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The Dusk Group Ltd (ASX: DSK) share price is trading higher today following the release of the company’s half-year results.

After opening at $3.11, the dusk share price has lost a little ground through morning trade. It’s currently trading at $2.94, up 1.38%. 

Dusk listed on the ASX quite recently in November 2020, and despite challenges posed by the coronavirus pandemic during this time, the specialty retailer still managed to achieve record sales and earnings.

Let’s take a look at the highlights for the half-year ended 27 December 2020.

Dusk reports record sales and earnings

In today’s results, dusk reported revenue for the first half of FY21 (1H21) was $90.9 million, compared to $58.6 million in 1H20.

The company – which sells candles, home decor, home fragrances and gift products in 117 stores Australia-wide and online – increased its profits by 160.4% to $16.9 million for the period. In comparison, dusk posted a $6.5 million profit in 1H20. 

Statutory earnings before interest and taxes for 1H21 totalled $25 million compared to $9.9 million in 1H20.

Earnings per share (EPS) more than doubled, rising from 11 cents in 1H20 to 27 cents in 1H21.

The board declared an interim fully franked dividend of 15 cents per share.

Store sales were up 44% during 1H21, and online sales soared 120% higher.

Dusk also advised that during the first six weeks of 2H21, total sales have risen by 55.5%.

Insight from the CEO

Commenting on the results, managing director and CEO Peter King said:

Dusk’s strong 1H FY21 results were generated by swift decision making and focused execution over the period. A near trebling of EBIT vs the pcp despite the lockdown of our 20 Melbourne metro stores points to the resilient teamwork of the dusk organisation and continued execution of its business plan in store and online despite a challenging operating environment…

For the business to bounce back from forced store closures and stand downs in FY20 to register these record results is a testament to the dusk team in all 117 stores, online and customer support office.”

The business acknowledged the uncertainties still presented by COVID-19. Therefore, the board elected not to provide full-year FY21 guidance at this time.

Dusk share price snapshot

Since the company’s initial public offering (IPO) in November, the dusk share price has rocketed up 80.69%.

The company has a current market capitalisation of $174.4 million, with 62.3 million shares outstanding.

More reading

• This ASX growth share is cheap like a value stock
• Revealed: ASX company underpaid staff $2.3 million

Motley Fool contributor Gretchen Kennedy 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 Aventus Group (ASX: AVN) share price is relatively flat today. This comes after the largest owner, manager, and developer of larger format retail centres in Australia report its half results for FY21.

At the time of writing, the Aventus share price is trading at $2.82, up 0.71%. 

Let’s take a closer look at the announcement and why the share price is flat. 

Why the Aventus share price isn’t moving on today’s results?

It appears that people got out and about during the last half. Foot traffic to Aventus’ centres was 8% above pre-covid levels. This traffic wasn’t just window shopping either. The company maintained its cash collections of 98% from its retailer tenants.

With 63 leases negotiated during the period, Aventus managed to increase its occupancy level to 98.5%. Aventus puts this down to its affordable rent compared to other retail sub-sectors, strong sales growth, and solid traffic performance.

Revenue remained flat at $87 million, with a negligible increase of 0.1%. However, net profit after tax (NPAT) increased by 43% to $103.4 million. Although an impressive result, it is worth keeping in mind that the majority of this was due to a $25.7 million increase in the net fair value of its property. Excluding accounting adjustments, funds from operations (FFO) were $55.9 million, an increase of 6.5%.

The forward outlook is strong

Aventus also upgraded its guidance for FY21, stating that it expects FFO of at least 19 cents per security. This would represent an increase of at least 4% from FY20. However, this guidance has been given on the assumption of no additional outbreaks of COVID-19. Additionally, this will rely on no new significant government restrictions.

The company’s CEO, Darren Holland, provided the following statement on Aventus’ results and outlook:

On capital management, we preserved value for investors by not raising capital through a dilutive equity raising. Additionally, the prudent management of our relief agreements resulted in an additional $2millionof rent being billed and our focus on cash collection resulting in98% of rent for the period collected. Pleasingly, we increased occupancy to 98.5% and reported a $46 million net valuation gain mainly driven from income growth and the completion of our Caringbah development

Pertaining to the company’s outlook, he stated:

Aventus remains focused on our strategy of optimising portfolio performance,seizing consolidation opportunities, building our development pipeline and diligent capital management. It has proven to be a successful formula from year to year and we remain confident in its value

Aventus also interestingly pointed to its diversified income opportunities in its results. Both solar projects and ticketless parking have been earmarked as drivers for added income streams.

