Day: August 17, 2022

The A2 Milk share price has climbed 10% so far this month. What’s going on?

baby, milk, formula, bellamy's, bubsbaby, milk, formula, bellamy's, bubs

The A2 Milk Company Ltd (ASX: A2M) has been frothing up a storm in August, shooting up 10%.

The company’s shares closed on Wednesday at $4.98 apiece after starting the month at $4.54.

So why has the A2 Milk share price been climbing lately?

The US opportunity

It seems its peer Bubs Australia Ltd (ASX: BUB) has regenerated excitement in the milk formula businesses after securing a major supply deal in the US and posting a stellar quarter for June 2022.

However, A2 Milk hasn’t experienced the same success. It has actually hit a bit of a roadblock in its bid for access to the US market, as outlined by my colleague Sebastian Bowen.

On 12 August, the US Food and Drug Administration (FDA) advised it had to defer further consideration for an enforcement discretion to import infant milk formula products into the United States.

According to the Sydney Morning Herald, another A2 Milk competitor Bellamy’s gained FDA approval shortly after Bubs.

Despite the hold up, A2 Milk CEO David Bortolussi remains confident. Bortolussi told the SMH the company had the relationships necessary on the ground to handle distribution and made the following comment:

Feedback from our US team on the ground is that the infant milk formula crisis has not been solved, with significant retail out-of-stock issues continuing across the country.

If Bortolussi’s optimism comes to fruition, a major contract in the US will act as a significant growth driver for the A2 Milk share price.

Another competitor considers ASX listing

The Australian Financial Review recently reported that another infant formula company Care A2 Plus is preparing for an ASX listing.

Care A2 Plus produces infant and toddler formula using single-sourced milk from Australian grass-fed A2 cows in Victoria. Unlike A2 Milk, it managed to gain approval from the FDA in early July to supply millions of tins to retailers short of supply.

The company advised the AFR that its first orders for Care A2+ Premium Infant Formula with iron were due to ship to the US in August.

Dominic Galati is the founder of Care A2 Plus and a former SBS executive.

Its chairman Walter Bugno said the company has more than 300 shareholders, including Chemist Warehouse.

A2 milk share price snapshot

The A2 Milk share price looks horrid across the last 12 months, falling 25% but the recent US shortage has driven it higher.

Across the same period, the S&P/ASX 200 Index (ASX: XJO) dropped 5% and like A2 Milk, it rallied with a 7% jump in the last month.

Given the roadblock and the potential listing of a competitor, which is already supplying to the US, it’s quite curious to see the A2 Milk share price climbing of late.

The post The A2 Milk share price has climbed 10% so far this month. What’s going on? appeared first on The Motley Fool Australia.

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Motley Fool contributor Raymond Jang has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended A2 Milk and BUBS AUST FPO. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips. 

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Here’s how much the Vanguard Australian Shares Index ETF (VAS) has paid in dividends over the past 5 years

recreational fisherman holding fishing rod and hands apart indicating it was this big with smile on his facerecreational fisherman holding fishing rod and hands apart indicating it was this big with smile on his face

The Vanguard Australian Shares Index ETF (ASX: VAS) doesn’t hold the mantle of the most popular exchange-traded fund (ETF) on the ASX for nothing.

There’s little doubt that this ETF’s unique structure in being the only fund to track the S&P/ASX 300 Index (ASX: XKO) rather than the more popular S&P/ASX 200 Index (ASX: XJO), plays a role here. As does the brand reputation of (the famously not-for-profit) Vanguard.

But dividend distributions surely play a role here too.

After all, the ASX share market has a well-earned reputation as a bountiful source of dividend income. Thus, an index fund that tracks ASX shares will, by definition, reflect this. Just consider the VAS ETF’s top holdings.

Big four banks like Commonwealth Bank of Australia (ASX: CBA) and Westpac Banking Corp (ASX: WBC) dominate VAS’ weighting, as does the dividend machine that is BHP Group Ltd (ASX: BHP).

But let’s take a deeper dive and look at the numbers.

