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The Redflex Holding Limited (ASX: RDF) share price is standing at the starting blocks today after the company released the results of its scheme meeting on a proposed acquisition.

Redflex shares are flat at 95 cents at the time of writing, after gaining more than 145% over the past 12 months.

Redflex designs and manufactures solutions for road congestion and safety, effective flow of traffic, ticketless parking systems, video surveillance, and back-office solutions.

Redflex’s takeover bid

Redflex shareholders voted today in favour of the company’s takeover by VM Consolidated, Inc, an indirect wholly-owned subsidiary of Verra Mobility Corporation. 

Redflex investors voted for the deal after Verra increased its offer from 92 cents to 96 cents for each Redflex share. While the deal still hangs on some regulatory approvals – including from the Saudi Arabian competition watchdog – Redflex expects to lodge paperwork with the ASX by 17 May.

The takeover bid was first announced in January, and 96 cents per share is a significant premium on the closing Redflex share price at any stage in the previous five years before the original offer.

Background on Redflex

Redflex is known for its manufacture of speed cameras and other traffic management products and services which are sold and managed in the Asia Pacific, North America, United Kingdom, Europe and Middle East regions.

Redflex develops, manufactures and operates a wide range of platform-based solutions all utilising sensor and image capture technologies enabling active management of state and local motorways.

The Redflex Group runs its own systems engineering operations, system integration technologies and innovation centre for research and development. It makes most of its revenue from the US, where its traffic business is predominantly a Build Own Operate and Maintain (BOOM) business providing fully outsourced traffic enforcement programs.

Its Australian business involves the sale of traffic enforcement products.

Redflex share price snapshot

The Redflex share price has doubled from 40 to 86 cents per share at the original announcement of the takeover bid and has raised steadily since then to its current price. The last time it was above 60 cents was in February 2015.

More reading

• Commonwealth Bank (ASX:CBA) share price hits record high. Here’s why
• Why Crown, Fortescue, Nearmap, & Tyro shares are charging higher
• Here’s why the Paragon (ASX:PGC) share price has surged 19% today
• 3 unstoppable growth trends to invest in today
• 2 ASX 200 COVID-19 shares to buy

Motley Fool contributor Lucas Radbourne-Pugh 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 Commonwealth Bank of Australia (ASX: CBA) share price has hit a new multi-year high today as the company announces a new tech partnership. Shares in the bank are currently trading at $94.68, up 0.8% on Friday’s close.

As well as breaking through its previous 52-week high, the CBA share price is closing in on its all-time high of $96.17, achieved in late March 2015. 

Let’s take a look at what the banking giant announced.

Big tech partnership

The Commonwealth Bank has announced a partnership with major e-commerce operator Bigcommerce Holdings Inc, in what The Age today described as a move to attract younger, digitally savvy business banking customers.

BigCommerce is a US-listed company worth $3.34 billion. It provides a software-as-a-service (SaaS) e-commerce platform that helps target online shoppers, similar to that of rival Shopify Inc.

CBA says the partnership will provide the bank’s business customers with a platform that allows them to establish and grow their online presence. Anything from building a website and marketing campaigns through to payment solutions will be covered. It will also enable Commbank merchants to get paid faster through its same-day settlement.

According to The Age, CBA aims to use the platform to make inroads into the business banking sector. Traditionally Commonwealth’s major rival National Australia Bank Ltd (ASX: NAB) has been dominant in this sector and CBA is looking to change this.

Hunting for millennials

With the cohort of millennials set to grow by 17% over the next 10 years, Australia’s major bank is on the hunt for younger customers. It is widely held that millennials are generally more tech-savy than their older counterparts and, as such, a different style of marketing is required to attract them to a business.

Commonwealth Bank has been increasing its focus on attracting this demographic and, so far, this play appears to be bearing fruit. According to CBA, 57% of all its new bank customers over the last 6 months have been millennials.

Nonetheless, as stated by James Fowle, CBA’s business customer solutions executive general manager:

This is for businesses of all sizes, from a small startup selling things from your Instagram account all the way up to a large e-commerce player with multiple warehouses across Australia.

As such, this move is not just for the younger generation but all those that have transitioned to a stronger online presence during the COVID-19 pandemic.

