Tag: Motley Fool

The Downer EDI Limited (ASX: DOW) share price rallied this morning after it announced the sale of its blasting business for $62 million.

Shares in the engineering group jumped 2.1% to $5.31 at the time of writing when S&P/ASX 200 Index (Index:^AXJO) gained 0.4%.

In case you didn’t notice, ASX stocks have been on a bit of a divesting spree as they look for creative ways to unlock value during these uncertain times.

Downer share price jumps on divestment news

Downer’s latest move seems to have worked. Its peers are lagging behind today with the NRW Holdings Limited (ASX: NWH) share price inching up 0.4% to $2.57 and Seven Group Holdings Ltd (ASX: SVW) share price gaining 1.2% to $22.32.

Downer is streamlining its business to focus on infrastructure construction work and to move away from mining. The sale of Downer Blasting Services to a subsidiary of Chilean company Sigdo Koppers Group is aligned to its strategic vision.

“The sale of Downer Blasting Services follows the sale of the Snowden consulting business and also our share in the RTL Mining and Earthworks joint venture,” said Downer’s chief executive Grant Fenn.

“We are in active discussions with a number of interested parties in relation to the rest of the Mining portfolio.”

Other ASX stocks looking to divest assets

The latest divestment comes at a time when state and federal governments are pumping billions into building infrastructure as a way to stimulate our COVID‐19-stricken economy.

Downer isn’t the only one divesting or spinning off underperforming businesses. The Boral Limited (ASX: BLD) share price also bounced on expectations that its new chief will be taking a broom to the group’s problematic US assets.

The Link Administration Holdings Ltd (ASX: LNK) share price is also another recent example, while Lendlease Group (ASX: LLC) is also getting out of mining services.

Other ASX divestment candidates

It’s also worth noting that the Incitec Pivot Ltd (ASX: IPL) share price is outperforming this morning too with an over 2% gain to $2.27. The explosives and fertiliser group is also believed to be exploring divestment options.

Other stocks that may be looking to shed assets include the Suncorp Group Ltd (ASX: SUN) share price and Perpetual Limited (ASX: PPT) share price.

I would add the AMP Limited (ASX: AMP) share price to the list if not for the fact that there’s a takeover offer for the entire group hanging over the embattled wealth manager.

Divestments and spin-offs are a surer way of creating shareholder value as opposed to mergers and acquisitions (M&As). For this reason, it may be worthwhile keeping an eye out for such transactions.

More reading

• The Perpetual (ASX:PPT) share price is moving after strategic acquisition
• 5 things to watch on the ASX 200 on Wednesday
• ASX 200 rises again on Tuesday
• Why the Austal (ASX:ASB) share price is edging higher today
• Dow Jones hits new record highs. Are ASX 200 shares next?

Brendon Lau owns shares of AMP Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Link Administration Holdings Ltd. The Motley Fool Australia has recommended Link Administration Holdings Ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post Why the Downer (ASX:DOW) share price is outperforming today appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/35DBePe

The United Malt Group Ltd (ASX: UMG) share price is surging higher today following the release of its FY20 results. At the time of writing, shares in the group are up 4.35% higher to $4.80. Let’s take a closer look at how United Malt performed over the past financial year.

What’s driving the United Malt share price?

For the period ending 30 September, United Malt reported a 2% revenue decrease to $1.3 billion over the prior corresponding period. The company blamed COVID-19-related volume declines in the second-half of the year for the drop.

Underlying earnings before interest, tax, depreciation and amortisation (EBITDA) shed 19% to $156.1 million. Earnings were hit hard with a perfect storm of a drop in sales and a change in the product mix. In addition, corporate costs and insurance premiums rose as the business demerged from Graincorp Ltd (ASX: GNC) in March.

Underlying net profit after tax (NPAT) stood at $57.4 million, down 3% on the prior year.

Net debt reduced to $261.7 million compared with the $584.1 million reached at the end of March (H1 FY20). A recent $170.6 million equity raise was used to fund growth opportunities and repay debt.

United Malt said that it maintained a comfortable headroom within its repayment obligations. The group has no substantial near-term refinancing commitments with long-term debt facilities not maturing until November 2022.

The board declared a final dividend of 3.9 cents to be paid to shareholders on 30 December. This represents a pay-out ratio of 40% of underlying NPAT for the second-half. The company noted that its future dividend will seek to distribute roughly 60% of NPAT, subject to trading conditions.

