Two ASX sectors had negative returns in 2021, and these are the worst stocks to be holding this year

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The ASX 200 has had a fantastic 2021, returning over 10% for shareholders at the time of writing.

Only two sectors, Tech and Energy, delivered negative return for investors while four sectors beat the benchmark index.

Telco was the best sector returning over 25%, while Discretionary, Financials, and Real Estate easily surpassed the benchmark.

The year was highlighted by controversies such as meme stocks, and the dramatic rise and falls in Bitcoin and iron ore prices.

We’ve also seen an ongoing energy crisis that resulted in oil prices jumping to the highest levels in years.

On the ASX, we saw stocks that returned thousand-plus percentage points, but at the same time those that have lost most of their value.

In this column, we’ll look into the worst-performing ASX stocks in 2021:

Atrum Coal (ASX:ATU)

The stock price of this coal play virtually evaporated after Canada’s western province of Alberta reaffirmed its policy that restricts coal mining in certain areas.

The decision in March has put Altrum’s hard coaking coal project in disarray as it’s located in an area designated as Category Two land under Alberta’s 1976 Coal Development Policy.

Category Two land is not normally considered for open-cut coal mining, and for Atrum Coal to employ this type of mining at Elan requires a specific exemption to be granted.

Elan was approved as a coal project under a 2020 coal exploration permit, and Atrum Coal noted that an exemption was granted to allow open-cut mining in Category Two land in 2016.

But the backflip in government policy had cost Atrum around $C40m on exploration and development costs for the project.

Sensera (ASX:SE1)

In October 2020 Sensera sold its IOT Solution subsidiary Nanotron Technology to Inpixon for US$8.7m cash, and used the proceeds to retire all outstanding debts and to provide working capital.

The divestiture of the business allowed Sensera to focus on its primary business of MicroDevices (US subsidiary) sensor business, using its MicroElectroMechanical Systems (MEMS) technology.

But the company’s stock price took a beating this year after a series of negative announcements.

In October, Sensera reported that its biggest client, NanoDX, has had challenges releasing its SARS-CoV-2 detection system, which had slowed progress towards volume production.

NanoDX also decided to go with an entirely different design to the Sensera’s MEMS technology, cutting off its sales pipeline.

This news was followed by a weak Q1 FY22 revenue of US$505k, which was down from US$633k in the last quarter.

The company has also been hampered by product issues throughout the year, resulting in significantly reduced sales.

Laybuy Holdings (ASX:LBY)

Buy-now-pay-later (BNPL) stocks were among the market darlings in 2020, but the sector has taken a dip since its peak in February.

Up to November 2021, the 15 ASX listed BNPL stocks have lost an average 36% of their value.

Among this group, NZ-based Laybuy has experienced the biggest fall.

The company’s latest half-yearly update showed net transaction margin falling to 1.5% (from 1.7%), as well as a NZ$22.6m statutory loss.

Headwinds ahead include rising competition and potentially tighter regulations.

In October, the RBA announced that it wanted to change payment rules to allow merchants to pass its BNPL fees on to consumers, a move that could make BNPL products less attractive compared to credit cards.

And just last week, the US Consumer Financial Protection Bureau (CFPB) announced an inquiry into the BNPL industry.

The bureau said it wants to conduct an investigation into how current consumer protection laws apply to BNPL operators, as well as how those companies harvest and use customer data.

Aumake Ltd (ASX:AUK)

Investors are worried about Aumake’s cash burn situation, as the company grappled with international border closures throughout the year.

The company’s business model relies on tourists, especially Chinese tourists, to buy its brands in physical retail stores.

Around 50,000 Chinese visitors to Australia pre-COVID purchased Aumake brands, generating most of the $60 million of revenues the company made in FY20.

But the company’s revenues were hit hard in FY21, with sales plunging from $60m to $12m, as inbound international tourism stalled to a standstill.

Earlier this month, however, Aumake announced store reopening and restructuring strategies with five physical stores reopening.

The company is also streamlining its operational costs, including a 65% salary cut for its directors.

Cleanspace Holdings (ASX:CSX)

The respiratory protection equipment specialist never recovered from an earnings downgrade in March, which it blamed on COVID-19 vaccine rollout in North America.

In March, the company reported that since the Biden administration came to power, several factors have caused a slowdown, particularly the acceleration of the COVID-19 vaccine rollout and a backlog stock-piling of low-tech disposable masks.

The company subsequently downgraded its revenues and earnings forecasts.

More recently, however, Cleanspace has shown improvements, with full year FY21 revenue of $49.9m, a 76% improvement from a year earlier.

Collection House (ASX:CLH)

The shares in this receivables and debt management company was reinstated in January  after it undertook a recapitalisation process that began in February 2020.

CLH managed to raise $160m after selling its debt ledger business and securing a $15m loan and $45m debt facility from the CBA and Westpac.

However, the CLH share price dropped soon after relisting.

The company has been in financial difficulties prior to suspension, reporting a $67m loss.

Bill Identity (ASX:BID)

The utility bill management solutions company has been falling since its record high of $1.60 in February 2019 when it was called BidEnergy.

Its core platform is an automated service that allows customers — mainly commercial clients — to manage invoices and analyse meter data.

Despite doubling its platform revenue to $9.8 million, the company’s shares has been on a downward spiral which led to a shakeup at the top, and a new CEO announced in August.

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