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If you want to build a balanced portfolio, having a few blue chip S&P/ASX 200 Index (ASX: XJO) shares would be a smart move.

But with so many to choose from, it can be hard to decide which ones to buy. To narrow things down for you, I have picked out two ASX 200 blue chip shares that are highly rated:

Goodman Group (ASX: GMG)

Goodman Group is a leading integrated commercial and industrial property company with operations across the world. Among its portfolio are warehouses, data centres, large scale logistics facilities, and business and office parks.

The company currently has $57.9 billion of total assets under management globally, 363 properties, and over 1,600 customers. Among the latter are the likes of Amazon, Coles Group Ltd (ASX: COL), DHL, Showpo, and Walmart.

Goodman has been growing its earnings at a strong rate over the last decade thanks to its highly successful strategy.

This strategy sees the company choose locations that are close to large urban populations and in and around major gateway cities globally. It notes that this is where demand is strong and transformational changes are driving significant opportunities.

Citi appears confident this positive form can continue. It has a buy rating and $26.00 price target on Goodman’s shares.

REA Group Limited (ASX: REA)

Another blue chip ASX 200 share to look at is REA Group. It is a leading property listings company with operations in Australia and several international markets. It also has a number of complementary businesses bolstering its growth further.

Once again, REA dominated the property listings market in Australia in FY 2021. For the 12 month ended 30 June, 12.6 million people visited realestate.com.au each month on average. This led to 121.9 million average monthly visits, which was up 35% year on year and was 3.3 times more than its nearest competitor.

This dominant position leaves REA Group well-placed to continue its fine form in the years ahead. Particularly given the improving housing market, price increases, cost reductions, acquisitions, and new revenue streams.

Macquarie is very positive on the company. The broker currently has an outperform rating and $185.00 price target on its shares.

The post 2 fantastic blue chip ASX 200 (ASX:XJO) shares to buy in September appeared first on The Motley Fool Australia.

More reading

• 2 excellent ASX 200 blue chip shares that may be worth a spot in a portfolio
• 2 top blue chip ASX 200 shares rated as buys
• How to turn $20,000 into $475,000 in 10 years with ASX shares
• 3 top ASX 200 shares that could be buys
• Can the Goodman (ASX:GMG) share price keep smashing the market?

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 owns shares of and has recommended COLESGROUP DEF SET. 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 Global Energy Ventures Ltd (ASX: GEV) share price is on the move today. This comes after the energy solutions company secured a renewable hydrogen grant from the Western Australian government.

At the time of writing, Global Energy shares are up 22.22% to 8.8 cents apiece.

Global Energy chosen for feasibility funding

According to its release, Global Energy advised it has successfully secured funding support of up to $300,000.

Global Energy will undertake a feasibility study on the export of green hydrogen utilising its compressed hydrogen shipping solution. This will see clean renewable energy transported from the HyEnergy Project, located in the Gascoyne, to Asia-Pacific.

Early preparation work and site assessment has since been completed with key appointments of technical and environmental advisors next up.

The scope of the project includes the transport of hydrogen from onshore compression facilities to an offshore ship loading buoy. From there, the hydrogen will be distributed to nominated Asia-Pacific markets using Global Energy’s compressed hydrogen ships.

It is expected the project will be online within the first-half of the 2022 financial year.

Global Energy managing director and CEO Martin Carolan commented:

One of the strategic focus areas for the WA Government’s Hydrogen Strategy is Export. GEV, together with the HyEnergy Project partners, aims to harness WA’s world class renewable energy resources and proud history of exporting energy to international markets, to develop the first green hydrogen export project using our compressed shipping supply chain.

More on the compressed hydrogen ship and zero-carbon marine transport

Global Energy noted that compression is a proven, safe and reliable method of storing hydrogen. It is currently used for onshore applications at pressures of up to 700 bar.

The ship design stores hydrogen in a gas form thus avoiding the energy and capital-intensive processes to convert hydrogen to a liquid or chemical state.

In future, compressed hydrogen shipping will focus on developing a zero-emission supply chain through the use of electric drive engines powered by onboard fuel cells.

