Tag: Motley Fool Australia

The Secos Group Ltd (ASX:SES) share price soared more than 250% in early trade after completing a commercialisation deal with Woolworths Group Ltd (ASX:WOW) for its compostable bag range. The Secos share price has since settled to 10 cents per share, putting it up by 87.50% so far today.

Woolworths selects Secos as supplier

In an announcement released earlier today, Secos informed the market that Woolworths has selected the company to supply 2 certified, compostable bin liners to be stocked in 86 of Woolworths’ Eco stores.

The initial rollout, expected to occur in July, will see Secos supply its 8L kitchen cady bag and 36L bin liners to the eco stores, with a view to expand supply through the broader Woolworths retail network. Secos’ management highlighted the importance of today’s announcement as a potential launchpad to expand the company’s market share in grocery and convenience stores.

Secos will be launching its Woolworths certified compostable bin liners under the ‘MyEcoBag’ brand and will be looking to expand this range for other compostable bag offerings.

What does Secos do?

Secos is an Australian-based company that develops and manufactures sustainable packaging materials. The company has a significant portfolio and intellectual property around the formulation and production of compostable resin, film and bags. Secos has sales offices in Australia, the US, China, Malaysia and Mexico with distributors in Europe, Asia, the Middle East and Africa.

Secos is well positioned to address the growing global trend towards sustainable packaging. The company boasts a range of certified industrial compostable and home compostable biopolymer resins. These resins can be used for a wide variety of applications such as bin liners, kitchen caddy bags and dog waste bags.

The company’s aim is to replace traditional single use plastic packaging and traditional plastic bags. According to Secos, the company’s compostable products will allow household food waste to be transferred and transformed into fertile mulch at organic treatment stations.

In May this year Secos was awarded a contract from the City of Melville worth $600,000 to provide over 42,00 homes with compostable kitchen tidy bags to facilitate food waste diversion.  

About the Secos share price

The Secos share price soared more than 250% in early trade after hitting an intraday and 52-week high of 20 cents. The company’s share price has been sold-off since and is currently trading 87% higher for the day at around 10 cents. Secos shares have returned more than 146% in the past year, and its current market capitalisation sits around $44 million.

More reading

• 3 dependable, blue chip ASX shares for uncertain times
• Is it possible Aussies are saving too much?
• Why it’s time to rotate out of JB Hi-Fi share price and these popular ASX stocks: Macquarie
• My bull and bear case for the ASX share market
• These ASX shares are swept up by the new Victorian COVID-19 lockdown

Motley Fool contributor Nikhil Gangaram has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of Woolworths 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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Today, the De Grey Mining Limited (ASX: DEG) share price is down 5.76% to $0.87, despite a positive announcement from the miner revealing high gold recoveries at its Hemi site.

What was in the announcement?

The announcement detailed positive metallurgical testing of the composites from two diamond drill holes at the company’s Hemi site. De Grey used two processes to extract gold from the composites, one which used a conventional carbon in leach method and one which used a pressure oxidation method.

The processes were focused on the Brolga section of the company’s Hemi site. The average grade of all samples at Brolga was 1.5 grams of gold per tonne.

The overall gold recovery from the two metallurgical processes combined was 96.3%, however, the company still has three additional composites which are still undergoing testing. The grade of the composite tested was 2.62 grams of gold per tonne.

Commenting on the result, De Grey managing director Glenn Jardine said:

The gold recovery achieved in the initial metallurgical testwork of oxide, transition and fresh mineralisation at Brolga is very encouraging. The testwork significantly de-risks the potential development of Hemi as a Tier 1 gold project in a Tier 1 jurisdiction. The testwork flowsheet used for Hemi can also be applied to De Grey’s other regional resources in the Mallina Basin.

Hemi is a growing resource and contains a combination of oxide, transitional and fresh sulphide mineralisation. We will continue to increase our understanding of the scale and metallurgical properties of each of these domains across the deposit with ongoing testwork.

Jardine also highlighted that the company’s Hemi mine location – which is situated 60 kilometres from Port Hedland and along major transport, gas and power corridors – is a major advantage for a Tier 1 gold resource project.

About the DeGrey Mining share price

De Grey Mining is a West Australian-based miner that conducts exploration and development activities for gold and base metals.

In June, De Grey announced it had expanded its footprint at Hemi with gold discovered at grades of up to 10.2 grams of gold per tonne. It also announced a near surface gold discovery in the Aquila zone of its Hemi site, with further drilling currently underway.

