The ASX tech share sector has been through plenty of pain since the start of 2022. But I think that gives it more of an opportunity to rebound.

For example, if a business dropped from $100 to $50, that's a fall of 50%. If an investor bought shares and it went back to $100, that would be a rise of 100%. I think some names could finish 2023 at a share price twice as high as the start of the year.

Still, a doubling of the share price in a short amount of time is certainly not guaranteed. With how much volatility we're seeing at the moment, they could just as easily finish 2023 lower than where they are right now.

However, with inflation seemingly peaking in the US and Australia, and interest rates getting close to the end of rises, the outlook could be improving for sold-off ASX tech shares, particularly if it seems like interest rate cuts are getting closer by the end of the year.

Airtasker Ltd (ASX: ART)

The Airtasker share price is down around 60% since December 2021.

This business provides a platform that enables people to advertise a task that needs doing, while taskers can offer to do the job.

I think the ASX tech share can continue to grow revenue and scale over the rest of 2023. Airtasker said in the three months to December 2022, its revenue rose 40.2% (13.6%, excluding the Oneflare acquisition).

What I thought was particularly exciting was that the UK's trailing twelve months of gross marketplace volume (GMV) grew 83.1% to £3.5 million, while US quarterly posted tasks increased 5.4 times year over year.

It also said its cash burn fell 44.3% to $2.6 million, while also having $23.3 million of cash on the balance sheet.

I think its ongoing growth can recapture investor attention as its profitability improves.

Gentrack Group Ltd (ASX: GTK)

Gentrack is an ASX tech share that provides software for utility companies and airports to run their operations.

A number of leading airports use Gentrack including Melbourne Airport, Sydney Airport, Gatwick Airport, Schiphol (Amsterdam's airport), and Auckland International Airport Limited (ASX: AIA).

Gentrack recently reported the rapid rebound of travel has accelerated airports' digitisation plans. In fact, the company said that 55% of airports expected to spend more on IT.

The company also said it's going to expand globally in 2023 – it plans to use its partnership strategy to replace other tech providers. It's also going to "amplify" its marketing to build global brand awareness, with around $3 million per year to spend on sales and marketing.

Management expects to achieve its previous FY24 revenue target of $130 million in FY23. FY24 revenue is now guided to be $150 million. As it scales, the company's profit margin could improve.

While the Gentrack share price is higher than 2022, I think it could keep rising as momentum builds.

Megaport Ltd (ASX: MP1)

The Megaport share price is down more than 70% since November 2021.

Higher interest rates and a slowing growth rate certainly aren't impressing investors. But I think the company's exposure to cloud computing infrastructure gives it a promising outlook for the long term.

The second quarter of FY23 still showed growth, with revenue up 10% quarter over quarter to A$37 million, and December 2022 monthly recurring revenue up 6% quarter over quarter to A$12.4 million.

However, at the end of the quarter, the number of customers had only increased 1% to 2,739 quarter over quarter and total ports had increased 2% quarter over quarter. Average revenue per port in December 2022 was A$1,260, an increase of 3.8% quarter over quarter.

Megaport said that the economic uncertainty is delaying customer decision-making. However, the company isn't seeing an increase in customer churn. The ASX tech share expects sales trends "will improve when the global economy stabilises". I think investor and business confidence could return by the end of 2023.

The post 3 ASX tech shares that could return 100% in 2023 appeared first on The Motley Fool Australia.

Small cap ASX shares have the potential to deliver big returns because they are starting from an earlier point in their journey compared to an established blue chip share. But how do you know which small cap company will go on to greater heights?

One fund manager has picked out Gentrack Group Ltd (ASX: GTK) shares as a major opportunity.

The ASX tech share is a software provider for utility businesses and airports around the world. It helps clients with efficiency and to deliver their customers better services. It's also helping utilities 'transform' in this 'sustainable era' to meet customer demand for how they purchase and consume energy and water. Gentrack says that "it is not a case of if utilities transform to meet these demands, but when".

Below is a snapshot of Gentrack's share price history.

The NAOS Asset Management investment team believes Gentrack shares offer considerable upside, saying it has a high level of conviction in the business as a core investment over the next three to five years. They give two main reasons.

Industry tailwinds for the small cap ASX share

NAOS said the first reason to be positive is the "significant" industry tailwind of all meter points globally transitioning to new IT systems.

According to NAOS, this represents an opportunity worth more than $1 billion across around 200 utility companies.

The fund manager noted that Gentrack has been able to secure new tier 1 and tier 2 customers and successfully implement their systems in a seamless manner, which was described as a "key risk" for any IT migration.

Gentrack share price valuation

NOAS says the small cap ASX share's valuation is also "extremely attractive".

The fund manager pointed out that Gentrack's customers operate in a highly regulated environment and are therefore "rather sticky clients".

NAOS analysts think the business generates excellent cash flow and has good cash conversion. It was noted that all of Gentrack's research and development is expensed (rather than spreading out the cost over multiple years, which is what a lot of other ASX tech shares do by capitalising those costs).

The fund manager pointed out that while Gentrack largely operates in three international markets, the small cap ASX share is now executing on a global expansion strategy. This was illustrated by the recent signing of a large utility company in Singapore. NAOS is particularly pleased by this foray because many ASX tech shares only operate within Australia and New Zealand.

The fund manager revealed how much future upside there might be with the Gentrack share price:

If management forecasts are to prove correct and in FY25 GTK produces $175 million of revenue and an EBITDA margin of 17%, then cash EBITDA for GTK would be ~$30 million. Of note would be the net cash position of the business which could reach close to $50 million. Using Objective Corporation Limited (ASX: OCL) as a comparative software business, which has similar attributes albeit a higher level of recurring revenue, OCL trades on 29 times EV/EBITDA. Even if you apply a 30% discount this would result in a valuation of $6.42 / share for GTK based on FY25 targets, which we see as particularly compelling given Gentrack's current share price.

The post This obscure small cap ASX share is 'extremely attractive': expert appeared first on The Motley Fool Australia.

This year has been a fascinating and painful one for ASX growth shares. Strong inflation and higher interest rates have punished the valuations of many assets.

But, as Warren Buffett's famous advice goes, "be fearful when others are greedy, and greedy when others are fearful".

Investors have certainly become fearful during this year. ASX growth shares have taken a hit as long-term growth isn't worth as much today because of higher interest rates (due to discounted cash flow valuations).

Buffett once explained why interest rates matter so much:

"The value of every business, the value of a farm, the value of an apartment house, the value of any economic asset, is 100% sensitive to interest rates because all you are doing in investing is transferring some money to somebody now in exchange for what you expect the stream of money to be, to come in over a period of time, and the higher interest rates are, the less that present value is going to be. So every business, by its nature…its intrinsic valuation is 100% sensitive to interest rates."

I think the current environment has made the below two ASX growth share options attractive:

Betashares Nasdaq 100 ETF (ASX: NDQ)

This is an exchange-traded fund (ETF) that gives exposure to 100 of the largest non-financial companies listed on the NASDAQ. It comes with an annual management fee of 0.48%.

Plenty of the top holdings are probably recognisable to readers: Apple, Microsoft, Amazon.com, Alphabet, Tesla, Nvidia, PepsiCo, Meta Platforms, and Costco.

While a lot of the portfolio is invested in tech-related companies, there are other sectors represented in the holdings, including utilities, industrials, consumer staples, and so on.

I think names like Apple and Microsoft have resilient earnings – smartphones and Microsoft Office software seem very embedded in daily life.

