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In late morning trade the S&P/ASX 200 Index (ASX: XJO) is on course to end the week with a day in the red. The benchmark index is currently down 0.5% to 6,720.6 points.

Four shares that have not let that hold them back are listed below. Here’s why they are pushing higher:

Bapcor Ltd (ASX: BAP)

The Bapcor share price is up 3% to $7.76. This appears to have been driven by a broker note out of Morgan Stanley. In response to yesterday’s trading update, the broker has retained its overweight rating and lifted the price target on the company’s shares to $9.00.

Fortescue Metals Group Limited (ASX: FMG)

The Fortescue share price has pushed 2% higher to $22.83. Investors have been buying the mining giant’s shares after the price of iron ore rebounded overnight. According to CommSec, the spot iron ore price lifted US$1.65 or 1.1% to US$158.70 a tonne on concerns about tightening supply. This comes at a time when demand from the world’s largest steelmaker China remains robust.

Nufarm Ltd (ASX: NUF)

The Nufarm share price is up 3% to $4.26. This follows the release of its annual general meeting update this morning. The agricultural chemical company revealed that it recorded further strong revenue growth in October and November. Nufarm reported a 47% increase in revenue for the two months compared to the same period last year. Though, management acknowledges that these are relatively quiet months in the context of the full year of trading.

Saracen Mineral Holdings Limited (ASX: SAR)

The Saracen share price has risen 3% to $4.82. Investors have been buying Saracen and other gold miners on Friday after the gold price jumped higher overnight. The catalyst for this was meaningful progress in making an agreement for COVID-19 stimulus in the United States. The S&P/ASX All Ordinaries Gold index is up 1.2% at the time of writing.

More reading

• 5 things to watch on the ASX 200 on Friday
• 2 ASX growth shares to buy that keep delivering wins
• ASX 200 rises on Thursday
• Leading broker just upgraded these ASX gold stocks to “buy”
• Citigroup picks the best ASX retail stocks to own for 2021

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Bapcor. 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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Genworth Mortgage Insurance Australia Ltd (ASX: GMA) shares have fallen by more than 11% in early morning trading, after the company announced a change to its reserving methodology will hit the bottom line by $110 million. As a result, the company says it is unlikely to report a profit or declare a dividend in FY20.

At the time of writing, the Genworth share price is trading at $2.24, down 25 cents.

Why the Genworth share price fell hard this morning

The Genworth share price is plunging lower today after the company advised an independent actuary was appointed to assess the potential impact of changes to delinquency behaviours and home loan repayment deferrals. The assessment formed part of the company’s annual earnings curve review.

In tandem with this review, the assessment also considered the appropriate timing of recognition and reserving for claims, given the changes to claims patterns arising from the COVID-19 borrower support packages.

Genworth says the introduction of repayment deferrals in response to the pandemic has interrupted the usual pattern of claim occurrence, notification and cure.

At the completion of the study, Genworth concluded that it is appropriate to “refine its reserving methodology”, and to hold re-delinquency claims reserves for all policies that have at any point experienced delinquency. This will apply to all policies currently cured and in force, and any new policies becoming delinquent from the fourth quarter of FY20 onwards. 

As a result of this update in reserving methodology, the company estimates that the pre-tax impact for the year ending 31 December 2020 (FY20) will be an increase in net claims incurred by $110 million.

Consequently, Genworth expects the fourth quarter FY20 net claims incurred to be in the range of $135 million to $150 million.

Given this announcement, the company says it is unlikely to report a statutory profit for FY20, and the board is unlikely to be in a position to declare a dividend for FY20.

About the Genworth share price

Genworth Mortgage is the provider of Lenders Mortgage Insurance (LMI) in Australia.

Back in November, the company announced steady results, reporting net profit after tax (NPAT) of $27.4 million for the third quarter, up from $26.5 million on the prior corresponding period.

The Genworth share price has lost 38% in 2020, including today’s losses. It is still a long way off from its 52-week high of $4.06. The company commands a market capitalisation of $1 billion.

More reading

• Why Bapcor, Fortescue, Nufarm, & Saracen shares are pushing higher
• Why the BetMakers (ASX:BET) share price is surging 12% higher today
• Why the CleanSpace (ASX:CSX) share price is climbing today
• Why the Mesoblast (ASX:MSB) share price crashed 45% lower today
• World’s 10 biggest companies are now worth 12% of Earth’s GDP

Motley Fool contributor Eddy Sunarto 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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BetMakers Technology Group Ltd (ASX: BET) shares are up by nearly 12% this morning after the company released a big market announcement. At the time of writing, the BetMakers share price has rocketed to 71.5 cents, just shy of its 52-week high of 76 cents. This comes on the back of a key development in a proposed acquisition for the company.

