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The Opthea Ltd (ASX: OPT) share price bounced up 5% then crashed this morning after the biotech company announced plans for a listing in the United States. At the time of writing, Opthea shares had dropped back down to $2.52 after opening trade this morning at $2.64. Opthea plans an initial public offering (IPO) of American depositary shares (ADSs) in the United States. This means Opthea ordinary shares would remain listed on the ASX with a concurrent listing of ADSs on the Nasdaq. 

What does Opthea do? 

Opthea is a biotechnology company that develops treatments for retinal eye diseases. The company’s product development programs focus on developing its OPT-302 therapy to treat wet age-related macular degeneration (Wet AMD) and diabetic macular edema.

OPT-302 is a soluble molecule that blocks the activity of two proteins which cause blood vessels to grow and leak, contributing to retinal diseases. A study of the OPT-302 therapy in wet AMD patients found participants who received it demonstrated superior vision gains. Phase 3 trials of OPT-302 are on track to be initiated in early 2021. 

Why the US listing?

Opthea says the potential US listing was intended to support its product development activities. This includes Phase 3 trials of OPT-302 for the treatment of wet AMD. The company said that no final decision had been made on the listing, and the price and timing of the offering had yet to be determined. Listing on the Nasdaq would provide Opthea with access to a much larger capital market. While Australia has a mature investment market, it represents just a small fraction of the global equity market. 

How did the Opthea share price perform in FY20? 

The Opthea share price has gained 110% from its March low but remains below highs recorded last year. Opthea’s share price boost saw it join the S&P/ASX 300 Index (ASX: XKO) in the most recent quarterly rebalance. Despite this, the company is not yet profitable, reporting a $7.6 million loss for 1HFY20.

This was a decrease on the prior corresponding period, mainly due to a reduction in research and development spending thanks to the completion of the Phase 2b trial of OPt-302 in wet AMD. As at 31 December 2019 Opthea had a cash position of $75 million, having raised some $48 million in a capital raising late last year. 

What next for the Opthea share price? 

Current treatments for wet AMD and and diabetic macular degeneration generated revenues of more than US$10 billion in 2019. Despite this, many patients respond sub-optimally meaning  large commercial opportunity remains for therapies that can address unmet medical needs. With the benefit of funds from last year’s capital raise, Opthea is fully funded to progress Phase 3 preparatory activities.

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• Results: Marley Spoon share price surges 40% on market update

Motley Fool contributor Kate O’Brien 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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New Energy Solar Ltd (ASX: NEW) posted its half year results after the close of trading on Friday. The renewables fund provides solar powered electricity production via two solar plants in Australia and 14 in the United States. The company derives its income from power purchase agreements (PPA). These are long-term contracts to provide solar energy with prices fixed at the time of signing.

New Energy Solar has had a mixed year so far, due largely to the impact from coronavirus. Nonetheless, it has already paid out an interim dividend of 3 cents per share in August. Based on the New Energy Solar share price at the time of writing, this represents an unfranked interim dividend yield of 3.6%. Moreover, the company has a trailing, 12-month dividend yield of 7.26%.

The principal issue for this fund over the first half of 2020 has been lower energy prices. This is more collateral damage from the oil price feud between Saudi Arabia and Russia. As a result, this is likely to be a long-term trend within the sector. Fortunately for the fund, 96% of its current output is under existing PPAs, which have an average remaining term of 15.4 years. However, the price drop impacts the company in various ways.

Financial forecasts

PPAs largely insulate the renewables fund from a drop in prices for the periods that the agreements are in place. However, for the period beyond the life of these agreements, there is little pricing stability. Consequently, independent valuers take into account forecast prices over the assets’ useful life, including the uncontracted period. 

As a result, New Energy has recorded a decrease on net asset value per security of 12.6%. Moreover, coronavirus has also led to a tightening of capital markets based on the uncertainty of the pandemic.

