ASX News Live | ASX Down 0.8%; EML, Nearmap, Nick Scali Feature

Electronics software company Altium Limited (ASX:ALU) released its FY22 results late on Monday, with ALU shares closing 2.5% lower.

Altium said it “outperformed all expectations and exceeded its financial targets for revenue and margin.”

The key results:

• Revenue up 23% to US$220.8 million
• Underlying EBITDA margin of 36.7%, up from 34.3%
• Profit after tax rose up 57% to US$55.5 million
• Total dividend up 18% to 47 cents

Altium also released its FY23 guidance:

• Revenue up 15%-20% to US$255-US$265 million
• Underlying EBITDA margin of 35% to 37%

Given the guided EBITDA margin, Altium expects EBITDA to come in between US$89.25 million and US$98.05 million.

No profit guidance was given.

 

Aerial imagery firm Nearmap closed 5% higher on Monday after the Board unanimously recommended Thoma Bravo’s $1.1 billion takeover offer, entering a scheme implementation deed.

Nearmap’s chair Peter James said the deal offered “attractive and certain value for shareholders in current markets.”

In current markets …

Would Nearmap have demanded more if the markets were not so downtrodden this year?

And in accepting the offer, did Nearmap’s board anticipate current market conditions to continue?

Since a June 2019 high, NEA shares have fallen 50%.

Lithium junior Anson Resources is currently up 20% after announcing a “major upgrade” to its JORC mineral resource at its Paradox Lithium project in Utah, US.

Anson relayed that the upgraded mineral resource represents a “significant achievement in the development pathway of the Project”.

The updated resource estimate will be incorporated into ASN’s upcoming detailed feasibility study.

ASN said the DFS is set for release by engineering group Worley “in the near future”.

According to Anson, the upgraded mineral resource represents:

• “A 324% increase on the previously reported Lithium Mineral Resource

• “A 378% increase in the Indicated Resource on the previously reported Lithium Mineral Resource

• “A 248% increase on the previously reported Bromine Mineral Resource”

Back in June, our small-caps guru Callum Newman attended the Resources Rising Stars conference in Queensland.

Plenty of companies presented.

Truth be told, there were too many to give feedback on, especially in such a complex space as the junior resource sector.

So Cal decided to sit down with the conference’s main presenter, Hedley Widdup, to chat about 12 projects from the conference.

Hedley runs Lion Selection Group, an investment fund that invests exclusively in this sector. He’s also a trained geologist.

During their chat, Cal and Hedley covered Hedley’s views on the BHP bid for OZ Minerals and where the mining sector sits according to Lion Selection Group’s ‘resource clock’.

Note, the below discussion does not constitute recommendations.

Hedley and Callum used their chat as a launching pad to explore the issues and outlook around copper, lithium, nickel, gold, and rare earths…plus the junior sector in general.

Watch their discussion here.

ICYMI: Watch as market veteran Murray Dawes makes sense of last week’s market moves and provides a follow-up on a few stocks he mentioned last week.

A key point of discussion for Murray was this — is the bear market rally running out of steam?

In today’s editorial, Ryan Dinse argued that investors should forget what the pundits on Bloomberg say — any rate rises by the Federal Reserve can only be temporary.

Ryan predicts a pivot to lower rates sooner than many anticipate.

Why?

As Ryan says, it’s just maths…

“Take the biggest debtor in the world, the US government.

Their annual interest bill is around US$400 billion. If the coupon (interest) rate on government bonds increases to 3.2%, then that’s an increase of US$600 billion to US$1 trillion a year.

That’s just to pay the interest on their debt.

Now, the US annual GDP — the total value of all the goods and services produced — is around US$23 trillion.

So, a trillion dollars of interest is 4.3%. In other words, you’d need the economy to grow at a nominal rate of 4.3% just to pay the interest bill.

The historical average from 1948 to 2022 is 3.13%, and with a recession looming, it’ll likely go backwards over the next 12 months.

Which means this debt is only going to grow thanks to budget deficits as far as the eye can see — including a new US$750 billion spending bill passed this week.

Part of this bill, called the Inflation Reduction Act, hired 87,000 new tax agents.

I can’t imagine shaking down taxpayers for more money will go down too well in November’s primary elections.

And ironically, with stock markets falling sharply with increased interest rates, it’s likely capital gains tax receipts will fall too.

Making the budget situation even worse…which can only be covered by…yes, you guessed it…more debt!

The Fed is shooting itself in the foot and contributing to an unstoppable debt spiral.”

 

Well, the consensus is clear…

This stock market rally is about to fizzle out.

If you believe the experts on Bloomberg TV, that is.

I caught an episode of the ‘Opening Bell’ segment on Friday morning while on the treadmill at the gym.

Usually, I go for an interesting documentary.

The history of the Celts or Romans, something on the great artists of the Renaissance…occasionally Maradona’s best goals.

But last Friday, I thought I’d take a risk and see what the mainstream pundits were saying about my day job.

And let me tell you, it was depressing viewing…

As I said, the consensus from nearly every single one of the guests on the show was that interest rates would continue to rise.

That the Fed would stick to their guns, no matter what.

And in turn, this current stock market rally would fizzle out fast.

Certainly, it’s been a fierce rally so far — we’re up more than 16% from the June lows on the US S&P 500 — and a pause or pullback wouldn’t surprise me at this point.

Our very own charting wizard Murray Dawes has been saying much the same recently. He’s yet to get confirmation from his signals that the bull is back for real.

And Murray is one voice I trust on this, so I’m playing it cautious right now.

But the pundits’ reasoning — sustained interest rate rises as far as the eye can see?

On that, I’m not so sure…

Read full article here.

https://www.moneymorning.com.au/20220822/a-catch-22-for-investors.html