ASX News Live | ASX Rises; European Lithium, Kogan, Whispir, Prospa, Medibank Feature

Retailer Kogan (ASX:KGN) rose on Wednesday despite Q1 FY23 gross sales slumping 38.8% year on year and gross profit falling 40%.

Kogan said the September quarter was an outlier as it cycled excess inventory and high sales volumes in Q1 FY22 brought forward by pandemic-enforced lockdowns.

KGN said it’s looking forward to H2 FY23 ‘with confidence’:

“The Company looks to 2HFY23 with confidence in its ability to return to a nimble, agile and inventory-light business that delivers strong operating margins.”

KGN shares were up 5% in late Wednesday trade but are down 60% year to date.

In Kogan’s own words, Q1 FY23 was a quarter of ‘subdued sales activity’, cycling a prior corresponding quarter ‘heavily impacted by COVID-19 lockdown orders.’

Q1 FY23 was less about sales growth and more about ridding itself of bloated inventory.

Kogan said the ‘vast majority’ of its inventory sell-through will end by early 2023.

Here are the (unaudited) Q1 FY23 trading figures as compared to Q1 FY22:

• Inventories cut to $132.1 million from $159.9 million
• Gross Sales down 38.8% to $202.3 million
• Gross Profit down 40.4% to $31.3 million
• Adjusted EBITDA loss of $0.3 million
• Group Active Customers down 12.3%
• Kogan First Subscribers up 48.8%
• Kogan Mobile Active Customers up 5.1%

$KGN is up 5% despite Q1FY23 gross sales slumping 38.8% YoY and gross profit falling 40%.
#Kogan said Q1FY23 was an outlier as it cycled a period 'heavily impacted by COVID-19 lockdown orders.' $KGN said it’s looking forward to H2 FY23 ‘with confidence’: #ausbiz pic.twitter.com/V18pdTDQeX

— Fat Tail Daily (@FatTailDaily) October 26, 2022

Australia’s Consumer Price Index (CPI) rose 1.8% in the September quarter and 7.3% annually, according to the latest figures released by the ABS.

This was well ahead of forecasts. Economists polled by Reuters expected the CPI to rise 1.6% in the September quarter, annualising at 7%.

ABS Program Manager of Prices Michelle Marquardt commented:

“This quarter’s increase matches that of last quarter and is lower than the 2.1 per cent result in March quarter this year. All three results exceed any other quarterly results since the introduction of the Goods and Services Tax (GST), and underlie the highest annual increase in the CPI since 1990.”

The biggest contributors to the rise in the September quarter were new dwellings (up 3.7%), gas (up 10.9%), and furniture (up 6.6%).

As for underlying inflation measures — preferred by the Reserve Bank of Australia as they mute noisy and temporary price spikes — the annual trimmed mean inflation was, for the second straight quarter, the highest since the reading was introduced in 2003.

Trimmed mean inflation rose 1.8% in the quarter and 6.1% for the year, up from 4.9% in the June quarter.

Again, this was well ahead of forecasts. Trimmed mean inflation was expected to rise 1.5% for the quarter and 5.6% annually.

Mind your eyes: latest inflation print in Australia is red hot.#inflation #CPI pic.twitter.com/0lCqY16uIi

— Jack Howe, CFA (@JackHoweCFA) October 26, 2022

On 17 March 1958, the US sent Vanguard 1 into space.

Weighing only 1.5kg and measuring 16.5cm, the satellite looked pretty insignificant. In fact, it was so small that Soviet leader Nikita Khrushchev called it ‘the grapefruit satellite’.

Still, Vanguard 1 was a trailblazer.

The satellite made history by being the fourth one to go into orbit and…because it’s still up there. Vanguard 1 is the oldest ‘human-made’ satellite still orbiting the Earth.

But that’s not its only claim to fame.

Vanguard 1 was the first satellite EVER to use solar cell power.

The satellite held two radio transmitters to send signals back to Earth. One was powered by a battery, which operated for 21 days before running out of juice.

The other one, powered by six silicon solar cells, was able to broadcast for a whopping six years before switching off.

You see, in space, solar has a clear advantage.

There are no clouds and no nights. And in space, where the sunbeams are stronger, solar panels can be constantly exposed to the Sun.

In fact, it’s why recently Europe has been looking at developing a huge floating solar farm in space as a way to increase its energy independence.

In case you are wondering how it would all work, the space station would collect solar power, which would be sent towards the Earth through a beam. Antennas on Earth would then capture this energy 24/7 and change it into electricity to be used.

While it all sounds very whacky, it’s crazy to think that solar power has been available in space for more than 60 years.

At the time, solar power wasn’t used that much because it was very expensive.

Of course, that’s not so much the case anymore.

Efficiency has increased in the last 10 years, and costs have dropped massively for solar — and new energy technologies — in the same period.

In fact, here in Australia, the use of solar has been growing quickly.

Almost a third (32.3%) of households have solar power, a number that’s doubled in just the last four years.

Globally, renewable energy has been growing exponentially. And while there’s recently been a political push for it, much of the growth was happening before as costs fell.

And while the renewable energy transition is forging ahead…

https://www.moneymorning.com.au/20221026/tipping-point.html

The Australian Bureau of Statistics has released the latest inflation data.