Operating results

During the 6-month period ended 30 June 2020, New Energy Solar’s portfolio generated over 748.1 GWh of electricity. This production is equivalent to an annual CO2 displacement of 1,000,000 tonnes of emissions. Accordingly, powering 126,000 US and Australian equivalent homes, or removing 102,000 cars from the road.

However, actual plant output was less than guidance for the first half. This was due mainly to higher than anticipated rainfall in North Carolina and parts of New South Wales. In addition, the fund faced commissioning issues at two of its new power plants. One of which has resulted in a warranty claim. Lastly, on 17 June 2020, several plants at California sustained damage following a grass fire. This has reduced their availability to approximately 68% of name plate capacity until mid 2021.

Earnings of the renewables fund

The fund recorded total underlying revenues of US$33.8 million, with earnings before interest, tax, depreciation and amortisation (EBITDA) of US$23.8 million. Because of the capital structure of the renewables fund, $16.4 million is attributable to New Energy Solar. This is clearly a very profitable enterprise. Even more so because of the long-term pricing protection of the PPAs. 

Nevertheless, as an investment trust, it has to account for any change in valuation in its profit and loss statement. Hence, the company registered a statutory net loss of $52.7 million. The devaluation of the company’s assets also had an impact on gearing, which now sits at 62.1%. New Energy Solar aims to have this at 50% over the long term. The company’s weighted average debt maturity is 7.4 years, and refinancing this debt is not possible due to coronavirus uncertainty.

Foolish takeaway

The fund’s business model insulates it from low energy prices on current assets for at least the next 15 years. On that issue alone, I believe the ongoing dividend payments are likely to be secure. However, as a weather dependent asset, there are always unknowns that can impact the company.

The clear challenges here are reducing the gearing of the fund, and looking for growth options that will preserve operating margins. Lastly, the market treats New Energy Solar as a dividend share. Therefore, the price builds up closer to the ex-dividend date, and then falls sharply. 

Buying this week will preserve high dividend yields into the future. The company currently has a share price that is 36.3% lower than its net tangible asset value per share.

More reading

• Reliable ASX dividend shares still exist

Motley Fool contributor Daryl Mather 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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5G Networks Ltd (ASX: 5GN) is a telecommunications carrier operating across Australia, engaged in the supply of cloud-based solutions, managed services and network services. 

The company is a small cap ASX share with a market capitalisation of ~$160 million. It might be on the more speculative and volatile end of town, but I believe there are many reasons why 5G Networks could be the ASX share to buy right now. 

FY20 financial results 

5G Networks delivered a solid FY20 performance with a focus on delivering shareholder value through its strong earnings before interest, tax, depreciation and amortisation (EBITDA) performance this year, which has grown by 96% from FY19. 

Its success has been underpinned by a number of key developments, highlighted by the introduction of key strategic acquisitions and new platform capabilities. This included new data centre locations in both central Sydney and North Sydney, which has enabled greater market opportunities.

In April, the 5GN Cloud Federation was launched, which is an innovative multi-cloud platform to support the growing demand for cloud services in Australia. Demand for the platform remains strong and the organisation is now forecasting solid growth for the approaching year. 

5G Network’s focus for acquisitions this year has been on data centre services. After completing the Melbourne Data Centre purchase in FY19, it then acquired the Pyrmont data centre and St Leonards (both in Sydney). In July 2020, it announced the acquisition of Colocation Australia, a specialist in wholesale data centre sales which also has interstate and international network capacity. 

On a broader level, Australia’s demand for cloud services has been fast-tracked in 2020 with the growing impact of COVID-19. It has been well documented that the shift to the cloud is a key objective for many organisations seeking to manage their business risk and support remote work during this pandemic.

ASX shares in the cloud-solutions space such as NextDC Ltd (ASX: NXT) and Megaport Ltd (ASX: MP1) have experienced significant success this reporting season. I believe 5G Networks may be reminiscent of these large-cap providers in their early days. 

