Block dives amid Hindenburg fraud claims, KMD Brands back in profit and Wyloo bids for Mincor

Shares in Afterpay-owner Block (ASX: SQ2) dived more than 26% on the ASX across the latter half of the week after short-seller Hindenburg Research published a scathing report accusing it of fraud on Thursday.

Hindenburg claimed its report was based on a two-year investigation into Block, which found it had willingly “facilitated fraud” against consumers and the government and misled investors with “inflated metrics”.

The short-seller says its research into Block involved “dozens of interviews” with former employees, partners, industry experts along with reviewing regulatory, public and litigation records.

“In sum, we think Block has misled investors on key metrics, and embraced predatory offerings and compliance worst-practices in order to fuel growth and profit from facilitation of fraud against consumers and the government,” the report stated.

Block founder Jack Dorsey didn’t emerge from the investigation looking too well either, with Hindenburg alleging he had “taken advantage” of the demographics he professed to care deeply about.

“With Dorsey and top executives already having sold over US$1 billion in equity on Block’s meteoric pandemic run higher, they have ensured they will be fine, regardless of the outcome for everyone else,” the report concluded.

On the New York Stock exchange, Block’s shares were down 15% on Thursday to US$61.88 following the news.

Block responded to the claims, saying it would work with the SEC and explore legal action against Hindenburg for its “factually inaccurate and misleading report”.

“Hindenburg is known for these types of attacks, which are designed solely to allow short sellers to profit from a declined stock price,” Block stated.

“We have reviewed the full report in the context of our own data and believe it’s designed to deceive and confuse investors.”

KMD Brands rebounds into profit

Owner of global brands Rip Curl, Oboz and Kathmandu KMD Brands (ASX: KMD) is back in the green, after announcing an underlying NZ$16.5 million (A$15.34 million) net profit after tax (NPAT) for the half year ending January (H1 FY2023).

The NZ$16.5 million NPAT figure follows a NZ$5.1 million loss in the previous corresponding period.

Driving the return to green was record sales, which reached NZ$547.9 million – up 34.5% on H1 FY2022.

The six-month period heralded continued sales growth for Rip Curl, as well as a strong recovery in Australia for Kathmandu. Meanwhile, Oboz achieved a record first half in sales.

KMD chief executive officer and managing director Michael Daly said the company was “delighted” with the record result.

“For the first time since Rip Curl was acquired, the group has experienced a full 12 months of trade without significant interruption from the COVID pandemic, which resulted in group sales of over NZ$1 billion (for that 12-month period).”

“With a healthy balance sheet, and expectations for strong cash flow generation in the second half, we are in an excellent position to execute on our growth strategy through expanding our global footprint, investing in digital platforms, leveraging operational excellence, and leading the industry through sustainability and innovation,” Mr Daly said.

Forrest-backed Wyloo bids for Mincor

Andrew Forrest-backed Wyloo Group has lobbed a $760 million bid for nickel miner Mincor Resources (ASX: MCR).

The $760 million on-market takeover play offers Mincor shareholders $1.40 per share, which represents a 35% premium to its last closing price of $1.04 a share.

However, Royal Bank of Canada has called the bid “opportunistic” and given Mincor a valuation of $1.95 a share.

Mincor was trading at $1.85 a share in January and had a 12-month peak of $2.84 in May last year.

Commenting on the bid, Mincor managing director and chief executive officer Gabrielle Iwanow said as the company ramps-up mining and continues to purse opportunities, its value will “continue to grow”.

He also advised shareholders to take no action.

Wyloo already owns almost 20% of Mincor.

Brickworks posts record profit

Another company to achieve a record half year (H1 FY2023) is Brickworks (ASX: BKW), which announced this week an all-time high underlying NPAT of $410 million.

This was up 24% on H1 FY2022’s figure of $331 million.

Boosting the record NPAT was a 13% increase in revenue, which came in at $584 million for the period.

Brickworks’ property division was described as the “standout” for H1 FY2023, while contributions from investments were higher and earnings from building products remained steady.

Managing director Lindsay Partridge said the company had continued to experience strong demand for prime industrial property – despite increasing interest rates.

The record profit prompted directors to announce a fully franked interim dividend of 23 cents per share – up 1c on H1 FY2022.

Mr Partridge said Brickworks was confident sales will remain resilient through H2 FY2023.

WAM Leaders cans $731.5m raising

Investment management company WAM Leaders (ASX WLE) canned a $731.5 million capital raising – citing the board deemed it in the “best interests” of shareholders.

No further elaboration for the cancellation was given, other than shareholders who’d already participated would be refunded.

The share purchase plan and placement were announced to existing shareholders at the start of the month.

Eligible holders were given the opportunity to subscribe to the raising at $1.48 per share, which was a 5.1% discount to WAM’s previous closing price of $1.56.

At the time of the announced raising, WAM chair Geoff Wilson said it provided an “equitable opportunity” for shareholders to increase their exposure to the company’s investment portfolio, which has “outperformed”.

He noted in the 12 months to 28 February, WAM’s investment portfolio had increased 11.1% and outperformed the S&P ASX 200 Accumulation Index by 3.9%.

However, since the announced raising WAM’s share price fell to a low of $1.47 – providing zero incentive for shareholders to partake.