Management commentary

Commenting on the results, United Malt managing director and CEO Mark Palmquist said:

Following a solid first half, our financial performance was impacted in the second half by COVID restrictions which adversely impacted on-premise alcohol consumption, particularly for small craft beer brands. While off-premise consumption increased, this was not sufficient to mitigate the decline in on-premise consumption.

We have implemented necessary changes to how we operate our production and warehouse facilities to align costs with demand, including staff redeployment, some curtailment of capacity and managing more frequent ordering patterns.

Mr Palmquist went on to say United Malt remained well positioned to manage through the current market uncertainty which was expected to continue throughout FY21.

We have entered into an in-principle agreement with our existing Mexican distribution partner for an expanded partnership to further grow United Malt’s penetration into the Mexican market. The new agreement will provide on the ground access to the growing craft market in Mexico, enhanced customer experience, and more efficient logistics.

While some signs of recovery have emerged in our markets, we remain prepared for the evolving impact of COVID and the potential for second and third waves, which could continue to disrupt demand, supply chains and operations, including further lock downs in the UK.

About the United Malt share price

The United Malt share price has gone on a mini-rally this month, up almost 15%. Although this can be attributed to positive market sentiment, shares a just a touch below its all-time high reached in April.

United Malt has a market capitalisation of $1.3 billion and a price-to-earnings (P/E) ratio of 16.6.

More reading

• Why Althea, BWX, Damstra, & GrainCorp shares are charging higher
• Graincorp (ASX:GNC) share price is trading higher today on broker upgrade
• 5 things to watch on the ASX 200 on Monday
• ASX 200 down 0.35%: Ramsay Q1 update, NEXTDC’s international expansion, gold miners surge
• Here’s why the GrainCorp (ASX:GNC) share price jumped 8% higher today

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. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post Why the United Malt (ASX:UMG) share price has lifted 4% higher today appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/36MTpBo

Determining when the next stock market crash will occur is an exceptionally difficult task. This year’s market downturn showed that they often appear without any forewarning.

However, the track record of the stock market shows that they occur fairly regularly. As such, it may be a good idea to start preparing for the next one today. This may help an investor to take advantage of temporarily low prices to generate high returns in the likely long-term recovery.

Another stock market crash

The 2020 stock market crash is not an isolated occurrence. In fact, equity investors are likely to experience a number of market downturns, corrections and bear markets during their lifetimes. The stock market is, by its very nature, dependent on cycles that can sometimes cause significant declines in its value over a short period of time.

Of course, the stock market has delivered high single-digit annual gains over the long run. However, its progress has been disrupted numerous times by periods of decline. Therefore, investors who can prepare themselves for periods where lower share prices are available may be able to capitalise on undervalued stocks. Buying a company when it trades at a discount to its intrinsic value may mean there is greater scope for capital growth over the long run, as investor sentiment and operating conditions can improve.

Short-lived market declines

This year’s stock market crash also showed how quickly downturns can take place. For example, the S&P 500 Index (SP: .INX) declined by over 30% in little over a month as investors became increasingly concerned about the prospects for the economy.

Furthermore, stock prices rebounded extremely quickly. In fact, within 11 weeks of reaching its lowest point in March 2020, the S&P 500 had gained over 40%. As such, investors who were not prepared for a market decline would have found it extremely difficult to respond. This may have meant that they missed out on low stock prices that ultimately were not available for very long.

Heightened risks

The potential for a stock market crash appears to be relatively high at the present time. Risks such as Brexit and the coronavirus pandemic may weigh on investor sentiment over the coming months.

As such, preparing today for the next market decline may be a good idea. Investors may wish to hold some cash within their portfolio so that they are in a position to react to temporary low prices. They may also wish to conduct due diligence into prospective purchases now so that they are ready to go ahead and buy them should their prices move to more attractive levels. And, it may also be a good idea for investors to check that their existing holdings continue to have investment appeal after what has been a challenging year.

By preparing for the next stock market crash, an investor can put themselves in a better position to capitalise on it. Over time, this may lead to higher returns as the market recovers.