I do feel higher interest rates have reduced the intrinsic value of many businesses, but some share prices have fallen significantly. It's not often we get the chance to buy, for example, Microsoft shares 28% lower than where they were at the start of a year.

The Betashares Nasdaq 100 ETF price has dropped 26% in price in 2022, so I'm thinking this ASX growth share is good value today for the long term.

Despite the decline, over the past three years it has delivered an average return per annum of 15.2% to 31 October 2022.

Gentrack Group Ltd (ASX: GTK)

The Gentrack share price is another that has taken a dive this year – it's down more than 25%.

Gentrack says it designs, builds and delivers "cloud-first revenue and customer experience solutions found at the heart of leading utilities and airports around the world".

Momentum seems to be returning to the business. It's yet to report its FY22 result for the year to 30 September 2022, but in February 2022 and May 2022, it advised that annual revenue was going to be $115 million (up from FY21 revenue of $105.7 million).

It had also said that FY22 earnings before interest, tax, depreciation and amortisation (EBITDA) was expected to be in the "low single digits" in terms of how many millions of dollars it expects to make.

But at the end of September, it said it's forecast to make revenue of $125 million and that EBITDA is expected to be in the mid-to-high single digits of millions of dollars.

The ASX growth share continues to win new customers as well as expand with existing clients.

It has also said that it's "well-positioned to capture the sizeable market opportunity created by the transformation of the utilities and airports across the world".

I think the opening up of borders can also have a useful impact on the airport software side of the business, as airports will have more earnings to spend.

Gentrack itself is growing its investment in research and development, as well as sales and marketing. This should help growth in the future.

The post 2 ASX growth shares I reckon are buys right now appeared first on The Motley Fool Australia.

If you're investing in ASX shares and want to outperform the average punter, or indeed the index, you need to do something different.

So it's sometimes worthwhile opening your horizons and considering businesses that don't make daily headlines in the newspapers (or websites).

Here are 3 examples of such ASX shares that the team at Market Matters reckons are ripe for buying:

Can this software firm return to its glory days?

Shares for software maker Gentrack Group Ltd (ASX: GTK) traded in the $6s and high $5s only a couple of years ago.

As of Wednesday's close, they were going for $1.755.

Shaw and Partners analyst Jules Cooper reckons Gentrack is "a quality business led by a credible team" that can return to glory.

"It is the darkest hour, and the stock is capitalising that into its valuation," he told a Market Matters video.

"We think this stock can more than double."

The resurrection may have already started, with a positive financial update a fortnight ago pushing the shares up 7.6% on the day.

Market Matters chief James Gerrish agreed with Cooper.

"We like this pick and believe you can play Gentrack with less than 10% risk, which is fairly conservative at this end of town."

All this data isn't going to hold itself

Global Data Centre Investment Fund (ASX: GDC) has much going for it, not least the worldwide thirst for data and the demand for physical locations to house it all.

But the share price has gone nowhere since listing in late 2019, trading at $1.85 as at Wednesday's close.

Shaw and Partners senior analyst Jonathan Higgins revealed that his team rates the stock as a "buy" with a price target of $3.03.

"We think it's one of the clearest valuation arbitrages in the market," he said.

"In the data centre space, we're seeing significant tailwinds. We're seeing the likes of the Googles, the Amazons, the Facebooks and the Microsofts of the world growing in this space anywhere from 40% to 50% per annum." 

According to Gerrish, the market has been reluctant to "push the stock too hard too fast".

"We like the thesis but would be nervous if the stock failed to hold the $1.75 area."

This ASX share has already rocketed since these comments

Audinate Group Ltd (ASX: AD8) makes audio networking technology, which has a flagship product named Dante.

Dante is fast becoming the default networking protocol pre-installed into audio equipment such as musical instruments.

According to Gerrish, such a lead in the industry is a great omen for the future.

"The $695 million business holds a comforting $65 million in cash and enjoys gross margins above 75%," he said.

"It certainly looks poised to go from strength to strength during the COVID re-opening period."

His team likes it as a buy around the $9 mark.

"But we would question what was unfolding under the hood if the stock fell under $7.50," he said. 

"We recently bought Audinate in the Emerging Companies portfolio at $8.93."

Audinate shares have exploded almost 8% in the past 48 hours to close at $9.72 on Wednesday.

The post 3 ASX shares you've never heard of that experts love appeared first on The Motley Fool Australia.

The Gentrack Group Ltd (ASX: GTK) share price is out of the blocks and is now trading 7.6% higher at $1.84. Gentrack is catching bids today after the provider of software solutions for utilities and airports released its FY21 results.

Here are the key takeouts from Gentrack's results for the full-year to 30 September 2021.

Gentrack share price gains as EBITDA beats guidance

The highlights from Gentrack's financial performance include:

• Revenue of $105.7 million, up 5.2% on FY20 and in line with guidance;
• Earnings before interest, taxes, depreciation, and amortisation (EBITDA) came in ahead of guidance at $12.7 million, also a 5.0% gain on FY20;
• Statutory net profit after tax (NPAT) of $3.2m; and
• Net cash in a stronger position of $26.0 million, up 54.8% year on year.

What happened in FY21 for Gentrack?

The Gentrack share price is climbing today amid positive results. Revenue growth last year was driven by an 8.8% increase in Gentrack's utilities business to $89 million. New customer wins and growth from existing customers offset previous years' losses, according to the release.

However, utilities annual recurring revenue (ARR) was down 0.3%, after absorbing approximately $4 million in customer revenue losses from prior periods.

The company wasn't immune to the effects of COVID-19. Its Veovo airport brand saw revenue slip from $18.7 million to $16.7 million in FY21 due to the impact of COVID on the aviation industry.

Yet, despite the down-step, it still remained profitable and ARR was up 7.7% for the division.

Underlying group EBITDA of $12.7m came in ahead of guidance management issued earlier in 2021, whereas costs were up 5.2% on FY20.

The release notes Gentrack continues to "experience a drag on revenue growth, from prior period losses and supplier failures in the UK".

The number of business to consumer (B2C) supplier failures in the UK has accelerated in the last 3 months due to the global energy crisis, the company said. However, this does not seem to have had a negative impact on the Gentrack share price.

According to the company, the government has now enforced a price cap for the B2C segment. It correlates this cap with a total of "9 customer insolvencies occurring since the beginning of FY21, compared to 6 in total from FY17 through FY20".

Gentrack anticipates there "may be some further supplier failures in the coming winter months after which [its] expectation is that the market will stabilise". It notes there are allowances for these potential failures in its forecasts.

What's the outlook for Gentrack?

The company today reconfirmed that FY22 group revenues are expected to be ahead of FY21 revenue of $105.7 million announced today.

Still, Gentrack is not providing earnings guidance for FY22. It also confirmed no changes to its FY24 targets provided on 16 June 2021.

In addition, the company notes in its "Strategic Growth Pillars 2 and 3" strategy that new engagements have been secured, and that these engagements and pipeline "will enable FY22 growth".

In the past 12 months, the Gentrack share price has climbed more than 30%, rallying 27% this year to date. Its shares have gained around 4% in the past month and are also up 4% for the week (since last Thursday's close).

The post Gentrack (ASX:GTK) share price leaps 8% on EBITDA surprise appeared first on The Motley Fool Australia.

The Gentrack Group Ltd (ASX: GTK) share price is on fire this morning. Shares in the software company have jumped 27.7% in early trade after an important ASX announcement.

Gentrack share price rockets higher on revenue upgrade

This morning's market announcement represented an FY21 trading update from the enterprise billing software provider.

