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The GWA Group Ltd (ASX: GWA) share price is today falling lower following the company’s annual general meeting this morning. At the time of writing, the GWA share price is trading 2.51% lower at $2.72 after the company announced  downward results and near-term challenges facing the business.

Highlights from today’s AGM

• The company emphasised its operational discipline throughout the year in what has been a challenging market.
• Revenue for the financial year was $398.7 million, down 12% from FY19.
• Net profit after tax (NPAT) was $44.9 million, down 16.5% from FY19 – which does, however, include interest costs on debt related to the Methven acquisition.
• The earnings before interest and tax (EBIT) margin was maintained at 18% compared with FY19, which supports the company’s claim of operational discipline.
• A solid balance sheet was maintained, with no significant near-term refinancing commitments.
• The company expects FY21 trading to remain challenging due to a weak construction market caused by coronavirus.
• The board has determined a final dividend of 3.5 cents per share fully franked.  

Quick peek into GWA’s world

GWA Group operates in a single business division: bathrooms and kitchens. It also recently acquired Methven – a manufacturer of bathroom accessories, taps and valves.

GWA has strong branding in Australia with its Caroma brand in particular. The well-known quality of this brand allows for premium pricing. Caroma also distinguishes itself in the commercial market, and is known as the standard in disabled toilets. The remainder of GWA’s brand portfolio – Dorf, Fowler, Stylus, Radiant and Clark – does not enjoy the same level of brand awareness and hence provides less scope for pricing premiums.

GWA also has well established distribution channels and strong relationships with plumbing retailers like Wesfarmers Ltd (ASX: WES) owned Bunnings as well as Reece Ltd (ASX: REH) and Tradelink.

Challenges faced by GWA

As mentioned in today’s AGM, GWA’s business depends considerably on the boom cycle of the real estate market. The coronavirus-stricken Australian economy presented the company with a new challenge to an already depressed property market. Housing constructions across the country pretty much peaked in mid-2018, and have been in decline since.

Management has warned that the whole business sector could feel even more pressure as the bottom in construction activity may not come until late next year.

Competition is also gradually encroaching in the form of global industry leader Roca Sanitorio. The Spanish company has a current market share in Australia of about 2%, still one-tenth that of GWA. But inroads are being made fast by this new giant entrant.

Some good news ahead for GWA

Despite the gloomy market in FY20, the company was able to deliver some respectable results, as announced today.

Looking at the AGM slides, it’s also worth noting that more than half of GWA sales are derived from the repair and remodel market segment. As such, the company is somewhat insulated from the boom and bust cycle of the new constructions market.

Longer term, Australia’s expected population growth should provide continued support for GWA’s products. The impact from the coronavirus, although devastating, is also expected to be relatively short-lived.

How has the GWA share price been perforing?

Including today’s falls, and at the time of writing, the GWA share price price has declined by 19.53% year to date. This compares similarly with the sector’s average of a 20% decline, as indicated by the ASX 200 Industrial Sector Index (ASX: XNJ). 

Based on the current GWA share price, the company has a market capitalisation of around $729 million.

More reading

• How ASX investors can capture these ‘billionaire trends’
• Why AMP, Fortescue, JB Hi-FI, & ResMed shares are charging higher
• Why the ResApp (ASX:RAP) share price is falling 18% lower today
• The rationale behind the Coca-Cola Amatil (ASX:CCL) takeover bid
• Why the Tesserent (ASX:TNT) share price jumped as much as 10% today

Motley Fool contributor Eddy Sunarto has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of Wesfarmers Limited. 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 GWA Group (ASX:GWA) share price down after AGM appeared first on Motley Fool Australia.

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A billion dollars is a lot of money.

Now that may sound like I’m stating the obvious. But the truth is a billion is such a mind-bogglingly large number it’s hard to really wrap your brain around. That’s why you generally see it written out as ‘$1 billion’ rather than $1,000,000,000.

So let’s break it down.

We all have a pretty good idea of what $1 million can get us. In Australia that would be a decent house in most capital city neighbourhoods. Or an exceptional house and property in most regional areas.

So $1 billion, then, would get you 1,000 of those houses.

And $29 billion – or $29,000,000,000 – would get you 29,000 of those houses. Enough to live in a different million-dollar home, every day, for more than 79 years.

Like I said. A mind bogglingly large number.

Yet for Gina Rhinehart, $29 billion (or $28.9 billion, to be more precise) is the number she sees listed for her wealth.