FY21 guidance 

5G Networks has forecasted revenue between $60 million and $65 million and EBITDA between $8 million and $8.5 million, before material acquisitions. The company has a strong cash position of $23.5 million, as at June 2020, which should allow it to pursue accretive acquisitions to increase revenue and tap into new markets. 

Foolish takeaway

The 5G Networks share price ran more than 60% between 21 July and 28 July. Following the run up, the share price has consolidated around the sub $2 level. This ASX stock is in a compelling space and certainly one to watch for growth-orientated investors. 

At the time of writing, the 5G Networks share price is sitting at $1.86 per share, down 1.84% for the day.

More reading

• 5G Networks share price falls 6% on FY20 results
• Why 5G Networks and these ASX shares just hit record highs

Lina Lim 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 MEGAPORT FPO. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends 5G NETWORK FPO. The Motley Fool Australia has recommended MEGAPORT FPO. 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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At lunch on Monday the S&P/ASX 200 Index (ASX: XJO) has fought back from an early decline and is pushing higher. The benchmark index is currently up 0.2% to 6,123.5 points.

Here’s what has been happening on the market today:

Afterpay expands into mainland Europe.

The Afterpay Ltd (ASX: APT) share price hit a new record high this morning after announcing its expansion into mainland Europe. Rather than starting afresh in the market, Afterpay has decided to expand into it through the acquisition of Pagantis. It is a Spanish buy now pay later provider which currently offers a range of buy now pay later and traditional credit services across Spain, France, and Italy. It also has regulatory approval to operate in Portugal. Management notes that the addressable ecommerce market in these four countries exceeds 150 billion euros or $247 billion.

Fortescue declares monster dividend

The Fortescue Metals Group Limited (ASX: FMG) share price is pushing higher today after announcing a monster dividend with its full year results. In FY 2020 the iron ore producer achieved record shipments, revenue, earnings, and cashflow. In respect to its profits, over the 12 months the mining giant’s net profit after tax lifted an impressive 49% to US$4.7 billion. This was driven by record shipments, lower costs, and a jump in the average realised price of its iron ore. As a result of this strong form, Fortescue will pay a fully franked full year dividend of $1.76 per share. This is an increase of 54% on the prior corresponding period.

NIB full year result disappoints

The NIB Holdings Limited (ASX: NHF) share price is under pressure on Monday after releasing a weaker than expected full year result. The private health insurer posted a net profit after tax of $89.2 million, down 40.3% on the prior corresponding period. According to CommSec, the market was expecting a net profit after tax of $95.02 million.

The best and worst ASX 200 performers.

The best performer on the ASX 200 on Monday has been the Reliance Worldwide Corporation Ltd (ASX: RWC) share price with a 19% gain. This follows the release of a better than expected full year result and trading update from the plumbing parts company. The worst performer is the G8 Education Ltd (ASX: GEM) share price with a 9% decline. This morning the childcare operator posted a half year loss of $239 million.

More reading

• Why G8 Education, Monash IVF, NIB, & Uniti shares are dropping lower
• The Reliance share price is rocketing up despite drop in net profit. Here’s why.
• Why Afterpay, Bubs, Fortescue, & Zip Co shares are charging higher
• 2 ASX 200 bargains to buy this week
• Boral cops $1.3bn body blow to profits could signal impending cap raise

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 Reliance Worldwide Limited. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool Australia has recommended NIB Holdings Limited and Reliance Worldwide 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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The Zip Co Ltd (ASX: Z1P) share price has surged 8.5% higher in morning trade. This follows a trading update on New York-based buy now, pay later (BNPL) provider QuadPay.

QuadPay has evolved to become one of the leading platforms in the United States (US), where the local retail market is estimated to be worth US$5 trillion per year.

Zip reported that it had entered into an agreement to acquire the remaining shares in QuadPay back in early June, as the ASX-listed BNPL provider expands on its global strategy. Zip Co has scheduled an EGM meeting to vote on the proposed acquisition of QuadPay on 31 August 2020.