Gentrack reported revenue in the second half of the year being "stronger than expected" across its utilities segment. The software group said that reflects early positive signs of its strategy to grow revenues by "providing innovative technologies and services to existing customers, win new business and expand into managed services".

The positive update sparked interest in the Gentrack share price which surged higher at the open. Full year revenue guidance was updated to be approximately $105 million for the group.

The company has previously forecast revenue "slightly ahead of $100.5 million" while earnings before interest, tax, depreciation and amortisation (EBITDA) guidance was bumped from $10 million to $12 million.

Increased incremental revenue, higher throughput and slower than expected increases in research and development expenditure were all sighted as key factors in the higher figures.

While an energy crisis in Europe looms, Gentrack said its core UK energy market exposures remain limited. That's thanks to a number of factors including:

• Increased focus on working capital management reducing individual customer exposures;
• Diversified business across B2B, B2C and Water business lines as well as geographies; and
• Increased revenue forecasts for FY2022 even after accounting for headwinds.

Foolish takeaway

Investors have pounced on this morning's update and sent the Gentrack share price soaring higher on Thursday. Shares in the Kiwi software group have been volatile throughout 2021 but have now climbed 11% in the last 5 days.

The post Gentrack (ASX:GTK) share price rockets 27% on revenue upgrade appeared first on The Motley Fool Australia.

Ask A Fund Manager

The Motley Fool chats with fund managers so that you can get an insight into how the professionals think. In part two of our interview with NAOS Asset Management portfolio manager Robert Miller, he presents 3 ASX shares that currently have beautiful prospects.

Hottest ASX shares

The Motley Fool: What are the 2 most attractive ASX shares right now?

Robert Miller: First one I'll talk about is Eureka Group Holdings Ltd (ASX: EGH). They are a provider of independent seniors living. So it's not aged care. 

If you think about people that are of senior age and they want to live in the community still, this is a way to live in a rental community that certainly doesn't have any aged care factor involved in it. It's simply a rental agreement. 

The vast majority, 95%-ish, of Eureka's revenue actually comes from government pension funds — in terms of rental assistance.

Eureka's got a portfolio of about 2,500 units across 40 villages that they own and manage. Strong management team and board. The key here is the aging population tailwind is very significant — only going to be a bigger factor for the economy over time. 

But also equally the flip side of that is as you get more people moving into retirement age, there are less people in the age of their working career, as in producing income for the economy. So therefore you get that natural switch between people that are generating income to… the government needing to provide more stimulus and whatnot over time.

Add to that housing affordability, which is a topic, and certainly one that you're seeing less home ownership percentages over time. That plays into Eureka's long-term [benefit] in terms of the tailwinds that they operate in. 

It's a very large market and we see them as providing a social infrastructure good that [has] a significant demand. 

What I would also say is I think Eureka's done a good job to date, under the current management and board, of acquiring businesses. There are significant M&A opportunities within this space. But as well as that, they've got a lot of assets where they might have some vacant land, or are able to purchase vacant land as well, and develop that internally.

You possibly could classify it as a boring business, but we believe that's one that's got very strong tailwinds, very stable revenue profile, and a business that can incrementally grow over time, and generate hopefully very strong free cash flow returns.

The Motley Fool: And the other one?

Robert Miller: Another one that is a little bit different, it's probably classified as a turnaround story at this moment, is a business called Gentrack Group Ltd (ASX: GTK), which is an enterprise software business that provides billing and customer support software to utility providers. 

So this business has been around for a few years… It went from $6 to 80 cents. Since that time, a new board [and] new management team have come on into this business. And it's a new strategy under the current management team who've been there for approximately 12 months now.

The reason for mentioning it today is they've put out an outline of a 3-year strategy at the end of their investor day in June. They're not starting from scratch on this turnaround. So they've got a very sticky product, and we believe by not starting from scratch, you're able to reinvest in technology and transition the business to becoming a cloud-first business with your existing customers first, before you have to go out and win new customers.

Despite the long-term tailwinds around energy businesses and utilities looking for a lower cost to serve and also more complexity around a transition to a green energy world, … there are short-term headwinds for this business. 

Quite a few of the [management team] have come out of a business called Amdocs Limited (NASDAQ: DOX), which is a US-listed business that does a lot of utility and customer billing software. I think roughly it's like a US$10 billion NASDAQ business. … There's a lot of pedigree out of that business.

So it's a big market. And I think if they're successful in turning around this business with their existing customer base and then grow it from there, and they want to be best of breed at what they do, the earnings profile could be significant in terms of the upside there.

They've got another small division, which is an airport software division. So the utilities division I've touched on, is by far the majority. But they do have an airport software business as well, which is providing some mission-critical software into some of the largest airports in the world, including Sydney Airport Holdings Pty Ltd (ASX: SYD), and JFK, around say things like passenger tracking.

Yes, this is at a cyclical low, but they've got some tier-one airport customers. We think there's quite a bit of inherent value in this airport software as well. Hopefully, it can be realised in time.

The keeper

The Motley Fool: If the market closed tomorrow for 5 years, which stock would you want to hold?

Robert Miller: A key principle of ours is long-term investing. So we almost always think about, when investing, for periods of 5-plus years. So this is perfect, and I could probably answer this with a few across the portfolio.

In saying that, I certainly will pick something within our investment universe. Objective Corporation Limited (ASX: OCL) — I don't know how familiar you are with that one, but it's an enterprise software business again. This one's for regulated industries, such as local councils, state councils, federal [government], whatnot. What they provide is software that has tools for governance, content and workflow processes. 

The business was founded by Tony Walls, who founded it over 30 years ago now. He's still the CEO and the major shareholder. He still owns over 65% of the shares on issue. They haven't raised capital since back in 2000.

Clearly, digital transformation is something that all industries are experiencing, but I think probably government and regulated industries have a long way to go on this and probably aren't as nimble as other sectors. So we think there's a long runway for this tailwind to benefit Objective Corp. 

Their software [contributes as] core platforms within their customer base. So their churn rate is very low. A low level of churn is an extremely valuable asset in an enterprise software business.

They expense all their R&D. And that's been the case since listing, and they've invested close to $200 million in their software over that time, all expensed. And they invest a very healthy portion of sales at over 20%. So they are continually reinvesting in the product and the software offering to make it a benefit for their customers, which in turn drives growth, which they in turn reinvest back in the businesses, and it becomes a bit of a perpetual cycle like that.

The other thing to note is they've taken the migration to the cloud successfully. … Objective are the majority of the way through that. I suppose once you've got a high-quality software cloud offering, you get compounding over time. 

Management has been excellent allocators of capital over a long period of time. And we see no reason why this won't continue. So very much if the market closed tomorrow … happy to hold this for that period of time.

Looking back

The Motley Fool: Is there a move that you regret from the past? For example, a missed opportunity or buying a stock at the wrong timing or price.

Robert Miller: Yeah, there's plenty. Where do I start? Wrong timing, wrong price, missed opportunities — I'd be lying if I said we hadn't had all of those things occur to us. I think regrets and mistakes are part and parcel of being an investor, unfortunately. 

What I would say is being able to learn from your mistakes and also potentially learning from the mistakes of others before they've happened to you, is another key factor. 

I would say the one that can hurt the most are missed opportunities in terms of our experiences. I won't name names, but I feel like over the years, you've probably missed a few businesses that have been run by excellent founders.

So when you miss one that's in your circle of competence that compounds for many, many years, and you can generate 5, 10 times returns, missing them are the ones that probably hurt the most.

The Motley Fool: You don't want to name an obvious clanger?