More reading

• Why did the Southern Cross (ASX:SXE) share price shoot up 7% this morning?
• Why the Chalice Gold Mines (ASX:CHN) share price is rocketing 16% higher
• ASIC rips into ASX again as more systems go down
• Why the ALS (ASX:ALQ) share price sank 4% lower today
• The Perpetual (ASX:PPT) share price is moving after strategic acquisition

Motley Fool contributor Peter Stephens has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post 3 reasons why I’d start preparing for the next stock market crash today appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/36ONkoh

Southern Cross Electrical Engineer Ltd (ASX: SXE) today announced it has acquired Trivantage for up to $53.5 million. The engineering company says the acquisition will bolster its service and maintenance capabilities, and enable it to enter new markets.

The announcement follows a trading halt on Southern Cross shares earlier this morning. Trade has since resumed and the Southern Cross share price is currently up 6.52% at 49 cents.

What’s the deal?

Trivantage is a Melbourne-based electrical solutions company that supplies and provided maintenance services on switchboards, CCTV, refrigeration, light and power. The company has a revenue base of low-risk maintenance and contracting work. It reported $116 million of revenue and a profit before tax of $8.2 million in the 2020 financial year. Its revenue guidance for the 2021 financial year is $130 million, with earnings before interest and tax of (EBIT) of $10.8 million.

Southern Cross will pay $25 million in cash on completion, and a further $10 million in cash and $5.5 million in Southern Cross’ shares after achievement and confirmation of Trivantage’s 2021 financial year targets. Further cash payments will be payable subject to performance hurdles in the 2022 and 2023 financial years.

About the Southern Cross share price in 2020

The Southern Cross share price has lost 15% on a year-to-date basis. The company paid a dividend yield of 6.12% in October, and it has paid a consistent dividend in 8 of the past 10 years. The company already has $330 million of secured project work in FY21, which accounts for 80% of the revenue target. At the current market price of 49 cents, it commands a market cap of $114 million. 

More reading

• Why the Chalice Gold Mines (ASX:CHN) share price is rocketing 16% higher
• ASIC rips into ASX again as more systems go down
• Why the ALS (ASX:ALQ) share price sank 4% lower today
• The Perpetual (ASX:PPT) share price is moving after strategic acquisition
• Plenti (ASX:PLT) share price soars 5% after solid first half results

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. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post Why did the Southern Cross (ASX:SXE) share price shoot up 7% this morning? appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/2Uyhg2a

The Chalice Gold Mines Limited (ASX: CHN) share price has been a very strong performer on Wednesday.

In morning trade the gold exploration company’s shares are up a sizeable 16% to $3.82.

Why is the Chalice Gold share price charging higher?

Investors have been buying the company’s shares this morning after it reported significant new results from ongoing exploration activities at its Julimar Nickel-Copper-Platinum Group Element (PGE) Project in Western Australia.

According to the release, five rigs are continuing a step-out and resource definition drill program at the Gonneville Intrusion, where Chalice recently made a major high-grade discovery.

A total of 27 diamond drill holes and 116 RC drill holes have been completed to date at the project, of which assay results for 18 diamond and 80 RC holes have now been reported. Assay results are pending for a further 45 completed drill holes.

What are the new results?

Chalice’s Managing Director, Alex Dorsch, revealed that its new results have been very strong and are pointing to significant growth opportunities.

He said: “The Gonneville PGE-Ni-Cu-Co-Au discovery continues to grow on multiple fronts, with another round of exceptional drill results extending the known high-grade zones, defining new zones and further reinforcing the numerous growth opportunities across the Project.”

“Given the width and grade of the drill results we are continuing to see over a very large area, the scale of the Gonneville Intrusion itself, and the significant growth potential beyond the limits of the current resource drilling, it is clear that Julimar is emerging as a globally significant deposit of critical metals in Western Australia,” he added.

What next?

With five rigs drilling, Chalice is on track to meet the mid-2021 guidance for a maiden Mineral Resource for Gonneville. It will also continue to prioritise the growth of the high-grade mineralised zones with step-out drilling.

Mr Dorsch commented: “Given that this very strong EM anomaly sits just 1.5km north of the very wide mineralised intercepts encountered in JD018, it’s not hard to see why we are so excited about the district-scale potential at Julimar. This is a large, multi-faceted mineralised complex which continues to surprise on the upside.”

More reading

• ASIC rips into ASX again as more systems go down
• Why the ALS (ASX:ALQ) share price sank 4% lower today
• The Perpetual (ASX:PPT) share price is moving after strategic acquisition
• Plenti (ASX:PLT) share price soars 5% after solid first half results
• Serko (ASX:SKO) share price drops lower after half year results

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. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post Why the Chalice Gold Mines (ASX:CHN) share price is rocketing 16% higher appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/2KjUSHZ

Just one day after the share market was forced to close for most of Monday, ASX Ltd (ASX: ASX)’s fitness to operate has been questioned again.