Australian annual inflation came in at 7.3% for the September quarter, the highest reading since June 1990.

Here's another way to think about today's inflation figures: More than 40 per cent of Australians have not seen inflation this high in their lifetimes pic.twitter.com/PM8Gt5eIzx

— casey briggs (@CaseyBriggs) October 26, 2022

Medibank expects the repercussions of the cyber-attack to cost between $25 million and $35 million pre-tax, hitting 1H23 earnings.

However, this estimate does not factor in “further potential customer and other remediation, regulatory or litigation related costs.”

Right now, Medibank is in the dark on the financial fallout.

The insurer said it is unable to predict “with any certainty the impact of any future events on Medibank including the quantum of any potential customer and other remediation, regulatory or litigation related costs.”

$MPL does not have cyber insurance, estimating the hack could cost $25m to $35m pre-tax and will impact earnings in 1H23.

However, #Medibank said this estimate does not include "further potential customer and other remediation, regulatory or litigation related costs."#ausbiz

— Fat Tail Daily (@FatTailDaily) October 26, 2022

Medibank Private (ASX:MPL) is currently down 15% after admitting that hackers had access to:

• All ahm customers’ personal data and significant amounts of health claims data
• All international student customers’ personal data and significant amounts of health claims data
• All Medibank customers’ personal data and significant amounts of health claims data

Medibank has evidence the cyber-criminal removed some of its customers’ personal and health claims data. Medibank expects the number of affected customers “could grow substantially.”

Medibank CEO David Koczkar commented:

“Our investigation has now established that this criminal has accessed all our private health insurance customers personal data and significant amounts of their health claims data.

“As we’ve continued to say we believe that the scale of stolen customer data will be greater and we expect that the number of affected customers could grow substantially.

“I apologise unreservedly to our customers. This is a terrible crime – this is a crime designed to cause maximum harm to the most vulnerable members of our community.”

$MPL

"#Medibank Private has confirmed hackers accessed personal information and sensitive health data on all 4 million of its customers, as well as on an unknown number of former customers, in another escalation of the spiralling data breach." https://t.co/wtWISO7pRm

— Fat Tail Daily (@FatTailDaily) October 26, 2022

Lithium developer European Lithium (ASX:EUR) rose as high as 30% in Wednesday morning trade on news it will merge with NASDAQ-listed special purpose acquisition company Sizzle (NASDAQ:SZZL).

As part of the merger deal, EUR will sell down its interest in its Wolfsberg Lithium Project to create a new entity named Critical Metals Corp.

Critical Metals is expected to be listed on the Nasdaq.

If the merger is successful, EUR will receive US$750 million worth of ordinary shares in the newly formed Critical Metals, an 80% ownership stake in the combined entity.

The US$750 million equity value to be paid for the Wolfsberg project “represents a significant increase to the current market capitalisation of EUR of approximately $112 million as a whole.”

The merger transaction also involves a capital injection of US$159 million to progress development of the Wolfsberg project.

Commenting on the deal, European Lithium Executive Chairman Tony Sage said:

“We are enthusiastic to partner with the Sizzle team to form a publicly traded company on NASDAQ and are thrilled to have Carolyn Trabuco, Sizzle’s lead independent director, join the Critical Metals board. The need for additional battery-grade lithium in Europe will only continue to accelerate as demand for EVs continues to outstrip supply. Wolfsberg is poised to become the first major source of battery-grade lithium concentrate in Europe, the world’s leading EV market, capable of supporting the production of approximately 200,000 EVs per year. The funds raised though this transaction will provide us with the resources anticipated to be required to advance construction and commissioning of Wolfsberg. With the capital raised, in addition to the increased access to the public capital markets by listing on NASDAQ by means of the business combination, we believe we will be able to achieve our commercial goals at Wolfsberg by 2025.”

While EUR is excited about the deal, the merger is not set in stone.

As the Wall Street Journal reported overnight:

“The company could still face challenges funding and developing the project. Nearby Serbia revoked mining giant Rio Tinto PLC’s permits for a lithium project early this year following protests about potential environmental damage.

“European Lithium could also struggle to complete the deal given the turmoil hitting many SPACs, also known as blank-check companies.

“SPACs are shell companies that raise money from investors and list on a stock exchange with the sole intent of merging with another company that eventually replaces it in the stock market if the deal is approved by regulators. Such mergers have become popular alternatives to traditional initial public offerings in the past few years.

“The Sizzle SPAC has about $160 million that European Lithium could use to grow if the deal gets completed. That number could shrink significantly because SPAC investors can pull their money out before mergers get done. Such withdrawals have skyrocketed during this year’s market volatility.

“The lithium upstart could also raise equity before the deal closes. To finance the project, it could attempt to tap debt markets or European government funding.

“When it raised money early last year, the Sizzle SPAC, launched by former restaurant executives and investors, said it intended to merge with a company in that industry, though such claims aren’t binding.”

ASX lithium stock $EUR is up 25% after announcing a merger with #NASDAQ-listed SPAC $SZZL. $EUR will sell down its interest in its Wolfsberg Lithium Project. $EUR expects to be issued US$750m worth of equity in the newly formed entity to be called Critical Metals. #ausbiz

— Fat Tail Daily (@FatTailDaily) October 25, 2022