Robert Miller: No, I really don't, because some of them we've invested in later on. 

But it's just identifying excellent founders and whatnot early on enough so you get that compounding nature of returns for shareholders. I would say that we probably learnt a lot from some of these, and you're never going to get a business that looks exactly the same, run by a founder who looks exactly the same. 

But using our knowledge and experiences, we've been able to invest in quite a few businesses since then, that are run by what we believe to be excellent founders and allocators of capital.

And hopefully in the future, we can identify them early. But obviously you're never going to get them all right.

The post This ASX tech share fell 87%, but we love it now appeared first on The Motley Fool Australia.

The S&P/ASX 200 Index (ASX: XJO) went up by 0.03% today to 7,095 points.

Here are some of the highlights from the ASX:

Fisher & Paykel Healthcare Corp Ltd (ASX: FPH)

The Fisher & Paykel Healthcare share price fell by 6% after the business reported its FY21 result and also gave some commentary about FY22.

FY21 total operating revenue rose 56% to $1.97 billion, with hospital operating revenue growing 87% to $1.5 billion. However, homecare operating revenue only went up 2%.

This led to net profit after tax going up 82% to $524.2 million. The ASX 200 share's board decided to implement a 42% increase of the final dividend to 22 cents per share.

Given the wide range of scenarios and uncertainties, the company didn't give guidance but instead made some observations. It said that a global vaccine rollout during FY22 is likely to reduce global hospitalisations requiring respiratory support for COVID-19 compared to FY21.

It also said that its customers' stocking and de-stocking choices in response to the pandemic are likely to vary over time. The gross margin is likely to be impacted with freight costs likely to remain elevated and air freight a higher proportion of freight. Fisher & Paykel also said it expects to retain its COVID-19 safety practices on its manufacturing sites.

In the financial year so far, hospital revenue continues to remain variable with higher volume of hospital hardware and consumables to locations with hospitalisation surges and an ongoing shift towards Optiflow nasal high flow therapy. OSA shows signs of recovery after a slower fourth quarter.  

Costa Group Holdings Ltd (ASX: CGC)

The Costa share price was smashed by around 24% today after giving a trading update about its different operating segments.

Overall, the 2021 first half performance is expected to be marginally ahead of the comparable period in 2020, with strong international operations offset by challenges in domestic produce conditions.

In its international segment it's well progressed with its harvests in both China and Morocco. The ASX 200 share said performance has been very positive versus the previous year and expectations.

In China, although volumes were initially slightly down due to late flowering, the yield is expected to finish in line with the company's expectations. Management said there has been strong pricing and demand over the season.

Costa said that in Morocco, early season plantings in Agadir as well as earlier season higher volumes across its northern farms together with "generally strong" pricing has seen the business perform well, although ongoing supply chain and COVID-19 related costs have had an impact.

However, the ASX 200 share's international segment is going to be impacted in the reported result by the higher Australian dollar.

Domestically, there is a mixed performance. Overall mushroom demand remains strong, but mushroom production at Monarto has been impacted by short-term labour constraints.

Avocado volumes and quality have been pleasing and export volumes continue to grow. However, it has seen recent pricing pressure due to increased haas variety production across the sector resulting in reduced pricing compared to last year. It is likely this pricing trend will continue into the second half of the year as increased volume is expected to be delivered across the industry.

Current half performance has been impacted by hail damage and fruit fly restrictions. Costa explained that the 2021 calendar year is an 'on year' in terms of yield and it is expected that results in the second half of the year, where the bulk of harvest occurs, will benefit from strong yields.

In tomatoes, whilst it has seen some short-term pricing pressure arising from increased tomato supply, this currently abating and pricing is improving.

It was the worst performer in the ASX 200.

Gentrack Group Ltd (ASX: GTK)

The Gentrack share price went up around 15% today in response to the company releasing its FY21 half-year result.

It said that revenue increased 0.7% year on year to $51 million. Earnings before interest, tax, depreciation and amortisation (EBITDA) increased 63.2% to $7 million. However, the business reported a statutory net loss of $1.1 billion.

Revenue was down in the airport business by $2.1 million due to the industry downturn, but annual recurring revenue (ARR) rose 5.8%.

The business reduced costs by 5% due to cost saving measures. That assisted in the $5.6 million cash generation for the period. It ended with net cash of $22.4 million.

It's now expecting FY21 EBITDA to be around $5 million and revenue to be similar to FY20 of $100.5 million. Gentrack is expecting to be net cashflow positive.

The post ASX 200 rises, Costa smashed, Fisher & Paykel drops appeared first on The Motley Fool Australia.

The Gentrack Group Ltd (ASX: GTK) share price is rocketing higher in morning trade, up 14%.

Below we look at the half year results (through 31 March) for the company, which provides software solutions for utilities and airports across the globe.

What results did Gentrack report?

Gentrack's share price is surging higher after reporting a 0.7% lift in revenue compared to the first half of the 2020 financial year. Revenue for H1 FY21 came in at $51.0 million.

The company said revenues from its utilities segment rose 6% over the corresponding half year while revenue from its airport segment fell by $22.1 million, impacted by continuing pandemic travel restrictions. Annual recurring revenues increased 5.8%, which Gentrack said reflects "the critical role of our product in our customers' operations".

Underlying earnings before interest, taxes, depreciation and amortisation (EBITDA) gained 63.2% over the previous corresponding period, to $7 million.

Statutory net profit before taxes (NPAT) showed a loss of $1.1 million.

That means investors won't see a dividend payment this half. Gentrack said, "In light of the NPAT loss, the Board has decided not to pay an interim dividend and will review the position at the year end."

The company also noted that, "We continue to have headwinds from prior year customer attrition and supplier failures in the UK. We have however, moved the business back to growth despite this revenue drag."

Following $5.6 million of net cash generation during the half, Gentrack's net cash was $22.4 million as of 31 March. That's up 33.5% from H1 FY20. Gentrack said its year-end cash position "provides scope for additional investment in technology".

Upgraded guidance

The Gentrack share price also looks to be getting some tailwinds for the companies new guidance.

Looking ahead, Gentrack upgraded its guidance for the full 2021 financial year. In February it estimated full year EBITDA would come in around $5 million with revenues of $100.5 million, in line with FY20.

The updated guidance forecasts that revenue will be "slightly ahead" of its $100.5 million estimate. While EBITDA for FY21 is now expected in the range of $10 million "on the basis that research and development (R&D) costs are expensed".

Gentrack share price snapshot

Over the past 12 months, Gentrack's shares have gained 28%. That edges out the 25% gains posted by the All Ordinaries Index (ASX: XAO).

Year-to-date, the Gentrack share price is up 19%, currently trading at $1.75 per share.

The post Here's why the Gentrack (ASX:GTK) share price is rocketing 14% higher appeared first on The Motley Fool Australia.

Gentrack Group Ltd (ASX: GTK) shares will be on watch this morning following an update regarding the company's FY21 outlook. At market close yesterday, the Gentrack share price finished the day 1.7% lower at $1.375.

Let's take a look and see what the software company announced.

How are things looking for Gentrack in FY21?

The Gentrack share price could be on the move today after the company reported a positive near-term future ahead.

During its annual general meeting (AGM) in November last year, the company advised that its performance for FY21 would likely be down. It said that earnings before interest, tax, depreciation and amortisation (EBITDA) for FY21 would fall well below H2 FY20, and profit could be break-even.

However, according to this morning's release, Gentrack revealed that its FY21 revenues are expected to be in line with or slightly ahead of FY20's revenues. The company achieved total group revenue of NZ$100.5 million for the full year's end in 2020.

