ASX News Live | ASX Opens Lower; Lithium Stocks Report; Cogstate, Dusk, Weebit Feature

Brainchip — a developer of what it calls ‘accelerated solutions for advanced artificial intelligence and machine learning applications’ — saw net losses widen to US$22 million on revenue of US$5 million, up from US$1.6 million in FY21.

The biggest jump in FY22 revenue came from licensing, which rose from US$825,000 to US$4 million in FY22.

FY22 cash receipts diverged from FY22 revenue, totalling US$2.7 million, up slightly from US$2.5 million.

Research and marketing expenses together reached US$11.5 million.

Interestingly, for a company worth $955 million, its annual R&D spend seems modest at US$8.4 million.

 

Specialty retailer of home fragrance products Dusk (ASX:DSK) may have a foot traffic problem.

In its 1H23 report, Dusk reported that total like for like sales dropped 10.4% while online sales fell a big 37.8%. Further, foot traffic outside its stores in the seven key trading weeks leading to Christmas was down a whole 29% on the prior corresponding period.

In a trading update for the first seven weeks of 2H23, Dusk also admitted that outside store traffic ‘continues to be soft at -6%’ versus the prior relevant period.

Dusk thinks this just means its channel mix ‘continued to normalise’ but if sales are declining in physical stores and customers are abandoning the online channel, where will the growth come from?

Not to mention that discretionary spending is likely to come under pressure from rising living costs. Dusk corroborated this by saying average transaction value fell 5.7% to $54 due to lower sales of pricier items, ‘signalling a more cost-conscious customer.’

Dusk refrained from giving FY23 earnings guidance ‘given the uncertainty that persists in the macro environment’.

Aiming to diffuse concerns, Dusk said the recent LFL sales performance is a victim of warped base effects, cycling a huge boom in late FY20 through to FY21.

 

CBDCs have been in development around the world for a while now. They’re the supposed answer to the volatile and unruly tokens and coins that make up the crypto market.

The problem, as we’ve stated before, is that a CBDC defeats the entire purpose of a digital currency.

Bitcoin and the blockchain were created to fight against the Fed’s idiocy and monetary tyranny. For them to try and appropriate and bastardise this technology is a slap in the face for the crypto community.

Not that central bankers would care about that…

As an investor though, you should absolutely care.

Whether you believe in crypto or not, none of us want to live in a world where central bankers potentially have direct control over your finances. And if anything, it further cements the argument for investing in crypto to combat it.

Initiatives like CBDCs prove that the need for decentralised money and markets is imperative.

Whether or not you believe in the crypto ethos is almost irrelevant. Simply committing a small portion of your portfolio to this alternative asset space could be the difference between submitting to financial tyranny or fighting it…

Why disruption can win

Now, I know this is all getting a little over the top. But I really can’t stress enough just how important these issues are.

They may seem trivial, but that is what’s so sinister about it.

Fortunately, I don’t think it will be enough to derail the crypto revolution. Because whether CBDCs flourish or not, real innovation almost always wins out.

As our resident crypto guru, Ryan Dinse, recently told his subscribers:

‘Firstly, changes to existing paradigms of thought are always resisted.

‘There are just too many entrenched interests with too much to lose — even in the supposedly unbiased world of science — when such a moment occurs.

‘There’s money at stake, of course, but also power, prestige, reputation, and authority too.

‘But the more important and second point is this…

‘Better models of reality eventually win out simply because they’re more useful.

‘They lead to futures that wouldn’t otherwise be possible.

‘There’s also the fact that in a competitive world, if you don’t take advantage of it, someone else will.

‘Anyway, here’s the point I’m trying to make…

‘Like the discovery of quantum physics, bitcoin doesn’t make sense to many at first. It’s too different from their perception of reality, even more so for those embedded in the financial scene.

‘And yet, now it exists, it can’t be put back in the box.’

There’s a quip attributed to finance professor Bruce Greenwald that states in the long run, everything is a toaster. That is, given enough time, the furnace of competition corrodes everything to a commodity.

Well, last week, Westpac (ASX:WBC) quietly rolled out a new payment instalments product.

Buy now, pay later has entered its toaster phase.

Westpac is rolling out PartPay, giving its credit card customers the ability to pay in four instalments.

Westpac Consumer and Business Banking Chief Executive, Chris de Bruin, commented:

“We want to give our customers greater flexibility by providing different payment options to suit their changing circumstances. We know our customers want more choice when it comes to their finances and this new feature will put them in the driver’s seat.

“The payment landscape has changed and customers have told us they like the option of making payments in instalments. This new feature provides that flexibility in a fast and convenient way, via a digital card that can be downloaded in the Westpac app.

“PartPay complements Westpac’s existing offers for customers including our partnership with ShopBack to reward customers with bonus cashback when they make purchases using their Westpac debit and credit card.”