Global Energy share price summary

Over the last 12 months, Global Energy shares have accelerated 83% higher but are not quite so impressive year-to-date, up 11%.

Global Energy presides a market capitalisation of roughly $41 million, with approximately 457 million shares on its registry.

The post Global Energy (ASX:GEV) share price leaps 18% on green hydrogen grant appeared first on The Motley Fool Australia.

More reading

• Here’s why the Global Energy (ASX:GEV) share price is leaping higher today

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. 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 Tabcorp Holdings Limited (ASX: TAH) share price has been a positive performer on Wednesday.

In afternoon trade, the gaming company’s shares are up 2% to $5.09.

This means the Tabcorp share price is up almost 5% since the start of the week.

Why is the Tabcorp share price pushing higher this week?

The Tabcorp share price was given a boost this week after S&P Dow Jones Indices announced that the company would be added to the exclusive ASX 50 index at the next rebalance.

According to the release, Tabcorp and ResMed Inc. (ASX: RMD) will be joining the index on 20 September. This is at the expense of struggling infant formula company A2 Milk Company Ltd (ASX: A2M), energy company AGL Energy Limited (ASX: AGL) and fuel retailer Ampol Ltd (ASX: ALD).

There is an additional removal from the ASX 50 index due to the recent Woolworths Group Limited (ASX: WOW) demerger of Endeavour Group Limited (ASX: EDV). The latter was automatically added to the index following the demerger, giving it 51 constituents.

The addition of the company to the ASX 50 is good news for the Tabcorp share price for a couple of reasons. As well as index tracking funds having to buy its shares, some fund managers will now be able to invest. This is because fund managers can sometimes have strict investment mandates allowing them to only buy shares from certain indices.

Is it too late to invest?

The good news is that the team at Macquarie Group Ltd (ASX: MQG) still see a lot of value in its shares.

Last month the broker put an outperform rating and $6.45 price target on its shares. Based on the current Tabcorp share price, this implies potential upside of almost 27% over the next 12 months.

Macquarie believes the market is undervaluing its lotteries and Keno businesses.

The post Why the Tabcorp (ASX:TAH) share price is up 5% so far this week appeared first on The Motley Fool Australia.

More reading

• ASX quarterly rebalance: A2 Milk dumped from ASX 50, Nuix kicked out of ASX 200
• Why the Tabcorp (ASX:TAH) dividend was boosted by 32%
• The Tabcorp (ASX:TAH) share price is rising on full-year results
• Tabcorp (ASX:TAH) share price on watch on FY21 earnings
• How did the Tabcorp (ASX:TAH) share price respond last earnings season?

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 recommended ResMed. The Motley Fool Australia owns shares of and has recommended Macquarie Group Limited. The Motley Fool Australia has recommended A2 Milk and ResMed Inc. 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 Paladin Energy Ltd (ASX: PDN) share price is booming in September, up 72% to an 8-year high of 86 cents.

The broad-based buying across the uranium sector has been underpinned by an uptick in uranium spot prices, running to a 6-year high of ~US$35/lb last week.

What’s driving uranium prices?

The uranium market can be difficult to get exposure to, with a limited number of listed uranium players to choose from and no official spot market for physical uranium.

The uranium landscape has evolved rapidly in this year, after the Sprott Physical Uranium Trust began trading on Canada’s Toronto exchange on 19 July.

The Sprott has been aggressively buying physical uranium off the spot market, driving demand and increased transparency in the sector.

Sprott’s Twitter highlighted the fund adding 3.45 million pounds of physical uranium in September alone. The aggressive buying of the spot market coincides with the recent strength behind the Paladin Energy share price.

According to Kitco, analysts believe Sprott is a “critical factor behind the recent push in the energy metal’s price. The Trust gives investors direct access to physical metal.”

Sprott CEO commentary

In an interview with Kitco News, Sprott CEO Peter Grosskopf said he saw the Uranium Trust as a “game-changer for the Uranium market” and expects “to see growing investment demand for the physical metal as industrial demand picks up”.

