Closing Bell: Xero losses undercut tech sector as ASX dips

The ASX 200 fell 0.1pc on Thursday, led lower by Xero after XRO announced a $3.9b acquisition of US invoicing firm Melio Payments.

The ASX was swamped by losses in accounting firm Xero, slipping 0.1pc as info tech slumped. Pic: Getty Images

• ASX falls 8.4 points, which was about 0.1%

• Xero sheds 4.7% on $3.9b acquisition of Melio Payments

• Info tech sector slumps 2%

ASX edges lower on Xero acquisition

The ASX 200 has fallen 8.4 points or 0.1% in trade today, after major information technology stock Xero (ASX:XRO) fell 4.7%.

The damage came after XRO made a $3.9 billion offer for US-based invoicing and accounting platform Melio Payments in a bid to enter the North American market.

The big draw points for the acquisition are integrated payments, expanded revenue streams and accelerated US growth, allowing Xero to expand into payment flows as well as accounting services.

Analysts reckon the price is pretty steep at 13.4-times Melio’s annual revenue of US$187 million, especially since the company printed a cash flow loss of $US154 million in the previous quarter.

That said, they also think there are some synergies at play here, and a real opportunity for Xero to break into the American market.

In the meantime, it’s cut the legs out from under the Aussie market as the info tech sector slides 2%.

Source: Market Index

The only solid gains today were in health care, with several biotech stocks making moves.

Clarity Pharmaceuticals (ASX:CU6) jumped 14%, Botanix Pharmaceuticals (ASX:BOT) 8.6%, and Cogstate (ASX:CGS) and Orthocell (ASX:OCC) added 8.2% each.

As for our indices, the ASX All Tech was predictably down 0.96%, with the All Ord Gold not far behind, shedding 0.84%.

The Small Ords made an effort, adding 0.46% but the ASX 200 Resources and ASX Banks indices were the only others in the green, adding just 0.08% and 0.05% respectively.

Source: Market Index

ACCC slams Australian Gas Network’s renewable gas claims

With oil prices stabilising at around US$67.88 a barrel of Brent today, the energy sector is almost dead flat.

A Federal Court action from the ACCC against gas distributor Australian Gas Networks certainly isn’t helping matters.

The ACCC alleges AGN made misleading claims in its ‘Love Gas’ TV and digital advertising campaign, where the company claimed it would be distributing renewable gas to households within a generation.

“It is not currently possible to distribute renewable gas at scale and at an economically viable price, and throughout 2022 and 2023 it was highly uncertain whether, and if so when, this would be possible,” ACCC chair Gina Cass-Gottlieb said.

“We allege that even though Australian Gas Networks knew the future of renewable gas was uncertain, it made an unqualified representation to consumers that it would distribute renewable gas to households within a generation.”

The ACCC is seeking declarations, penalties, costs and other orders.

Parent company Australian Gas Infrastructure Group vowed to defend its subsidiary’s claims.

“We always strive to provide clear and accurate communications about the role and benefits of natural gas today and renewable gas into the future,” AGIG’s statement read.

“For this reason, we are disappointed with the ACCC’s decision to take proceedings and will be defending these claims. AGIG will not be making any further comment at this stage."

ASX SMALL CAP LEADERS

Today’s best performing small cap stocks:

Security	Name	Last	% Change	Volume	Market Cap
VML	Vital Metals Limited	0.003	200%	10668158	$5,895,067
PFM	Platformo Ltd	0.085	81%	5000	$4,460,690
LKY	Locksleyresources	0.088	52%	22958926	$10,633,333
ALR	Altairminerals	0.003	50%	264438	$8,593,488
EEL	Enrg Elements Ltd	0.0015	50%	354475	$3,253,779
RCM	Rapid Critical	0.003	50%	22383999	$2,831,556
TEG	Triangle Energy Ltd	0.003	50%	2942226	$4,178,468
OPL	Opyl Limited	0.028	47%	14061855	$4,464,398
SPQ	Superior Resources	0.005	43%	5075539	$8,298,440
PV1	Provaris Energy Ltd	0.017	42%	4201927	$8,376,015
LOC	Locatetechnologies	0.245	40%	6432545	$40,307,564
SLZ	Sultan Resources Ltd	0.007	40%	5173612	$1,157,350
AMS	Atomos	0.004	33%	4718113	$3,645,055
BP8	Bph Global Ltd	0.002	33%	105539	$1,576,477
CZN	Corazon Ltd	0.002	33%	667996	$1,776,858
VN8	Vonex Limited.	0.024	33%	360256	$13,546,863
WWG	Wisewaygroupltd	0.185	32%	140498	$23,429,447
EVR	Ev Resources Ltd	0.009	29%	6333485	$13,900,857
DY6	Dy6Metalsltd	0.11	28%	362157	$5,708,107
OLH	Oldfields Holdings	0.025	25%	60000	$4,261,183
JAV	Javelin Minerals Ltd	0.0025	25%	4377333	$12,252,298
KPO	Kalina Power Limited	0.005	25%	2945589	$11,731,983
SHP	South Harz Potash	0.0025	25%	3977937	$2,205,457
VRX	VRX Silica Ltd	0.086	23%	4347080	$52,311,230
BTE	Botalaenergyltd	0.06	22%	58960	$12,797,475

Making news…

Vital Metals (ASX:VML) is about to initiate a share consolidation on a 50 to 1 basis after shareholders voted in favour at today’s general meeting.