While the main market successfully reopened at 10am on Tuesday and survived a whole day’s trading, troubles arose in other ASX systems.

Late in the afternoon, the Australian Investments and Securities Commission tore into the market operator for data issues with the Centre Point matching system.

That system normally takes in bids and offers from both ASX and alternative market Chi-X to give buyers and sellers the best price possible.

But the data failures meant ASX decided to ignore the Chi-X feed from 11.17am onwards.

ASIC warned that this exclusion could mean a violation of market integrity rules.

As of Wednesday morning, ASX had decided to suspend Centre Point “until further notice”.

“ASX believes it is prudent to suspend the Centre Point service for today, following the issues experienced yesterday creating a national best bid and offer,” an ASX spokesperson told The Motley Fool.

“This will allow ASX to implement a fix to the service, and ensure a safe and stable market environment.”

Is ASX fit to run the market?

Just like Monday, ASIC expressed its concern about ASX’s infrastructure and the company’s fitness to operate the market.

“ASIC is actively assessing ASX’s compliance with its market licence obligations and is considering further actions to ensure the adequacy of ASX’s human, financial and technological resources to operate its markets in an orderly manner,” stated ASIC.

ASX’s share price fell more than 2% on Tuesday, falling from $82.91 at 10am AEDT to close at $81.19.

ASX’s CHESS system also failed Tuesday

The ageing CHESS system, which settles trades, also failed Tuesday afternoon.

The delay in batch processing was not connected to Monday’s market outage.

The CHESS system processes trades 3 business days after they took place, meaning the Tuesday problems would have affected Friday’s transactions.

As of Tuesday night, ASX’s system status page showed the delayed batch run was completed.

More reading

• What caused the ASX outage on Monday trading?
• ASIC to investigate if ASX is fit to hold market licence
• ASX trading halt to remain in place for the rest of the day
• Update: Trading on ASX remains in ‘enquire’ state after market data error
• ASX trading has been frozen this morning in IT glitch

Motley Fool contributor Tony Yoo has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post ASIC rips into ASX again as more systems go down appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/3pHgOgu

The ALS Ltd (ASX: ALQ) share price has come under pressure on Wednesday following the release of its half year results.

In early trade the testing services company’s shares were down as much as 4% to $9.40.

The ALS share price has recovered since then and is now down 1% to $9.69.

How did ALS perform in the first half?

For the six months ended 30 September, ALS reported an 8.7% decline in revenue from continuing operations to $838.8 million.

This was driven largely by the negative impacts of COVID-19 pandemic on its first quarter performance which led to a 9.7% decline in quarterly revenue. Pleasingly, the company’s revenues are improving, with second quarter revenue down 7.8% over the prior corresponding period.

The company’s Life Sciences business was resilient and only posted a 3.5% decline in revenue. Whereas the Commodities business reported a 13% decline in revenue and the Industrials business posted a 17.1% decline.

On the bottom line, ALS posted a statutory net profit after tax of $70.3 million. This was down 48.1% on the prior corresponding period due to one-off gains from the sale of its China business a year earlier.

On an underlying basis, the company’s net profit after tax from continuing operations was down 17.9% to $80.6 million. This excludes government subsidies and related direct costs.

The ALS board has declared an interim dividend of 8.5 cents per share fully franked. This is down from 11.5 cents per share a year earlier. Management notes that this reflects its prudent capital management strategy and demonstrates its strong liquidity position.

Outlook.

No guidance has been given for the full year, but management has provided an update on current trading.

It commented: “The first quarter of FY21 is expected to be the most challenging for the Group in this financial year due to economic shutdowns related to the COVID-19 pandemic. The sustained increase in global economic activity during the second quarter resulted in a significant improvement in performance across the Group. This trend has continued into early Q3.”

More reading

• The Perpetual (ASX:PPT) share price is moving after strategic acquisition
• Plenti (ASX:PLT) share price soars 5% after solid first half results
• Serko (ASX:SKO) share price drops lower after half year results
• Here’s the ASX bank share rated as a conviction buy
• 2 food-based ASX dividend shares to feed your income needs

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. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post Why the ALS (ASX:ALQ) share price sank 4% lower today appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/35DtdK8

Financial services company Perpetual Limited (ASX: PPT) has today announced its successful 75% acquisition of investment management business Barrow, Hanley, Mewhinney & Strauss. At a price of US$293 million (A$403 million), the purchase will instantly triple Perpetual’s asset under management (AUM) to more than $87 billion.

