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CSL Limited (ASX: CSL) shares have come back into investors’ view over the last week. This has been in response to the company releasing its first-half results to the market on Wednesday.

Investors have now had some time to digest the announcement which included a 2.8% reduction in net earnings. In turn, the CSL share price has settled roughly in line with where it finished after handing down its results.

The Australian biotechnology company has missed out completely on any kind of COVID-19 vaccine boost. Meanwhile, pharmaceutical giants such as Pfizer Inc (NYSE: PFE) snagged a winner.

The US-based vaccine maker said it generated US$13 billion in COVID-19 vaccine revenue. In addition, Pfizer expects to reach US$36 billion in revenue from its vaccine for the full 2021 calendar year. To put that into perspective, CSL booked US$10.61 billion in revenue for 2021 across all its segments.

Despite this, CSL’s CEO is not getting hung up on the missed opportunity. Let’s take a look at why.

Focusing on the flu

After canning its efforts to develop its own COVID-19 vaccine in partnership with the University of Queensland, CSL has fallen back on its key expertise — developing influenza vaccines.

In the first half, CSL’s influenza vaccine division — Sequirus — notched up a record volume of roughly 110 million doses distributed. The achievement also translated into financial performance as Seqirus’ revenue increased 17% to US$1.685 billion.

To move away from its majority weighting towards egg-based flu vaccines, CSL is expanding upon its cell-based manufacturing capability. This involves an $800 million cell culture facility in Tullamarine set for completion in 2023.

Cell-based vaccines are made without the need for growing a flu virus inside of an egg. Essentially, this removes the need to worry about egg supply. Additionally, some studies suggest cell-based vaccines may offer better protection compared to egg-based.

Another consideration for CSL shares is the company’s push for its own mRNA development. However, CSL is tackling what is being heralded as the next evolution of mRNA vaccines — self-amplifying messenger RNA (sa-mRNA).

However, ASX-listed CSL lost a bid against Moderna Inc (NASDAQ: MRNA) to build a specialised research facility in Australia for mRNA technology.

Talking about this, CSL CEO Paul Perreault said:

Australia doesn’t want us as part of that, OK. In the US we have a new contract with BARDA that includes Self Amplifying Messenger RNA (sa-mRNA). In the UK we have very strong relationships and they’re interested and when we look at Europe there’s interest there as well. So I’m not fussed from that perspective.

Analysts’ take on CSL shares

Following the company’s half-year results, analysts have gone back to the drawing board to work out what CSL shares could be worth going forward.

The team at Morgans has concluded the biotechnology giant is worth a price target of $327.60. This would suggest a 24% upside from the current CSL share price. Improvement in plasma collections was a pleasing sight to the analyst team.

The post Own CSL shares? Boss reveals why biotech is ‘not fussed’ about exiting COVID vaccine race appeared first on The Motley Fool Australia.

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Motley Fool contributor Mitchell Lawler has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and has recommended CSL Ltd. 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 Santos Ltd (ASX: STO) share price is in the red on Monday despite no news having been released by the company.

However, there is one explanation for the oil producer’s suffering. Santos’ shares are trading ex-dividend today.

At the time of writing, the Santos share price is $6.86, 2% lower than its previous close.

For context, the S&P/ASX 200 Index (ASX: XJO) has recovered from a morning dip to trade 0.12% higher.

Additionally, the S&P/ASX 200 Energy Index (ASX: XEJ) – Santos’ home sector – is up 0.04% right now.

Let’s take a closer look at what could be weighing on the Santos share price today.

What’s driving the Santos share price lower on Monday?

The Santos share price is sliding lower as traders buying into the company miss their chance to secure its upcoming dividend. That’s right, Santos’ stock is now ex-dividend.

For those who aren’t familiar with the term, it means that Santos will only be paying dividends out to investors who held its shares as of yesterday’s close.

Generally, stock’s tend to fall in line with the value of their dividend on their ex-dividend dates, as potential buyers will miss out on the value of the payout.