Why is the BetMakers share price on the move?

BetMakers announced on 1 December 2020 that it was set to acquire Sportech PLC‘s (LON: SPO) racing and digital assets. Today, BetMakers announced the Sportech board has terminated talks with another third party, Standard General.

The board has also urged shareholders to vote in favour of the resolution to approve the disposal of the assets to BetMakers.

That announcement has seen the BetMakers share price jump 11.72% higher in early trade as investors react to the news.

The board’s approval and recommendation has paved the way for the key acquisition of the assets.

Sportech’s  global tote business is being acquired by the Aussie betting technology group for total cash consideration of 30.9 million pounds sterling (A$55.1 million).

The acquired assets will include the North America-facing white label digital betting solutions business alongside other key assets.

In total, US$12.2 billion in stakes were processed for the year ended 31 December 2019 with clients in 37 countries.

How has the BetMakers share price performed this year?

The BetMakers share price has rocketed more than 400% higher in 2020 in what has been a bumper year for shareholders.

Shares in the Aussie wagering group are also currently yielding around 5% p.a. The group’s market capitalisation has also swelled to $388.0 million prior to the start of trade today.

Other ASX wagering shares are also climbing higher this year with the Pointsbet Holdings Ltd (ASX: PBH) share price up 167% in 2020 to $12.19.

Foolish takeaway

The BetMakers share price has rocketed higher in early trade to near its 52-week high. Today’s announcement by the Sportech board paves the way for the offshore acquisition towards the end of the year.

More reading

• Top ASX shares to buy in 2021
• The Pointsbet (ASX:PBH) share price just crashed 8%
• The Pointsbet (ASX:PBH) share price is up 170% in 2020. Here’s why
• Why BetMakers, Medical Development International, Qantas, & Zip are dropping lower
• Why the BetMakers (ASX:BET) share price is crashing 15% lower today

Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Pointsbet Holdings Ltd. The Motley Fool Australia has recommended Pointsbet Holdings Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The CleanSpace Holdings Ltd (ASX: CSX) share price is up today after the company provided the market with a trading update to finish off the calendar year.

At the time of writing, the CleanSpace share price is up 4.55% at $6.90. 

A quick take on CleanSpace

CleanSpace designs, manufactures and sells workplace respiratory protection equipment (RPE) for healthcare and industrial end markets.

PAPRs are specialised respirators that come equipped with blowers, filters, respirator hood or face-pieces, and breathing tube assemblies. CleanSpace’s PAPRs operate in two markets, healthcare and industrial.

How is CleanSpace performing?

In today’s release, CleanSpace advised demand is continuing to outperform previous forecasts. Given the strong trading conditions, the company is now projecting revenue in the range of $39 million to $41 million. The upgraded guidance for the period ending 31 December, reflects an increase on the $34 million to $36 million originally announced on 12 November.

CleanSpace noted that its product and regional sales mix is tracking along similar to last month’s trading update. Healthcare and industrial is reported to be at a 77% and 23% split, respectively.

Group profit margin is predicted to be between 77% to 79%, with earnings before interest, tax, depreciation and amortisation (EBITDA) around the $17 million to $19 million mark.

Consumable sales are sitting at 47% of total sales, which is at the same level recorded last year.

In addition to the financial figures, the company highlighted that its new facility in St Leonards is now operational. Production capacity is running at 7,000 units pm which equates to $100 million per year for CleanSpace.

Cleanspace noted, however, that as the world approaches a vaccine roll-out for COVID-19, its current business environment remains uncertain.

In light of this, it did not provide a guidance for the second-half of the 2021 financial year.

CleanSpace share price summary

The CleanSpace share price is up more than 54% since its initial public offering (IPO) of $4.41 back in October. Its shares have levelled in the last month, where the broader All Ordinaries Index (ASX: XAO) has taken off.

CleanSpace has a market capitalisation of $508.3 million and a price-to-earnings (P/E) ratio of 60.5.