That’s according to the latest Australian Financial Review (AFR) Rich List, which reports Rhinehart’s wealth more than doubled – up 109% – since last year.

How did she achieve that?

Below we take a look at some of the ‘billionaire trends’ Rhinehart and a few other top rich-listers rode this past year to ever greater wealth.

It may not be shiny, but…

When it comes to this year’s billionaire-making trends, you can’t beat iron ore.

The iron ore price has been choppily trending higher since hitting lows of US$40 per tonne in December 2015. And it received a big boost this year from, of all things, the coronavirus pandemic.

First, the virus has hampered new supply from Brazil as mining operations were forced to close. And second, demand ramped up as China and other developed nations launch – or plan to launch – major infrastructure projects to bolster their virus weakened economies. (Iron ore is a core ingredient in making steel.)

This has seen the price rise from US$74 per tonne 6 months ago to US$120 per tonne today, a gain of 62%.

It was also a boon for Rhinehart’s Roy Hill mine and her company, Hancock Prospecting. According to IBISWorld, Hancock Prospecting notched up almost $11 billion (there’s that number again) in revenue, making it Australia’s biggest private company.

While you can’t buy shares of Rhinehart’s iron ore operations on the ASX, you can buy shares of the company founded by Australia’s second richest person, Andrew ‘Twiggy’ Forrest. His net wealth leapt 189% over the past year, to $23 billion.

Forest’s shares in Fortescue Metals Group Limited (ASX: FMG) – part of the S&P/ASX 200 Index (ASX: XJO) – helped drive that momentous growth.

Over the past 12 months, Fortescue’s share price is up 94%. And it pays an annual dividend yield of 10%.

According to the AFR, Forrest’s wealth grew as much as $500 million per week at one stage this past year.

Oh, and he collected $2 billion in dividends.

A growing, under the radar wealth trend

Both Forest and Rhinehart also have extensive agricultural property portfolios.

Rhinehart is not only Australia’s wealthiest person, she’s also the nation’s biggest private landowner. And Forest has continued to expand his own agricultural holdings this year, along with aquaculture where he plans to become a major producer of oysters.

While both of these multi-billionaires’ agricultural ventures remain private, ASX investors have a number of options for investing in Australia’s agricultural sector.

Rural Funds Group (ASX: RFF), for example, owns a range of quality Australian agricultural properties, including cattle ranches, almond farms, vineyards and sugar plantations.

Rural Funds’ share price is up 34% over the past 12 months. At the current share price, it pays an annual dividend yield of 3.5%.

Between the click and the collect

Coming in at number 3 on the AFR’s rich list is Anthony Pratt “and family”. The Visy Industries founder’s wealth surged 27% over the last year to reach $15.6 billion. Visy is one of the world’s largest privately owned paper, packaging and recycling companies.

Just as with the price of iron ore, a large part of Pratt’s success over the 12 months can be attributed to the pandemic. That’s because people working and shopping from home has ushered in a rapid growth in e-commerce. And after you click on the item you want to buy it needs to be packaged before it gets sent.

Visy Industries is a private company. But ASX investors wanting exposure to the packaging business could consider Amcor Limited (ASX: AMC). Headquartered in Melbourne, Amcor is a global packaging company operating across Australasia, North America, Latin America, Europe and Asia.

Amcor’s share price is up 8% over the last 12 months. It pays a dividend yield of 2.5%.

Tapping into the future

Coming in at number 4 and number 5 on the rich list are Mike Cannon-Brookes and Scott Farquhar. Both men are co-founders of US-listed, Australian software company Atlassian Corporation PLC (NASDAQ: TEAM).

Cannon-Brookes wealth grew by 73% over the year to reach $16.9 billion. Farquhar’s wealth grew by 71% to reach $9.6 billion.

Atlassian’s share price has soared 69% over the past year, giving the company a market cap of more than $52 billion.

The already rapidly growing technology sector was also given a boost by the outbreak of the global pandemic. And while some share prices may be looking stretched, technology continues to evolve at an increasingly rapid pace.

That should help support the share prices of technology companies, like Atlassian.

More reading

• Why AMP, Fortescue, JB Hi-FI, & ResMed shares are charging higher
• $14 trillion investor alliance warns Aussie mining companies
• Why market crashes are useful for buying ASX dividend shares
• How did ASX iron ore shares perform in the last quarter?
• Fortescue (ASX:FMG) share price lower despite record Q1 shipments

Motley Fool contributor Berndt Struben 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 How ASX investors can capture these ‘billionaire trends’ appeared first on Motley Fool Australia.