Record month of July for Quadpay

Zip revealed today that QuadPay had ended the month of July with record monthly transaction volumes – higher than US$70 million, which was 30% up on the June quarter average. The monthly transaction volume is also more than 600% higher on a year-on-year basis.

QuadPay added 133,000 new customers during the month, and the company passed the 2 million customer milestone during August. QuadPay also reported to be continuing to achieve impressive high net transaction margins above 2%.

In addition, QuadPay’s enterprise sales pipeline is reportedly still strong going into the US holiday season.

New strategic partnerships and merchant agreements

QuadPay partnered with a number of Internet Retail 1000 merchants during July, such as Fanatics and Mercari. These partnerships are set to generate a combined US$3 billion in online volume. Also, all are on track to be up and running before the busy fourth quarter US holiday period.

A number of successful strategic partnerships were also finalised during July. These include agreements with Fiserv (NASDAQ: FISV). This will see BNPL services rolled out across QuadPay’s US based merchant base, in conjunction with with Fanatics.

QuadPay has also partnered with MasterCard‘s Vyze financing platform. This will enable BNPL services to be provided within the Vyze platform.

Quadpay secures new debt facility

The US BNPL provider also managed to secure a debt facility provided by Goldman Sachs and Oaktree of up to US$200 million. The new credit facility will be used by QuadPay to further expand its BNPL business throughout the US.

Brad Lindenberg, QuadPay Co-CEO, said:

The momentum we are starting to see is a testament to our product and technology capabilities which are being recognized as market leading. QuadPay is the easiest platform for enterprise merchants to integrate with, both online and in-store. With less than 15% of the Internet Retail 1000 offering an interest free BNPL service, we look forward to joining forces with Zip and rapidly accelerating our growth in market.

At the time of writing, the Zip share price was up by 8.5% to be trading at $7.15.

More reading

• Why Afterpay, Bubs, Fortescue, & Zip Co shares are charging higher
• Fortescue and 2 more ASX 200 shares to watch this week
• 5 things to watch on the ASX 200 next week
• The Afterpay share price is up a massive 700% since March. Is it still a buy?
• This ASX fund manager is going back to value in a post-COVID world. Here’s why.

Phil Harpur 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 Mastercard. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of ZIPCOLTD FPO. The Motley Fool Australia has recommended Mastercard. 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 Monash IVF Group Ltd (ASX: MVF) share price has fallen lower this morning, down 9.95% at the time of writing to 57 cents. The fall in the Monash IVF share price came after the company released its annual result for the year to 30 June 2020.

What was in the announcement?

The company had revenue of $154.4 million in the 2020 financial year, this was down 4.3% compared to revenue received during the prior financial year. According to the company, revenue was impacted by the disruption created by coronavirus and the departure of fertility specialists in Victoria. 

Monash IVF reported net profit after tax of $11.7 million in the 2020 financial year; this was down 40.9% when compared to net profit after tax of $19.9 million earned in the 2019 financial year. The company stated that there was an adverse impact to net profit after tax of $3.9 million during March to June when compared to the prior corresponding period. According to the company, this was due to the coronavirus shut down. 

Adjusted net profit after tax, which excluded irregular items, was $14.4 million, according to the company this was above previous guidance of $14 million released in June. 

Earnings before interest, tax, depreciation and amortisation (EBITDA) were $32.8 million. This compared to EBITDA of $37.2 million in the previous financial year.

The company reported that its balance sheet was strong and allowed for investment into future growth including a Sydney CBD clinic and partnerships in South East Asia. 

Monash IVF treated 14,894 patients in the 2020 financial year, this was down 7.2% compared to the number of patients treated during the 2019 financial year. Total Australian patient treatments were 13,149 in the 2020 financial year, a drop of 5.6% compared to the 2019 financial year.

The company commented on the result and its current outlook, stating;

“Whilst COVID-19 has disrupted operations since March 2020, the Group is well positioned to grow earnings going into FY21 with strong recovery in June and July 2020 across all markets with increased marketing investment.” 