More reading

• Recent development sends the Antisense (ASX:ANP) share price soaring 45%
• With the Archer Materials (ASX:AXE) share price up 222% this year, what’s next?
• Why the BSA (ASX:BSA) share price has surged 7% higher today
• Why the Uniti (ASX:UWL) share price is on watch today
• Why Meteoric Resources (ASX:MEI) share price is soaring 6% higher

Motley Fool contributor Aaron Teboneras 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.

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The Mesoblast limited (ASX: MSB) share price has returned from its trading halt and crashed significantly lower.

In early trade the biotechnology company’s shares are down a massive 45% to $2.08.

Why is the Mesoblast share price crashing lower?

Investors have been selling the company’s shares this morning after it provided an update on the randomised controlled trial of its remestemcel-L product in ventilator-dependent patients with moderate to severe acute respiratory distress syndrome (ARDS) due to COVID-19 infection.

According to the release, the Data Safety Monitoring Board (DSMB) has performed a third interim analysis on the trial’s first 180 patients.

The trial was aiming to achieve a primary endpoint of 43% reduction in mortality at 30 days for treatment with remestemcel-L on top of maximal care in a trial of 300 patients.

This target was based on pilot data observed during the initial stages of the pandemic when control mortality rates were exceedingly high. It was also prior to new evolving treatment regimens that have reduced disease mortality in ventilated patients.

While the DSMB has reported that there were no safety concerns, importantly, it noted that the trial is unlikely to meet the 30-day mortality reduction endpoint at the planned 300 patient enrolment.

In light of this, the DSMB has recommended that the trial be ended early at just 223 enrolled patients.

What now?

While the primary endpoint has not been achieved, management is pushing ahead to see if it achieves its secondary endpoints.

These include days alive off mechanical ventilation at 60 days post randomisation, overall survival, days in intensive care, duration of hospitalisation, and cardiac, neurological, and pulmonary organ damage.

What went wrong?

The company has suggested that changes in the treatment regimens for COVID-19 patients are to blame for the trial’s failure.

It explained: “During the course of the trial, as the pandemic has evolved, numerous changes in the treatment regimens for COVID-19 patients occurred, including both prior to and while on mechanical ventilation that may have an effect on the mortality endpoint in the trial.”

“These include extended management of patients prior to ventilator support, and use of experimental therapies such as dexamethasone, antivirals, and re-purposed immunomodulatory agents. All of these may have changed the natural course of ventilated patients and reduced overall mortality rates during the trial compared to the early stages of the pandemic,” it added.

What about the Novartis deal?

Readers may be aware that Mesoblast recently signed a deal with Novartis for remestemcel-L. That agreement will have an initial focus on the development of a treatment for acute respiratory distress syndrome (ARDS), including that associated with COVID-19.

It also sees Novartis pay US$50 million upfront and then upwards of US$1.25 billion in milestone payments.

This news appears to have led to concerns that this deal may now not go ahead.

Though, the release advises that “Mesoblast and Novartis will both analyse these results to identify meaningful clinical outcomes that may guide decisions on the development program for remestemcel-L in non-COVID ARDS.”

More reading

• Why Mesoblast, Pilbara Minerals, Pushpay, & Retail Food Group shares are dropping lower
• ASX 200 down 0.1%: APRA removes bank dividend restrictions, Fortescue slides, Zip higher
• Why the Mesoblast (ASX:MSB) share price is sinking 11% lower
• These are 8 of the best performing ASX healthcare shares of 2020 so far
• Which shares will benefit from trillions of dollars in new global stimulus?

Motley Fool contributor James Mickleboro 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 world’s largest companies have done pretty well for their shareholders this year, rapidly climbing out of the COVID-19 crash in March.

With interest rates at historic lows, and even negative in some countries, investors have flocked to park their money in shares.

And all that additional capital has pumped up the value of those stocks.

So much so that, this week, new research revealed the market capitalisation of the 10 largest publicly listed companies have reached 11.93% of the entire world’s gross domestic product.

The study, commissioned by Dutch financial comparison site Bankr, showed the 10 companies were worth US$10.06 trillion as of 13 December.

This compares to a COVID-adjusted global GDP of US$84.27 trillion.

Five US technology companies sit firmly at the top.

“The top 5 companies saw their stock soar in 2020 during the pandemic. The brands were used as a means of navigating the pandemic as most people opted for technology solutions to work remotely, learn, and keep entertained,” read the report.