The company now has $2.1 billion of assets under management.

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Motley Fool contributor Mitchell Lawler has no position in any of the stocks mentioned. The Motley Fool Australia has recommended AVENTUS RE UNIT. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post Aventus Group (ASX:AVN) share price flat despite 43% increase in profits appeared first on The Motley Fool Australia.

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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 1% to 6,847.4 points.

Four ASX shares that have failed to follow the market higher are listed below. Here’s why they are tumbling lower:

A2 Milk Company Ltd (ASX: A2M)

The A2 Milk share price has crashed 16% lower to $8.79. Investors have been selling the infant formula and fresh milk company’s shares following the release of its half year results. Although the infant formula and fresh milk company delivered a first half result in line with expectations, it was forced to downgrade its full year guidance once again.

Service Stream Limited (ASX: SSM)

The Service Stream share price is sinking 20% lower to $1.36. The catalyst for this was the release of a disappointing half year result after the market close on Wednesday. After a difficult first half, the essential network services provider warned that its second half could be just as tough. In light of this, it advised that the higher contribution that it expected in the second half is unlikely to materialise.

TPG Telecom Ltd (ASX: TPG)

The TPG share price has fallen over 2.5% to $6.83. This morning the telco released its full year results and revealed a 24% jump in annual revenue to $4.35 billion and an 18% lift in EBITDA to $1.39 billion. However, this was largely due to a six-month contribution from the Vodafone Australia business. This may have been softer than the market was expecting.

Zip Co Ltd (ASX: Z1P)

The Zip share price is down 7% to $11.02 despite releasing a half year result which revealed further strong growth across key metrics. For the six months ended 31 December, Zip reported a 141% increase in total transaction volume (TTV) to $2.32 billion. This led to a 130% jump in half year revenue to $160 million. It appears as though investors were expecting an even stronger result.

More reading

• Why the a2 Milk (ASX:A2M) share price is crashing 20% to a multi-year low
• ASX 200 up 0.85%: A2 Milk & Zip shares hammered, Afterpay to raise $1.25bn
• TPG (ASX:TPG) share price seesaws on full-year results
• Zip (ASX:Z1P) share price on watch with 130% revenue growth in HY21
• a2 Milk (ASX:A2M) share price on watch after downgrading guidance again

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 ZIPCOLTD FPO. The Motley Fool Australia owns shares of and has recommended A2 Milk. The Motley Fool Australia has recommended Service Stream 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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Qube Holdings Ltd (ASX: QUB) shares are having a whirlwind of a day following the company’s release of its  FY21 half-year (1H21) results for the period ended 31 December 2020. 

In intraday trading, the Qube share price was down by as much as 4.9%, the biggest intraday percentage drop the company has seen since 11 June 2020. However, at the time of writing, Qube shares have bounced back to trade at $3.12, up 0.97% for the day so far.

Here’s what the logistics company reported about its 1H21 performance.

Qube financial highlights

The Qube share price took a dive in morning trade after the company posted statutory revenue of $939.3 million for the period, a 1.9% dip compared to 1H20. 

However, underlying net profit after tax attributable to shareholders pre-amortisation (NPATA) increased by 8.5% coming in at $82.8 million.

Earnings before interest, tax, depreciation and amortisation (EBITDA) totalled $204.9 million, which was a smidge higher than 1H20’s EBITDA of $204 million.

Basic earnings per share (EPS) inched 3.1% down to 3.1 cents compared to 3.2 cents in 1H20.

The 1H21 fully franked interim dividend per share fell 13.8% to 2.5 cents.

Qube advised that performance continues to be impacted by coronavirus. Incremental costs accrued during the period which exceeded the JobKeeper subsidies received included higher cleaning and IT costs as well as additional labour costs.

Logos transaction and outlook

In other news impacting the Qube share price, the company also reported it has entered into a non-binding commercial term sheet with Logos Property Group. The agreement involves the sale of 100% of Qube’s interest in the warehousing and property components of the MLP project (MLP Property Assets) to Logos.