In April, De Grey Mining raised $31.2 million at $0.28 cents per share.

At the end of the March quarter, the company’s cash balance increased by $1,973,000 to $9,919,000. The company spent $2,668,000 on exploration activities in the March quarter. 

The DeGrey Mining share price is up 2,130% from its 52 week low of $0.039 cents. It has risen 1,640% since the beginning of January, and 1,081% since this time last year.

More reading

• Why De Grey, Resolute, Suncorp, & Webjet shares are dropping lower
• Why De Grey, Fisher & Paykel Healthcare, Perseus, & PolyNovo shares are charging higher
• $10,000 invested in De Grey Mining shares in January would be worth $165,000 today
• De Grey Mining share price up 25%, hitting 9-year high

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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The Etherstack PLC (ASX: ESK) share price surged more than 45% in early trade today. This was before settling back to a more modest rise of around 19% at the time of writing. The increase came following the company’s release of a promising trading update.   

What did Etherstack announce?

Earlier today, Etherstack released an unaudited update on the company’s performance for H1 FY20. It also published a report detailing its operations for the fourth quarter of FY20. The update was highlighted by revenue growth of 40% for the first half of 2020 (on the prior corresponding period). According to the company, revenue growth was fuelled by a broad mix of equipment sales, support, technology licencing and royalty revenues.

Etherstack also reported strong, positive operating cashflow, generating US$1.354 million in net cash from its operations in the first half of 2020. The company posted cash on hand of US$1.4 million from sales of US$2.2 million for the quarter ending 30 June 2020.

The ASX tech also noted the combination of new and expansion orders as driving Etherstack’s recurring revenue growth. The trading update further highlighted various strategic and expansion wins the company was able to achieve.

What does Etherstack do?

Etherstack is a wireless technology company that specialises in the development, manufacturing and licencing of radio technologies. The company’s technology allows safety-grade, ‘push-to-talk’ capabilities that can be implemented for radio communications on the 4G and 5G networks. As a result, Etherstack’s technology is focused on servicing the public safety, defence, utilities and transportation sectors.

In late June, Etherstack made headlines after entering a strategic, multi-year agreement with electronics giant Samsung. The deal will allow Etherstack to generate revenue by supplying Samsung customers with next generation, ‘mission-critical, push-to-talk’ technology. The deal will span 2 years, with an option to extend it for another 2 years.

The Etherstack share price

The Etherstack share price initially surged to $3.70 following announcement of the Samsung deal on 1 July before being sold off. Following today’s announcement, the company’s shares rallied to $1.06 before falling back to 84.5 cents at the time of writing. This was after closing yesterday’s session at 71 cents per share. 

More reading

• Why Etherstack and these shares were the most traded on the ASX last week
• Etherstack share price skyrockets 900% on Samsung partnership

Motley Fool contributor Nikhil Gangaram 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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One area of the market that I continue to be particularly positive on is the tech sector.

At this side of the market there are a good number of shares that have been smashing the market over the last few years. The good news is that I don’t believe this outperformance is going to end any time soon.

Here’s why I think these ASX tech shares could be long term market-beaters:

Appen Ltd (ASX: APX)

Over the last few years Appen has cemented its position as the global leader in the development of high-quality, human annotated datasets for machine learning and artificial intelligence (AI). It has a global crowd of more than 1 million skilled contractors and the industry’s most advanced AI-assisted data annotation platform.

This allows Appen to provide solutions to the leaders in technology, automotive, financial services, retail, manufacturing, and governments worldwide. Its customers include the likes of Amazon, Adobe, and Microsoft. The good news is that spending on machine learning and AI expected is expected to increase strongly over the next decade. I believe this puts Appen is a position to continue growing its bottom line at a rapid rate for many years to come. If this proves to be the case, I expect the Appen share price to climb notably higher over the 2020s.

Pushpay Holdings Ltd (ASX: PPH)

Another tech share to buy is Pushpay. It is a donor management system provider with a focus on the faith sector. Its innovative solutions simplify engagement, payments, and administration, which allows its users to increase participation and build stronger relationships with their communities. In FY 2020 Pushpay delivered further strong profit growth and provided very bullish guidance for the year ahead. It expects its operating earnings to double in FY 2021 despite the coronavirus pandemic.