That’ll reduce the company’s issued shares from 5 billion to just under 118 million, in turn bumping its share price up 50-fold. As the company hit 2 cents a share in trade today, that will translate to a $1.00 price tag for VML shares post consolidation.

Rapid Critical Metals (ASX:RCM) has its eyes set on the Conrad and Webbs silver projects in New South Wales after securing firm commitments to raise $10.5m in a share placement at $0.024 a share.

There’s been no modern exploration on either project for a decade, offering an opportunity to expand and upgrade existing resource estimates. RCM will begin with the Webbs project, employing targeted geophysics, drilling and metallurgical studies.

Opyl (ASX:OPL) has snapped up two Bitcoin for about $330k as part of a treasury diversification process led by executive Tony G.

Tony is chair of SOL Strategies, a CSE-listed Solana-based crypto company with a market cap of CAD$375M.

OPL reckons the asset class is gaining momentum and offers high levels of liquidity, as well as opening up opportunities to plug into blockchain-based AI infrastructure.

Locksley Resources (ASX:LKY) has officially listed to the OTCBQ under the ticker LKYRF, gaining broader access to North American investors and a deeper capital pool for its flagship Mojave rare earths project

VRX Silica (ASX:VRX) has received the green light from the WA Minister for Environment for its environmental protection proposal at the Arrowsmith North silica sand project.

Originally knocked back by an appeal from the Conservation Council of WA, the Minister has accepted recommendations to amend conditions addressing vegetation dieback, which VRX is happy to address.

ASX SMALL CAP LAGGARDS

Today’s worst performing small cap stocks:

Security	Name	Last	% Change	Volume	Market Cap
AOA	Ausmon Resorces	0.001	-50%	515819	$2,622,427
C7A	Clara Resources	0.0025	-38%	5508687	$2,353,084
HCD	Hydrocarbon Dynamics	0.002	-33%	33333	$3,234,328
PIL	Peppermint Inv Ltd	0.002	-33%	137297	$6,903,269
QXR	Qx Resources Limited	0.002	-33%	1148011	$3,930,987
WEL	Winchester Energy	0.001	-33%	4062051	$2,044,528
TML	Timah Resources Ltd	0.024	-31%	10000	$3,106,592
ASP	Aspermont Limited	0.005	-29%	1191980	$17,312,314
LU7	Lithium Universe Ltd	0.005	-29%	13733062	$5,501,857
FHS	Freehill Mining Ltd.	0.003	-25%	4970168	$13,655,414
HLX	Helix Resources	0.0015	-25%	350000	$6,728,387
MGU	Magnum Mining & Exp	0.003	-25%	2731100	$4,486,603
MTB	Mount Burgess Mining	0.003	-25%	4843886	$1,406,811
RDS	Redstone Resources	0.003	-25%	1100000	$4,137,069
BLU	Blue Energy Limited	0.005	-23%	2147376	$12,031,328
SPX	Spenda Limited	0.0055	-21%	1872752	$32,306,508
ERL	Empire Resources	0.004	-20%	100000	$7,419,566
PKO	Peako Limited	0.002	-20%	233022	$3,719,355
RDN	Raiden Resources Ltd	0.004	-20%	12447509	$17,254,457
TFL	Tasfoods Ltd	0.004	-20%	2242057	$2,185,478
TGH	Terragen	0.018	-18%	1770327	$11,110,378
NSB	Neuroscientific	0.074	-18%	729709	$13,014,438
ALY	Alchemy Resource Ltd	0.005	-17%	45000	$7,068,458
BLZ	Blaze Minerals Ltd	0.0025	-17%	416000	$4,842,000
DAF	Discovery Alaska Ltd	0.01	-17%	48333	$2,810,816

IN CASE YOU MISSED IT

Neurizon Therapeutics (ASX:NUZ) has developed a liquid version of its ALS treatment drug with the goal of improving the patient experience as the disease progresses.

X2M Connect (ASX:X2M) has scored $1m of water monitoring contracts in South Korea, bringing total contract value in the country to $5.5m.

Brightstar Resources (ASX:BTR) reckons it can grow the maiden ore reserve for its Second Fortune and Fish underground mines with more surface and underground drilling, which is due to start imminently.

Everest Metals Corporation (ASX:EMC) have confirmed an extensive regional gold trend that highlights the considerable scale of the Revere gold project.

Hillgrove Resources (ASX:HGO) has revealed more copper beyond the confines of its Kanmantoo mine resource base, thanks to deep diamond drilling.

HyTerra (ASX:HYT) has expanded drilling plans at the Nemaha project, increasing the number of white hydrogen wells from two to three.

TRADING HALTS

Astron Corporation (ASX:ATR) – work plan application update
Percheron Therapeutics (ASX:PER) – pending licensing deal
PointsBet Holdings (ASX:PBH) – outcome of scheme meeting
hummgroup (ASX:HUM) – potential acquisition offer
Xero Limited (ASX:XRO) – corporate transaction and equity raise

At Stockhead, we tell it like it is. While Locksley Resources is a Stockhead advertiser, it did not sponsor this article.

This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.

Originally published as Closing Bell: Xero losses undercut tech sector as ASX dips