In addition, EBITDA is forecast to be roughly NZ$5 million. This is provided that research and development (R&D) costs are expensed. Gentrack noted that incremental R&D costs are projected to be around NZ$3 million per quarter from Q3 FY21 moving forward.

The company anticipates it will continue to be net cash flow positive for FY21 due to working capital management. This will build upon the NZ$16.8 million of net cash that was reported at 30 September 2020.

Profit and cash flow are predicted to be primarily based on the performance of H1 FY21. This is because the company's incremental R&D spend is planned for the second half of 2021.

Gentrack share price snapshot

Over the last 12 months, the Gentrack share price has sunk more than 30%, reflecting difficult trading conditions. Gentrack shares took a dive last year in March, hitting a multi-year low of 77 cents. Since partially recovering, its shares have been moving sideways at around the $1.40 mark.

Based on the current Gentrack share price, the company commands a market capitalisation of around $135 million.

The post Why the Gentrack (ASX:GTK) share price will be on watch today appeared first on The Motley Fool Australia.

The Gentrack Group Limited (ASX: GTK) share price has slipped slightly in opening trade this morning after the software company released mixed full-year results for the 2020 financial year.

Gentrack builds software for energy utilities, water companies and airports, mainly in Australia and New Zealand. The company's platform aims to develop, integrate and support billing and customer management solutions. At the time of writing, the Gentrack share price is trading 1.42 lower at $1.39.

What did Gentrack announce?

Gentrack reported growth in a number of metrics, but fell short other areas. For the period ending 30 September, revenue declined 10% to $100.5 million over the prior corresponding period (pcp). The company attributed the revenue slump to the impact of COVID-19 which saw delays in projects, particularly its airport programs.

Annual recurring revenue (ARR) saw an 4.9% uplift, which Gentrack registered $81.3 million over the comparable period. Its utilities business did the heavy lifting, representing $70.9 million of the group portfolio, with its airport division coming in at $10.4 million.

Earnings before interest, tax, depreciation and amortisation (EBITDA) plummeted 51% to $12.1 million.

Statutory net profit after tax came at a loss of $31.7 million. This included a partial write-down of $34.5 million mostly related to its blip and utilities segment due to COVID-19 uncertainly.

Gentrack recorded a cash balance of $16.8 million at the end of September, reflecting an increase of 263% from the year before.

The board advised that due to the net profit after tax loss, it will not pay a final dividend to shareholders.

Management commentary

Commenting on the results, Gentrack CEO Gary Miles said:

The results reflect a tough year for our utilities and airports customers. Pleasingly, the revenue mix and shift in annual recurring revenues is positive.

We see opportunities in our markets and our strong net cash position sets us up to accelerate our technology investment and lead the industry as it transforms to the cloud and clean technologies. This year, we've also played a key role in enabling our customers to adapt to COVID, keeping their mission critical systems operational and ready to support customer hardship at this time.

FY21 outlook

Looking ahead to the new FY22 year, Gentrack opted not to provide investors with a guidance. However, it did reveal that it expected EBITDA run rate for FY21 to be well below H2 FY20. This in turn could hit the company's bottom line with a possible break-even depending on its ongoing product investment strategy.

Management said that it continued to see opportunities in cloud technology and would seek to compete in this space.

Furthermore, the company will deliver an update on progress at its annual general meeting in February.

About the Gentrack share price

The Gentrack share price has been trading lower this year, sitting around 65% below its high of $4.02 last November. However, the Gentrack share price is up 25% since the start of the month.

The company has a market capitalisation of $139 million and a price-to-earnings (P/E) ratio of 12.8.

The post Gentrack (ASX:GTK) share price slips following mixed full-year results appeared first on The Motley Fool Australia.

Ask Sam Granger, the fund manager for the Totus Capital High Conviction Fund, and he'll readily refute that concept.

Sam has a long-term investing horizon, telling The Motley Fool he hopes to find investments his fund can buy and hold forever. And a look at his fund's performance over the past 3 years adds significant weight to his words.

Since the High Conviction Fund's inception in January 2017, it's delivered 18.5% in annual returns, net of all fees (as at the end of October). That compares to the 5.4% annual return from the All Ordinaries Total Return Index (ASX: XAOA), which includes dividend payments.

The past 12 months has seen an even stronger outperformance, with the High Conviction Fund returning 26.0%. That compares to a loss of 6.5% for the All Ords Total Return Index.

The fund is ASX focused, investing in both small and large-cap businesses. It's also able to invest globally in developed markets when opportunities present.

The Totus High Conviction Fund currently has $12.5 million of total assets under management.

Sam explains that the fund's small size, relative it its peers, provides a key competitive advantage, saying, "It enables us to invest up and down the market cap spectrum without compromising our liquidity."

Read on for the full interview as Sam Granger reveals the methods behind his fund's stellar track record. 

What attributes do you look at before investing in a share?  

We have a rigorous due diligence process that we put prospective investments through before they can be included in the Totus High Conviction Fund. The three key attributes we are looking for are:

1. Deep and sustainable competitive advantage – we are looking for great businesses that have unique characteristics that allow them to earn high returns on capital for long periods in to the future. 
2. Runway for growth ­– we are looking for businesses that have opportunities to grow their earnings through time with high returns on incremental capital deployed.
3. Excellent management team – we are looking for management teams that have a track record of outstanding operational performance and shareholder focused capital allocation. 

Once you have found these three characteristics, the fourth consideration is price. Overpaying for good assets can lead to poor investment outcomes.

How important is broader macro analysis in your decisions? 

We place no emphasis in our research process on macro forecasts of interest rates, exchange rates, commodity prices, etc. These variables are important but unknowable, in our view. We instead focus on building a portfolio of companies with robust business models and strong balance sheets that can thrive under a variety of macroeconomic outcomes. 

Whilst we are not interested in macroeconomic forecasts, we are interested in structural shifts in consumer and business behaviour and how that impacts businesses. We generally favour companies that are benefitting from structural tailwinds that can aid future earnings growth.

ESG (environmental, social, and governance) investing continues to be a growing trend. Does this impact your investing decisions? 

We have no specific ESG mandate in the Totus High Conviction Fund. That said, we think it makes good investment sense to look for businesses which are creating value for all of their stakeholders. Unsustainable relationships within the business value chain are a good sign of a management team too focused on the short term.  

Knowing when to sell can mean the difference between a profit and a loss. How do you determine when it's time to sell?  

It's a good question and one that I think about a lot. Unfortunately, there is no rule of thumb here which will enable you to make good sell decisions all the time.

One thing I would say is that if you read the letters of the investment greats, one of the recurring lessons is that selling a truly great business because it has gotten expensive on near term earnings is a mistake. My own experience selling great businesses too early suggests that this is a valuable piece of advice.  

Do you use stop-losses of any variety? What types of risk management do you employ? 

No, we do not use stop losses. The key piece of risk management for external investors is alignment. The Totus High Conviction Fund is by far my largest personal investment and for that reason we are focused on risk as well as return. We have also set ourselves a limit of no position being larger than 20% of the fund at cost.

What was your top investment over the past year? Why did you choose to invest in it? And what is your outlook for this share? 

The top investment for the Fund over the past year was Objective Corporation Limited (ASX: OCL), which delivered a 186% return.

We chose to invest in this business because it met the 3 criteria I mentioned earlier – deep moat, runway for growth and excellent management. Objective sells mission critical software into government, which is very sticky once implemented. It has been undertaking a transition to recurring revenue, which has greatly improved the earnings quality of the business.