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In afternoon trade the S&P/ASX 200 Index (ASX: XJO) has given back its morning gains and is dropping lower. At the time of writing the benchmark index is down 0.35% to 5,939.7 points.

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

AMP Limited (ASX: AMP)

The AMP share price has rocketed 22% higher to $1.56. Investors have been fighting to get hold of the wealth manager’s shares after it revealed that it has received a takeover bid from Ares Management. No figures have been provided in respect to the indicative and non-binding takeover proposal. Furthermore, management has warned that talks are at a very preliminary stage and there is no certainty that a transaction will eventuate.

Fortescue Metals Group Limited (ASX: FMG)

The Fortescue share price is up over 4% to $17.32. The catalyst for this appears to be a broker note out of Macquarie this morning. In response to its first quarter update, the broker has retained its outperform rating and lifted its price target on the iron ore producer’s shares to $20.00. Fortescue’s shipments were stronger than it expected, and its costs were lower than the broker forecast.

JB Hi-Fi Limited (ASX: JBH)

The JB Hi-Fi share price has climbed 1% to $47.73. This also appears to have been driven by a broker note out of Macquarie. Its analysts have retained their outperform rating and lifted the price target on the retailer’s shares to $54.90. It believes the company is well-placed to benefit from a strong holiday season. Particularly given the release of a new iPhone and PlayStation 5.

ResMed Inc (ASX: RMD)

The ResMed share price has jumped 9% higher to $27.80. Investors have been buying the medical device company’s shares after it smashed expectations in the first quarter of FY 2021. ResMed delivered a 10% increase in revenue to US$751.9 million and a 37% lift in earnings per share to US$1.27. This compares to the market consensus estimate of US$709.47 million and US$1.03 per share. A key driver of ResMed’s strong result was strong demand for ventilators because of the pandemic.

More reading

• ASX 200 flat: ResMed smashes expectations, AMP surges on takeover talks
• Why the AMP (ASX:AMP) share price could be set to rocket higher today
• Takeover talks puts AMP (ASX:AMP) share price in focus
• ResMed (ASX:RMD) share price on watch after smashing Q1 expectations
• 5 things to watch on the ASX 200 on Friday

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has recommended ResMed Inc. 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 AMP, Fortescue, JB Hi-FI, & ResMed shares are charging higher appeared first on Motley Fool Australia.

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The ResApp Health Ltd (ASX: RAP) share price is sinking lower today following the company’s release of its quarterly update. At the time of writing, the ResApp share price is down 18.18% to 9 cents.

Let’s take a look at why shareholders are fleeing for the hills today.

What’s impacting the ResApp share price?

Investors are selling down the ResApp share price following today’s release of the company’s quarterly figures. For the period ending 30 September, ResApp reported a worrying result to the start of the new financial year.

Receipts from customers totalled just $3,000 due to the company only receiving payments from Apple Inc (NASDAQ: AAPL) for SleepCheck downloads during June and July, not August and September. The company noted that with ResAppDx now available on select Android smartphone devices, larger revenue streams will likely follow suit.

In addition, SleepCheck is expected to be launched on the Android platform by the end of the calendar year.

Net cash used in operating activities came to $1.4 million, and the company received $1.5 million in proceeds from the exercise of options.

Research and development costs came to $377,000 for the three months, however staff expenses took a big hit at $815,000. The employee cash outflow is double that of administration and corporate costs and almost six times that of marketing costs, $317,00 and $142,000, respectively.

ResApp closed the quarter with a cash balance of $5.8 million.

Operational overview

The company touched on a number of developments that it has made over the September period. Most notably, ResApp secured a two-year service agreement with Coviu to make ResAppDx available to Coviu’s telehealth customers in Australia. Furthermore, ResAppDx also launched on Phenix Health’s telehealth mobile application.

ResApp’s SleepCheck product was promoted in a partnership with Diabetes Queensland. The company is confident the collaboration will lead to an uptake of its SleepCheck application, providing invaluable marketing and exposure.

Towards the end of Q1, ResApp signed on a 12-month agreement with HealthEngine to integrate its booking platform with SleepCheck. The deal will allow ResApp to identify a person with sleep apnoea, and book an appointment with a health professional.