Santos’ final dividend for 2021 is worth 8.5 US cents – around 12 Australian cents – and is 70% franked.

It represents 1.71% of the oil producer’s previous closing price – $7. That likely helps explain some of the energy giant’s falls today.

The company’s latest final dividend will be paid to yesterday’s investors on 24 March 2022.

Impressively, Santos’ upcoming dividend is 70% higher than the company’s final dividend for 2020, which was worth just 5 US cents – around 6.9 Australia cents at today’s exchange rate.

It’s also Santos’ highest dividend since its 2015 interim dividend. Back then, it handed investors 15 US cents – around 21 Australian cents.

The post Why is the Santos (ASX:STO) share price underperforming today? appeared first on The Motley Fool Australia.

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Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. 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 PointsBet Holdings Ltd (ASX: PBH) share price has started the week on a very disappointing note.

In afternoon trade, the sports betting company’s shares are down 11% to a new 52-week low of $3.99.

This means the PointsBet share price is now down 44% since the start of the year.

Why is the PointsBet share price sinking again?

The weakness in the PointsBet share price on Monday has been caused by an update from one of the company’s biggest rivals.

On Friday, Nasdaq-listed sports betting giant, DraftKings, released its quarterly update. And as you might have guessed, this update did not go down well with the market. In fact, the DraftKings share price crashed 22% on Friday night and hit a 52-week low of its own.

DraftKings revealed that it made a massive loss of US$326 million during the fourth quarter of FY 2021. And unfortunately, these losses aren’t expected to end any time soon. The company advised that it expects to post a loss of ~US$1 billion in FY 2022.

These losses are largely being driven by customer acquisition costs. This has many in the market questioning the long-term profitability of sports betting companies.

And while PointsBet finished the second quarter with a cash balance of A$523.3 million, investors may be wondering how long that will last if it wants to keep up with the likes of DraftKings.

Is this a buying opportunity?

While it is never a good idea to catch a falling knife, the team at Goldman Sachs sees a lot of value in the PointsBet share price.

At the end of January, the broker retained its buy rating with a $9.97 price target. This is more than double where its shares trade at today.

Goldman appears optimistic the company can navigate successfully through the difficult operating environment.

It said: “In our view, the company has been able to thus far execute on the balancing act of juggling the forces of handle share, marketing promotional activity and margins. We think this highlights the strong foundation of its US franchise, underpinned by its leading proprietary tech stack and product offering.”

The post Why is the PointsBet (ASX:PBH) share price crashing 11% today? appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and has recommended Pointsbet Holdings Ltd. The Motley Fool Australia has recommended Pointsbet Holdings Ltd. 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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One of the country’s respected fund managers has outlined a key metric to look for when it comes to finding some ASX share opportunities.

The ASX share market saw a correction during January 2022. There is plenty of speculation about what interest rates are going to do this year as central banks try to keep inflation under control.

But Auscap Asset Management Tim Carleton believes that there’s a metric that investors can focus on to find opportunities, according to the Australian Financial Review. He also outlined some ASX shares that could be opportunities.

Mr Carleton actually thinks some of the companies being sold-off are opportunities:

The one thing that I think is getting confused is this correction, particularly in highly priced stocks in the market, has nothing to do with the outlook for the domestic economy. For us, it’s very positive.

The special investment metric

It was pointed out that just because the economy is seeing inflation, that doesn’t mean that all businesses and ASX shares will be affected in the same way. Certain ones could benefit from higher inflation.

Which ones are high-quality? The answer, for Mr Carleton, is to look at the return on investment (ROI):

It’s not rocket science. It’s finding companies that have proven themselves to be high-quality companies. And broadly, you’ve got a bit of a cheat function to determine whether something’s a high-quality company, and that’s go and have a look at its statutory ROI.

Everyone talks about moats and competitive advantages. Well, if they have a demonstrably higher ROI than their peers, there’s obviously something there.