Five years of VAS dividend distributions

So VAS pays out dividend distributions every quarter. Here’s a summary of those payments over the past five years:

Date (quarter ending) VAS Distribution (cents per unit)
30 June 2022 215.95
31 March 2022 199.59
31 December 2021 69.65
30 September 2021 140.73
30 June 2021 55.64
31 March 2021 77
31 December 2020 43.42
30 September 2020 56.84
30 June 2020 20.6
31 March 2020 67.27
31 December 2019 72.14
30 September 2019 107.1
30 June 2019 82.14
31 March 2019 91.59
31 December 2018 71.06
30 September 2018 112.74
30 June 2018 101.73
31 March 2018 66.53
31 December 2017 68.1
30 September 2017 100.88

If any reader would like a more concise version of this data, here it is:

  • For the 12 months ending 30 June 2022, VAS paid out $6.26 in distributions per unit.
  • For the 12 months to 30 June 2021, it was $2.33 per unit.
  • The 12 months to June 30 2020 saw a total of $2.67 per unit.
  • For the 12 months to 30 June 2019, it was a sum of $3.58 per unit.
  • The 12 months to 30 June 2018 had VAS pay out $3.37 in distributions per unit.

Why so bumpy?

So what is immediately obvious is the massive dividend distribution haul investors have enjoyed over the past 12 months compared to prior years. This probably comes down to a couple of factors.

Firstly, the past 12 months have seen many ASX shares, especially the big four banks, raise their dividends to well above what was being paid out during the worst months and years of the pandemic.

Secondly, since ending its London dual-listing earlier this year and rehoming to the ASX in full, BHP now enjoys a far greater weighting in the ASX 300 Index than it used to.

As such, index ETFs like VAS now hold far more BHP shares, which is currently one of the most generous dividend-paying shares on the market, as a proportion of its overall portfolio today.

So that’s a summary of VAS’s dividend distribution history over the past five years. The most recent four distributions give this ETF a trailing yield of 7.07%.

The post Here’s how much the Vanguard Australian Shares Index ETF (VAS) has paid in dividends over the past 5 years appeared first on The Motley Fool Australia.

Wondering where you should invest $1,000 right now?

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for over ten years has provided thousands of paying members with stock picks that have doubled, tripled or even more.* Scott just revealed what he believes could be the “five best ASX stocks” for investors to buy right now. These stocks are trading at near dirt-cheap prices and Scott thinks they could be great buys right now

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*Returns as of August 4 2022

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Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Westpac Banking Corporation. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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Corporate Travel share price slides despite earnings beat

A man sits in the airport terminal with a laptop and credit card, ready to make a travel booking on the Flight Centre

A man sits in the airport terminal with a laptop and credit card, ready to make a travel booking on the Flight CentreThe Corporate Travel Management Ltd (ASX: CTD) share price dropped 2.5% after the ASX travel share reported its FY22 result today.

As one of the world’s largest corporate travel businesses, it is highly aligned to the recovery of business travel.

But, despite positive commentary, investors weren’t impressed by what the business told the market overall.

What did the company report?

It revealed that total transaction value (TTV) increased 215% to $5.07 billion in FY22, with the fourth quarter showing $1.8 billion of TTV.

FY22 revenue rose 94% year over year. It generated $17.5 million of underlying net profit after tax (NPAT), which was a major improvement from the $32.3 million loss in FY21. According to reporting by The Australian, this is better than what the market and the broker RBC was expecting.

The broker thought the commentary about the fourth quarter of FY22 was “strong” and that demand looks “strong” too.

In a sign of future profit generation, it generated $20.5 million of underlying NPAT in the fourth quarter of FY22.

It even declared a dividend of 5 cents per share. The ASX travel share didn’t pay anything in FY21.

Investors like to look ahead

The Corporate Travel share price is usually forward-looking. In other words, the FY22 result is interesting, but what FY23 looks like (and beyond) is usually more important for investors.

In terms of what could have caused the decline of the business today, management noted that the travel industry has resourcing challenges.

It is facing “unprecedented resourcing shortfalls with corresponding challenges to service levels, airport and airline capacity”.

The company added 950 new employees during FY22 as part of its commitment to maintaining service levels to support customer travel needs.

It has engaged in several initiatives to manage this shortfall, including “innovative employee recruitment, training, onboarding and retention initiatives to attract and retain the business talent in the industry.”

The business is also focusing on delivering improved internal efficiency, by implementing advanced automation and new technologies across its operations, giving employees more time to deliver personalised customer service. Growing scale and technology investments are helping with productivity gains and the revenue per full time equivalent employee, which was 14% higher in the fourth quarter of FY22 compared to the FY19 average.