About the Monash IVF share price

Monash IVF provides IVF and fertility solutions. It operates in Australia and Asia and has been listed on the ASX since 2014.

In May 2020, Monash IVF raised $80 million from investors. This was via a retail entitlement offer and a placement to sophisticated and institutional investors. The issue price was 52 cents per share.

The Monash IVF share price is up 62.9% from its 52 week low of 35 cents, however, it is down 41.2% since the beginning of the year. The Monash IVF share price is down 36.7% since this time last year.

More reading

• Why G8 Education, Monash IVF, NIB, & Uniti shares are dropping lower

Motley Fool contributor Chris Chitty 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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The Reliance Worldwide Corporation Ltd (ASX: RWC) share price surged more than 23% in early trade today. That’s despite the plumbing supplies company recording a significant drop in profit for FY20.

How did Reliance perform in FY20?

In its financial report released today, Reliance headlined a 33% drop of $89.4 million in net profit after tax (NPAT) for FY20. Reliance also reported an 18% drop in adjusted NPAT of $130.3 million. Earnings before interest, taxes, depreciation and amortisation  EBITDA were $217.9 million.

Despite the hit to earnings, Reliance recorded promising revenue figures for FY20. The company highlighted a 5% lift in net sales for FY20 of $1.16 billion. However, the coronavirus pandemic heavily impacted sales in the second half of FY20, with sales performance varying across regions.

Reliance sales in the US fared well during the pandemic, with a 13% lift in FY20 net sales for the region. Sales in the Australian market saw a small growth of 2%. However, sales in Europe, the Middle East and Africa dropped 20 per cent in the second half due to the coronavirus restrictions, and fell 10% for FY20.

Reliance cited a slowdown in global residential construction due to COVID-19 for its performance in FY20. Reliance management said despite growth in demand, the company’s performance was hampered by supply chain challenges and different market responses to the pandemic.

Although Reliance reported a significant drop in net profit, the company declared a final dividend of 2.5 cents per share.

Outlook for the Reliance share price

Given the uncertain market outlook and potential impacts of the COVID-19 pandemic, Reliance did not provide earnings guidance for FY21. However, the company expected core end-markets to remain resilient in the 2021 financial year.

Reliance highlighted a 22% lift in sales in the US in July 2020. The company also noted a slight increase in sales in the APAC region and reported that sales were recovering in Europe, the Middle East and Africa.

In addition, the company said it had undertaken several restructuring initiatives in FY20 to support future growth. This included the closure of its Tennessee manufacturing facility and restructuring of activities in the UK.

As a result, the company expected to deliver annual cost savings of $25 million by the end of 2021. Synergies from its recent acquisition of John Guest were also expected to deliver annual savings of about $31.3 million by the end of year.

Foolish Takeaway

At the time of writing, the Reliance share price is trading more than 17% higher for the day. Shares in the company have been sold-down slightly after hitting an intra-day high of $3.54 earlier.

More reading

• Reliance Worldwide operations to continue in Victoria
• How will Victoria’s stage 4 lockdowns impact ASX shares?
• Why the Reliance Worldwide share price is one to watch today
• The rocketing Aussie is shaping up as a new threat to the profit season
• Top broker picks the cheapest ASX stocks to buy today

Nikhil Gangaram has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Reliance Worldwide Limited. The Motley Fool Australia has recommended Reliance Worldwide 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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After a poor start to the day, in late morning trade the S&P/ASX 200 Index (ASX: XJO) has edged ever so slightly higher. At the time of writing the benchmark index is up a fraction to 6,114.9 points.

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

The Afterpay Ltd (ASX: APT) share price is up 3.5% to $81.60. This morning the payments company announced its expansion into mainland Europe through the acquisition of Spanish buy now pay later provider Pagantis. It currently provides a range of buy now pay later and traditional credit services across Spain, France, and Italy. It also has regulatory approval to operate in Portugal. Management notes that the addressable ecommerce market in these four countries exceeds 150 billion euros or $247 billion.