We think earnings and cash flow growth from here will be strong and it remains one of the largest positions in the Totus High Conviction Fund.

Flipping that, can you share your worst performer with us?

Our worst performer has been Gentrack Group Ltd (ASX: GTK), which sells customer billing software to energy retailers. Our key error was overestimating the stability of Gentrack's end markets.

Energy retailers operate on thin margins in a highly competitive market. Regulatory changes in Australia and the UK impaired retailer profitability, which subsequently stymied their investment in software systems like Gentrack's. We were too slow to recognise this business model pressure and then underestimated its impact on Gentrack. We also failed to act aggressively enough in cutting the position when we discovered some accounting red flags.

What's the average holding period for shares in the High Conviction Fund? 

We are long-term investors and hope to find investments we can buy and hold forever. We subscribe to Charlie Munger's belief that "the big money isn't made in the buying and selling, but in the waiting". We have owned Objective Corp for 3½ years and many of our other largest investments for a number of years. 

When we are entering new positions, we tend to start small and slowly build the position as our knowledge and conviction grows. Sometimes you quite quickly discover you have made a mistake and need to exit a position after a short period of time because the business or management are not what you thought they were. 

How did COVID-19 impact your investment decisions? How do you see that moving forward over the next 12 months? 

Financial history teaches us that unanticipated shocks such as credit crunches, wars and pandemics will inevitably rear their head over an investing life time.

Our view was that COVID-19, whilst devastating to some communities and businesses in the short-term, would not impair the long-term earnings power of the businesses we owned. For that reason, we used the COVID-19 sell off as a buying opportunity, deploying our cash reserves into existing holdings at very attractive prices. Cash levels in the Fund fell from 21% in January 2020 to 11% in March as equity markets sold off.  

Ideally, we would have all our cash deployed in great businesses at fair prices. The movement in our cash holdings from here will be a function of how successfully we find new investment opportunities and more broadly whether equity prices become attractive. We can't predict this in advance.

What do you see as the biggest opportunity for retail investors in year ahead?

We continue to like Microsoft Corporation (NASDAQ: MSFT) as an investment proposition. It's got two huge growth businesses in Office365 and Azure, both of which look to have significant runway for future growth.

Office365 has the opportunity to further penetrate the office installed base and increase price through time. We are users of the software and derive a huge amount of value from it relative to what we pay in monthly subscription fees.

On Azure, as recently as last quarter, CEO Satya Nadella estimated cloud infrastructure is only 20% penetrated for existing applications. In addition to these 2 large growth assets, Microsoft owns a collection of high-quality businesses such as Windows, Xbox and LinkedIn.

And what do you believe is the biggest threat to share investors? 

The biggest threat to investors is always their own emotions and behaviours. Trying to time markets, using leverage and over trading are just a few examples of perennial threats to long-term wealth creation in the share market.

As Warren Buffett says, "The stock market is a device for transferring money from the impatient to the patient."

The post Ask a fund manager: Totus Capital's Sam Granger reveals the methods behind his outperforming High Conviction Fund appeared first on The Motley Fool Australia.

The Gentrack Group Limited (ASX: GTK) share price is pushing higher today, following the announcement of the appointment of new CEO Gary Miles.

At the time of writing, the Gentrack share price is trading at $1.47, up 1.03% compared with the All Ordinaries Index (ASX: XAO), which is up 1.51%.

What does Gentrack do?

Gentrack provides specialist software for energy utilities, water companies and airports, mainly in Australia and New Zealand. The company's platform aims to develop, integrate and support billing and customer management solutions.

What did management say?

Commenting on the new appointment, Gentrack acting chair Fiona Oliver said:

The Board is delighted to welcome Gary to the Gentrack business. He brings a real focus on driving global growth and building a workplace that fosters innovation, diversity and collaboration. His combined software and services experience with cloud technologies will also help to accelerate our transition to SaaS and deliver more value to customers and shareholders. 

Incoming CEO Gary Miles added:

The utility industry is entering a new era where regulatory, technology and environmental forces are accelerating the digital transformation of the market. Gentrack has been successful in helping service providers in some of the world's most dynamic markets and countries. I am excited to work with the Gentrack team to bring great, customer centric technologies to these and other service providers around the world.

Gary Miles' resume includes extensive experience in technology innovation and cloud capabilities, most notably serving on the leadership team of Amdocs Limited (NASDAQ: DOX) as chief marketing officer. Amdocs is a provider of cloud business software and services in the communications industry.

Miles' previous roles within the company included division president and CTO leading strategy development. This involved building the company's product portfolio and sales organisation as well as overseeing its digital services, big data and mobile engagement segments.

Gary Miles is expected to assume the CEO position on 1 October.

How has the Gentrack share price performed?

The Gentrack share price has struggled over the past 12 months. The technology company is 73% lower from its 52-week high of $5.50. However, the Gentrack share price is up 89% since its March low of 77 cents.

Should you invest?

Whilst this is a positive announcement and could be the start of good things to come, I think that there are better opportunities on the market at present. I will be watching Gentrack from the sidelines instead.

The post Gentrack share price higher on announcement of new CEO appeared first on The Motley Fool Australia.

Confidence appears to be returning to ASX shares again today as the S&P/ASX 200 Index (ASX: XJO) and All Ordinaries (ASX: XAO) are currently up 1.36% and 1.55%, respectively, at the time of writing. Let us at least hope that it is actually due to confidence and not a case of FOMO (fear of missing out) that's driving this rise.

In either case, below are 3 ASX shares that are smashing the market today and are currently up by more than 10%.

Gentrack Group Ltd (ASX: GTK)

Gentrack is a software provider based in New Zealand. Its software is used around the world by airports and utility companies, including a large presence here in Australia. Its share price has come under significant pressure over the past 6 months as a result of the company making a number of earnings downgrades. Additionally, Gentrack's CEO Ian Black announced that he would be standing down from his position last month.

However, Gentrack's share price has jumped a whopping 32.35% today to sit at $1.35 at the time of writing – albeit a small gesture for long term shareholders, who have slowly watched it drop from a 12-month high of $6.23.

This rise appears to be off the back of an announcement the company made today confirming its half year guidance and decision to withdraw full year guidance as a result of the COVID-19 outbreak. While many companies have also withdrawn full year guidance, investors appear happy not to have received another downgrade for its half year guidance.

Dicker Data Ltd (ASX: DDR)

Dicker Data shares have also jumped far higher today, with the shares currently up 11.37% to $5.68. With no announcements made by the company, it appears investor sentiment is returning to the shares following the numerous director buys throughout March.

In fact, Dicker Data shares are now up almost 50% from their low of $3.90 just over a week ago. This rise could be thanks to investors becoming increasingly bullish on the wholesale computer company, given more people are now required to setup home offices to work from during the pandemic.

Dicker Data shares also offer investors an attractive grossed-up dividend yield of 7.84% on current prices, which may be attracting dividend seekers.

Challenger Ltd (ASX: CGF)

Challenger has continued its recent rally today with its shares up 12.94% to $4.54 at the time of writing. This follows strong gains over the last week, when the company traded as low as $2.82. That's a 62% jump in 8 days, which is not common for a large cap ASX 200 company.

With the market rising strongly today, I'm not surprised to see some of the more 'beaten down' shares from the last month making some of the largest gains. Given that Challenger shares were trading above $10 in mid February, its shares have been impacted more than most. Challenger also made an announcement yesterday reaffirming its revised guidance range and confirming that it remains strongly capitalised. 