Commenting on this transaction, Qube managing director Maurice James said:

The proposed transaction will allow Qube to realise a strong value for the MLP Property Assets and focus on growing its core logistics business, all while retaining exposure to long-term growth in container volumes at MLP through terminal and logistics activities.

The transaction de-risks delivering the MLP development and warehouse leasing and significantly reduces Qube’s ongoing capex requirements. We look forward to forging a strong partnership with Logos at MLP and benefiting from its strong tenant relationships and specialist development expertise.

Qube expects to deliver strong underlying NPAT pre-amortisation (NPATA) results and earnings per share pre-amortisation (EPSA) gains in FY21 compared to FY20.

Qube share price snapshot

Over the past year, the Qube share price has edged around 1.2% lower. However, over the past six months, Qube shares have bounced back, gaining around 9.5%.

Based on the current share price, the company has a market capitalisation of approximately $5.9 billion.

More reading

• Growthpoint Properties (ASX:GOZ) share price rises on increased profits and buyback
• Why Flight Centre, Life360, Nanosonics, & Universal Store are racing higher
• Is the Reddit army planning another GameStop (NYSE:GME) short squeeze?
• Infomedia (ASX:IFM) share price dips 9% on flat earnings
• Square reports mixed Q4 results, reveals a further push into Bitcoin

Motley Fool contributor Gretchen Kennedy 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 Growthpoint Properties Australia Ltd (ASX: GOZ) share price is rising today off the back of increased half-yearly net profit after tax and an announced share buyback.

At the time of writing, the Growthpoint share price is up 2.45% to $3.14 per share.

What did Growthpoint report?

The real estate investment trust (REIT) announced a net profit after tax of $205.8 million for the six months ending 31 December 2020. In the previous corresponding period (pcp) net profits were $202 million – a 1.9% increase.

The company also announced funds from operation of 12.7 cents per share, which is a 0.8% increase on the pcp. Growthpoint’s net tangible assets per share rose 4.7% from 30 June 2020 to $3.82 

Growthpoint’s operations are divided across 2 property sectors: office and industrial. The group reported the value of its industrial portfolio increased by $50.2 million or 3.9% on a like-for-like basis. The value of its office portfolio also increased across the half — lifting by $82.6 million or 2.9% on a like-for-like basis. The total value of the company’s property portfolio is $4.3 billion, a 2.4% increase on 30 June 2020.

Within the office portfolio, Growthpoint signed 16 lease agreements during the half. These agreements included a 10-year lease with home improvement retailing behemoth Bunnings Group, which is wholly owned by Wesfarmers Ltd (ASX: WES).

The company’s weighted average lease expiry remained steady on 30 June 2020 numbers at 6.2 years.

The company also announced it would pay a dividend of 10 cents per share – down 15.3% on the pcp.

Words from the managing director

Timothy Collyer, managing director of Growthpoint, gave the following statements about today’s announcement:

Growthpoint has delivered strong results this half. While the COVID-19 pandemic continues to have a profound impact on individuals and businesses around the world, the direct impact on our business to date has been relatively immaterial.

The pandemic has highlighted the resilient nature of our property portfolio and strong tenant base. Since the Group’s inception, we have focused on constructing a portfolio of high-quality metropolitan office and industrial properties.

Collyer added:

We built upon our robust capital position during the half, extending two debt facilities and now have no debt maturing until December 2022. As the Group could deploy more than $400 million of undrawn debt capacity and still be at the bottom of our gearing range, we are well positioned to capitalise on opportunities in the near term.

COVID-19’s impact on the construction and office leasing industries

According to the Australian Bureau of Statistics, the value of non-residential work done in the September 2020 quarter fell 6.7% compared to the September 2019 quarter. Much of the fall is largely attributed to the COVID-19 pandemic and government restrictions, with Victoria’s stringent lockdown weighing especially hard on the construction industry.

While Growthpoint’s managing director stated COVID had a “relatively immaterial” impact on business, the company’s results announcement did highlight the pandemic’s impact on its office portfolio:

The COVID-19 pandemic has had a significant impact on the office sector. While the long-term impact of the pandemic is still unclear, many businesses have been reluctant to make significant decisions about headcount and office requirements. As a result, a relatively small number of leasing deals transacted in 1H21.