Trading update and demand

Corporate Travel said that revenue in June 2022 equated to 74% of the monthly average pro-forma revenue for FY19. It said that forward bookings for September are “strong”.

In a global customer survey, conducted in May 2022, around 80% of respondents said that they expect to travel “as much or more” in the coming 12 months as they did before the pandemic.

Corporate Travel is assuming a full recovery in FY24, based on projections for travel activity. This would be revenue of $810 million and earnings before interest, tax, depreciation and amortisation (EBITDA) of $265 million based on synergies and productivity improvements.

The recovery is not expected to be a straight line due to capacity constraints and Greater China’s current travel restrictions. But things are expected to progressively improve during FY23.

The post Corporate Travel share price slides despite earnings beat appeared first on The Motley Fool Australia.

Should you invest $1,000 in Corporate Travel Management Ltd right now?

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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Corporate Travel Management Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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Should Magellan shareholders ‘get out while they can’?

A man waves goodbye as he leaves an office.A man waves goodbye as he leaves an office.

The Magellan Financial Group Ltd (ASX: MFG) share price is hurting today. It’s down 5.87% after the business reported its FY22 result to investors. But, it’s still up 22% over the past month.

Magellan is one of Australia’s largest fund managers. But, it’s now quite a lot smaller after the business suffered a major loss of funds under management (FUM) during the financial year.

Investors turned negative on the business as its investment funds underperformed compared to the global share market index. People and institutions pulled out billions of dollars of FUM during the year.

Adjusted net profit before tax dropped 12% to $515.2 million. The total dividend of $1.79 per share was a reduction of 15%.

Over the financial year, FUM plunged from $113.9 billion to $61.3 billion. Negative investment performance was the cause of $2.3 billion of negative movement. The $49.5 billion of negative net flows was the key reason for the decline.

Should investors get out?

According to The Australian reporting, one “veteran trader” says the business is “a basket case” and thinks “investors should get out while they can”. However, any interests in Magellan shares were not disclosed within the article.

The latest monthly update for FUM, being July, showed a drop in FUM to $60.2 billion, down from $61.3 billion at the end of June.

Committed to rebuild

The Australian reported that Magellan is “committed to rebuilding trust among clients and shareholders.” It quoted Magellan chair Hamish McLennan who said:

Our number one priority is to deliver on our clients’ objectives, which in turn will provide the foundation for revenue growth and returns for shareholders over the long-term.

We recognise that the global equities strategy has underperformed relative to the market over the past 18 months and that we must do better.

The new CEO and managing director, David George, said he will share his thoughts with shareholders in October.

But, George did indicate that the current investment landscape is a volatile and difficult one, which should “reward outstanding fundamental company research and active management of portfolios”. He went on to say:

Magellan remains an asset manager of scale, with considerable underlying financial strength and great potential. The strength of Magellan’s balance sheet provides us with significant headroom to invest in our business to deliver our clients and position ourselves for future growth.

During the year, Magellan’s total of cash, financial assets and investments in associates increased 7% to $963.3 million. It has no debt either.

Magellan said its focus is on its core funds management business, strengthening processes and driving consistent and improved investment performance. It’s “determined to rebuild value for clients and shareholders”.

The fund manager revealed that based on the FUM of $60.2 billion at 29 July 2022, retail fees make up 68% of the base fees, even though retail money only represents 38% of the FUM. If retail FUM proves to be more ‘sticky’ than institutional money, then this could be a positive mix.

Foolish takeaway

I did recently sell my own Magellan shares.

After the loss of FUM, FY23 profit is likely to fall again because of the loss of revenue. I recently wrote the following in my previous Magellan article:

The key thing for Magellan is to start generating some good performance in its key investment funds over longer time periods again. With relatively high fees, what will attract/retain funds if the investment fund is underperforming against its benchmark consistently?

Will the dividend and FUM keep falling? It’s really hard to say. But going for a declining business is not the type of investment I normally like to make.

The post Should Magellan shareholders ‘get out while they can’? appeared first on The Motley Fool Australia.

Wondering where you should invest $1,000 right now?

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for over ten years has provided thousands of paying members with stock picks that have doubled, tripled or even more.* Scott just revealed what he believes could be the “five best ASX stocks” for investors to buy right now. These stocks are trading at near dirt-cheap prices and Scott thinks they could be great buys right now

See The 5 Stocks
*Returns as of August 4 2022

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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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