The S&P/ASX 200 Index (ASX:XJO) fell by around 1.2% today. The A2 Milk Company Ltd (ASX:A2M) share price fell around 23.5%.
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The S&P/ASX 200 Index (ASX: XJO) fell by around 1.2% today to 6,676 points.
Here are some of the highlights from the ASX today:
A2 Milk Company Ltd (ASX: A2M)
The A2 Milk share price fell by 23% today after the company adjusted its guidance for the FY21 first half and full year results.
A2 Milk first reminded investors that it has been saying for months it was suffering from lower sales in Australia because of daigou sales reductions with reduced tourism from China and international student numbers.
The company was previously guiding that there would be a significant increase of revenue in the second half.
However, today the company said that the disruption in the daigou channel, which represents a significant proportion of infant nutrition sales in the ANZ business, has proved to be more significant and protracted than previously anticipated. Whilst this was predominately affecting infant nutrition sales, sales in other nutritional segments have now also been impacted.
Whilst A2 Milk had expected some disruption in the FY21 second quarter, the recovery hasn’t been as much as expected. It’s also seeing a higher level of disruption to the cross border e-commerce channel (CBEC). The daigou channel is reportedly important for stimulating demand across multiple channels, including CBEC.
It said that the performance in the 11/11 online sales event showed year on year growth, but sales in the CBEC channel in the period after that event was below expectations.
A2 Milk is now expecting the sales for both daigou and CBEC channels for the rest of FY21 to be materially lower. The company intends to focus further on reactivating the daigou channel in the second half.
On the positive side of things, the company said its performance in Chinese ‘mother and baby’ stores remains very strong and it’s expecting revenue growth of 40% in the first half compared to the prior corresponding period. It also said that the liquid milk businesses in Australia and the USA are performing well with growth compared to the FY20 first half.
In the first half of FY21 A2 Milk is expecting revenue of NZ$670 million, with second quarter revenue stronger than the first quarter. The earnings before interest, tax, depreciation and amortisation (EBITDA) margin for the first half is now expected to be in the order of 27%.
For the full year, the revenue is now expected to be between NZ$1.4 billion to NZ$1.55 billion. The EBITDA margin for FY21 is expected to be between 26% to 29%.
Mesoblast Limited (ASX: MSB)
The Mesoblast share price was another to fall heavily today. It dropped by around 35% after giving an update about its trial of remestemcel-L in ventilator-dependent patients with moderate to severe acute respiratory distress syndrome (ARDS) due to COVID-19 infection after the Data Safety Monitoring Board (DSMB) performed a third interim analysis on the trial’s first 180 patients.
The company said that the trial was powered to achieve a primary endpoint of 43% reduction in mortality at 30 days for treatment with remestemcel-L on top of leading care in a trial of 300 patients.
The projected mortality reduction was based on pilot data observed during the initial stages of the pandemic when control mortality rates were exceedingly high and prior to new evolving treatment regiments that have reduced disease mortality in ventilated patients.
The DSMB reported that there were no safety concerns and noted that the trial is not likely to meet the 30-day mortality reduction endpoint at the planned 300 patient enrolment. The DSMB recommended that the trial complete with the currently enrolled 223 patients, and that all be followed-up as planned.
Australian Ethical Investment Limited (ASX: AEF)
The Australian Ethical share price fell 1.2% after it gave a profit update today. It said that it’s expecting underlying net profit to be between $4.6 billion and $5.1 billion, which would be a mid-point increase of 11% for the six months ending 31 December 2019.
It said that funds under management (FUM) increased to $4.92 billion at 30 November 2020, up 14% from 30 September 2020 and up 21.6% since 30 June 2020.
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Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Australian Ethical Investment Ltd. The Motley Fool Australia owns shares of and has recommended A2 Milk. The Motley Fool Australia has recommended Australian Ethical Investment Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.