In the long run, everything is a toaster, #BNPL edition. $WBC $ZIP $SZL $SPT $OPY $LBY #SQ2 pic.twitter.com/0pt9l9SdYd

— Fat Tail Daily (@FatTailDaily) February 24, 2023

Pet services marketplace Mad Paws (ASX: MPA) grew 1H23 revenue 275% to $12 million while net losses trimmed 18% to $3.9 million. The pet stock has now accumulated over $35 million in losses.

Gross merchandising value — the total value of transactions processed by Mad Paws — rose 225% to $29.2 million, with new customer acquisitions rising to 63,600.

While revenue grew strongly, cost of goods sold jumped 336% to $6.7 million and gross margin as a percentage of revenue fell from 54% to 44%.

 

Lithium developer Vulcan Energy Resources (ASX:VUL) has vested performance rights following the release of its Definitive Feasibility Study despite the DFS not being delivered by the milestone date of 31 December 2022.

VUL’s board said it exercised its discretion to allow the rights to fully vest.

Vulcan elaborated:

“In making this decision, the Board placed recognition on the individuals’ material contribution to the DFS and the fact that the ~6-week delay in its release was not within the control of the relevant holders of the performance rights.”

Payments firm EML Payments (ASX:EML) is down ~8% after its Irish subsidiary PFS Card Services Ireland Limited (PCSIL) received further negative news from its regulator, the Central Bank of Ireland.

The CBI continues to have little faith in PCSIL cleaning up its act after flagging governance issues last year.

EML reported the CBI as saying that PCSIL has made ‘limited remediation progress to date with significant and ongoing deficiencies remaining in PCSIL’s AML/CFT control framework.’

The regulator was also unsatisfied with PCSIL’s remediation plan the timetable for its completion.

All up, the CBI is now ‘minded to issue a direction’ that PCSIL’s growth in total payment volumes for the 12-month period between 31 March 2023 and 30 March 2024 be ‘restricted to nil percent above annualized baseline volumes in the year January to December 2022.’

The CBI has not issued that direction yet — PCSIL has until 10 March 2023 to petition the regulator.

What will the financial impact be if the CBI issues the direction?

EML ran the numbers and stated today:

“In respect of EML’s previously stated guidance for FY23, the estimated impact of restricting PCSIL’s growth as set out above, would be a reduction in revenue of approximately A$3.5 million1 , and a reduction in underlying EBITDA of approximately A$2 million1 for the period 1 April 2023 to 30 June 2023. EML notes that any restriction will only apply to EML’s European General Purpose Reloadable programs under the PCSIL eMoney institution license, which represents approximately 30% of EML’s global revenue for the half year ended 31 December 2022. The remaining 70% of EML’s global revenue is not impacted by the potential restriction.”

Now we know.

After an unexplained 30% plunge this week, Cogstate fessed up on the urging of the ASX.

On Friday, Cogstate divulged both that a potential contract transaction fell through on the 18th of February and that FY23 guidance requires a downgrade.

Cogstate — developer of brain health assessment technology — entered a trading halt on Tuesday, the day it received a ‘please explain’ from the ASX relating to its steep share price drop.

Today, finally, Cogstate revealed it was in discussions with a third party ‘in relation to a potential control transaction’ — a takeover bid.

The discussions commenced in December 2022 and due diligence was granted in late January 2023.

Why didn’t Cogstate disclose it was granting due diligence to a potential bidder?

The company said:

“At all times, the Company considered that the discussions were and remained confidential, non-binding, incomplete and insufficiently definite to warrant disclosure. On 18 February 2023, it was determined that the potential transaction would not proceed, and accordingly, all such discussions have ceased.”

But that was not the end of it.

Along with its response to the ASX price query, Cogstate issued a separate announcement downgrading FY23 guidance.

Cogstate now expects to recognise less revenue in FY23 due to ‘slower than expected enrolment of patients by pharmaceutical companies’, causing delays in revenue recognition.

Cogstate has therefore downgraded FY23 guidance:

• ‘2H23 revenue expected to increase over 1H23, but FY23 revenue expected to be approximately 6-9%
below FY22;
• ‘EBITDA is expected to be in the range of 12-15% of revenue (4/Nov/22 guidance of 27-29%);
• ‘EBIT is expected to be in the range of 6-8% of revenue (4/Nov/22 guidance of 20-24%); and
• ‘Cash balance as at 31 December 2022 of $29m; expect positive operating cash flow for 2H23.’

$CGS's recent plunge finally explained in FY23 guidance downgrade. #ASX #ausbiz #cogstate pic.twitter.com/cSJoUDikut

— Fat Tail Daily (@FatTailDaily) February 23, 2023