About the CBA share price

The CBA share price has had a great year so far, gaining more than 13%. What’s more, investors holding the stock will receive a dividend yield of 3.3%, fully franked.

And with the bank yet to disclose its results this month, Citi analysts are expecting a jump in that amount. According to the analysts, Commonwealth Bank should pay a $3.45 dividend in FY21, meaning a 3.65% payout at today’s prices.

More reading

• ASX 200 Weekly Wrap: Bank shares push ASX 200 towards all-time high
• The big four banks and Macquarie offer these juicy dividend yields
• How the Commonwealth Bank (ASX:CBA) share price moved this week
• 4 reasons this broker thinks the NAB (ASX:NAB) share price is a buy
• IOOF (ASX:IFL) share price higher on transformational acquisition update

Daniel Ewing has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Shopify. 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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In afternoon trade, the S&P/ASX 200 Index (ASX: XJO) is on course to record a strong gain. At the time of writing, the benchmark index is up 0.8% to 7,137.9 points.

Four ASX shares that are climbing more than most today are listed below. Here’s why they are charging higher:

Crown Resorts Ltd (ASX: CWN)

The Crown share price is up 7.5% to $13.02. This follows news that rival Star Entertainment Group Ltd (ASX: SGR) has tabled a conditional, non-binding, indicative merger proposal. On a pro forma basis, Star’s offer implies a price in excess of $14.00 per Crown share. This was a 15.5% premium to its last close price. Crown is considering the offer and also an improved bid from Blackstone. The Star share price is up 6.5% on the news.

Fortescue Metals Group Limited (ASX: FMG)

The Fortescue share price is up 7% to $24.63. Investors have been buying the iron ore producer’s shares after the price of the steel making ingredient continued to rise. According to Metal Bulletin, the spot iron ore price rose US$10.37 per tonne or 5.1% to US$212.25 per tonne on Friday night.

Nearmap Ltd (ASX: NEA)

The Nearmap share price has rebounded 3% to $1.77. This appears to have been driven by some heavy insider buying and a positive broker note out of Morgan Stanley. In respect to the latter, this morning the broker retained its overweight rating and $3.30 price target on its shares despite Nearmap’s legal issues. This price target represents potential upside of 86%.

Tyro Payments Ltd (ASX: TYR)

The Tyro share price is up over 7% to $3.67. The catalyst for this was news that the payments company has signed an agreement to acquire health fintech, Medipass, for $22.5 million. Medipass has created a digital health payment platform allowing healthcare providers to accept healthcare payments without the need for a terminal. Its multi-sided platform links healthcare funders, healthcare providers and patients to streamline the claims approval and payment acceptance process.

More reading

• The Tyro (ASX: TYR) share price jumps 5% on 2 positive updates
• Why the Nearmap (ASX:NEA) share price is jumping 7% today
• ASX 200 up 1.1%: A2 Milk crashes, Crown-Star $12bn merger, Woolworths update
• Star (ASX:SGR) and Crown (ASX:CWN) shares on watch amid $12bn merger proposal
• ASX 200 Weekly Wrap: Bank shares push ASX 200 towards all-time high

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Tyro Payments. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Nearmap Ltd. The Motley Fool Australia has recommended Nearmap 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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The Paragon Care Ltd (ASX: PGC) share price is flying today following two exciting updates from the company. At the time of writing, the Paragon share price is 19% higher than its previous close, with shares in the company trading for 25 cents.

This comes after Paragon announced that it had renegotiated its financing facilities with the National Australia Bank Ltd (ASX: NAB). It also provided the market with a positive update to its quarterly performance.

Let’s take a closer look at today’s news from the medical device company.

Renegotiated financing facilities

Paragon announced today it has renegotiated its financing facilities with NAB.

The company expects the new banking facility to create $575,000 of savings annually, increasing in time.

The new banking contract will cover the next 3 years and is designed to support the company’s future growth.

Paragon states the new facility will allow it to resume dividends and explore acquisition opportunities.

As of the end of March, Paragon had $101 million in debt. Its amortisation will resume from 1 July 2021.

Paragon’s third quarter update

Paragon also announced today its earnings before interest, tax, depreciation, and amortisation (EBITDA) for the financial year to date at the end of last quarter was 79% higher than the prior corresponding period.