Lastly, AstraZeneca plc (NYSE: AZN) Japan will use ResApp software in a lung cancer clinical study. A new cough counting smartphone application will be trialed in a number of patients undergoing treatment for lung cancer. AstraZeneca will pay a monthly licencing fee for each person enrolled in the study, as well as monthly support fee.

Management commentary

ResApp CEO and managing director, Dr Tony Keating, commented on the achievement made in the quarter. He said:

ResApp achieved a number of key milestones during the period, which have created a strong foundation for it to leverage during the current quarter and beyond.

We have secured partnerships with two of Australia’s leading telehealth platforms and will continue to work with both Phenix and Coviu to explore opportunities that will expedite the uptake of ResAppDx amongst clinicians, allowing the company to strengthen its revenue stream. 

Dr Keating went on to speak about ResApp’s latest product to the market, SleepCheck. He added:

Our national marketing campaign for SleepCheck has resulted in good uptake amongst consumers. Download rates have continued to grow strongly month-by-month and we anticipate that these will increase as more aggressive marketing continues in the UK and other countries.

ResApp has retained a strong cash balance, which provides us with financial flexibility and ample runway to scale operations over the coming months.

More reading

• Why the ResApp (ASX:RAP) share price is racing higher today
• Why the ResApp (ASX:RAP) share price is up almost 20% today
• The ResApp (ASX:RAP) share price is soaring 10% today. Here’s why.

Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Apple. The Motley Fool Australia has recommended Apple. 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 ResApp (ASX:RAP) share price is falling 18% lower today appeared first on Motley Fool Australia.

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Coca-Cola Amatil Ltd (ASX: CCL) is one of the largest bottlers in the Asia Pacific region. This $9 billion Australian beverage business spans Australia, New Zealand, Fiji, Indonesia and Papua New Guinea, and also belongs to a network of independent companies connected to The Coca-Cola Company (NYSE: KO).

Coca-Cola Amatil operates as an authorised bottler and distributor of the US Coca-Cola Company. As part of its recent investor presentation the Australian arm released unaudited third quarter results, with group revenue and volume down 4.2% and 5.4% on the prior corresponding period – a result that is relatively unsurprising given the impact of the coronavirus pandemic. What is surprising is that it has also received a $9.3 billion takeover offer from Coca-Cola European Partners (NYSE: CCEP).

The deal has been labelled as opportunistic by Coca-Cola Amatil shareholders, who think the bid offer does not take into account the bottler’s third quarter recovery (compared to the first half). Independent shareholders will receive $12.75 per share in cash, less final 2H20 dividends paid, subject to approval from shareholders and regulators.

The Coca Cola Amatil share price jumped more than 16% after the announcement. Let’s look at the reasons for the takeover bid and Coca-Cola Amatil’s future prospects, assuming the deal is approved.

The refranchising strategy of The Coca-Cola Company

The Coca-Cola Company announced its plan to refranchise bottling operations in 2016 to focus on building brands and developing products.

The Coca-Cola Company holds a nearly 31% stake in Coca-Cola Amatil and a 19% stake in Coca-Cola European Partners. Coca Cola European Partners was formed in 2016 by 3 European companies with a market capitalisation of $17.4 billion. If the takeover proceeds, the Coca-Cola Company will hand over its shares in Coca-Cola Amatil to Coca-Cola European Partners.  

Under the proposed takeover, Coca-Cola Amatil will shed expensive, global bottling operations to become a more nimble, less capital intensive and more profitable beverage business.

Premium brands with higher profit margin

The Coca-Cola Company has been developing a new business model of higher prices, smaller packages and premium brands to deliver modest volume growth but greater profitability. One way this can be achieved is by bringing together 2 Coca-Cola bottlers.

The takeover will provide access to a broader and more balanced geographic footprint for consumer reach, especially the company’s non-alcoholic ready to drink (NARTD) products (including Coca-Cola no sugar, energy drinks and juices).

National NARTD volume in Australia grew 1.9% in the first 3 weeks of October compared to the declining sales in alcohol and coffee products, according to the company’s recent investor briefing. I think this space is the growth driver for the company, as consumers are becoming more health conscious amid the pandemic.

Foolish takeaway

From a business perspective, I can see the strategic rationale of a takeover to deliver value to Coca-Cola Amatil’s shareholders.

The COVID-19 pandemic presents a perfect time for Coca-Cola European Partners to go ahead with this transaction, which creates a cross-border platform for accelerated growth and returns.