After which, management is aiming to capture a 50% share of the medium and large church segments. It estimates this to be worth US$1 billion in annual revenue at present, which is almost eight times more than the operating revenue of US$127.5 million it achieved in FY 2020. Due to the quality of its offering, I believe it has a very good chance of achieving this goal.

More reading

• How to beat the market with 2 kids and no time
• Is the Appen share price still in the buy zone? I think it is
• Why CSL and these ASX 200 shares could be fantastic buy and hold options
• 3 of the best ASX tech shares to buy in July
• 2 fantastic ASX tech shares to buy and hold

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 PUSHPAY FPO NZX. The Motley Fool Australia owns shares of Appen Ltd. The Motley Fool Australia 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.

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The rush by more than 30 ASX shares to tap the market for capital back in March and April was arguably an opportunistic bid to fortify their balance sheets, while ‘emergency measures’ allowed them to raise up to 25% of their share base in discounted placements.

In April alone, ASX companies raised a whopping $8.9 billion, which, to put in context, was close to that raised in the US, a market which is 28 times bigger.

Fast forward 3 months and many of the funds raised to help ride out the worst of the COVID-19 storm have morphed into sizeable war chests with which to hunt for attractively priced assets.

Here are 3 ASX shares to watch in this space. All 3 went to market to raise capital earlier this year and are sufficiently cashed-up to start picking off some mouth-watering acquisitions at discounted prices.

National Australia Bank Ltd. (ASX: NAB)

Responsible for the largest capital raising back in April, NAB managed to raise $3.5 billion from predominantly institutional investors and is expected to use it to acquire quality assets. While NAB is no stranger to acquisitions, in my view it has made some horrendously bad ones over the past 35 years, including the biggest doozy of them all, the fated Clydesdale Bank in the UK.

With those blunders etched into the annals of Australia’s corporate history, NAB’s future growth-by-acquisition strategy is a much more calculated and local affair.

The bank has worked hard to throw off its former moniker as Australia’s most accident-prone bank, and an eventual sale of its wealth unit, MLC will help to shore up its balance sheet even more. I expect future acquisitions by NAB to further consolidate its position as the more business-focused of the big four major banks.

Webjet Limited (ASX: WEB)

Having been hit hard by the COVID-led shutdowns, the travel group raised $231 million in an April placement at a 55% discount to its closing share price. Then earlier this month it started raising €100 million via a convertible note.

While the first rising was very much about shoring up the balance to get the company though a bleak 2021, capital raising number 2 is all about engaging in acquisitions. Following the second raising, Webjet CEO John Guscic was quick to reassure the market that the net effect is not designed to ‘screw over shareholders’, at the betterment of institutional investors.

He’s also on record as signalling that post-COVID-19 presents some eye-opening buying opportunities. While Guscic has not flagged any specific potential acquisitions to the market, I think the potential to pick off quality assets at discounted prices bodes well for shareholders.

After some heavy cost cutting in April, Webjet’s cash burn is currently running at around $15 million a month. As of 31 May it had liquidity of $307 million, including $215 million in cash. Given the nature of Webjet’s former acquisitions, I suspect it will start to deploy its firepower to do more M&A deals with offshore counterparts, particularly in Asia. Reporting season may see the online travel group disclose more detail here, so pay close attention to the commentary that supports the numbers.

Telstra Corporation Ltd (ASX: TLS)

After shoring up €500 million in a (bond issue) borrowing spree, and assuring a further $940 million in bank facilities since mid-March, Australia’s biggest telco’s committed bank facilities stand at a total of $3.6 billion. Telstra made some tough decisions during the coronavirus pandemic, including massive layoffs and stand-downs, but appears to have emerged a leaner and much more robust version of itself.

The company also seized the opportunity to bring forward $500 million worth of capex from the 2H FY21 into CY 2020. It also has plans to deploy a similar amount to increase the capacity in its network. This is likely to include a further acceleration of its 5G rollout.

To its credit, Telstra had placed its current outlook within the range of its FY20 guidance, which will be looked at favourably by the market. Despite having slipped into what could have been takeover territory when the price slumped to around $2.60 late June 2018, the telco now looks a lot more like an acquirer going forward.

Success with previous acquisitions has seen Telstra consolidate a string of companies – including VMTech, MSC, Readify, and Kloud – into a single brand dubbed Telstra Purple, which is now Australia’s largest technology services business.