“We think uranium is entering a new bull market as the world looks for a mix of clean energy in the new green energy revolution,” he said. 

This could place the Paladin Energy share price in the spotlight, as the largest ASX-listed uranium player.

“If you want a low carbon grid, you can achieve it by spending an enormous amount of money and having a highly inefficient grid, which is inherently unstable, or you include nuclear as a core part of the power base. We think uranium has been underplayed for the last 15 years,” said Grosskopf.

Paladin Energy share price snapshot

The broader uranium sector from large cap players like Paladin Energy to small cap explorers like Deep Yellow Limited (ASX: DYL), Peninsula Energy Ltd (ASX: PEN) and Vimy Resources Ltd (ASX: VMY) have all emerged as some of the best performing ASX shares in the past few weeks.

The Paladin Energy share price has come to life this year after trading mostly sideways between 2015 and 2019.

Paladin Energy shares are up 230% year-to-date to 86 cents, but well off its 2011 highs of almost $5.

The post Up 70% in September, why the Paladin Energy (ASX:PDN) share price keeps going up appeared first on The Motley Fool Australia.

More reading

• Why the Paladin Energy (ASX:PDN) share price is up 5% on Monday
• Guess which sector last week’s top performing ASX shares come from
• ASX uranium shares are booming this week. Here’s why.
• Up 50% this week, the Paladin Energy (ASX:PDN) share price is booming. Here’s why.
• Which ASX shares are set to finish the week as the top movers on the ASX 300?

Motley Fool contributor Kerry Sun 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 S&P/ASX 300 Index (ASX: XKO) is dragging lower on Wednesday, following three consecutive days of gains.

During mid-afternoon trade, the ASX 300 is down 0.35% to 7,506.5 points.

Let’s take a look at which ASX companies are making headlines today.

Novonix Ltd (ASX: NVX)

The Novonix share price is up 9.74% to $5.41, after racing to a record high of $5.57 during midday trade.

With no news coming out of the lithium company, it appears investors are buoyant on its prospects.

Just last week, S&P Dow Jones announced changes in the S&P/ASX Indices. As such, Novonix will be officially included in the ASX 300 Index prior to the market open on September 20.

Washington H Soul Pattinson & Co Ltd (ASX: SOL)

The Soul Patts share price is also pushing ahead on Wednesday, up 4.94% to $37.99. This is also a new record high for the company’s shares.

The Australian investment house released a trading update earlier this week, revealing robust growth across its portfolio. The news is having a positive effect with Soul Patts shares up almost 7% so far this week.

Macquarie Group Ltd (ASX: MQG)

Another significant mover today is the Macquarie share price, advancing 4.87% to $179.44.

The investment bank provided a first-half update to the short-term outlook statement given at its late July Annual General Meeting.

Macquarie noted several reasons as to why it expects weaker earnings in the H1 FY22 period. This didn’t appear to faze investors, however, as the company’s shares were on a tear in the morning to an all-time high of $182.66.

Which ASX companies are heading the other way?

St Barbara Ltd (ASX: SBM)

The St Barbara share price is down 6.60% to $1.457. Investors are selling the gold miner’s shares after the spot price of gold fell heavily overnight before rebounding slightly. Its peers, Newcrest Mining Ltd (ASX: NCM) and Northern Star Resources Ltd (ASX: NST), are also down, 2.86% and 5.08%, respectively.

Eagers Automotive Ltd (ASX: APE)

Also being weighed down by investors today is the Eagers Automotive share price, down 6.52% to $16.21.

With no news out of the automotive retailer, its shares appear to be taking a breather after reaching a record high of $17.67 yesterday. Over the past year, the company’s share price is up roughly 80%.

The post Which ASX shares are making a move on the ASX 300? appeared first on The Motley Fool Australia.