More reading

• Xplore Wealth share price surged to a 2-year high today on M&A fever
• 3 ASX stocks are outperforming today after brokers upgraded them to “buy”
• ASX 200 was mixed today, ends down 0.2%
• Coca-Cola Amatil (ASX:CCL) share price jumps 16% on takeover bid
• ASX 200 up 0.3%: Coca-Cola Amatil rockets on takeover approach, Westpac’s $1.2bn earnings hit

Motley Fool contributor Miles Wu has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the shares 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 rationale behind the Coca-Cola Amatil (ASX:CCL) takeover bid appeared first on Motley Fool Australia.

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The Tesserent Ltd (ASX: TNT) share price soared as high as 10% this morning following a strong quarterly announcement. The Tesserent share price faced selling pressure however, and is currently up 4.05% at the time of writing. Here is the rundown of its quarterly update. 

Tesserent earnings 

The internet security-as-a-service provider delivered strong Q1 revenue of $15.1 million, up 42.5% from the previous quarter. Q1 revenue included two months of revenue from Seer Security and one month’s revenue from both Airloom and Ludus. All three were acquisitions that the business made in mid-late FY19. 

With the addition of full quarter revenue from all three acquisitions as well as full quarterly revenue from its most recent acquisition iQ3, subject to audit, the group’s current revenue run-rate is now in excess of $100 million. This is anticipated to increase to more than $150 million by the end of FY21 on a quarterly annualised basis with continued organic growth and the completion of planned future acquisitions. 

The company continues to build its high-value recurring annuity revenues with multi-year, locked-in managed security services (MSS) and security operations centre (SOC) contracts now exceeding $30 million. 

A cash flow positive business 

Q4 FY20 saw Tesserent achieve quarterly earnings before interest, tax, depreciation and amortisation (EBITDA) and operational cash flow positivity for the first time in its history. The company has been able to maintain its trend in profitability with Q1 increasing operational profit to $405,000, up from $17,000 from the previous quarter. It expects to continue this growth trend for the foreseeable future.

Additionally, the company maintains a healthy cash balance of $13.76 million available at the end of September. This will provide the balance sheet flexibility it needs to pursue additional acquisitions. The quarterly update notes that there are a number of acquisitions in an ‘advanced stage’. 

Business integration update 

The business continues to identify and realise cross-selling opportunities across its business units resulting in a number of notable wins in the quarter. This includes: 

• New federal, state and local government contract wins across the group in excess of $6 million in the September quarter 
• Significant enterprise contract wins in aggregate in excess of $4 million in September with large financial services, insurance, advertising and media organisations 
• 14 cross-selling wins in September from the recent acquisitions 
• Growing pipeline of opportunities and wins across business units leveraging Splunk service and capabilities 

Moving forward 

The company’s primary objective moving forward is to maximise shareholder value by increasing earnings margins through the growth of its high-margin annuity-based income and the inclusion of proprietary intellectual property in its solutions. 

The quarterly highlights important goals for the remainder of this current financial year including capturing market share in government, critical infrastructure and banking & finance, exploring international market opportunities and integrating its acquisitions. 

More reading

• The niche ASX shares critical to fuelling the tech boom
• Why the Tesserent (ASX:TNT) share price has surged 18% today

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 Why the Tesserent (ASX:TNT) share price jumped as much as 10% today appeared first on Motley Fool Australia.

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At lunch on Friday the S&P/ASX 200 Index (ASX: XJO) has given back its morning gains. The benchmark index is currently flat at 5,960.7 points.

Here’s what is happening on the market today:

ResMed smashes expectations.

The ResMed Inc (ASX: RMD) share price is surging higher today after smashing expectations in the first quarter. The medical device company reported a 10% increase in revenue to US$751.9 million. This compares to the market consensus estimate of US$709.47 million. Also beating expectations was its earnings per share, which grew 37% to US$1.27. The market consensus was US$1.03 per share. A key driver of ResMed’s result was strong demand for ventilators because of the pandemic.

AMP takeover news.

The AMP Limited (ASX: AMP) share price is rocketing higher today after management confirmed that Ares Management has tabled a takeover bid to the embattled wealth manager. No figures have been provided for the indicative and non-binding takeover proposal, but investors clearly appear to believe it will be a compelling offer. Management has warned that talks are at a very preliminary stage and there is no certainty that a transaction will eventuate.

Tech shares tumble.