While much of Telstra’s focus is on its dominant position in the 5G space, one area that I think is ripe for future investment is its Telstra Ventures division. This is the telco’s high growth venture capital portfolio of investments, which has actively invested in a broad range of leading technology businesses. These include digital storage options DocuSign and Box, a holding in Snapchat and a particular focus on cyber security via AttackIQ.

More reading

• 3 ASX dividend shares to buy in July
• 3 ASX shares for growth, income, and value investors to buy today
• These ASX shares are the winners and losers in the “new normal”
• Why Afterpay, Alumina, Magellan, & Webjet shares are dropping lower
• Why NAB and Telstra shares could be top options for income investors

Motley Fool contributor Mark Story has no position in the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Telstra Limited and Webjet 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.

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A team of analysts at Citigroup has raised its target level for the S&P 500 for the end of this year. Despite the lift, however, the investment bank’s new estimate is nearly 10% below the current level of the benchmark US stock index.

Citigroup upped its estimate to 2,900 from the previous 2,700. The analysts believe that ‘powerful fiscal and monetary stimuli’ that will likely soon rain onto the market justify a bump in its target.

They still feel, however, that the stock market in general and the S&P 500 specifically are in for a tough time in the second half of this year.

Bumpy ride

The old saying goes that if US markets sneeze, the ASX catches a cold. With the S&P/ASX 200 Index (ASX: XJO) riding high at close to 6,000 – up more than 30% since its lows in March this year – if Citigroup is close to being right, the Australian share market could be in for a bumpy ride in the rest of 2020.

Citigroup’s chief US equity strategist, Tobias Levkovich, warned they ‘envision volatility for equities’ saying that good news is being priced into the markets and ‘problems are being overlooked’.

Prominent among these difficulties is, of course, the resurgent coronavirus outbreak, both in the US and here in Melbourne. With cases again rising sharply in many locations, and businesses reclosing (either by mandate or voluntarily), overall economic activity is set to constrict between now and the end of the year.

For the S&P 500 to rise substantially, Levkovich said that corporate earnings have to rebound ‘in a very meaningful way’.

That’s not going to be easy, since – despite employee layoffs and furloughs – many companies have been stuck with significant fixed costs against sudden drops in revenue.

More reading

• Top brokers name 3 ASX 200 shares to sell today
• ASX 200 up 0.8%: Afterpay jumps on broker note, Treasury Wine update disappoints
• Gold jumps to 9-year high with record highs in sight
• Will retail vacancies hurt the Vicinity Centres share price?
• 5 things to watch on the ASX 200 on Thursday

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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On Wednesday I looked at three ASX shares that brokers have given buy ratings to this week.

Unfortunately, not all shares are in favour with them right now. Three ASX 200 shares that have just been given sell ratings by brokers are listed below.

Here’s why these brokers are bearish on them:

Afterpay Ltd (ASX: APT)

According to a note out of UBS, its analysts have retained their sell rating but lifted their price target on this payments company’s shares to $27.00. While the broker notes that its capital raising has significantly de-risked its operating model and means it should be able to fund the next couple of years of underlying sales estimates, it still feels its shares are wildly overvalued at the current level. The Afterpay share price is up over 10% to $73.05 this afternoon.

AGL Energy Limited (ASX: AGL)

A note out of Credit Suisse reveals that its analysts have retained their underperform rating and cut the price target on this energy company’s shares to $13.70. The broker believes that electricity demand has been resilient since its last update and expects the company to announce a share buyback with its full year results. However, it remains concerned by its prospects in FY 2021 due to weak wholesale prices. The AGL Energy share price is changing hands for $17.01 today.

Northern Star Resources Ltd (ASX: NST)

Another note out of UBS reveals that its analysts have retained their sell rating but lifted the price target on this gold miner’s shares to $14.25. Although Northern Star’s latest quarterly update was better than it expected, it remains concerned that the gold miner’s guidance for FY 2021 will fall short of expectations. It believes the market is expecting too much and that lower grades will weigh on its overall production. The Northern Star share price is up at $14.95 this afternoon.

More reading

• ASX 200 up 0.8%: Afterpay jumps on broker note, Treasury Wine update disappoints
• 3 ASX dividend shares to buy in July
• 2 ASX shares that could flourish in an Australian recession
• Why Afterpay, Evolution, Netwealth, & Praemium shares are racing higher
• 3 dependable, blue chip ASX shares for uncertain times

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

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The Netwealth Group Ltd (ASX: NWL) share price is trading 7.76% higher in today’s trade, after the company released a positive trading update.  