It said its improved performance reflects its new cost rationalisation program, which has significantly reduced its employment, marketing, and administration costs.

Paragon also stated its trading conditions have improved over the past six months. Particularly, elective surgery has now returned to pre-COVID levels. As a backlog of elective surgery cases still remain, sustained demand of the company’s devices is expected to continue until next year.  

Paragon’s revenue for the financial year to date is down 3% compared to the prior corresponding period. It’s raked in $173 million so far. Its gross profits are in line with the prior corresponding period.

The company also made $15.3 million in payments to vendors for business acquisitions this financial year. It now has no more payments remaining. Paragon states this will lead to significantly more free cash flow in the future.

As of 31 March 2021, the company had $19 million in cash.

Commentary from management

Paragon’s CEO Phil Nicholl commented today’s updates, saying:

The successful renegotiation of our banking facilities is a significant milestone for the Company. The strength of our underlying business now means that we can repay debt, whilst also preserving our ability to pay dividends and explore acquisition opportunities…

Over the past year, we have been working hard to implement improved processes across the business and these initiatives are now delivering over $7 million in annualised savings and a structurally lower cost base… We are well positioned to capitalise on the growth opportunities to expand our market share as COVID pressure abates.

Paragon Care share price snapshot

The boost to the Paragon Care share price from today’s news has put the company’s shares back into the green on the ASX.

Currently, the Paragon share price is up 8.7% year to date. It’s also gained 25% over the last 12 months.

The company has a market capitalisation of around $70 million, with approximately 337 million shares outstanding.

More reading

• 3 unstoppable growth trends to invest in today
• 2 ASX 200 COVID-19 shares to buy
• Why the Digital Wine (ASX:DW8) share price is crashing 12% today
• Facebook to invest $15 million into regional Australian news media
• Why the Regional Express (ASX:REX) share price is flying higher today

Motley Fool contributor Brooke Cooper 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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This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

Every day, the media seems to promote a hot new trend for investors to chase. Cryptocurrencies, NFTs, SPACs, and other buzzy terms frequent the headlines with jargon and lofty promises.

Investors might profit from some of those trends, but there are other markets that are more resilient and easier to follow. Let’s review three of them and see why they could be great investing opportunities.

1. The fintech market

The fintech market includes digital-payment platforms, online banking and wealth management services, and some cryptocurrency trading platforms. This sector continues to expand as people use less cash, shop online more frequently, and rely less on traditional banks.

Businesses are also starting to recognize the value of streamlining their payment services, integrating those tools into their mobile apps, and using analytics to track customer purchases and trends. Allied Market Research expects the global mobile payment market to expand at a whopping compound annual growth rate (CAGR) of 30.1% between 2020 and 2027 to become a $12.06 trillion market.

Companies that could profit from that expansion include PayPal (NASDAQ: PYPL), which provides online-payment services to 377 million accounts, and Square (NYSE: SQ), which processes payments for merchants and offers consumers peer-to-peer payments, Bitcoin purchases, and free stock trades through its Cash App.

2. Artificial intelligence

The artificial intelligence (AI) market is often associated with intelligent robots but its reach is actually much broader. AI services are now used to crunch data for social networks and advertising platforms, process large amounts of information to help companies make decisions, and control machines and vehicles.

They can power chatbots to streamline a company’s customer-support services, optimize a company’s supply chain by identifying inefficiencies, and improve safety standards by spotting hazards.

The global AI market grew into a $39.9 billion market in 2019, according to Grand View Research, but it could still expand at a CAGR of 42.2% between 2020 and 2027.

My top picks in this market include NVIDIA (NASDAQ: NVDA), which provides high-end GPUs for processing AI tasks in data centers, and Palantir (NYSE: PLTR), which collects and processes data for government agencies and enterprise customers.

3. Virtual and augmented reality

The virtual reality (VR) and augmented reality (AR) markets are still tiny but both have explosive growth potential.

VR devices, which immerse users in digital environments, could be used for more video games, simulations, and even remote socialization. Facebook‘s Oculus VR enjoys a first-mover’s advantage in this market, and its headsets could expand Facebook’s ecosystem beyond PCs and mobile devices.