More reading

• Why A2 Milk, Flight Centre, Medibank, & St Barbara shares are dropping
• Why Aeris Resources, Macquarie, Novonix, & Qube shares are pushing higher
• ASX 200 midday update: Macquarie jumps, gold miners sink
• Dividends galore! 10 ASX shares trading ex-dividend on Wednesday
• Macquarie (ASX:MQG) share price gains 6% despite lower second half forecast

Motley Fool contributor Aaron Teboneras owns shares of Northern Star Resources Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Macquarie Group Limited and Washington H. Soul Pattinson and Company Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Commonwealth Bank of Australia (ASX: CBA) share price is gaining despite the Federal Court finding its subsidiary misled superannuation members.

The Federal Court has declared CBA’s subsidiary Colonial First State Investments misled and deceived its members at least 12,978 times.

Right now, the CBA share price is $103, 0.84% higher than its previous closing price.

Let’s take a closer look at the findings against CBA’s wealth management subsidiary.

Colonial found to have misled members

The CBA share price is in the green despite Colonial being found to have given its superannuation customers misleading investment advice.

The Federal Court found that, between 2014 and 2016, Colonial told some members to continue using its FirstChoice Superannuation Trust.

It did so despite the Superannuation Industry Act requiring all superannuation be paid into a MySuper product since 2012.

The Australian Securities and Investments Commission (ASIC) launched the proceedings against Colonial.

ASIC claimed Colonial told members it needed their direction to keep them in the FirstChoice fund due to legislative changes.

It also alleged Colonial failed to tell members that, if it didn’t get a direction, it would have been forced to transfer the member’s superannuation contributions into a MySuper product.

Colonial has apologised to those affected by its communications and is finalising remediations.

According to Colonial, a penalty hearing will be held in late 2021.

ASIC’s deputy chair, Sarah Court, commented on the findings:

Superannuation fund members need to receive clear and accurate information to make informed decisions. ASIC alleged Colonial made misleading representations which may have impacted members’ decisions about where to keep their funds and may have resulted in members’ funds being kept in higher fee-paying super products that included commissions. These actions did not put members’ interests first.

CBA share price snapshot

The Commonwealth Bank share price has been performing well on the ASX lately.

It is currently 25% higher than it was at the start of 2021. Additionally, it has gained 50% since this time last year.

The post CBA (ASX:CBA) share price lifts despite latest superannuation woes appeared first on The Motley Fool Australia.

More reading

• How have ASX bank shares performed during the August 2021 earnings season?
• The CBA share price has struggled in the last month. Here’s why
• The Macquarie (ASX:MQG) share price is outperforming the ASX big 4 in the past month
• ASX 200 bank shares fall as AUSTRAC says risk of criminal activity is ‘high’
• Will ASX 200 shares be rocked by RBA taper talk tomorrow?

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 ASX 50 index is home to some of the highest quality companies that the region has to offer.

While not all shares in the index are necessarily in the buy zone, two that could be are listed below.

Here’s why analysts rate these ASX 50 shares highly:

Cochlear Limited (ASX: COH)

The first ASX 50 share to look at is Cochlear. It is one of the world’s leading hearing solutions companies with a portfolio of industry-leading cochlear implant products such as the Nucleus System and the Baha System.

In addition, it has a wide global distribution network. Combined with its high level of investment in research and development, this leaves it well-positioned to benefit from the ageing population tailwind.

Analyst at Macquarie are positive on the company. In response to its full year results last month, the broker put an outperform rating and $256.00 price target on the company’s shares.

Xero Limited (ASX: XRO)

Another ASX 50 share that is rated as a buy is Xero. It is a provider of a cloud-based business and accounting solution to small and medium sized businesses. It has been growing strongly over the last few years and looks well-positioned to continue the trend in the years to come.

This is thanks to its international expansion, acquisitions, the transition to the cloud, and its burgeoning app ecosystem. The company recently introduced its App Store in the ANZ and UK markets. Much like Apple’s App Store, this will allow Xero to earn royalties on third party apps that its subscribers use. This has the potential to be a very lucrative revenue stream in the future.

One broker that is particularly positive on Xero is Goldman Sachs. It currently has a buy rating and $165.00 price target on its shares. Goldman believes Xero has the potential to deliver strong revenue growth over multiple decades.