What did Netwealth announce?

Earlier today, Netwealth released its quarterly business update which highlighted record growth in annual net inflows. Despite negative market movements wiping $900 million from its funds, Netwealth reported that total funds under administration (FUA) grew 35% for FY20 to $31.5 billion.

The growth in FUA was fuelled by record net inflows of $9.1 billion for FY20. For the quarter, FUA surged 13% to $3.6 billion, with $1.5 billion from net inflows and $2.1 billion attributed to positive market movements.

According to the update, Netwealth has recorded the highest net fund flows for 8 consecutive quarters. In addition, of the major platforms, Netwealth is the fastest growing in absolute terms. It is also the seventh largest platforms provider on the market with a 3.6% market share.

As a result of this strong growth, Netwealth expects to exceed its previous guidance for FY20. The company had previously expected revenue for FY20 to be in the range of $116 to $120 million and forecast underlying EBITDA to be in the range of $50 to $62 million. Unsurprisingly, today’s news has had a positive impact on the Netwealth share price.

What does Netwealth do?

Netwealth Group is a specialist investment platform used by financial intermediaries to provide investment management solutions. The company’s platform provides financial advice on superannuation and other investments. It also provides users with the ability to invest in a wide range of products.

Following the Royal Commission into banking and financial services, Netwealth has been taking market share from other institutional platforms. These include the big banks and other large finance companies. Despite the uncertainty and disruptions surrounding COVID-19, the group remains positive given its strong cash position, no debt and growing market share.

As at 30 June 2020, Netwealth boasted 81,804 member accounts. This came after adding 3,261 new accounts for the quarter. 

The Netwealth share price

The Netwealth share price has surged more than 100% from its lows in March. It is currently trading over 28% higher for 2020. At the time of writing, the Netwealth share price has surged more than 7% in today’s trade and is currently trading at a multi year high of $10 per share.

More reading

• ASX 200 up 0.8%: Afterpay jumps on broker note, Treasury Wine update disappoints
• Why Afterpay, Evolution, Netwealth, & Praemium shares are racing higher
• Top brokers name 3 ASX shares to sell next week
• The latest ASX stocks to be downgraded by top brokers today
• Why Adbri, BlueScope, Netwealth, & Rio Tinto shares are tumbling lower

Motley Fool contributor Nikhil Gangaram has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of Netwealth. 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 Sezzle Inc (ASX: SZL) share price has been an exceptionally strong performer again on Thursday.

In early afternoon trade the buy now pay later provider’s shares are up 29% to $6.34.

At one stage they were up as much as 32% to a new record high of $6.48.

Why is the Sezzle share price on fire?

Investors have been fighting to get hold of Sezzle’s shares this week following the release of a very positive update.

On Tuesday Sezzle released its second quarter update and revealed that its strong underlying merchant sales (UMS) growth had continued.

During the quarter, the Afterpay Ltd (ASX: APT) rival reported UMS of US$188 million (A$272.3 million). This was a 58% quarter on quarter increase and a massive 349% year on year increase.

Management advised that key drivers of this growth were increases in active customers, active merchants, and customer usage.

At the end of the quarter there were 1.48 million active customers and 16,112 active merchants on its platform. This represents a 243% and 219% increase, respectively, over the prior corresponding period.

Pleasingly, these customers were using its platform more frequently than ever before. Repeat usage improved over 10 points year on year to 87.5% for June 2020. This compares to 77.2% in June 2019 and represents its 18th straight month of sequential improvement.

Management appears confident this positive form will continue and provided full year annualised UMS guidance of US$1 billion.

Broker buy rating.

One broker that liked what it saw was Ord Minnett.

In response to this update, the broker reiterated its buy rating and lifted its price target by almost 50% to $5.95.

Ord Minnett made the move after increasing its revenue forecasts to reflect its stronger than expected growth.

However, it is worth noting that the Sezzle share price has now broken through this level. So, this could be a sign that the near term share price gains are coming to an end. Though, given the positive investor sentiment in the buy now pay later industry, anything is possible.