At the opening bell today, the Perpetual share price has dipped slightly by 0.2% to $30.38.

More details of the acquisition

An initial consideration of $403 million was paid to BrightSphere Investment Group Inc. (BSIG), the owner of Barrow Hanley. A potential additional payment may be paid to reflect final consents received, but will not exceed $439 million.

Barrow Hanley has around US$41 billion in assets under management across global equities and fixed income investments. It has a team of roughly 100 employees, head-quartered in Dallas. It also has international presence in London and Hong Kong. Perpetual says that Barrow Hanley will retain its brand and continue to operate independently with no change to its investment process or key personnel.

This acquisition is consistent with Perpetual’s stated strategy to build world-class investment capability and a global distribution footprint. Following the purchase, the company confirms it is on-track to achieve more than 20% underlying earnings per share (EPS) accretion on an annualised basis .

Perpetual chief executive and managing director Rob Adams says:

This is a transformational deal for Perpetual. We now have a broad range of world class investment capabilities; we have significantly diversified our AUM by client type, client location and by asset sector and; we now have multiple opportunities to drive strong future growth in AUM, with substantial capacity across those strategies. 

The successful early build-out of our US distribution team is now greatly accelerated, with 31 distribution professionals joining us through the acquisition of Barrow Hanley. The Barrow Hanley investment teams are truly world class, and we are delighted to partner with them to forge a strong growth path into the future.

Perpetual’s other recent purchase

Today’s announcement came on the back of another recent acquisition by Perpetual. In July, the company purchased another US-based investment advisory firm Trillium. Trillium focuses exclusively on environmental, social and governance (ESG) investments. That deal was inked at $36 million and added $3.3 billion to Perpetual’s AUM. 

Perpetual plans to introduce new business division Perpetual Asset Management International in the first-half of FY21. This will include the operations of Trillium and Barrow Hanley, and any future international asset management functions.

Quick take on Perpetual

Perpetual was founded in 1885 by Australia’s first prime minister Edmund Barton, and is a company steeped in history. Today, the diversified financial services company comprises four main businesses. These include Perpetual Investment, Perpetual Private, Corporate Trusts and Group Support Services.

How has the Perpetual share price performed in 2020?

The Perpetual share price has lost around 25% this year. The share price opened the year at $41.12, before COVID-19 disrupted its business. The Perpetual share price is currently trading at $30.38, giving the company a market cap of $1.72 billion.

More reading

• Tabcorp (ASX:TAH) share price slips after systems failure
• Crown (ASX:CWN) share price bucked bad news to rise 6% last week
• RBA taps bank partners for crypto Australian dollar project
• Why the AMP (ASX:AMP) share price could be set to rocket higher today
• These could be the next ASX stocks to unlock value by selling assets

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. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post The Perpetual (ASX:PPT) share price is moving after strategic acquisition appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/3pANVlP

The Plenti Group Ltd (ASX: PLT) share price has shot out of the gates this morning after the lender announced its half year FY21 results for the 6 months ended 30 September 2020. 

Plenti listed on the ASX on 23 September 2020 at an offer price of $1.66, but prior to today its shares had sunk more than 30% from the offer price. However, the company’s results reveal it has exceeded its prospectus forecasts, and the Plenti share price is up 5.7% to $1.20 per share at the time of writing.

About Plenti 

Plenti is a fast-growing technology-led consumer lending and investment business. It seeks to provide borrowers with efficient and competitive loans, delivered via simple digital experiences. 

Plenti has funded approximately $870 million in loans to over 55,000 borrowers since its launch in 2014. Its target sectors include automotive, renewable energy and personal lending verticals. 

What did Plenti report in its first half results?

Plenti delivered ahead of prospectus forecasts on all key financial metrics. The company reported revenue of $26.0 million, representing growth of 41% on the prior corresponding period and 2% ahead of prospectus forecast, driven by continued strong origination and loan portfolio growth.

It achieved record loan originations of $167.0 million for the half, 33% above the first half of FY20 and 7% ahead of its prospectus forecast. Loan origination growth resumed in the second quarter, with record monthly volumes achieved in July, August and September.