“Due to the companies’ ability to offer solutions during the pandemic, their stock rallied, indicating a sign of investor confidence amid economic turmoil.”

Rank	Company	Market capitalisation (USD)
1	Apple Inc (NASDAQ: AAPL)	$2.09 trillion
2	Microsoft Corporation (NASDAQ: MSFT)	$1.59 trillion
3	Amazon.com Inc (NASDAQ: AMZN)	$1.55 trillion
4	Alphabet Inc (NASDAQ: GOOGL) (NASDAQ: GOOG)	$1.22 trillion
5	Facebook Inc (NASDAQ: FB)	$0.79 trillion
6	Alibaba Group Holding Ltd (NYSE: BABA)	$0.72 trillion
7	Tesla Inc (NASDAQ: TSLA)	$0.59 trillion
8	Berkshire Hathaway Inc (NYSE: BRK.A) (NYSE: BRK.B)	$0.55 trillion
9	Visa Inc (NYSE: V)	$0.49 trillion
10	Taiwan Semiconductor Mfg. Co. Ltd (TPE: 2330)	$0.47 trillion
Source: Bankr; Table created by author

COVID-19’s impact on valuations 

As well as the growth in share prices, the report noted the virus itself had an effect in the massive valuations proportional to the planet’s GDP.

“The health crisis inflicted high and rising human costs worldwide, and the necessary protection measures severely impacted economic activity,” the report stated.

“As a result of the pandemic, the global economy contracted. When comparing growth, the overviewed companies have witnessed rapid growth, unlike the global economy.”

With emerging economies struggling to grow in the last few years, the dominance of massive multinationals predominantly from the US was a concern, according to the study.

“For example, Facebook’s plan to launch its currency has been met with objections. Additionally, some companies continue to invest more in political lobbying,” the Bankr report read.

“It will be interesting to see how this influence will impact their market capitalisation and the global GDP share.”

More reading

• Is it time for Facebook to do the unthinkable?
• Amazon stock: Buy, sell, or hold going into 2021?
• ACCC hauls Facebook to court for ‘deceptive’ conduct
• Tesla has a high-class problem
• With the high Aussie dollar, is now a good time to buy US shares?

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Teresa Kersten, an employee of LinkedIn, a Microsoft subsidiary, is a member of The Motley Fool’s board of directors. 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. Tony Yoo owns shares of Alphabet (A shares) and Amazon. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Alibaba Group Holding Ltd., Alphabet (A shares), Alphabet (C shares), Amazon, Apple, Berkshire Hathaway (B shares), Facebook, Microsoft, Tesla, and Visa and recommends the following options: long January 2022 $1920 calls on Amazon, short January 2022 $1940 calls on Amazon, long January 2021 $200 calls on Berkshire Hathaway (B shares), short January 2021 $200 puts on Berkshire Hathaway (B shares), and short December 2020 $210 calls on Berkshire Hathaway (B shares). The Motley Fool Australia has recommended Alphabet (A shares), Alphabet (C shares), Amazon, Apple, Berkshire Hathaway (B shares), and 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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Experts are predicting a big year for mergers and acquisitions (M&As) in 2021 and this is likely to impact on your ASX share investments.

Herbert Smith Freehills partner, Tony Damian, says he has never seen the M&A pipeline this full. And unlike previous years, his firm is not expecting any Christmas slowdown for dealmakers this year, reported the Australian Financial Review.

COVID could unleash M&A frenzy in 2021

You can thank or blame the COVID‐19 for this. The pandemic has created a number of tailwinds for takeovers, which will carry though well into next year.

“There’s a confidence around the boardroom table, people are getting on with things that they have been thinking about for some time,” Damian told the AFR.

“Boards are acutely conscious any decent asset will have a range of admirers – corporates, [private equity], pension funds, local super funds. The animal spirits of M&A are alive and kicking.”  

Cheap money only half the story

The economic meltdown caused by COVID unleashed a wall of money into the global financial system. Cash is so cheap and bountiful that we have an increasing number of dollars hunting for new homes.

This flood of liquidity is primarily credited for the rapid rebound in the S&P/ASX 200 Index (Index:^AXJO) and international share markets.

The other “benefit” from the pandemic is the nominalisation of working from home. It’s now acceptable for deals to be struck online and that means many bankers and advisors will be working from their beach houses over the festive break and beyond.

This increase in productivity could see more deals done. The AFR reported that we could see a record number of M&A transactions over the next 12 months.