AR devices, which project digital images on real-world environments, can be used as heads-up displays for certain professions or entertainment, navigation, and communication tools for mainstream consumers.

One company worth watching in this market is Vuzix (NASDAQ: VUZI), which mainly sells AR smartglasses to enterprise customers. It’s still a small company but enjoys an early-mover’s advantage in the AR space, and could continue to expand as more companies try out AR glasses.

The global VR and AR markets could expand at a CAGR of 42.9% between 2020 to 2030, according to Research and Markets, and become a $1.27 trillion market. That bullish forecast suggests VR and AR devices could become the next big computing platforms after smartphones.

Look before you leap

Spotting these secular trends is a good first step toward finding great growth stocks, but investors should still do more homework and split the more speculative investments from the conservative ones.

For example, PayPal is a more conservative investment than Square, since it’s trading at much lower valuations and isn’t heavily dependent on revenues from Bitcoin trades. Palantir is pricier, more speculative, and more controversial than NVIDIA, and Vuzix could still face tough competition from tech giants like Apple as they enter the nascent AR market.

That said, understanding these companies and their secular tailwinds can give investors a better grasp of the tech sector than simply chasing the financial media’s hippest investing trends.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

More reading

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• 1 simple (and safer) way to invest in cryptocurrency
• Dogecoin price drops by a third after Elon Musk calls it a “hustle” on comedy show
• ASX 200 Weekly Wrap: Bank shares push ASX 200 towards all-time high
• ASX tech shares are in a world of pain. There might be more to come…

Leo Sun owns shares of Apple, Palantir Technologies Inc., and Square. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to its CEO, Mark Zuckerberg, is a member of The Motley Fool’s board of directors. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Apple, Bitcoin, Facebook, NVIDIA, PayPal Holdings, and Square. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Palantir Technologies Inc and recommends the following options: short March 2023 $130 calls on Apple, long March 2023 $120 calls on Apple, and long January 2022 $75 calls on PayPal Holdings. The Motley Fool Australia has recommended Apple, Facebook, NVIDIA, and PayPal Holdings. 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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This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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There are a few S&P/ASX 200 Index (ASX: XJO) shares that are seeing a lot of growth despite, or because of, the COVID-19 pandemic.

However, the below two global businesses have been generating long-term growth and expect growth after the pandemic subsides:

Sonic Healthcare Ltd (ASX: SHL)

Sonic is one of the biggest healthcare shares on the ASX. It is a major pathology business with laboratories all around the world.

It’s currently operating in Australia, Belgium, Switzerland, the UK, Germany, the USA, Ireland and New Zealand.

Sonic’s COVID testing capability continues to play an important part in controlling the control. How important? At the time of its FY21 half-year result release, it had done over 18 million COVID PCR tests across the world.

Whilst the global business revenue (excluding COVID testing) half-year revenue was down 1%, it was hurt significantly less than the initial COVID lockdowns. But the COVID-19 testing revenue contributed significantly. HY21 revenue grew 33% to $4.4 billion, earnings before interest, tax, depreciation and amortisation (EBITDA) rose 89% to $1.3 billion and net profit rose 166% to $678 million.  

The ASX 200 COVID-19 ASX share saw margin accretion in both laboratory and imaging operations because the company was able to utilise its existing infrastructure. That includes specimen collections facilities, courier networks, laboratories and other facilities, equipment, IT, management, staff and supply chains.

Sonic is now focusing on further growth opportunities, including acquisitions, contracts and joint ventures, supported by its “very strong” balance sheet. Management revealed the business is bidding on significant opportunities in Australia, the UK, the USA and Canada.

According to Commsec, the Sonic share price is valued at 24x FY22’s estimated earnings.

Ansell Limited (ASX: ANN)

Ansell is one of the largest global makers of protective gear, specialising in gloves. It has customers in over 100 countries.

It has two main segments – industrial and healthcare. As you can imagine, the healthcare division has seen strong growth over the last year.

Ansell has successfully managed COVID-19 risks at its manufacturing locations, resulting in limited downtime. It has managed to implement price increases to offset raw materials and outsourced supplier costs.

Its non-COVID units have seen a faster and stronger comeback than previously foreseen.