The company added, “Vacancy has risen in most markets, driven by an increase in available sub-lease space, reflecting a weaker operating environment for some businesses, as well as an increase in supply.”

Growthpoint share price snapshot

The construction company’s ability to increase profits during a difficult period has been well received by the market, with a share price jump of more than 2% in today’s trade.

Across the past year, the Growthpoint share price is down 26%, giving the company a current market capitalisation of $2.36 billion.

More reading

• Qube (ASX:QUB) share price bounces around on mixed results
• Why Flight Centre, Life360, Nanosonics, & Universal Store are racing higher
• Is the Reddit army planning another GameStop (NYSE:GME) short squeeze?
• Infomedia (ASX:IFM) share price dips 9% on flat earnings
• Square reports mixed Q4 results, reveals a further push into Bitcoin

Motley Fool contributor Marc Sidarous has no position in any of the shares mentioned. The Motley Fool Australia owns shares of Wesfarmers 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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In afternoon trade the S&P/ASX 200 Index (ASX: XJO) is bouncing back from yesterday’s decline. At the time of writing, the benchmark index is up 0.95% to 6,843.1 points.

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

Flight Centre Travel Group Ltd (ASX: FLT)

The Flight Centre share price is up 8.5% to $17.74. This follows the release of the travel agent giant’s half year results this morning. For the six months ended 31 December, total group revenue came in at $160 million. This was down materially from the $1,546 million it achieved at the same time last year. This led to Flight Centre recording an underlying loss of $247 million for the half. Positively, despite this decline, at the end of the period the company had a cash balance of $1,670 million.

Life360 Inc (ASX: 360)

The Life360 share price is up a massive 21% to $4.80. Investors have been buying the family social networking app provider’s shares after it reported a 39% year-on-year increase in normalised revenue to US$81.6 million. This was at the upper end of its guidance range of US$79 million to US$82 million. At the end of the period, the app recorded 26.5 million monthly active users. This was near pre-COVID levels of 27.2 million.

Nanosonics Ltd (ASX: NAN)

The Nanosonics share price has jumped 10% to $6.11. The catalyst for this appears to be the release of a broker note out of Morgans this morning. According to the note, the broker has upgraded the infection prevention company’s shares to an add rating with a $6.69 price target. It made the move largely on valuation grounds after a recent decline in its share price.

Universal Store Holdings Ltd (ASX: UNI)

The Universal Store share price has surged 10% higher to $6.69. This has been driven by the release of an impressive half year result this morning. For the six months ended 31 December, Universal Store reported a 23.3% increase in sales to $118 million and a 63.6% increase in underlying net profit after tax to $21.1 million.

More reading

• ASX 200 up 0.85%: A2 Milk & Zip shares hammered, Afterpay to raise $1.25bn
• The Life360 (ASX: 360) share price rips 18% higher on strong results
• Flight Centre (ASX:FLT) share price climbs higher on first-half results
• Why the Universal Store (ASX:UNI) share price is up 6% to a record high
• ASX 200 drops, Appen sinks, Nine jumps

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 Nanosonics Limited. The Motley Fool Australia has recommended Flight Centre Travel Group Limited and Nanosonics 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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Holy moly, they’re at it again.

Yep, I’m talking about the Reddit army. The US-based group of retail investors linked together via Reddit’s WallStreetBets and other social media.

You probably remember the wild ride higher this collective sent the GameStop Corp (NYSE: GME) share price on last month. And the subsequent plummet.

Now they’re at it again.

GameStop shares surge 104%

Cutting to the chase, the GameStop share price leapt 104% yesterday (overnight Aussie time). Shares opened at $44.97 and closed the day at $91.71.

But it’s not over yet.

In after-market trading, the GameStop share price is currently at $169.10. In other words, 85% above where it closed just hours ago. Though mind you, that’s still well below the 27 January peak, when the retail army’s trading frenzy saw shares close at $347.51.

The déjà vu price action could be another effort to trigger a short squeeze. And it will likely again bring short selling – where you hope to profit when a company’s share price falls – onto investors’ radars.

With that in mind, we turn to Adam Smith, CEO at Saxo Capital Markets Australia, for some insight.

Short selling or put options?

 According to Smith:

No-one disagrees with the practice of short selling per se as it affords traders and investors a mechanism to trade their view. For example, if they perceive a listed company to be overvalued relative to fundamentals or set for a pullback in advance of a results announcement, they can take a short position on the stock. This is all fair and legal.