Another reason investors may be pushing the shares higher today is for its grossed-up 12.61% dividend yield. With no mention of its dividend in its recent announcements, investors may be confident that it wont be cut or postponed.

The post Up 10%: 3 ASX shares smashing the market today appeared first on The Motley Fool Australia.

The US share market is pointing to a strong opening, so we may see a strong Tuesday performance for US stocks too.

Some of the highlights from today:

Various COVID-19 updates

Previous guidance by companies is going out of the window as the coronavirus causes havoc to earnings expectations, dividends and operations.

The share price of Vista Group International Ltd (ASX: VGL) dropped 16%.

The share price of Gentrack Group Ltd (ASX: GTK) fell 11.9%.

The share price of Estia Health Ltd (ASX: EHE) fell 7.8%.

The share price of Crown Resorts Ltd (ASX: CWN) fell 1.7%.

The share price of Coca-Cola Amatil Ltd (ASX: CCL) dropped 0.1%.

The share price of Auckland International Airport Limited (ASX: AIA) declined 1%.

And these weren't even some of the worst falls today.

Qantas Airways Limited (ASX: QAN) cuts international flights 

One big update today came from Australia's main airline. Qantas said that it would reduce its international capacity by around 90% until at least the end of May 2020, up from a 23% reduction.

Total group domestic capacity will be cut by around 60% until at least the end of May 2020. 150 aircraft have been grounded, including almost all of the group's wide-body fleet. Qantas is trying to help its people by using paid and unpaid leave.

The airline doesn't want any government support and said it's well placed to ride through this period.

Strong market reaction

Elsewhere, there was still strong reaction of both positive and negative movements.

The share price of Metcash Limited (ASX: MTS) rose 27%.

The share price of Gold Road Resources Ltd (ASX: GOR) grew 21.1%.

The share price of Silver Lake Resources Limited. (ASX: SLR) went up 20.1%.  

At the red end of the ASX:

The share price of Unibail-Rodamco-Westfield (ASX: URW) fell 22.8% after providing a market update.

The share price of oOh!Media Ltd (ASX: OML) fell 16.5% after providing a market update.

The post ASX 200 recovers 5.8%, investor optimism returns appeared first on The Motley Fool Australia.

It's been a mixed reporting season so far, with some ASX shares spurred higher off the back of encouraging results, while others have been sold off. Investors have been unforgiving when results disappoint or clouds appear on the horizon.

Here we take a look at 5 shares that have downgraded guidance this reporting season, and ask why. 

Corporate Travel Management Ltd (ASX: CTD)

Corporate Travel Management had forecast full year underlying earnings before interest, tax, depreciation and amortisation (EBITDA) of $165–$175 million. Last week, however, the company downgraded its guidance due to the coronavirus-induced travel restrictions. Corporate Travel's full-year EBITDA is now forecast to be between $125 million and $150 million. This would represent a flat result on FY19 results at the upper end, or a 16.5% reduction at the lower end of the range. 

The actual impact of the coronavirus on Corporate Travel's results will depend on the severity and duration of the outbreak. The company has assumed the outbreak will extend throughout the second half with a peak impact through February and March. Corporate Travel assumes activity will return to normal levels by July.

A key difference with the coronavirus outbreak compared to previous epidemics is government restrictions on travel to and from China, which is likely to increase the severity of impacts. Corporate Travel reports that in its Asian region, approximately one-third of transactions relate to flights in to and out of China. In February, post-Chinese New Year activity is down 50%, largely driven by border closures and travel bans. Corporate Travel has advised that significant cost management measures are underway to mitigate lower client activity. 

Across the rest of the world, less than 2% of flights relate to travel to and from China, with less than 4% of flights relating to travel to and from Asia. Minimal impact has been reported in Europe and the US to date. Declines in activity in Australia and New Zealand have been reported, which Corporate Travel believes is primarily related to the coronavirus. 

Cochlear Limited (ASX: COH)

Cochlear has also downgraded its full year guidance due to the impacts of the coronavirus. Previously it had forecast underlying net profit of $290–$300 million. This was revised downward to $270–$290 million last week. CEO Dig Howitt said, "while we are delivering strong results from the cochlear implant business, profit growth will be lower than our original expectations due to the impact of the coronavirus on sales in greater China." 

The coronavirus is expected to reduce sales in greater China as hospitals defer surgeries, including cochlear implants, to limit the risk of infection from the virus. The low end of guidance factors in a significant decline in sales in the second half. Cochlear is confident that many of the delayed surgeries will progress once hospitals resume normal operations. While the virus represents a near-term challenge, Cochlear believes that the longer-term opportunity to grow markets remains unchanged. 

Synlait Milk Ltd (ASX: SM1)

Synlait Milk recorded net profits of $82.2 million in FY19, a 10% increase over the previous year. In September, the company advised it expected FY20 profits to continue to grow at a similar rate. In an update to full year guidance provided earlier this month, however, Synlait Milk advised it now expects full year profits to be between $70 million and $85 million in FY20. 

The company advised that the expected rate of growth in profits has not been achieved. This was due to a number of factors. Infant base powder sales have been significantly lower than anticipated due to China infant nutrition market consolidation. This has caused a reduction in demand from brand owners who are yet to receive brand registration. 

Prices of lactoferrin, a protein commonly used in infant formulas, have been more volatile than previously anticipated, which has also impacted Synlait's earnings. While Synlait still anticipates growth in consumer-packaged infant formula sales volumes over the full year, this growth is not as strong as initially envisaged. 

In light of these factors, Synlait has also updated its expected half year performance. Net profit after tax (NPAT) is forecast to be in the range of $26.5 million to $28.5 million for the 6 months ending 31 December 2019. Sylait's HY19 NPAT was $37.3 million. 

The half year result will be impacted by lower sales of ingredient products than anticipated due to sales phasing and product mix impacts. Lower sales of infant base powders due to China infant nutrition market consolidation will also impact results. Finally, increased incremental interest, manufacturing, and costs associated with the Pokeno and advanced liquid dairy packaging facilities have had an impact.  

WiseTech Global Ltd (ASX: WTC) 

WiseTech is another victim of the coronavirus outbreak, downgrading its forecast FY20 revenue to $420–$450 million, and forecasting an EBITDA of $114–$132 million. The outbreak has resulted in an effective shutdown of China, which is a critical driver of the global manufacturing supply chain. This has slowed supply chains and economic trade across the world, delaying execution of logistics activities by logistics service providers. 

A significant rebound in volumes is anticipated as manufacturing in China recovers, inventories worldwide are replenished, and supply chain volumes are restored. The interim delay, however, may cause some transactional revenues to move to the next reporting period.  

Gentrack Group Ltd (ASX: GTK)

Gentrack has reforecast in the face of challenging conditions, resulting in its forecast revenue declining significantly. Full year EBITDA is now expected to be between NZ$8 million and NZ$12 million. Previously, Gentrack had advised its FY20 results would be broadly flat on the previous year, when EBITDA was $24.8 million. 

Gentrack advised it is experiencing difficult conditions in its utility markets. In the UK and Australia, regulatory price caps on electricity and competitive market conditions have both led to reductions and deferrals of IT investment, which has impacted Gentrack's sales pipeline. Gentrack is also transitioning from an upfront license model to a recurring SaaS model, whereby initial contract values are declining and being replaced by more predictable contracted recurring payments. 

In light of these market conditions Gentrack is taking action to reduce its cost base by approximately $8 million on a full year basis. There will be an approximate $4 million benefit in the current year. 