ASX stocks in the M&A spotlight

As it stands, a number of ASX stocks are under the M&A spotlight. The Coca-Cola Amatil Ltd (ASX: CCL) share price, AMP Limited (ASX: AMP) share price and WPP Aunz Ltd (ASX: WPP) share price are just a few examples of companies fighting off takeover approaches.

There’s also speculation that the BlueScope Steel Limited (ASX: BSL) share price and the Boral Limited (ASX: BLD) share price may also see some corporate action in 2021.

Takeovers an extra tailwind for ASX value stocks

What’s perhaps more significant for ASX investors is that the potential M&A frenzy will feed the rotation into value stocks from growth.

ASX value stocks have only recently been outpacing ASX growth stocks and experts remain divided on whether this marks a real turnaround.

Value stocks tend to be those that have underperformed. These stocks are also the ones that attract the most interest from would be bidders.

Of course, one should never invest based on takeover speculation. But it’s always nice to know that some bidder might be lurking behind some attractively priced ASX stocks.

More reading

• 5 things to watch on the ASX 200 on Friday
• ASX 200 rises on Thursday
• Leading broker just upgraded these ASX gold stocks to “buy”
• ASX stock of the day: Why are Netwealth (ASX:NWL) shares up 7%?
• Why the ASX 200 could be the Nasdaq of 2021

Motley Fool contributor Brendon Lau owns shares of AMP Limited and BlueScope Steel Limited. Connect with me on Twitter @brenlau.

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 National Australia Bank Ltd (ASX: NAB) share price is dropping lower on the day of its annual general meeting.

In morning trade the banking giant’s shares are down 1% to $23.60.

For investors that are interested, I have picked out three key takeaways from the event. They are as follows:

~90% of customers are off COVID-19 loan deferrals

The bank’s CEO, Ross McEwan, revealed that around 90% of its customers that were on a COVID-related loan deferral are now getting back to normal.

He commented: “It is pleasing that around 90 per cent of customers who were on deferral are getting back on track with their payments.”

Though, Mr McEwan acknowledged that some customers are still struggling and the bank intends to support them.

“Despite the positive signs, some are not yet through the worst. We are resolute in helping them. In the past few weeks, I have written to 5.8 million customers, to personally outline this commitment. In almost all cases, what has happened during COVID-19 has not been their fault. Most will just need a bit more time to recover. But some customers’ situations have changed permanently. We will work with them to help them protect their equity. That’s the responsible thing to do,” he explained.

Growth opportunities lie ahead.

The chief executive is positive on NAB’s long term prospects and has set a clear plan for the bank to achieve a sustainable performance.

He explained: “While revenue headwinds from low credit growth and ultra-low interest rates remain, we see opportunities for growth in our core banking businesses; NAB, BNZ and UBank. As we lift performance, we expect to have the opportunity to return more profit to you, our shareholders.”

Dividend increases could be coming.

Mr McEwan accepts that many investors choose to invest in the banks for their dividends. Pleasingly, as alluded to above, he expects the bank to start paying a higher proportion of its earnings out to dividends again in the future.

“We are a dividend-paying stock and we will resume paying at higher levels when it’s right to do so. Achieving double-digit cash return on equity will be a key measure of our success. Cost and capital discipline are essential to delivering better returns. It is our responsibility to spend NAB shareholders’ money very carefully. I expect each and every dollar spent to be justifiable. That is my obligation and commitment to you,” the CEO said.

More reading

• Wilson Asset Management thinks these 2 ASX shares are a buy
• ASX stock of the day: Why are Netwealth (ASX:NWL) shares up 7%?
• NAB almost had $22m defrauded before man’s arrest
• Why the NAB (ASX:NAB) share price climbed higher today
• The Commonwealth Bank (ASX:CBA) share price is climbing higher today. Here’s why.

Motley Fool contributor James Mickleboro 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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In morning trade the Paradigm Biopharmaceuticals Ltd (ASX: PAR) share price is climbing higher.

At the time of writing, the biopharmaceutical company’s shares are up 2% to $2.59.

Why is the Paradigm share price rising?

Investors have been buying the company’s shares this morning after it announced that it has received feedback from the US Food and Drug Administration (FDA). This is in relation to its Zilosul product for the treatment of osteoarthritis.