More reading

• 2 ASX shares that could flourish in an Australian recession
• Top brokers name 3 ASX shares to buy right now
• ASX buy now, pay later shares leading the recovery
• ASX 200 drops on return of lockdown in Melbourne
• Why Australian Ethical, Magellan, St Barbara, & Sezzle shares are zooming higher

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool Australia has recommended Sezzle Inc. 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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Reporting season is always awaited with anticipation of good news, but the losses witnessed on the ASX this year have already primed the market to expect the worst earnings numbers since 2011–2012. Given that consensus forecasts project a 15%–20% decline in company earnings for FY20, the sea of red during this reporting season shouldn’t come as a rude shock.

While it will be good to get the full brunt of the COVID-19 hit to corporate earnings out on the table, the trickier part for investors will be making sense of earnings forecasts for FY21 – which Morgan Stanley expects to improve to a drop of 2.7%.

Adding to the forecasting conundrum is the unknown impact from any extension to JobKeeper and/or the fallout from the federal government’s budget night announcements in October.

Due to the continuous disclosure rules for listed companies, shareholders should be in a ‘no-surprise’ situation when companies finally report. However, some companies may feel it’s prudent to feed the market with any updates – especially on any major earnings adjustments – before their results are released.

Here are 3 ASX shares that may be among those likely to deliver a surprise in terms of either earnings, outlook guidance or capital management at or before reporting season.

FlexiGroup Limited (ASX: FXL)

With the FlexiGroup share price down around 35% since the start of the year, despite improving fundamentals, it’s clear in my opinion that this point-of-sale finance provider has been left oversold in the wake of COVID-19. I expect the commentary at full year to provide greater insight into FlexiGroup’s digital offering – mainly under the Humm brand – and how that has helped to add new customers to its platform.

Much of the company’s recent trans-Tasman customer growth – now 2.1 million – can be attributed to its diverse business model, which includes buy now, pay later (BNPL), credit cards and SME lending. Equally encouraging is the ‘stickiness’ of its customer base, with those using one of its payment products doing so on average 9 times a year.

While the FlexiGroup share price soared 12% following its recent market update, which included revelations its customer base exceed 2 million, it has not enjoyed the same manic party experienced by its all-star peers Afterpay, Zip, and Splitit.

I’m expecting the full result to include supporting commentary around the company’s recent turnaround. This should help to woo those investors who still view the stock under its former guise as a struggling consumer lender.

In my opinion, those who buy at current levels, and before the full year announcement, should not be disappointed 12 months from now.

Sydney Airport Holdings Pty Ltd (ASX: SYD)

Despite being one of the hardest hit by the shutdown in domestic and international travel due to COVID-19, I think investors in the airport will be rewarded for staying the course over the longer haul. I believe the stock is well capitalised to weather a more protracted recovery.

I expect the market to reward any sliver of blue sky announced during reporting season by pushing the Sydney Airport share price – currently down around 40% on its February high of $9.04 – higher. The airport will also benefit from a recalibration of the COVID-19 crisis, which is now less about eradication, and more about containment.

Total passenger numbers were down 97.4% in May and will remain similarly low until government travel restrictions are eased.

While domestic and international passenger numbers aren’t expected to return to pre-COVID levels until 2023 and 2024, respectively, it’s important recognise the near-monopoly status of this infrastructure asset, and how that underscores its core earnings. I suspect, that within short-order, analysts will recognise the futility of benchmarking Sydney Airport by its pre-COVID highs.

I’m of the belief that if you enter this stock for a long-term play, at current levels, you won’t look back in anger. Watch out for any announcements during reporting season of new lease agreements with luxury brands, plus further updates on its hard infrastructure investments, and updates on its covenant position.

Centuria Industrial Reit (ASX: CIP)

Australia’s largest domestic pure-play industrial REIT, Centuria Industrial has arguably crawled out from under the COVID-19 mockers with one of the finest set of numbers. Centuria has pre-empted reporting season with an announced uptick in the value of its portfolio by an estimated 1.3%, or $21 million.

Much of the strong showing in its industrial property comes from the defensive nature of its industrial occupiers, with ongoing demand from e-retailing, online grocery shopping and packaging requirements providing an added kicker.

But these are preliminary revaluations, and I’m assuming there’s more good news in store the will accompany its full year announcement. I’m going to watch the full year announcement for further insights into how industrial property appears set to ride the post-COVID online sales boom.

Based on this upside and the numbers that Centuria has already reported to the market, I can’t see any real justification for the 15% discount the stock is trading at relative to its mid-February high of $3.79.

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Motley Fool contributor Mark Story owns shares of Sydney Airport Holdings Pty Ltd. 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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