The post 2 fantastic ASX 50 shares that analysts rate as buys appeared first on The Motley Fool Australia.

More reading

• 2 excellent ASX 200 blue chip shares that may be worth a spot in a portfolio
• Top broker says Xero (ASX:XRO) share price is a buy
• 2 excellent ASX tech shares rated as buys
• Here’s a look at how ASX WAAAX shares compare on growth
• The Cochlear (ASX: COH) share price is up 4% this last week

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 shares of and has recommended Cochlear Ltd. and Xero. The Motley Fool Australia owns shares of and has recommended Xero. The Motley Fool Australia has recommended Cochlear 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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In afternoon trade, the S&P/ASX 200 Index (ASX: XJO) has followed the lead of US markets and is dropping. At the time of writing, the benchmark index is down 0.4% to 7,502.1 points.

Four ASX shares that are falling more than most today are listed below. Here’s why they are dropping:

A2 Milk Company Ltd (ASX: A2M)

The A2 Milk share price has continued its slide and is down over 2% to $5.56. Earlier this week the team at Credit Suisse reiterated their underperform rating and $5.50 price target. The broker has concerns over China’s falling birth rates and the impact this may have on its sales. The A2 Milk share price is now down a very disappointing 52% in 2021.

Flight Centre Travel Group Ltd (ASX: FLT)

The Flight Centre share price is down 2.5% to $18.12. This appears to have been driven by profit taking after some strong gains in recent weeks. For example, prior to today, the travel agent’s shares were up a massive 35% since 20 August.

Medibank Private Ltd (ASX: MPL)

The Medibank share price is down 2.5% to $3.54. This private health insurer’s shares have fallen today after trading ex-dividend this morning for its fully franked 6.9 cents per share final dividend. Eligible shareholders can now look forward to receiving this dividend in a little over three weeks on 30 September.

St Barbara Ltd (ASX: SBM)

The St Barbara share price is down 6.5% to $1.46. Investors have been selling St Barbara and other gold miners today following a pullback in the gold price. According to CNBC, the spot gold price fell 2% on Tuesday night to US$1,796.40 an ounce. This was driven by the strengthening US dollar and higher bond yields.

The post Why A2 Milk, Flight Centre, Medibank, & St Barbara shares are dropping appeared first on The Motley Fool Australia.

More reading

• Why the A2 Milk (ASX:A2M) share price has this leading broker’s Aussie clients scrambling
• ASX 200 midday update: Macquarie jumps, gold miners sink
• Leading broker reveals why these 10 big-name shares have been firing up its clients
• Dividends galore! 10 ASX shares trading ex-dividend on Wednesday
• 5 things to watch on the ASX 200 on Wednesday

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 and Flight Centre Travel 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 Milton Corporation Ltd (ASX: MLT) share price has been a major winner on the ASX broad indices over the last few weeks.

Whereas the S&P/ASX 200 Index (ASX: XJO) has slipped 0.4% into the red over the last month, the investment company’s shares have climbed 22%.

Let’s investigate further.

What tailwinds are behind the Milton share price?

The major takeout weighing in on the Milton share price right now is the proposed merger with Washington H. Soul Pattinson & Company Ltd (ASX: SOL).

Back in June, the company announced it had entered into a scheme implementation agreement with Soul Pattinson with the latter proposing to acquire 100% of the outstanding Milton shares it does not already own.

Under the proposal, Milton shareholders will receive several incentives. Firstly, they will receive a “scrip consideration” that reflects a 10% premium to Milton’s net tangible assets (NTA) pre-tax.

Next, they will receive a fully franked Milton special dividend of up to 37 cents per share, in addition to Milton’s final dividend of 8 cents per share. Shareholders will also access a portion of Soul Pattinson’s full franked FY21 dividend, estimated at 36 cents per share.

If the proposal is successfully voted through, Milton shareholders will own 33.8% of the new entity.

What’s happened since?

On 3 September, the company announced that both entities had finalised the exchange ratio for the proposed merger.

