ASX News Live | ASX Ends 0.16% Lower; Webjet, Pointsbet, Harvey Norman, Splitit, Mesoblast Feature

The S&P/ASX 200 closed modestly lower on Wednesday as bookmaker Pointsbet ended the day down nearly 12%.

On the other side, BNPL provider Zip (ASX:ZIP) finished 11.7% higher. Are some investors buying into Zip’s turnaround story and its new emphasis on reaching profitability?

 

With reporting season almost over, a pattern has emerged among ASX retailers — a significant increase in inventories.

Retail names like City Chic Collective (ASX:CCX), Breville (ASX:BRG), Nick Scali (ASX:NCK), and Lovisa (ASX:LOV) have all raised inventory levels over 40% year on year.

Only Kogan (ASX:KGN) has seen inventory levels decrease YoY — but that was an intentional measure to ‘right-size’ bloated stock.

https://twitter.com/lachlanbjensen/status/1564544326583349248

Australian bookmaker Pointsbet Holdings (ASX:PBH) saw both revenues and net losses rise in FY22 as PBH shares sank on Wednesday.

Year to date, Pointsbet shares are down 55%.

Other wagering stocks have copped a similar sell-down.

Betmakers Technology (ASX:BET) and Bluebet Holdings (ASX:BBT) are down 50% and 65% respectively year to date.

PBH’s revenue from ordinary activities was up 52% from $194.7 million in 2021 to $296.5 million in FY22.

Net loss after tax also increased 43% from $188 million to $268 million.

Total operating expenses climbed from $244.1 million to $365.6 million.

While revenue grew 52% YoY, gross profit grew 38%.

The gross profit margin fell from 45% in FY21 to 41% in FY22.

Importantly, PBH’s gross profit was dwarfed by its marketing expense, which came in at $236.8 million in FY22.

ASX BNPL stock Splitit (ASX:SPT) released its H1 FY22 results, showing feeble revenue growth of 2% to US$5.1 million. Merchant sales volumes (total transaction volume processed) rose 13% YoY to US$195 million.

Splitit did trim its net loss by 35% to US$12.3 million, from US$18.8 million in 1H21.

How did Splitit manage to reduce net losses on flat revenue growth?

SPT said it cut operating expenses by 22%, including a reduced marketing spend.

Splitit touts white label Instalments-as-a-Service

Splitit has gone out of its way in recent months to distinguish itself from the BNPL crowd.

The fintech presents itself as a unique BNPL provider due to its focus on offering a “white label Instalments-as-a-Service product”.

In its own words:

“As a white-label plugin it allows merchants to retain customer relationships, drive loyalty and promote brand consistency on their terms.”

Goldman Sachs restricts Splitit’s available cash

Tucked away in the going concern section of its half-year accounts, Splitit admitted that its reported 1H22 US$30.9 million cash and cash equivalents figure is complicated.

Of that US$30.9 million, US$14.0 million can “only be utilised for merchant funding, or be repaid to Goldman Sachs.”

Meaning Splitit has access to US$16.9 million for use in other operations.

Splitit said it’s “actively engaged in conversations with Goldman” to expand the receivables eligibility criteria of its Goldman Sachs facility.

$SPT has whittled down the exercise price of the warrants granted to Goldman Sachs from $1.30 to 18 cents.

— Fat Tail Daily (@FatTailDaily) August 31, 2022

Energy, energy, energy!

That’s where all the market action is right now.

Coal stocks have stormed up in the last six months.

And uranium plays ramped up 5–20% in yesterday’s session.

Here’s a taste:

Apparently, the juicing came via a tweet from Elon Musk, of all people.

Nuclear is good, declared the King of EVs.

Is he right? I don’t know. Probably.

The danger with Musk is the same as with Barack Obama back in the day.

All the fanboys swallow whatever he says without question or second thought.

What about natural gas?

Check out this report from The Guardian yesterday:

‘Gas shortages across Europe are likely to last for several winters to come, the chief executive of Shell has said, raising the prospect of continued energy rationing as governments across the continent push to develop alternative supplies.’