The Bubs Australia Ltd (ASX: BUB) share price has pushed 5.5% higher to 97.5 cents. This follows the announcement of a memorandum of understanding (MOU) with joint venture partner Beingmate. The MOU gives Bubs the opportunity to acquire an ownership interest in one of Beingmate’s infant formula manufacturing facilities in China and obtain its support in securing a SAMR brand slot. It appears to believe this is the best option it has for gaining entry into the lucrative market. Unfortunately, it will mean sharing its China-based profits with Beingmate. It is also worth noting that Beingmate doesn’t have a great track record. Fonterra lost hundreds of millions of dollars when it teamed up with the infant formula manufacturer.

The Fortescue Metals Group Limited (ASX: FMG) share price is up 3.5% to $18.62. This morning the iron ore producer released its full year results and revealed record shipments, revenue, earnings, and cashflow in FY 2020. Over the 12 months the mining giant’s net profit after tax lifted 49% to US$4.7 billion. This allowed the Fortescue board to pay a fully franked full year dividend of $1.76 per share. An increase of 54% on the prior corresponding period.

The Zip Co Ltd (ASX: Z1P) share price has jumped 8.5% higher to $7.15. Investors have been buying the payments company’s shares after it provided an update on its soon-to-be-acquired US-based QuadPay business. According to the release, QuadPay achieved record monthly transaction volume in excess of US$70 million in July. This represents a 30% increase on the June quarter average and a 600%+ increase year on year.

More reading

• Bubs share price storms higher on new China plans
• Fortescue share price pushes higher after declaring huge FY 2020 dividend
• Fortescue and 2 more ASX 200 shares to watch this week
• Afterpay share price on watch after announcing European expansion
• 2 of the best ETFs for investing in ASX shares

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 BUBS AUST FPO and ZIPCOLTD FPO. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool Australia has recommended BUBS AUST FPO. 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 Austal Limited (ASX: ASB) share price is flat this morning following the release of the company’s FY2020 results. At the time of writing, the Austal share price has edged lower to $3.58 after closing Friday’s session at $3.61. The global defence contractor’s shares were up as much as 5.5% to $3.81 at one stage before giving back all of those gains. 

What’s moving the Austal share price?

The Austal share price has edged lower this morning despite the company announcing a net profit after tax (NPAT) of $89 million for the six months ending 30 June 2020, up 45% on the prior period. The company reported a 13% increase in revenue for the full-year to $2,086 million.

Earnings before interest, tax depreciation and amortisation (EBITDA) came in at $176.1 million, a 30% jump on FY H120 results.

The company achieved record revenue, EBITDA, EBIT and NPAT. This was underpinned by expansion of commercial shipbuilding, growth revenue support in the United States and a favourable FX translation.

Austal’s cash flow from its operations remained unchanged at $164.5 million, and underlying earnings per share was at 25 cents, up 42%.

The global shipbuilder recorded a strong balance sheet of $272.4 million net cash on hand.

The company declared an unfranked final dividend of 5 cents per share. Austal has paid a total of 8 cents per share for the full year, a year-on-year increase of 33%.

What were the drivers of Austal’s results?

Austal’s FY20 results highlighted strong growth in its US segment, news of which has already been driving the Austal share price higher over the last month. Over half of total group revenue was accounted for by US Navy contracts. Three vessels were delivered with a further seven in construction.

In the company’s Australian operations, shipbuilding margins grew 210% with EBIT more than doubling (180%) following infrastructure investment over the past three years.

COVID-19 impact

The operational impact from coronavirus has been minimal on the company.

Austal did advise its commercial ferry market is likely to be affected, however it is considered a relatively small area of revenue for the business.

The current commercial market turnover for Austal is less than 10%. The shipbuilder aims to have a pipeline of $1 billion to be bided over the next three years.

FY21 0utlook

Austal did not provide EBIT guidance for FY2021 given the global economic uncertainty. However, the company has an order book of $4.3 billion with expectations that both defence and commercial ships will be delivered by FY2024.