Both parties agreed that Milton shareholders will receive 0.1863 Soul Pattinson shares for every Milton share owned, if approved.

This exchange ratio implied a total value of $7.18 per Milton share based on Soul Pattinson’s share price of $35.76 at the timing of the release.

At the time, that value signified a 5.6% premium to the Milton share price. However, Milton shares are now exchanging hands at $7.38 apiece and Soul Pattinson shares are trading at $38.12.

As such, the economics of the exchange ratio now implies a total value of $7.62 per Milton share at Soul Pattinson’s current share price. This represents a premium of 3.2% to the current Milton share price.

As a result, Milton’s independent board has maintained its recommendation that shareholders vote in favour of the proposal. An independent expert has also concluded that the scheme is in the best interests of Milton shareholders.

What has management said?

Regarding the proposal, Committee of Independent Milton Directors’ chair Graeme Crampton said:

The exchange ratio confirmed today demonstrates the implied value in the proposed transaction for Milton Shareholders and underscores the Independent Directors’ recommendation. We continue to recommend that shareholders vote in favour of the Scheme in the absence of a superior proposal and subject to the Independent Expert continuing to conclude that the Scheme is in the best interests of Milton Shareholders.

Milton share price snapshot

The Milton share price has climbed 54% this year to date, extending the previous 12 months’ return of 80%.

Both of these results have outpaced the broad index’s return of around 25% over the past year.

The post Here’s why the Milton (ASX:MLT) share price has rallied 22% in a month. appeared first on The Motley Fool Australia.

More reading

• ASX 200 rises, TechnologyOne climbs, Milton up

The author Zach Bristow has no positions 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 owns shares of and has recommended Washington H. Soul Pattinson and Company Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The buy now, pay later (BNPL) industry has grown rapidly in recent years.

Fueled by a shift to online shopping, ASX BNPL shares have seen significant increases in customer numbers and spending levels, which have flowed through to share prices.

Australia’s major player Afterpay Ltd (ASX: APT) has seen its share price rise from below $10 in 2018 to more than $130 currently. meanwhile, shares in its closest ASX competitor, Zip Co Ltd (ASX: Z1P), have lifted from less than a dollar in 2018 to closer to $7 today. 

A quick take on buy now, pay later

BNPL refers to a range of point of sale financing options that allow customers to pay for purchases via instalments. The BNPL provider pays the merchant for the goods, and the merchant pays the BNPL provider a fee for facilitating the transaction.

The customer is then required to pay the BNPL provider the cost of the goods in instalments. BNPL providers generally do not charge customers interest, but they may be charged fees for late or missed payments.

The COVID-19 pandemic has provided tailwinds to the sector as consumers moved online. A recent report in Business Wire said the adoption of BNPL was expected to grow steadily in Australia during 2021-2028, at a compound annual growth rate of 13.1%. 

The Australian industry is now starting to mature, with BNPL players turning to global expansion to further grow their businesses.

Afterpay operates in North America, the United Kingdom, Australia, and New Zealand, and launched into Canada, Spain, France and Italy in FY21. Zip operates in 12 markets across 5 continents, including the United States, UK, Canada, and Mexico.

Newer competitor Sezzle Inc (ASX: SZL) listed on the ASX in 2019 and is focused on the North American market from its base in the US.

Splitit Ltd (ASX: SPT), which also listed in 2019, is headquartered in New York and is accepted by e-commerce merchants in 30 countries. 

How have ASX BNPL shares performed against the market?

ASX BNPL shares bounced back strongly from the March COVID-19 downturn to produce some impressive returns in 2020. Since peaking around February 2021, however, BNPL share prices have retreated somewhat.

The Zip share price is currently down 51% from its February peak of $13.92, with the Sezzle share price down 44% from a high of $11.72.

The Splitit share price is currently trading 72% below its February high of $1.51 while the Afterpay share price has retreated 17.5% from its own February high of $158.47.

By comparison, the All Ordinaries Index (ASX: XAO) is up 12.7% since February while the S&P/ASX 200 Index (ASX: XJO) is up by the same amount.