However, a naked short sale of shares is not the only way they can express their view. They could also buy put options over the stock with the same outcome, but we don’t see anyone crying foul over people buying puts – suggesting the real issue lays elsewhere.

If you’re not familiar, put options give the buyer the right, but not the obligation, to sell a certain number of shares at a predetermined price by a certain date. If a company’s share price falls, the put option will be ‘in the money’, and the investor will bank the gains minus the put purchase fees. Of course, if the share price rises, the put options are worthless, and the investor is out the price of the put options.

As Smith points out, there has never been a broad backlash against put options. So why so much angst over short selling? Smith says:

That issue is a perceived lack of regulation over the methods adopted by some short sellers, such as looking to issue damning reports that may or may not be factually correct then profiting from the ensuing share price movement.

What’s required now is clarity over whether the spread of misinformation is a form of market manipulation that needs to be policed in the same way as other market misconduct matters.

More reading

• Here’s why GameStop stock just exploded higher
• GameStop CFO resigns
• Reddit’s ‘Roaring Kitty’ doubled his stake in GameStop (NYSE:GME)
• How CBA (ASX:CBA)’s CommSec expanded its millennial footprint
• Why I’m never selling my Square shares

Motley Fool contributor Bernd Struben 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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Infomedia Limited (ASX: IFM) shares are plunging to a 4-month low today following the company’s report of flat earnings growth in the first half of FY21 (1H21). At the time of writing, the Infomedia share price is trading 9.44% lower at $1.63.

Why the Infomedia share price is weaker today 

The Infomedia share price is taking a dive today after the company delivered steady revenue of $47.7 million for the 6 months to 31 December 2020. Meanwhile, net profit after tax (NPAT) increased 3% to $9.3 million. Infomedia’s cash balance at 31 December 2020 sat at $97.3 million. 

The business blamed timing delays for the lack of sales momentum in the first half. It cited that sales closed during calendar 2020 are expected to translate into revenue in late 2H21 with strong monthly recurring revenue leading into FY22. 

Infomedia CEO Mr Jonathan Rubinsztein said:

The result is in line with our expectations having anticipated the impact of delayed negotiations and installations. We worked very closely with our customers during the year, initially to offer immediate support in response to COVID, and later to ensure the smooth transition to the Next Gen SaaS platform.

In further news impacting the Infomedia share price, the company was unable to provide a concrete earnings outlook for FY21. It anticipates that some moderate organic growth will return in the second half of FY21. However, it noted that lockdowns and travel restrictions will continue to hamper the timing of sales converting to revenue. Infomedia did highlight that trading conditions are likely to improve as restrictions ease with the rollout of the vaccine. 

It also noted that, since its capital raising in April 2020, it has yet to close an acquisition but remains vigilant in its pursuit of transactions. 

In the report’s closing, the company reminded investors of its aspiration to double revenue to $200 million by 2025, as shared at its 2020 annual general meeting. It noted that, in the medium term, it anticipates a return to consistent, sustained growth buoyed by strategic wins across all regions. 

Company snapshot  

Infomedia is a software-as-a-service (SaaS) provider catering to the parts and service sector of the automotive industry. Its platforms allow users to precisely and quickly identify replacement parts manufactured by the world’s leading original equipment manufacturers.

Recently, the company successfully launched its Next Gen SaaS platform across its entire user base. According to Infomedia, with Next Gen, the company has moved to an integrated SaaS platform that delivers a modern, comprehensive suite of offerings across multiple customer segments. 

The Infomedia share price has fallen by more than 13% over the past twelve months. Year to date, Infomedia shares are also trading nearly 14% lower. Based on the current share price, the company has a market capitalisation of around $675 million.

More reading

• Square reports mixed Q4 results, reveals a further push into Bitcoin
• Why the CleanSpace (ASX:CSX) share price is tumbling 8% today
• Why the Althea (ASX:AGH) share price is surging 8% higher today
• Atlas Arteria (ASX:ALX) share price driven lower by FY20 report
• Why the a2 Milk (ASX:A2M) share price is crashing 20% to a multi-year low

Kerry Sun has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Infomedia. The Motley Fool Australia has recommended Infomedia. 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.