Europe is scrambling to source whatever gas or alternatives it can find.

The current drought isn’t helping.

Already, Norway is moving to limit exports from its hydropower industry.

That’s not going down so well with its neighbours, who see it as funny as Scott Morrison’s tweets regarding his secret portfolio antics.

Norway wants to keep the power to serve its domestic economy first. Australia may be in a similar situation shortly.

We’re a big exporter of natural gas via the Gladstone LNG terminals in Queensland.

That’s a problem when the Australian Competition and Consumer Commission (ACCC) says Aussie domestic gas supply will be 10% too low in 2023, relative to the projected demand.

The ACCC says: keep it here!

But the world price is currently double, even triple in some parts, what it is here.

The Australian Financial Review quoted the chair of the ACCC as saying:

‘We know there’s a forecast shortfall, there is sufficient uncontracted gas well to meet it.

‘What needs to happen is that it is offered domestically, contracted domestically and then by next year we will not have a shortfall and we’ll have sufficient supply.’

Western Australia, for example, already demands that 15% of local gas production be reserved for the WA economy.

It’s hard to see gas producers as anything but the sweet spot regarding free market dynamics. Global demand is high and unmet because of the war in Ukraine.

Read full article here.

The energy crisis is pushing Europe to look for alternatives. Ahead of winter, Europe is looking into emergency measures to fight the energy crisis.

It’s been boosting renewable energy, but as we’ve mentioned before, it’s also been looking into nuclear energy. In fact, Europe declared nuclear ‘green’ earlier this year and since several countries have been looking at boosting their nuclear energy production.

Of course, it’s not just Europe.

More than 10 years after the Fukushima disaster, the Japanese government announced they were planning to restart seven nuclear reactors to ramp up their nuclear power generation.

The Sprott Physical Uranium Trust Fund jumped 12% on the news.

It’s now sifting into ASX uranium stocks. For example, yesterday Bannerman Energy [ASX:BMN] was up more than 20%, Deep Yellow [ASX:DYL] jumped more than 14%, and Alligator Energy [ASX:AGE] was up more than 22%.

And this could be just the start for uranium as more countries look to nuclear and renewables for energy security.

https://www.moneymorning.com.au/20220831/uranium-stocks-are-going-bananas.html

The All Ords is currently down 0.4%.

The worst performers on Wednesday morning:

• DGL (ASX:DG:), down 24%. The chemical products manufacturer and hazardous waste transporter released its FY22 results, with sales revenue up 88% to $370 million and underlying net profit after tax rising 197% to $33.6 million. However, DGL anticipates “earnings growth to flatten in FY23”. The firm said FY22 was marked by “opportunistic growth in earnings which is unlikely to be replicated to the same extent in FY23.” DGL also cited inflationary cost pressures stalling future growth.
• Best and Less (ASX:BST), down 15%. The retailer announced a sell-down from major shareholder Allegro Fund. Allegro entered a block trade agreement to sell 11.1% of BST shares, trimming Allegro’s stake to 32.4%. The fund attributed the primary purpose to enhancing liquidity in BST stock, remaining “highly supportive of BST and its management.”
• Pointstbet (ASX:PBH), down 11.5%. The bookmaker saw FY22 revenue rise 52% to $296 million but net loss rise 43% to $268 million.

The All Ords is currently down 0.4% in early Wednesday trade.

The best performing stocks at the open:

• Nitro Software (ASX:NTO), up 39% after rejecting a “highly conditional” takeover proposal from Potentia Consortium valued at $1.58 cash per Nitro share. NTO closed at $1.13 on Tuesday.
• 4DMedical (ASX:4DX), up 22%. The respiratory imaging tech stock disclosed a “major success” at a clinical trial evaluating 4DX’s technology for detecting constrictive bronchiolitis where pulmonary function tests and CT scans failed.
• Clinuvel Pharmaceuticals (ASX:CUV), up 16% after total revenues rose 37% to $65.7 million but net profit after tax fell 16% to $20.9 million