According to the release, having received the FDA’s feedback, the company can confirm that the same clinical trial protocol will be used in the USA, Europe and Australia. Management is optimistic that this has the potential to enable registrations in multiple jurisdictions, saving time and money.

However, in order to achieve regulatory harmonisation across the FDA and European Medicines Agency (EMA), Paradigm will increase the proposed number of clinical trial study participants in its osteoarthritis clinical program.

Investigational New Drug (IND) application.

Paradigm has also revealed that it is now finalising its IND for submission to the FDA in the first quarter of calendar year 2021.

It has already begun the planning and start-up phase for Zilosul and once the IND is open, clinical trial participants from the USA and Australia will be enrolled into its pivotal Phase 3 randomised double-blind, placebo controlled, multicentre, multinational clinical trial (PARA002).

PARA002 will firstly determine the minimally effective dose and then investigate the safety and efficacy of Zilosul in subjects with osteoarthritis.

Management aims to enrol the first patient for its clinical program in mid 2021. Based on this timetable, the company would expect top-line efficacy results in the first quarter of calendar year 2023.

Paradigm’s CEO and Interim Chairman, Paul Rennie, commented: “Paradigm is grateful to the US FDA for their feedback. Paradigm is confident that it has all the necessary information and clarity for a pivotal Phase 3 program to now make an IND application in Q1 CY 2021.”

“Paradigm has appointed its CRO in the USA and Australia. Paradigm can confirm preparatory work on its pivotal Phase 3 clinical trial has commenced but obviously no clinical trial subjects can be treated, with the investigational product (Zilosul), until the FDA IND is open,” he added.

More reading

• Paradigm (ASX:PAR) share price drops lower on trial update

Motley Fool contributor James Mickleboro 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 Viva Energy Group Ltd (ASX: VEA) share price will in the crosshairs when the ASX opens this morning, after it announced a weak, unaudited full year guidance for FY20.

The Viva Energy share price closed yesterday at $2.01.

Why the Viva Energy share price could move today

The Viva Energy share price will be on watch this morning after the company reported its full year underlying earnings before interest, tax, depreciation, and ammortisation (EBITDA) is expected to come in around $494 million to $524 million, down 21% from FY19.

This is expected to result in a net loss after tax for the company of between $17 million to $47 million, compared with a net profit of $135 million in FY19.

The weak numbers are a result of weak sales volumes in FY20, down 16% compared to FY19.

The company said its non-refining earnings are expected to perform strongly for the full year, up approximately 14% from FY19. 

Its refining earnings, however, been heavily impacted by weak regional refining margins, reduced production in response to lower Victorian market demand, and periods of higher crude premiums earlier in the year. 

The company’s refining earnings losses are expected to come in at between $83 million and $93 million, compared to positive earnings of $117 million in FY19.

Viva Energy also says that capital management has been a key focus, with $591.6 million returned to shareholders through a mix of capital return, dividends, and on market buybacks in FY20. 

Capital expenditure has also been closely managed and is expected to be approximately $70 million lower than the original guidance given at the beginning of the year. 

The company says it is committed to returning the remaining $100 million from the divestment of its stake in Viva Energy REIT (real estate investment trust) during FY21.

Viva Energy CEO Scott Wyatt remains upbeat, saying: 

The response to the COVID-19 pandemic has naturally had a significant impact on our business and our customers.

Overall, the company has performed well during 2020 given the difficult trading conditions. The Non- Refining businesses have delivered significant growth over the prior year, and while Group results have been impacted heavily by the global weakness in the refining sector.

More about Viva

Viva Energy was a recent recipient of the federal government’s subsidy for refiners. This will result in the company receiving a minimum of 1 cent per litre for the production of primary fuels at its Geelong refinery between 1 January and 1 July 2021.

The subsidy is part of Australia’s fuel security strategy, and is designed to protect the country’s refiners by improving the viability of the refining sector over the next ten years.

Viva Energy estimates the payment will contribute approximately $30 million to its underlying refining EBITDA for the six-month period.

About the Viva Energy share price

The Viva Energy share price has gained around 6% in value since the beginning of the year. 

Viva shares dropped by almost 40% in April, at the height of the pandemic before rebounding to today’s level.

The company commands a market capitalisation of $3.23 billion.

More reading

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Motley Fool contributor Eddy Sunarto 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.

The post Viva Energy (ASX:VEA) share price in crosshairs at opening bell after this announcement appeared first on The Motley Fool Australia.

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