Who are the winners this earnings season? 

Afterpay was a strong performer this earnings season, reporting a 90% increase in underlying sales for FY21. The BNPL behemoth transacted $21.1 billion in sales for the financial year. Based on Q4 FY21 trading, this is a run rate of more than $24 billion per annum. This exceeds Afterpay’s objective of reaching $20 billion in underlying sales 12 months ahead of target.

Zip, which reported its results on the same day as Afterpay, saw transaction volumes increase 176% year on year to reach $5.8 billion. Zip reported that growth was continuing to accelerate in FY22, with year to date transaction volumes up 58% in Australia and 240% in the United States. 

Afterpay reported a 63% increase in customers over FY21, with 16.2 million active customers at the end of the financial year. Approximately 25,000 new customers joined Afterpay per day during FY21. Zip reported a 248% year on year increase in customer numbers, with 7.3 million customers at the close of FY21.

Both Afterpay and Zip also reported significant increases in the number of merchants offering their payment solutions. Zip grew merchant numbers by 109% to 51.3k, while Afterpay increased merchant numbers by 77% to 98.2k. 

And the losers in FY21? 

Not all ASX BNPL shares reported their full-year results in the August earnings season. Smaller players Sezzle and Splitit released interim results last month, providing insight into their growth progress.

According to Sezzle’s 2Q FY21 results, $1.4 billion in sales were made through its platform over the preceding 12 months. Sales for the quarter were $411.1 million, up from $375.1 million in the preceding quarter.

Splitit’s half-year report revealed sales of US$172.5 million for the half, which correlates to annualised sales of US$361 million. 

Sezzle reported 3 million active customers at the end of June, with its top 10% of customers transacting 49 times a year. Splitit added 134,000 new customers during the half, bringing total customers to 566,000. Sezzle counted 41,800 merchants at the end of June, while Splitit reported merchant numbers of 2800.  

Looking ahead?

As the BNPL sector matures, companies are looking offshore for growth opportunities. Sezzle is making headway with larger enterprise merchant partners as it seeks to scale its offering, with Target and GameStop onboarded.  Geographic expansion is also on the cards for the company — Sezzle’s primary market is the US, but it has also launched in Canada, India, and Brazil.

Splitit has also signed up multiple new large merchants, including Google Japan. This marks an important step in Splitit’s expansion into Asia. Zip is also focused on expanding its global footprint, launching in the UK and entering markets in Europe and the Middle East. 

Recent merger and acquisition (M&A) activity has highlighted opportunities in the sector, which may accelerate strategic focus and commercial integration.

Afterpay is set to be taken over by fintech Square Inc (NYSE: SQ) in a $39 billion deal announced last month. The Afterpay share price surged on the news, which will see shareholders receive 0.375 shares of Square Class A common stock for each Afterpay ordinary share they hold.

Square will establish a secondary listing on the ASX following the acquisition, which will allow Afterpay shareholders to trade Square using CHESS Depository Interests. 

While earnings are increasing as BNPL shares scale their offerings, none are yet profitable or paying dividends.

Zip raised $676 million in capital in FY21 but recorded a cash earnings before interest, tax, depreciation and amortisation (EBITDA) loss of $22.9 million.

Afterpay completed a $774.4 million capital raise in early FY21, but reported a statutory loss after tax of $159.4 million. Sezzle reported a loss of approximately $30 million for the half-year, while Splitit reported a loss of US$18.77 million. Longer term, investors will likely expect ASX BNPL shares to shift to profitability. 

The post How have ASX BNPL shares performed during the August 2021 earnings season? appeared first on The Motley Fool Australia.

More reading

• The Zip (ASX:Z1P) share price has plunged 30% in 5 months. Is it a buy?
• Leading broker reveals why these 10 big-name shares have been firing up its clients
• Is the Sezzle (ASX:SZL) share price a beaten-up buy?
• Afterpay’s done, so here’s the BNPL player we’re backing: expert
• Here’s why the Afterpay (ASX:APT) share price is up 5% in a month

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