The ASX 200 COVID-19 share has managed to continue to supply customers with product despite the tight raw material supply and freight constraints. Lower travel and marketing costs are also helping profitability.

Ansell is investing in key capacity expansion to meet the increased demand. These expansions are on track.

Over the longer-term, Ansell is expecting more growth even after a high level of vaccinations because of enhanced safety practices at plants and hospitals, better protection awareness leading to increased glove use per capita (particularly in emerging markets), elevated research and testing activities worldwide, improving industrial activity and the potential need for annual COVID-19 vaccinations.

Ansell is expecting the FY21 second half sales growth to be strong despite the solid performance of the prior corresponding period. It’s expecting earnings per share (EPS) to be in the range of US$1.92 to US$2.02.

More reading

• ASX 200 up 1.1%: A2 Milk crashes, Crown-Star $12bn merger, Woolworths update
• ASX 200 Weekly Wrap: Bank shares push ASX 200 towards all-time high
• 5 things to watch on the ASX 200 on Monday
• 2 ASX 200 shares to buy for dividends
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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Ansell Ltd. and Sonic Healthcare 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 Digital Wine Ventures Ltd (ASX: DW8) share price is having a rough day at trading. At the time of writing, shares in the online wine company are trading for 12 cents each – down 12.0%.

The precipitous fall comes after the company provided an update on its trading during April.

Let’s take a closer look at the announcement and what it means for the Digital Wine share price.

Digital Wine share price crashes on lower sales

In a statement to the ASX, Digital Wines says it sold just over 23,000 cases of wine in April. The company was at pains to point out that this figure is up 580% on the same time last year. However, sales are down 9.1% over March. Back in March, sales increased 540% month on month (MoM). However, orders processed in April are up 350% MoM compared to 504% MoM in March. From March to April, orders processed also fell 22.5% to around 9,500 orders.

Digital Wine largely attributed the fall in sales and orders processed in April to “the extended vintage preoccupying many winemakers.”

Investors did not seem to be buying this, however, judging by the Digital Wine share price.

Other announcements

Along with the sales figure, Digital Wine also had another few announcements in today’s update.

Firstly, 19 additional suppliers have signed with the company since its last update in March. This includes 14 producers and 5 importers/wholesalers.

Digital Wine also reports it has “soft launched” its direct-to-trade marketplace on its Wine Depot platform. First orders were delivered in Sydney and Melbourne last week. Over the next few weeks, the company will progressively roll out access to the trading floor in Sydney before making the platform available in Melbourne.

Finally, the company received a liquor licence allowing Wine Depot to sell alcohol to the general public. With the licence secured, Digital Wine will launch an invitation-only membership program called Insider Trading. Shareholders, staff, and suppliers will be able to purchase wine directly from the business at discounted rates.

Digital Wine share price snapshot

Over the past 12 months, the Digital Wine share price has increased an astonishing 1,733.33%. In mid-April, shares reached an all-time high of 21 cents each.

Digital Wine Ventures has a market capitalisation of $176.3 million.

More reading

• What’s with the Digital Wine (ASX:DW8) share price today?
• Why is the Digital Wine (ASX:DW8) share price tumbling despite strong results?

Motley Fool contributor Marc Sidarous 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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Facebook, Inc. (NASDAQ: FB) is investing $15 million into Australia’s regional and digital newsrooms in its latest grant funding.

Facebook told The Motley Fool Australia it expects the funding will help Australian publishers and independent journalists to produce news of public interest.

The grants will also be available to regional, rural and diverse news publications to help them develop new products and strategies to boost their reach and revenue.

$15 million for regional newsrooms

Facebook will partner with The Walkley Foundation to distribute the grants among Australian newsrooms.  

Facebook Australia’s head of news partnerships, Andrew Hunter, commented on the value of funding smaller Australian newsrooms, saying:

Facebook will invest these funds where they are needed most. It will go to the newsrooms that are doing the important work of telling stories that matter to local, regional and rural communities. It will also help diverse newsrooms and independent journalists producing news of public interest value across Australia. We want to help smaller publishers develop new products and strategies to expand reach and revenue, ultimately creating a sustainable path for the news industry.

The Walkley Foundation’s CEO Louisa Graham, also commented on the funding:

We are currently in discussions with Facebook to partner on a public interest journalism fund that will help smaller publishers and independent journalists produce news of public interest value across Australia.