Furthermore, Austal has committed to investing $100 million to build a modern steel shipbuilding plant in the US that is estimated to be completed within the next two years. This will position Austal to bid for work in a series of significant contracts for the US Navy.

Commenting on Austal’s FY20 results, COO Patrick Gregg said:

The financial results highlight the success of our ongoing strategy to grow our defence business, which now makes up approximately 88 per cent of the Group’s revenue across construction and support. The value of this is clear as we see that the broader Defence Market is strengthening and has largely been shielded from the economic impacts of COVID-19.

Importantly, these record earnings have translated into significant cash flow, enhancing our strong balance sheet position with $397 million of cash. This financial strength is enabling Austal to target strategic investment opportunities to drive the Company’s next phase of growth whilst at the same time increasing dividends and considering debt reductions in FY2021.

About the Austal share price

The Austal share price has recovered nearly 55% from its March low of $2.31. Whilst trading around 28% lower than its 52-week high, the Austal share price has fallen 4.8% in year-to-date trading.

More reading

• Austal share price jumps on Alabama expansion
• 3 surging ASX defence shares to buy next week

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 Austal Limited. 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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The Cynata Therapeutics Ltd (ASX: CYP) share price leapt by as much as 14% this morning as patient enrolment begins on the company’s COVID-19 trial.

Cynata is trialling the use of its Cymerus MSC technology in COVID-19 patients with respiratory distress. The study will be conducted in New South Wales with 12 patients to receive Cymerus MSC infusions. Efficacy of the treatment will be assessed according to levels of oxygen in the blood as well as safety and tolerability. 

The Cynata share price has since pulled back slightly to 92 cents per share, up 11.59% on yesterday’s close.

What does Cynata Therapeutics do? 

Cynata Therapeutics is a stem cell and regenerative medicine company. It is focused on the development of therapies using its proprietary therapeutic stem cell platform technology, Cymerus. Cymerus is able to achieve economic manufacture of cell therapy products, including mesenchymal stem cells (MSCs), at a commercial scale, without the limitation of multiple donors. 

MSCs are primarily found in the bone marrow and remain dormant until called upon to promote healing within the body. They age as we age, and their number and effectiveness decreases over time. MSCs are at the forefront of a new generation of treatments being investigated for use in treating diseases including osteoarthritis, heart disease, and Crohn’s disease. Cynata’s Cymerus technology allows cells for therapeutic use to be produced in virtually limitless quantities. 

COVID-19 treatment 

Cynata is now conducting a clinical trial into the use of Cymerus MSCs in the treatment of coronavirus. The trial forms part of a broader clinical development strategy for the Cymerus MSC product to be trialled in COVID-19 patients in other countries.

Commenting on the trial, Cynata’s CEO Ross MacDonald said:

Our substantial pre-clinical database in relevant disease models, together with the urgent need for more effective treatments for critically ill patients with COVID-19 patients, allowed us to accelerate planning….we are pleased to be able to move so quickly to further investigate the potential benefits our MSCs could have to treat patients in dire need during this global pandemic.

Cymerus MSCs have demonstrated promising pre-clinical trial results in several conditions that can arise from severe COVID-19 infection, including acute respiratory distress syndrome. Cynata plans to advance Cymerus MSCs into phase 2 trials for severe complications arising from COVID-19 as well as graft versus host disease. A phase 3 trial is planned for osteoarthritis.

The utility of the technology has also been demonstrated in preclinical models of asthma, diabetic wounds, heart attack, sepsis, and acute respiratory distress syndrome. 

Foolish takeaway 

Cynata joins Mesoblast Limited (ASX: MSB) in trialling treatments for COVID-19. The focus on this new clinical development area is a logical step based on the current global environment and Cynata’s solid pre-clinical foundations in respiratory and related diseases. 

The Cynata share price is currently trading at 92 cents per share, putting its market cap at just over $100 million.

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Motley Fool contributor Kate O’Brien owns shares of CYNATA THR FPO. 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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