Square (NYSE: SQ) reported fourth-quarter revenue that soared 141% year over year to $3.16 billion, along with adjusted earnings per share (EPS) of $0.32. The results were mixed, as analysts’ consensus estimates called for revenue of $3.22 billion and EPS of $0.24. Gross payment volume (GPV) rose 92% year over year to $32 million.

The top-line results were skewed by the company’s ongoing foray into Bitcoin (CRYPTO: BTC). Excluding revenue related to its cryptocurrency transactions, revenue grew to a more modest $1.4 billion, up 23%.

The numbers were further clouded by its strategic investments and one-time events. Square reported net income of $294 million, a decline of 25% year over year. Excluding gains from equity investments and a one-time gain in the prior-year quarter, net income of $20 million increased by 11%.

Square continued to focus on the impressive growth delivered by its Cash App ecosystem, which generated gross profits of $377 million, up 162% year over year.

The company also doubled-down on Bitcoin, saying it spent $170 million to acquire 3,318 Bitcoins. This resulted in a purchase price of just over $51,000 per Bitcoin. Square had previously disclosed a purchase totaling $50 million. Taken together, the two equate to approximately 5% of the total cash and equivalents on Square’s balance sheet.

More than 3 million customers purchased or sold Bitcoin via Square’s Cash App last year. As the popularity of cryptocurrency has spread, the number of users purchasing Bitcoin has exploded, with more than 1 million customers making a transaction in January, 2021 alone.

While the cryptocurrency accounts for more than half of Square’s revenue, it makes a much smaller contribution to its bottom line. While Cash App generated roughly $1.76 billion in Bitcoin revenue, it resulted in just $41 million in gross profit. This suggests that Square earns just over 2% from each user investment in the cryptocurrency. 

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

More reading

• Why I’m never selling my Square shares
• Forget Bitcoin, buy PayPal and Square instead
• GameStop, AMC trades temporarily blocked on Square’s Cash App

The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Square. 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.

Danny Vena owns shares of Square. The Motley Fool owns shares of and recommends Square. The Motley Fool recommends Bitcoin. The Motley Fool has a disclosure policy.

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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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The Cleanspace Holdings Ltd (ASX: CSX) share price is falling today, as the respirator company gives forewarning to the end of the COVID-19 tailwind.

The company released its half-year results for the period ending 31 December 2020 this morning. At the time of writing, the CleanSpace share price is trading hands at $6.79 a share, down 8.82%.

Results boosted by COVID-19 demand

There are not too many industries that directly benefitted from the situation fostered by COVID-19. However, respirators would certainly be one of them. Given the respiratory nature of the virus, masks and respirators have been used widely to combat the spread. In the healthcare space, it has been essential in abating the risk to frontline workers.

Hence, it comes as no surprise that CleanSpace’s revenue increased by more than fivefold compared to 1H FY20. The top-line result of $39.7 million was comprised of 50% US sales, 17% EMEA sales, and 33% Asia Pacific sales. The healthcare industry really outshone the industrials segment during the half, with 78% of total revenue.

The high proportion of healthcare sales combined with high accessory sales aided in lifting the company’s gross margin to 78%. Consequently, CleanSpace’s net profit after tax nearly doubled to $13.7 million for the half.

Wary of a drop-off

Although the company outlines the possibility of a prolonged way of living with the virus, there is also looming uncertainty. As stated in the CleanSpace presentation, “There are clear signs the pandemic has shifted to a closing phase, and it is expected that 2H will be lower than 1H.”

The company currently has 2 operational manufacturing facilities between St Leonards and Artarmon in New South Wales. Clearspace detailed its intentions to consolidate to one location to capture increased efficiencies as the virus risks taper off.

CleanSpace share price recap

CleanSpace listed on the ASX last year on 22 October. Since then, the share price has been floundering around between $5.60 and $7.50 per share. Despite the tailwind of COVID-19, the CleanSpace share price is down 8.5% since its listing.

The company currently trades on a 41.4 times price-to-earnings (P/E) ratio. This is based on its current market capitalisation of $568 million.

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Motley Fool contributor Mitchell Lawler has no position in any of the stocks mentioned. The Motley Fool Australia has recommended CleanSpace Holdings Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post Why the CleanSpace (ASX:CSX) share price is tumbling 8% today appeared first on The Motley Fool Australia.

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