The post 5 ASX shares that have downgraded guidance this reporting season appeared first on The Motley Fool Australia.

The share price of Gentrack Group Ltd (ASX: GTK) dropped just over 9% today after the software company announced that its chief executive officer would be leaving. 

The company announced today that Ian Black will be standing down from his position as CEO. John Clifford will assume the role of Executive Chairman until a new chief executive officer can be appointed. Within the market release, Gentrack said that the Board thanks Ian for his contribution to Gentrack and wishes him well for his future endeavours. 

Gentrack's Board has started to search for the next CEO and has engaged Odgers Berndtson, a global executive search firm, to carry out a comprehensive process and the board will evaluate internal and external candidates. 

Over the past year the company has suffered a series of setbacks, largely due to Brexit, which has sent the share price lower by almost 60%. 

The post Gentrack share price falls 9% on CEO departure appeared first on The Motley Fool Australia.

Australia's S&P/ASX 200 (Index: ^AXJO)(ASX: XJO) and ALL ORDINARIES (Index: ^AXAO) (ASX: XAO) indices finished lower on Monday.

Here's a short recap of the Australian market:

• S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) lower 2.25% to 6,978.30
• ALL ORDINARIES (Index: ^AXAO) (ASX: XAO) lower 2.28% to 7,065.40
• AUD/USD at US 66 cents
• Gold at US$1,663.13 an ounce
• Brent Oil at US$57.05 a barrel

One of the best-performing ASX 200 shares today was gold miner Saracen Mineral Holdings Limited (ASX: SAR), its share price increased 7.3% with the fast increase of the gold price.

Indeed, gold miners were most of today's top five performers as worries about the coronavirus grow. The share price of St Barbara Ltd (ASX: SBM) grew by 5% today.

The release of Chorus Ltd's (ASX: CNU) report today sent its share price higher by almost 6% despite the negative market day.

At the red end of the ASX the share price of Reliance Worldwide Corporation Ltd (ASX: RWC) dropped 26.3% with investors being disappointed by its half-year result.

Steel business BlueScope Steel Limited (ASX: BSL) suffered a share price drop of 7.8% after reporting a fall in profit.

Airline Air New Zealand Limited (ASX: AIZ) downgraded its profit expectations for the year, which sent its share price down by 5.7%.

The departure of the CEO of Gentrack Group Ltd (ASX: GTK) saw its share price decline another 9%.

Finally, the share price of Audinate Group Ltd (ASX: AD8) declined by 15.3% after reporting its result to the market.

Here are some of today's top stories:    

• What's wrong, Warren?
• Why are Medical Developments shares crashing 11% lower today?
• How to avoid getting crushed by falling ASX growth shares
• Is the Westpac share price a great turnaround buy?

The post ALL ORDINARIES finishes lower Monday: 8 ASX shares you missed appeared first on The Motley Fool Australia.

In space, when a giant star runs out of the gas that fuels it, it will collapse spectacularly in on itself. The collapse creates a crushing gravitational pull from which nothing, not even light, can escape. Hence its name; a black hole.

When a company with a popular growth story runs out of gas, the same thing can happen. The investor expectations that fuel the glowing share price run dry and the implosion that follows can wipe out years of gains.

In more than 10 years of investing I have never seen this to be as dramatic as in the last 12 months. In my view, a lot of ASX growth shares have high expectations, higher valuations and there seems to be little consideration for margin of safety.

Even before the February reporting season took off we saw large share price falls as companies with strong expectations like Gentrack Group Ltd (ASX: GTK) and Nearmap Ltd (ASX: NEA) revised guidance down. As reporting season gathers pace, other stars have also imploded.

Last week, investors in WiseTech Global Ltd (ASX: WTC) rudely discovered the strong expectations for growth were over-done. Share price declines in Citadel Group Ltd (ASX: CGL) and the cooling-off of Altium Limited (ASX: ALU) and EML Payments Ltd (ASX: EML) are further examples.

Most of these are great businesses which in years to come will continue to grow steadily. But the huge demand for companies with growth narratives and high valuations means it's time to be extra vigilant.

How to avoid getting crushed

As investors, our job is to evaluate the narrative around a company and decide 1) if it is reasonable and 2) if the share price reflects this. It is not easy, but it is essential if we are to avoid getting crushed.

For a long time, the management team of utility billing software company Gentrack was telling a story of "15%+ long‐term organic EBITDA growth", caveated with the specific timing of projects. It appeared realistic and the share price rose along with investor expectations.

I certainly believed it. But I should have been more skeptical when the chief operating officer suddenly departed and the company started machine-gunning warnings to the market that growth was in doubt.

Foolish takeaway

To safely navigate the pull of star ASX shares, don't be afraid to stay skeptical and stay diversified. It can be exciting to find a company with great growth prospects, but having a sense of valuation is critical to prevent your money from being lost into the investing void.

The post How to avoid getting crushed by falling ASX growth shares appeared first on The Motley Fool Australia.

Some of the best ASX shares to own over the last five years have broken all the rules.

The Motley Fool (U.S) 'Rule Breaker' investing service, run by Motley Fool co-founder David Gardner, looks for six simple, but crucial, characteristics when hunting for long-term winning companies. Many of the best performing ASX shares would meet his criteria. 

Let's look at David Gardner's six traits and see how they apply to some of the best performing ASX growth shares like Xero Limited (ASX: XRO), CSL Limited (ASX: CSL) and Afterpay Ltd (ASX: APT).

1. A 'top dog', 'first mover' company in an important, emerging industry

Being the first mover in an emerging industry usually requires significant investment and risk. However, companies that successfully navigate this stage can build a deep understanding of the industry which is difficult for competitors to replicate. Accounting platform Xero was early to seize on the potential of cloud storage – an important, emerging industry – to enable small businesses to cost-effectively manage their accounting.

2. Holding a sustainable advantage

A sustainable advantage, says Gardner, can be gained through "business momentum, patent protection, visionary leadership, or inept competitors". CSL is an example of a company that has built a formidable advantage through continuous research and development and patent protection.

3. Strong past share price appreciation

Here is where traditional investing rules start to go out the window. David Gardner's 'rule breaker' criteria looks for companies that have a history of strong upward share prices. This goes against the common 'buy low, sell high' philosophy of many investors, but in Gardner's own words, "We think the winners generally keep on winning."

4. Good management and smart backing

This element can be hard to assess from outside the company, but if the company has had a consistent management team with a history of making good investment decisions, it's likely well on its way.

5. Strong consumer appeal

Strong consumer appeal is about giving customers a positive experience to generate repeat business. Users are certainly smitten with the simplicity of the by now, pay later service offered by Afterpay. This is an incredibly powerful position for a young company to drive future growth.

6. Documented proof that the stock is considered overvalued according to the financial media

Gardner's final point, similar to number three, goes against conventional investing wisdom. Being labelled overpriced, he argues, is less relevant if the other five 'rule breaker' characteristics ring true. This is because growing companies regularly command high valuations. Gardner cites Amazon as an example, which was labelled 'overvalued' back in 2000. Since then, Amazon shares are up by many, many multiples.

I must admit I remain cautious here. There is often more risk to owning fast-growing, cash-burning companies with high valuations. If the growth story changes unexpectedly, the share price can plummet. Recent examples of this are Gentrack Group Ltd (ASX: GTK) and Nearmap Ltd (ASX: NEA).

Still, if you're looking for tomorrow's winning ASX companies, perhaps consider companies that feel like they break all the rules.

The post The secret to finding the best ASX shares – breaking all the rules appeared first on The Motley Fool Australia.