A good business isn’t a popular business, it’s not a business that’s getting a lot more users. A business to its owner is only valuable to the extent that it produces cash flow that the owner can take out of the business.

Which ASX shares are high-quality?

The investment manager gave a few different examples, as reported by the AFR.

First was BHP Group Ltd (ASX: BHP). This is one of the world’s biggest resources businesses which has operations focused on commodities like iron ore, copper and nickel. It’s divesting oil and expanding into potash. The fund manager said that BHP has got better deposits than peers.

Another mentioned business was REA Group Limited (ASX: REA). It’s the owner of digital Australian real estate portals realestate.com.au and realcommercial.com.au, as well as other real estate-related businesses. REA Group also has a number of international property portal investments in Asia and the US. Mr Carleton notes that REA Group has a very strong position in the online property portal space.

Another two ASX shares that were mentioned as potential opportunities were JB Hi-Fi Limited (ASX: JBH) and Nick Scali Limited (ASX: NCK).

JB Hi-Fi generated a “very, very strong result” as well as ongoing positive year-on-year growth for January 2022. Commenting on expectations that consumer demand for electronics would drop at JB Hi-Fi, the fund manager said:

And so as a result, that stock is trading at a very deep discount to the rest of the market, despite the fact that it’s an extremely high-quality retailer, very, very well run, generates a truckload of cash and has a very strong capital position.

Nick Scali was also named as an ASX share facing a similar narrative despite the strong housing cycle and high earnings before interest and tax (EBIT) margin. But it’s on a “low double-digit earnings multiple”. But the ASX share has one of the best management teams and is conservatively run, according to the fund manager.

The post Fund manager reveals one key metric in finding quality ASX shares during a correction appeared first on The Motley Fool Australia.

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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended REA Group 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 Adairs Ltd (ASX: ADH) share price is deep in the red on Monday afternoon. This comes after the company released its first-half results for the 2022 financial year before market open.

At the time of writing, the homewares and furniture retailer’s shares are swapping hands for $2.95, down 5.14%.

Adairs delivers disappointing result for H1 FY22

The Adairs share price is heading south following the company’s performance for the 26 weeks ending 26 December 2021. Here are some of the key highlights:

• Total sales fell to $229.3 million, down 5.7% on the prior corresponding period (H1 FY20 $243 million)
• Earnings Before Interest and Tax (EBIT) dropped to $32.9 million, down 45.3% (H1 FY21 $60.2 million)
• Net profit after tax (NPAT) declined to $23.1 million, down 44.9% (H1 FY21 $41.9 million)
• Earnings Per Share (EPS) shed to 10.4 cents, down 59.8% (H1 FY21 25.9 cents per share)
• Fully-franked Interim dividend of 8 cents per share, down 27.3% (H1 FY21 11 cents per share).

What happened in H1 FY22 for Adairs?

The Adairs result was significantly impacted by government-mandated store closures, with store sales down 13.8% to $131.7 million.

Gross margin fell 380 basis points against the prior comparable period. This was due to global supply chain cost increases, higher delivery costs, and an increase in promotional activity.

In the Mocka business, sales jumped 22.8% to $34.3 million, attributed to strong growth in website traffic and search activity.

However, operations in Australia in the second quarter were significantly impacted by COVID-19-related customer delivery challenges. Although the company said this issue has now been resolved with a new delivery partner onboard.

Higher import freight costs, courier delays, and promotional activity resulted in a decline in delivered gross profit margin to 38.3%.

What did management say?

Adairs managing director and CEO Mark Ronan commented:

The first half of FY22 brought significant one-off operational disruptions related to COVID-19 which impacted our portfolio of brands and our overall financial results. Despite this we continued to progress our strategic priorities with Adairs’ National Distribution Centre commencing operations, two new stores opened, four stores upsized, continuing range expansion with pleasing results and continued investment in digital capabilities.