Despite a strong night of trade on the tech-focused Nasdaq index, Australian tech shares have been tumbling lower today. The S&P/ASX All Technology Index (ASX: XTX) is down 1.3% at the time of writing, with the likes of Appen Ltd (ASX: APX) and Zip Co Ltd (ASX: Z1P) weighing on the index at lunch.

Best and worst ASX 200 performers.

The best performer on the ASX 200 today by some distance is the AMP share price. Its shares are up 21% at the time of writing following the takeover approach. The worst performer has been the Western Areas Ltd (ASX: WSA) share price with a disappointing 18% decline. This morning the nickel producer downgraded its production guidance and increased its costs guidance due to issues at Flying Fox.

More reading

• Why Bigtincan, Bubs, Carsales, & Western Areas are dropping lower
• Sezzle (ASX:SZL) share price charges higher on Q3 update
• Why the AMP (ASX:AMP) share price could be set to rocket higher today
• Takeover talks puts AMP (ASX:AMP) share price in focus
• ResMed (ASX:RMD) share price on watch after smashing Q1 expectations

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended ResMed, Appen, and Zip Co. The Motley Fool Australia owns shares of A2 Milk. 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 ASX 200 flat: ResMed smashes expectations, AMP surges on takeover talks appeared first on Motley Fool Australia.

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In late morning trade the S&P/ASX 200 Index (ASX: XJO) is on course to end the week on a positive note. At the time of writing, the benchmark index is up 0.3% to 5,977.6 points.

Fours shares that have failed to follow the market higher today are listed below. Here’s why they are dropping lower:

Bigtincan Holdings Ltd (ASX: BTH)

The Bigtincan share price is down over 7.5% to $1.22 following the release of its first quarter update. That update revealed that the AI-powered sales enablement automation platform provider’s customer cash receipts fell 15% to $4.5 million. Positively, management has held firm with its guidance for FY 2021.

Bubs Australia Ltd (ASX: BUB)

The Bubs share price has fallen over 2% to 69.5 cents. This follows the release of the infant formula and baby foods company’s first quarter update. For the three months ended 30 September, Bubs reported a 34% decline in gross revenue to $9.4 million. Management blamed the decline on a COVID-led contraction in the daigou channel.

Carsales.Com Ltd (ASX: CAR)

The Carsales share price has dropped 4% to $20.79 on the day of its annual general meeting. Ahead of its virtual meeting, the auto listings company released a presentation which included a trading update. Management advised that lead volumes in the first quarter have been impacted by the closure of dealerships in Metro Melbourne. However, excluding Metro Melbourne, overall lead volumes grew strongly on the prior corresponding period.

Western Areas Ltd (ASX: WSA)

The Western Areas share price has crashed 19% lower to $1.90 after updating its guidance for FY 2021. According to the release, the nickel producer has downgraded its production guidance range from 19,000 to 21,000 tonnes to between 17,000 and 19,000 tonnes. This will be achieved with higher than expected costs. Its unit cash cost of production guidance has been lifted by 25 cents to A$3.50/lb to A$4.00/lb. Production issues at Flying Fox are to blame.

More reading

• Bubs (ASX:BUB) share price tumbles lower on sales drop and cash burn
• Why the Bigtincan (ASX:BTH) share price is sinking 7% lower today
• 5 ASX tech shares that could be the next WAAAX stocks
• 5 things to watch on the ASX 200 next week
• Got $1,000? You should buy one of these 8 ASX shares

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended BUBS AUST FPO, Carsales, Bigtincan. The Motley Fool Australia owns shares of A2 Milk. 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.

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The Southern Cross Media Group Ltd (ASX: SXL) share price price is up 2.94% to 17.5 cents in morning trade today. The jump follows the company’s AGM this morning and comes amid a broader upbeat in market trading today. 

The company announced some negative news about its performance in FY20, which was already expected by analysts.

Highlights from Southern Cross’s AGM today

• The company acknowledged that FY20 has been a difficult year for Southern Cross, citing COVID-19 as the most significant factor affecting its performance.
• Full year revenue of $540.2 million was 18.2% lower than the prior year.
• Earnings before interest, tax, depreciation and amortisation (EBITDA) of $93.0 million was 36.9% below the comparable amount in the prior year.
• The metropolitan free-to-air radio advertising revenue decreased 25.3% year on year. Regional radio performed somewhat better, but was also down by 13.1% compared to 2019. In contrast, revenues from digital audio streaming and podcasting doubled to $7.1 million.
• The television business delivered EBITDA of $19.5 million which is 40.5% lower compared to prior year.
• The company emphasised the importance of digital radio and podcasts to its future plans, and will aim to divert its resources to these platforms.