Growth was led by automotive lending, coinciding with the launch of Plenti’s warehouse-funded car loan offering in early 2020. Automotive loan originations were $81.1 million for the half, up 323% on the prior corresponding period. Its renewable energy loan originations were at $28.5 million for the half, up 47% on the prior corresponding period. 

The average interest rate paid by customers decreased to 12.1% from 13.3%, reflective of the company’s shift towards automotive and renewable energy loans, which are lower-risk and longer term in nature compared to personal loans. 

Funding rates continued to decrease, down to 6.3% from 7.1% in the prior corresponding period. This flows on into Plenti’s cost-to-income ratio, which reduced to 48.5% from 61.6% in the first half of FY20, reflecting the benefits of increased operating efficiency. 

The results delivered a more favourable loss for the half, with pro forma net loss after tax of $3.4 million compared to the $7.9 million in the pcp. 

Plenti reports that it has continued to experience strong trading momentum in the second half of its financial year, which ends 31 March 2021. Loan originations were $37.2 million in October, representing a fourth consecutive record month of originations. 

More reading

• Serko (ASX:SKO) share price drops lower after half year results
• Here’s the ASX bank share rated as a conviction buy
• 2 food-based ASX dividend shares to feed your income needs
• Virgin Money (ASX:VUK) share price on watch following CFO appointment
• Aristocrat Leisure (ASX:ALL) share price in focus after FY 2020 results

Motley Fool contributor Lina Lim has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post Plenti (ASX:PLT) share price soars 5% after solid first half results appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/3kFGJ4j

The Serko Ltd (ASX: SKO) share price is dropping lower this morning following the release of its half year results.

At the time of writing, the travel and expense technology solution provider’s shares are down 3% to $5.11.

How did Serko perform in the first half?

Given its exposure to the travel market, Serko unsurprisingly had a very tough first half of FY 2021.

For the six months ended 30 September, the company reported a 66% decline in total operating revenue to NZ$5.1 million.

The company’s recurring product revenue was also impacted by the COVID-19 pandemic travel disruptions. It was down 65% on the prior corresponding period to NZ$4.6 million.

During the half, total travel booking volumes were down 77% on the prior corresponding period. However, booking trends are now improving. Volumes have lifted from 23% of last year’s levels to 35% during October.

On the bottom line, Serko recorded a sizeable loss after tax of NZ$10.1 million. This compares to a net loss of NZ$0.9 million in the first half of FY 2020.

This loss was driven by the tough trading conditions and also its investments in growth opportunities. Serko has been investing in its expansion into the Northern Hemisphere markets ahead of an anticipated travel market recovery.

This led to a net cash burn average of NZ$1.8 million per month for the six-month period, which is within the NZ$2 million COVID-19 cost saving cap set by the company.

Despite this cash burn, the company finished the period with a cash balance of NZ$31.5 million. However, since then Serko has completed a capital raising, which leaves it with over NZ$90 million of cash on hand. Management believes this positions Serko well for an anticipated travel market recovery.

Outlook.

Serko’s Chief Executive, Darrin Grafton, remains very positive on the company’s prospects on the other side of the pandemic.

He said: “We consider that Serko’s prospects within the travel industry remain significant over the medium to long-term, notwithstanding the currently known impacts of the COVID-19 pandemic, and we remain confident in the recovery of travel over time. We are committed to supporting our partners through this period of change and accelerating our drive to transform business travel and expense management globally.”

However, at this stage, it is unable to provide any guidance for FY 2021 due to the uncertain timing of the travel market recovery.

Though, the company’s Chair, Claudia Batten, has provided investors with an idea of how Serko expects travel volumes to trend in the coming months.

She said: “Serko continues to assume in its forecasts that travel volumes will be in the range of 40-70% of pre-COVID levels by March 2021. The extent of travel restrictions in place within Australia and New Zealand will be determinative of where, within this range, actual travel volumes fall.”

Ms Batten also commented on the company’s cash burn expectations.

She added: “Serko continues to target an average monthly cash consumption of between $2 million and $4 million during the remainder of FY21 and through to FY22. We continue to invest in growing our global footprint, managing investment based on travel resumption and achievement of key performance metrics (including the Booking.com opportunity and NORAM customer onboarding).”

More reading

• Wilson Asset Management thinks these 2 small cap ASX shares are a buy

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 Serko Ltd. The Motley Fool Australia has recommended Serko Ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post Serko (ASX:SKO) share price drops lower after half year results appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/38TR4rc