The finalisation of the Mocka earn-out allowed us to build out our team to support our growth strategies and we added to our portfolio of vertical omni-channel retail brands by acquiring Focus on Furniture. With all brands having strong opportunities for growth, and all benefiting from good in-country inventory levels, we are confident about the prospects for the Group in 2H FY22 and beyond.

What’s next for Adairs?

Looking ahead, Adairs noted forecasted ‘clear opportunities for growth through 2H FY22’. This is based on the macro-economic environment which is supportive of strong employment and higher wages growth.

Whilst the COVID-19 operating environment can be unpredictable, the company refrained from providing guidance for the FY22 full year.

The post ‘Significant’ COVID-19-related disruptions: Adairs (ASX:ADH) share price sinks 5% following horror first-half results appeared first on The Motley Fool Australia.

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Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and has recommended ADAIRS FPO. The Motley Fool Australia owns and has recommended ADAIRS 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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S&P/ASX 200 Index (ASX: XJO) mining shares have broadly had a good run in 2022.

While the ASX 200 is down 5% year-to-date, mining giant BHP Group Ltd (ASX: BHP) has seen its shares gain 14%.

Rival iron ore giant, Rio Tinto Limited (ASX: RIO), meanwhile, has gained a whopping 21% since the opening bell of 4 January.

The ASX 200 miners, and others, have received a healthy tailwind from rising inflation figures. More so as many analysts have been reporting that in times of rising prices, commodities are the place where investors want to be.

But Damien Klassen, head of investment at Nucleus Wealth, believes much of the hype surrounding a new commodity super cycle is overdone.

Why China’s numbers look bearish for ASX 200 mining shares

If the heat comes off commodity prices like iron ore, it will throw up some unwelcome headwinds for the ASX 200 miners who have benefited from resurgent prices.

In analysing the outlook for commodities, Klassen, as reported by Live Wire, took a close look at Chinese inflation figures.

According to Klassen, Chinese inflation indexes released last week were once again weak. “Consumer price inflation has been weak for more than a year now,” he said. Adding that last week’s data ” merely confirmed December’s downtrend”.

Investors need to keep an eye on Chinese producer price inflation, which has been stoking inflation concerns around the world. Digging into that data, he said, “All of the annual growth is in energy and commodities. But, even in those categories, the last three months have seen reversals.”

Does Wall Street have an agenda?

We’ve certainly heard plenty of bullish commodity analysis coming out of some major US brokerages.

And Klassen believes Wall Street may be spinning its own story.

“The Wall Street narrative is that the only thing that will save your portfolio from inflation is commodities,” he said.

Before investing in commodities or ASX 200 mining shares, there are some things to consider, atop the fact that Chinese inflation numbers point to a reversal of the global inflation story.

According to Klassen, “Most commodities are close to their all-time highs. So you are not starting from a good place. Effectively, you are buying high and expecting prices will go higher.”

Then there’s the supply and demand imbalance.

As the world has reopened from COVID closures, demand for commodities has outpaced the industry’s ability to ramp up supply. Particularly as there are still many hurdles in place from the ongoing pandemic.

“It may be a price super-cycle. It is not a volume super-cycle,” Klassen said. He added (quoted by Live Wire):

Supply volumes struggle to keep up with booming demand in a real commodity super-cycle. But that is not the case now. Prices for most commodities haven’t risen on the back of booming volumes. They have increased because of supply shortages and disruptions. If supply disruptions end and higher prices spark increased supply, prices will reverse quickly.

He also expects increased knock-on effects to impact commodity prices from a major slowdown in China’s property sector. “Housing starts are down 30% over the last few months. But slowing starts take some time to filter through to commodity demand. The effects are only just beginning.”

As for investors in ASX 200 mining shares banking on US inflation driving the commodity super cycles, Klassen cautioned, “US wage inflation is the most important factor for continuing inflation. That story is not yet determined. But higher US wages do not automatically mean higher commodity prices.”

The post Could this really end the party for ASX 200 mining shares in 2022? appeared first on The Motley Fool Australia.