Quick take on Southern Cross business

Southern Cross is a media provider that broadcasts programmed contents on free-to-air commercial radio, television, and online media platforms across Australia.

The company has 100 radio stations and 105 TV signals in both regional and metropolitan markets. It generates about 70% of its advertising revenue from radio and 30% from television.

Why the market has been tough for Southern Cross this year

Southern Cross’ business revolves around generating advertising revenue from marketers.

Advertising on free-to-air television has slumped significantly since the mid-2000s as advertisers follow eyeballs to digital platforms.

Although the radio industry is more stable, the same dynamics apply. Management admitted that listeners now have more choices especially with the increasing popularity of streaming services such as Spotify and Pandora.

At today’s AGM, chief executive Grant Blackley emphasised the urgent need for the government to review the current broadcasting regulations on free-to-air television in regional Australia. He noted that the current regulation “constrains the ability of incumbent operators to compete in the internet era”.

Analysts have often said that the advertising industry is highly cyclical and fickle. Advertisers spend big when the economy is booming, but might eliminate their entire marketing budget at the slightest hint of a downturn. 

How the Southern Cross share price performed

The impact of coronavirus on Southern Cross has been severe, given the financial pressure that most advertising clients are under. This has been reflected in Southern Cross share price YTD.

The Southern Cross share price has declined by about 70% this year. It traded as low as 10.5 cents in March, before bouncing back to today’s level at 17.5 cents per share at the time of writing.

The broader ASX Communications Services Sector Index (ASX: XTJ) is down 10% YTD.

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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. 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.

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Hours before the Myer Holdings Ltd (ASX: MYR) AGM yesterday, the chair, Garry Hounsell, retired from the ailing retailer. Mr Hounsell had been under intense pressure to resign by Solomon Lew, chair of  Premier Investments Limited (ASX: PMV). The Myer share price increased 2.17% by the close of business yesterday. In addition, at the time of writing, it has already risen by 4.35% in early trading today.

The decline of the Myer share price

With 10.8% ownership of Myer, Premier has long been a critic, indicating it would vote against re-election of the chair. However, the deciding moment came when Wilson Asset Management, with 7.8% ownership, also indicated it would vote against the re-election. Nonetheless, the Premier chair has continued his criticism, saying in a statement.

Mr Hounsell’s ousting signals to the entire board that their time is up.

In the interests of all shareholders, we expect the remaining Myer directors will now indicate their intention to step aside in an orderly manner or face an extraordinary general meeting at which they will be certainly dismissed.

For the sake of all of Myer’s dedicated employees, its many hardworking suppliers, its loyal but frustrated customers, and of course its long-suffering shareholders, the company needs to be restored to health by installing a new, independent board.

In its annual report, the Myer board announced a statutory loss for FY20 of $172.4 million last month. This was the second largest loss in the storied company’s history. Consequently, the Myer share price entered a period of volatility. Mr Lew has been calling for the resignation of the entire board since then. Wilson Asset Management chair, Mr Geoff Wilson, has stated that the company should revisit the number and remuneration of its directors.

Mr Hounsell’s resignation comes after two other directors had already confirmed in September they would not seek re-election on pressure from Mr Wilson. The salaries of the board had also been reduced. However, Mr Wilson was seeking further discussions on remuneration for directors of a company with a market capitalisation of $190 million.

What happens next?

Mr Wilson has indicated that he doesn’t support an extraordinary general meeting for a full spill of the board. Moreover, Mr Wilson has previously allied with other large shareholders to resist Mr Lew’s 2018 attempt to roll the board. 

Acting chair, JoAnne Stephenson, a former KPMG partner, called for unity during the AGM. The company is fast approaching its peak season during Christmas, and Mr Wilson in particular believes tipping the entire board out at this time would prove too disruptive. Ms Stephenson believes it is essential that the management team is able to focus on the period from Black Friday through to the January stocktake sale. 

The Myer share price has been in inexorable decline for over a decade. Chief executive, John King, continues to negotiate with landlords to reduce floor space by at least another 60,000 square metres.

More reading

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• These are the 10 most shorted shares on the ASX

Motley Fool contributor Daryl Mather has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Premier Investments Limited. 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.

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