound annual growth rate of 59% between 2015 and 2019. Underlying earnings before interest, tax, depreciation and amortisation (EBITDA) has grown at a compound annual rate of 64% over the same period. The company expects the COVID-19 pandemic to have a negligible impact on outlook based on currently available information. Full year underlying EBITDA for the year to 31 December 2020 is expected to be between $125 million and $130 million. 

Viva Energy Group Ltd (ASX: VEA)

Viva Energy shares gained 14.2% last week to close the week at $1.805. Shares in Viva surged on Tuesday when the energy company provided better than expected earnings guidance. Group underlying EBITDA for 1H2020 is expected to be in the range of $257.5 million to $287.5 million, compared to $297.4 million in 1H2019. 

COVID-19 resulted in a drop in fuel volumes sold in April and May, with petrol and jet fuel most impacted. Diesel and petrol volumes are expected to recover more quickly than jet fuel, with signs this recovery has begun. Weaker global demand growth and increased production is weighing on gasoline margins. Global demand for oil products will take time to restore as restrictions are removed and economies recover. 

Viva has managed the impact of COVID-19 by deferring projects to reduce capital costs and scaling back airport refuelling operations to reflect significantly reduced requirements. Capital expenditure for FY20 is expected to be between $145 million and $180 million, compared to $161 million in FY2019 and $242 million in FY2018. 

More reading

• These 5 ASX shares saw the biggest losses last week
• A $73m boost sends the Austal share price to the top of the ASX 200 today
• Is there a better buy than JB Hi-Fi shares today?
• Altium share price sinks 7% lower after FY 2020 trading update
• Is the a2 Milk share price a buy after falling nearly 5% on Friday?

Kate O’Brien has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Altium. The Motley Fool Australia owns shares of AFTERPAY T FPO and Appen Ltd. 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 These 5 ASX shares were last week’s top performers appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/3dheGV6

The Transurban Group (ASX: TCL) share price has edged lower this morning despite the company providing a positive update. It is down by 2.18% at the time of writing.

Gradual recovery in traffic volumes

Pleasingly, Transurban reported today that it has seen a progressive recovery in traffic volumes across Australia. This recovery began in mid-April and correlated with the easing of government restrictions as the impact of coronavirus improved.

There had previously been a sharp decline in traffic numbers from early March due to COVID-19 restrictions. Transurban noted today that declines in traffic volumes from the commercial segment have been less severe.

Despite the positive news, Transurban pointed out that traffic volumes in the near future will still be highly impacted by any further government responses to COVID-19. This will be especially significant in the event of subsequent waves of the pandemic. 

Recovery of traffic volumes in North America has been slower than in Australia. This is due to the higher impact of COVID-19 restrictions in this market, particularly in the greater Washington Area.

Global project update

In Australia, Transurban advised that its NorthConnex initiative located in Northern Sydney is on track to open in the first quarter of FY2021. Also in the Sydney area, the M8 motorway is expected to open during this quarter. The M8 will connect with the M4-M5 Link, which is currently under construction, as well as the M6 Extension which is in procurement.

In North America, construction on both the Fredericksburg Extension and 495 Northern Extension projects continues to progress well.

Final FY2020 dividend of 16 cents per share declared

Transurban today declared a 2H FY2020 distribution of 16.0 cents per share. This takes Transurban’s overall FY2020 dividend distribution to 47.0 cents per share which is down on its FY2019 distribution of 60 cents per share.

Strong liquidity position

Despite the challenging conditions, Transurban commented that it remains in a strong liquidity position. It believes that the company has sufficient funds on its books  to meet any capital requirements and debt refinancing obligations that may arise before the end of FY 2021.

Transurban’s overall cash position has improved since the height of the crisis on the back of rising traffic volumes. The company further noted that this now places it in a stronger position to capitalise on any emerging opportunities.

Can the Transurban share price push higher?

The Transurban share price has recovered fairly strongly since its March lows at the peak of the coronavirus crisis. With a 2.18% share price decline so far today, it is still trading below its 12-month peak in February, despite the positive news release. It will be interesting to see if the Transurban share price can push higher in the weeks ahead.

More reading

• ASX 200 Weekly Wrap: ASX back in the green
• What is the price/earnings (p/e) ratio?
• 5 ASX dividend shares that could potentially smash term deposits
• How the ASX 200 can help first home buyers save for a deposit
• 3 ASX dividend shares to buy to beat low interest rates

Motley Fool contributor Phil Harpur has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of Transurban Group. 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 Transurban share price falls despite a positive market update appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/2NogjWl