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The Motley Fool Australia’s parent company Motley Fool Holdings Inc. 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 A2 Milk Company Ltd (ASX: A2M) share price is having an excellent start to the week.

In afternoon trade, the embattled infant formula company’s shares are up 12% to $5.95.

Why is the A2 Milk share price racing higher?

Investors have been bidding the A2 Milk share price higher today following the release of its half year results.

In case you missed it, A2 Milk reported a 2.5% increase in revenue over the prior corresponding period to NZ$661 million. Though, this was driven by the inclusion of the Mataura Valley Milk (MVM) business, which wasn’t part of the company in the prior corresponding period.

A better reflection on its performance during the half was that of its core infant nutrition business, which reported a 10.5% reduction in revenue to NZ$471 million. This was driven by the lower birth rate and rapidly changing market dynamics in China.

On the bottom line, things were even worse. A2 Milk reported a 53.3% decline in net profit after tax to NZ$56 million. This compares unfavourably to the market consensus estimate, which according to Commsec was NZ$60 million.

So why are its shares rising?

The catalyst for the rise in the A2 Milk share price today appears to have been its outlook.

Some upbeat commentary from management seems to have offset the profit miss and got investors excited.

A2 Milk’s CEO, David Bortolussi, commented: “The Company’s outlook for 2H22 revenue has improved. It is still expected to be significantly higher than 2H21, and with growth now expected on 1H22 and for FY22, ahead of initial expectations due mainly to growth in China label and English label IMF.”

Mr Bortolussi also revealed that the company has seen an improvement in trajectory in the ANZ reseller/daigou channel and that he is “confident in the long-term China infant milk formula market.”

All in all, this appears to have sparked hopes that the company is now over the worst of its issues. Time will tell if that is the case.

The post A2 Milk (ASX:A2M) share price jumps 12% on ‘improved’ outlook appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended A2 Milk. 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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As most ASX investors would be painfully aware of, the past few months have seen share market volatility spike to levels we haven’t seen since the initial COVID-induced crash of 2020.

As of today’s pricing, the S&P/ASX 200 Index (ASX: XJO) remains down by close to 5% over 2022 thus far, and hasn’t gone anywhere since June last year. Yes, the ASX 200 has traded sideways for roughly 8 months.

Not that we haven’t seen some dramatic moves in that time though. To illustrate, here is a graph of the S&P/ASX 200 VIX Index, which measures market volatility, over the past 12 months:

So as you can see, volatility has indeed been on the rise over the past few months. Many investors link this rise in volatility to a number of factors, including the Russia-Ukraine Crisis, higher inflation, and the prospect of higher interest rates, and oil prices.

Is ASX 200 share market volatility here to stay?

No one really likes volatility and the large fluctuations it inflicts upon our share portfolios. So is this something ASX investors will just have to live with now? Is volatility here to stay?

Writing for Livewire, Chief Investment Officer at Jamieson Coote Bonds, Charlie Jamieson, argues it is.

Jamieson points to the actions of central banks around the world in recent years. These banks responded to the initial outbreak of the pandemic by pumping unprecedented amounts of liquidity into financial markets around the world. We saw that in the United States, as well as here in Australia. Indeed, our own Reserve Bank of Australia (RBA) initiated a quantitative easing (QE) program for the first time in our history in 2020.

But what goes up must come down, and central banks around the world are today working to unwind much of this stimulus. New Zealand and the United Kingdom have already started hiking interest rates. And most commentators are expecting the RBA and the US Federal Reserve to follow suit very soon.

Are central banks fuelling a wild market?

So, we had large levels of capital enter the global financial system, which is still “sloshing around”, according to Jamieson. It’s the ongoing withdrawal of this stimulus that has Jamieson convinced volatility is here to stay:

But I think that the one thing that we’ve got to remember is that interest rates are the locomotive on the front of a huge train of assets. Where they go ultimately really matters…

There have been episodes in the last few months where that train right at the front has derailed… And yet a lot of the train has still been broadly travelling straight ahead. But in January, [central banks are] starting to realise that there are some twists and turns coming up.