Facebook said it hopes the $15 million investment will help to build its partnership with The Walkley Foundation over the next 3 years.

The social media platform stated it will continue to back best practice and ethical journalism through its support of the Walkley Foundation’s awards program this year.

The Walkley Foundation will be releasing more information on Facebook’s latest investment in Australian news media over the coming weeks.

Facebook’s funding of Aussie news

Facebook’s soon-to-be-announced grant project will be the largest the social media giant has entered into in Australia.  

The $15 million worth of grants follow multiple, smaller, investments from Facebook into Australian news publications over recent years.

Last year, Facebook invested $2 million into journalism in the Asia Pacific region as a part of its Journalism Project’s COVID-19 News Relief Fund Program. 17 Australian news publications were involved in the funding, each receiving grants worth between US$10,000 and US$60,000.

Michael Waite, founder of the Naracoorte News, which received a COVID-19 News Relief Fund Program grant, was quoted by Facebook’s Journalism Project. Waite said:  

The grant funds… provided an incredibly important independence strength to our newspaper. The funds enabled us to focus on local stories and serve the community with local council coverage, without the concern of needing council advertising.

At the request of the communities in the surrounding areas, this paper expanded to report on more local councils… Our paper and the community are seeing the benefits each week.

Facebook also invested $5 million into Australian news producers when it brought its Journalism Project News Accelerator to Australia in 2019.

Facebook’s still making deals with Australian newsrooms

Following the short-lived removal of Australian news from Facebook in February 2021, Facebook has been making deals with Australian news producers in an effort to work within the Australian government’s new media code.

Soon after the Australian government extended the negotiation period of its world-first News Media Bargaining Code, Facebook and Seven West Media Ltd (ASX: SWM) struck a deal to see Seven’s news appear on the social media platform.

Following in Seven’s footsteps, News Corporation (ASX: NWS) and Nine Entertainment Co Holdings Ltd (ASX: NEC) signed deals with Facebook in mid-March.

Since then, Australian Community Media, Solstice Media, Private Media, and Schwartz Media have each entered into agreements with Facebook to see their content published on the platform.

According to the AFR, Facebook and the Guardian Australia are still working towards an agreement. Discussions between the two bodies previously stalled due to financial issues.

More reading

• Why Adore Beauty, Appen, HUB24, & News Corp shares are charging higher
• ASX 200 up 0.45%: Macquarie full year results & REA Group Q3 update
• News Corp (ASX:NWS) share price rises on latest results
• This ASX tech ETF might be in the buy zone today. Here’s why
• Brokers point to these ASX 200 shares to beat the market in May

Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to its CEO, Mark Zuckerberg, is a member of The Motley Fool’s board of directors. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Facebook. The Motley Fool Australia has recommended Facebook. 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 Regional Express Holdings Ltd (ASX: REX) share price is soaring. At the time of writing, the regional airline operator’s shares are swapping hands for $1.34 apiece, up 4.2%.

This comes after the company provided a business update on its operations for the FY21 period.

How is Regional Express performing so far?

Investors appear upbeat on the company’s progress, sending Regional Express shares on the rebound from its 6-month low.

In its announcement, Regional Express advised that overall demand across its business is sitting at 60% from pre-COVID levels. However, some states in Australia are performing better than others, with Queensland and Western Australia taking the lead.

The company noted that it’s carefully expanding its regional network with capacity growth roughly 5% ahead of forecasted demand. As a result, total capacity stands around 35% of what was it was before the pandemic hit the aviation industry.

In a bid to invigorate demand, Regional Express has added new regional routes in competition with rival company, Qantas Airways Limited (ASX: QAN). Operations such as the Coffs Harbour and Port Macquarie route commenced in late March this year. Interestingly, these two regional centres account for around 40% of the total number of passengers in Regional Express’ entire network.

Furthermore, the company revealed it is looking at entering new domestic markets that are monopolised by Qantas. Recently, Regional Express introduced new $39 fares between Sydney and Melbourne to challenge its bigger opponent, Qantas.

Moving on to the financial side, Regional Express stated its currently operating at a slight loss on current demand levels. This is due to the closing of the JobKeeper program as well as a significant drop in federal government assistance.