So think about that. Clearly, if central bankers continue to deliver aggressive withdrawal of accommodation, we have to expect that volatility is going to be very pronounced.

If Jamieson is to be believed, volatility is certainly here to stay. It seems we had better strap on our seatbelts if he proves to be correct.

The post Do ASX investors simply have to get used to volatility? appeared first on The Motley Fool Australia.

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Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. 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 Tyro Payments Ltd (ASX: TYR) share price is tumbling after the company released its earnings for the first half of financial year 2022.

At the time of writing, the Tyro share price is $1.64, 24.77% lower than its previous close.

Tyro share price plunges as EBITDA falls 67%

• Processed $15.8 billion in transactions ­– a 31% increase on the first half of financial year 2021
• Earnings before interest, tax, depreciation, and amortisation (EBITDA) of $2.8 million – down 67%
• Payments business’ statutory gross profits reached a record $68.1 million – up 25%
• Banking business’ gross profits came to $2.4 million ­– up 35%
• Normalised gross profit – post Bendigo and Adelaide Bank Ltd‘s (ASX: BEN) share – rose 11% to $68.1 million
• A record 61,554 merchants using Tyro – up 68%

Tyro has recorded increased profits, transactions, and merchants despite many of its users suffering through outbreaks of COVID-19‘s Omicron variant.

Over the half, the company provided terminal rental relief to impacted merchants and deferred its annual pricing adjustments.

However, that, as well as investments in growth initiatives, wage inflation, the removal of JobKeeper, and costs associated with its acquisition of Medipass, saw the company’s EBITDA tumble.  

Tyro ended the period with $157 million in cash and financial investments – down from $173 million at the end of the previous half.

The company is now Australia’s fifth largest merchant acquiring bank by terminal count, with 103,935 terminals handed out – an increase of 52.1%.

Additionally, merchant deposits grew to $100.8 million over the half and merchant and transaction value churn rates fell to 10.1% and 9% respectively.

Finally, merchant loan originations rebounded to $36.2 million – a 1,279% increase.

What else happened in the half?

Last half marked the first time the company reported an entire half’s earnings inclusive of its deal with Bendigo Bank.

The alliance between the financial institutions was completed on 1 June 2021 and saw all Bendigo Bank merchants novated across to Tyro. Bendigo Bank merchants brought Tyro $2.5 billion of transactions last half – consistent with expectations.

Additionally, Tyro generated $22.4 million in payments from Medipass health providers in the period and $77 million in claims. It acquired Medipass in May 2021.

The company’s merchants in New South Wales and the Australian Capital Territory saw their transaction values fall a combined 9.4% over the first half.

Though, excluding those regions, Tyro’s payments business reported transaction value growth of 23.2%.

Additionally, Tyro’s banking business saw lending income from its Merchant Cash Advance product increase 25.4% to $2.6 million.

Tyro’s Bank Account also saw greater uptake. It had 4,964 active accounts as of 31 December, representing a 19.6% increase on the prior comparable period.

Finally, during the half the company made a deal with Telstra Corporation Ltd (ASX: TLS) that saw the telco’s business customers offered Tyro’s merchant acquiring solutions.

What did management say?

Tyro CEO and managing director Robbie Cooke commented on the company’s first half results, saying:

Booking a 31% lift in transactions processed to set a new record of $15.8 billion is something as a team we are really proud of. We worked alongside our 61,500 merchants as they continued to navigate the impact of lockdowns and provided all the assistance we could including terminal rental relief, loan repayment relief and we did not pass on scheme and interchange fee increases we incurred in the half.

While lower than first half last year, our positive EBITDA result of $2.8 million reflected our continuing investment in growth initiatives, the absence of any JobKeeper benefits, wage inflation and first time costs associated with our newly acquired Medipass operation.

What’s next?

The company didn’t provide any guidance for financial year 2022.

However, it said it’s expecting a return of workers to Australia’s CBDs which will likely help boost card transitions in retail and hospitality in the second half.

Additionally, the company is looking to roll out its new card reader shortly and is working on its android-based terminal.

Tyro also provided a trading update for the start of the second half.

The company’s transaction values for January increased 35% on the previous year’s to $2.7 billion.

For the first 3 weeks of February, its transaction values were 50% higher, reaching $1.8 billion.

Its eCommerce transactions grew to a new record of $36.5 million in January – up 836% on the same month of 2021.

Its payments business – post Bendigo Bank’s share of the profits and on a normalised basis – saw $11.1 million of profit for January, a 24% increase.  

Finally, for the first 7 weeks of the calendar year, Tyro’s banking business saw loan originations total $5.8 million – a 1,099% increase.

The bank business’ deposit balance also remained relatively stable at $96.1 million at the end of January.

Tyro share price snapshot

It’s been a rough start to the year for the payments provider’s stock.

Right now, the Tyro share price is 43% lower than it was at the start of 2022.

It’s also 45% lower than it was this time last year.

The post Tyro (ASX:TYR) share price plummets 25% as COVID takes its toll appeared first on The Motley Fool Australia.

More reading

• Here’s why the Tyro (ASX:TYR) share price is having such a positive day

Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and has recommended Tyro Payments. The Motley Fool Australia owns and has recommended Bendigo and Adelaide Bank Limited and Telstra Corporation Limited. The Motley Fool Australia has recommended Tyro Payments. 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 Ltd (ASX: Z1P) share price has tumbled to a new 52-week low on Monday.

The buy now pay later (BNPL) provider’s shares dropped as much as 6.5% to $2.40 in morning trade.

Why is the Zip share price falling?

Investors have been selling down the Zip share price today after it released an update ahead of the release of its half year results later this week.

According to the release, the company expects to report record revenue of $302.2 million for the first half. This will be an increase of 89% over the prior corresponding period. This was driven by record transaction volumes and transaction numbers. These were up 93% to $4.5 billion and 147% to 36.3 million, respectively.

Management notes that these record numbers have been underpinned by customers continuing to benefit from products such as Tap and Zip, and deepening engagement through initiatives such as Zip’s personalised rewards offering.

Also growing at a solid clip were its customer and merchant numbers. They have increased 74% to 9.9 million and 113% to 81,800, respectively.

Bad debts and losses

One slight disappointment that may be weighing on the Zip share price is its bad debts. Zip’s net bad debts have risen to 2.6% of transaction volumes (excluding the movement in provisions). This reflects the inclusion of less mature expansion markets and a change in the external environment in the US impacting the industry. The latter includes the easing of government stimulus affecting consumer portfolios generally.

In response to this, management has adjusted its risk settings to drive down future losses. This is in line with similar actions successfully implemented in 2020 at the onset of COVID-19, which were effective in bringing losses back to levels in line with medium term targets (<2%).

Also potentially putting pressure on the Zip share price today is its expectation to post a cash EBTDA loss of $108.1 million. This was driven by the company’s investment in growth, geographic expansion, and the pathway to becoming a global company.

Sezzle talks ongoing

Zip also revealed that its acquisition talks with Sezzle Inc (ASX: SZL) are ongoing.

However, once again, it warned that there is no certainty that the discussions will result in a transaction of any kind and intends to keep the market updated in accordance with its continuous disclosure obligations.

The post Zip (ASX:Z1P) share price sinks to new 52-week low after revealing rising debts and big loss appeared first on The Motley Fool Australia.

More reading

• These were the worst performers on the ASX 200 last week
• What’s going so wrong for ASX BNPL shares this week?
• The ASX 200 is awash with 52-week lows on Friday. Here are some of the biggest names growing smaller
• Down 80% in a year: Can the Zip (ASX:Z1P) share price sink any lower?
• How did ASX tech shares perform today?

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and has recommended ZIPCOLTD FPO. 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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