The company said that it is hopeful that demand will increase in the short-term, enabling operations to return to profitability.

Although Regional Express didn’t specify, it revealed that its cash position has increased over 1,000% when compared to March 2020. This is attributed to strong advanced bookings on 5 new domestic routes and two regional routes.

FY21 is projected to be breakeven for the company, despite the aviation sector still navigating through the pandemic.

About the Regional Express share price

In the last 12 months, Regional Express shares have climbed close to a 50% gain. However, year-to-date performance sits almost 40% below.

On valuation grounds, Regional Express has a market capitalisation of roughly $144 million, with approximately 110.1 million shares on issue.

More reading

• Alliance (ASX:AQZ) share price edges lower despite positive update
• Qantas (ASX:QAN) share price lower on ACCC update
• Could the grounded Qantas (ASX:QAN) share price take off in May?
• This ASX airline you never heard of could see 40% earnings boost
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Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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It has been another bitterly disappointing day of trade for the A2 Milk Company Ltd (ASX: A2M) share price on Monday.

At one stage today, the fresh milk and infant formula company’s shares were down 15.5% to a multi-year low of $5.93.

The a2 Milk share price has recovered a touch since then but remains 9% lower at $6.40 at the time of writing.

Why is the a2 Milk share price crashing lower?

Investors have been heading to the exits in their droves on Monday after a2 Milk downgraded its FY 2021 guidance for the fourth time.

Management made the move due to sustained weakness in the daigou channel and significant inventory issues.

How a2 Milk’s FY 2021 guidance unravelled

Back in August 2020, the company first announced its guidance for FY 2021. Management revealed that it expected “strong revenue growth” and an earnings before interest, depreciation and amortisation (EBITDA) margin of 30% to 31% in FY 2021.

This would be up from revenue of NZ$1.73 billion and EBITDA of NZ$549.7 million in FY 2020.

The first signs of trouble

This guidance was reaffirmed on 9 September, only to be downgraded a little under three weeks later on 28 September.

At that point, management revealed that it was starting to observe emerging additional disruption to the corporate daigou market.

As a result, instead of “strong revenue growth”, it was now expecting revenue of NZ$1.8 billion to NZ$1.9 billion, representing growth of 4% to 10% year on year. Its EBITDA margin was still expected to be ~31%, representing EBITDA of NZ$558 million to NZ$589 million.

Things get worse

On 18 December, the a2 Milk share price sank after management made a further downgrade to its guidance due to sustained weakness in the daigou channel.

As a result, it reduced its guidance to revenue of NZ$1.4 billion to $1.55 billion with an EBITDA margin of between 26% and 29%. This implies EBITDA between NZ$364 million to NZ$450 million.

The third downgrade

On 25 February, a2 Milk released its half year results and once again downgraded its FY 2021 guidance.

At this point, management advised that it was now expecting revenue of NZ$1.4 billion with an EBITDA margin of 24% to 26% (excluding acquisition costs). The latter represents EBITDA of NZ$336 million to NZ$364 million.

The fourth (and surely final?) downgrade

This brings us to today, which has seen the company downgrade its guidance materially once again, putting significant pressure on the a2 Milk share price.

The company now expects revenue of NZ$1.2 billion to NZ$1.25 billion for FY 2021 with an EBITDA margin of 11% to 12% (excluding acquisition costs).

This implies EBITDA of just NZ$132 million to NZ$150 million, which will be down 73% to 76% year on year.

This guidance includes an inventory provision of approximately NZ$80 million to NZ$90 million, in addition to the NZ$23 million provision recognised in the first half.

Insider selling

Following today’s decline, the a2 Milk share price is now down 65% over the last 12 months.

Management certainly will be relieved that they were able to offload millions of dollars worth of shares in August last year just before the downgrade cycle began.

More reading

• ASX 200 up 1.1%: A2 Milk crashes, Crown-Star $12bn merger, Woolworths update
• A2 Milk (ASX:A2M) share price in danger after downgrading guidance again
• A2 Milk (ASX:A2M) share price falls as China suspends dialogue
• Top brokers name 3 ASX shares to buy today
• Is it time to give the A2 Milk (ASX:A2M) share price another chance?

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended A2 Milk. 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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