Stock Pick

  • A Million-Mile Battery From China Could Power Your Electric Car

    A Million-Mile Battery From China Could Power Your Electric Car(Bloomberg) — The Chinese behemoth that makes electric-car batteries for Tesla Inc. and Volkswagen AG developed a power pack that lasts more than a million miles — an industry landmark and a potential boon for automakers trying to sway drivers to their EV models.Contemporary Amperex Technology Co. Ltd. is ready to produce a battery that lasts 16 years and 2 million kilometers (1.24 million miles), Chairman Zeng Yuqun said in an interview at company headquarters in Ningde, southeastern China. Warranties on batteries currently used in electric cars cover about 150,000 miles or eight years, according to BloombergNEF.Extending that lifespan is viewed as a key advance because the pack could be reused in a second vehicle. That would lower the expense of owning an electric vehicle, a positive for an industry that’s seeking to recover sales momentum lost to the coronavirus outbreak and the slumping oil prices that made gas guzzlers more competitive.“If someone places an order, we are ready to produce,” said Zeng, 52, without disclosing if contracts for the long-distance product have been signed. It would cost about 10% more than the batteries now inside EVs, said Zeng, whose company is the world’s largest maker of the batteries.Concerns about batteries losing strength and having to be replaced after a few years is one factor holding back consumer adoption of EVs. Tesla last year flagged it expected to bring into production a battery capable of a million miles of operation, and General Motors Co. last month said it is nearing the milestone. That distance is equivalent to circling the planet 50 times.Anticipating a rapid return to growth for the EV industry, CATL is plowing research-and-development dollars into advances in battery technology. While the coronavirus outbreak will drag down sales throughout this year, EV demand will pick up in early 2021, said Zeng, who founded CATL a decade ago.Car buyers holding back during the pandemic is creating pent-up demand that will be unleashed starting next year, led by premium models, he said. CATL’s customers include BMW AG and Toyota Motor Corp.Zeng’s comments strengthen views that electric vehicles are set to weather the economic slowdown caused by the outbreak better than gas guzzlers. Battery-powered cars will swell to 8.1% of all sales next year in China, which accounts for the largest share of global EV sales, and to 5% in Europe, BNEF predicts.“The pandemic may have a lasting effect throughout 2020, but won’t be a major factor next year,” Zeng said. “We have great confidence for the long run.”CATL struck a two-year contract in February to supply batteries to Tesla, a major boon for the Chinese company as the U.S. electric-car leader has thus far mainly worked with Japan’s Panasonic Corp. and South Korea’s LG Chem Ltd. The deal followed months of negotiations, with Tesla Chief Executive Officer Elon Musk traveling to Shanghai to meet with Zeng.The CATL batteries are set to go into Model 3 sedans produced at Tesla’s massive new factory near Shanghai, which started deliveries around the beginning of this year. Batteries are the costliest part of an EV, meaning suppliers of those components have a chance to reap a lion’s share of the industry’s profits.Zeng said he often shares insights with Musk, with the two exchanging text messages about developments in technology and business. CATL is strengthening its relationship with Tesla, with matters such as cobalt-free batteries on their agenda, Zeng said.“We’re getting along well and he’s a fun guy,” Zeng said of Musk. “He’s talking about cost all day long, and I’m making sure we have the solutions.”Zeng said Musk also requested his help in obtaining ventilators for coronavirus patients. The U.S. billionaire delivered more than 1,000 of the breathing machines from China to officials in Los Angeles in March.Shares of CATL have advanced about six-fold in Shenzhen since its initial public offering in 2018, giving the company a market value of about $47 billion. Tesla, by far the most valuable EV maker, has a market capitalization of about $160 billion.A “trigger point” for electric cars will occur once they overtake gasoline-powered vehicles around 2030-2035, Zeng said. That view is more ambitious than that of researchers such as BNEF, which expects the shift to take place a few years later.CATL, which is adding a production facility in Germany, is set to make more than 70% of batteries required by BMW, an early customer, Zeng said. CATL also works with Volkswagen’s Audi unit and is cooperating with Porsche, he said.Zeng didn’t rule out building a plant in the U.S., though he said the company has no specific plans for now.“Our team has made achievements in competing with our global rivals in overseas markets,” Zeng said.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

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  • Could these ASX shares be the future dividend stars that make you rich?

    business leader making money

    It may seem counterintuitive, but if you’re looking for the best dividend shares to own, it doesn’t necessarily mean you should be buying the ones with the most attractive yields.

    I think the best example of this is biotherapeutics company CSL Limited (ASX: CSL).

    Very few people think about dividends when they think of CSL. I feel this is completely understandable, given that its shares only offer a trailing 1% dividend yield.

    However, anyone that invested in the CSL IPO will not agree with this view. I suspect they will be counting down the days to the next dividend payment from the healthcare giant.

    As I mentioned here recently, if you were lucky enough to buy CSL’s shares at its IPO, you could’ve picked them up for a stock-split-adjusted price of $0.76 per share.

    Let’s say you bought $20,000 worth of its shares at that point. You would have ended up with approximately 26,316 shares.

    We’re not going to focus on what they would be worth today (a lot!), instead we’re going to focus on the dividends these shares would have received this year.

    Over the last 12 months, CSL has paid its shareholders two dividends. A final dividend in October 2019 of $1.455 per share and an interim dividend in April of $1.471 per share. Combined, that’s a total of $2.926 per share.

    This means that those 26,316 shares you received from a $20,000 investment at its IPO, generated $77,000 of dividends over the last 12 months. That’s almost four times the original investment!

    I feel this demonstrates why companies with strong growth potential can become dividend stars even if they only offer small yields.

    Which shares could be future dividend stars?

    I think three growth shares that could become future dividend stars are fintech company Bravura Solutions Ltd (ASX: BVS), lottery ticket seller Jumbo Interactive Ltd (ASX: JIN), and ecommerce company Kogan.com Ltd (ASX: KGN).

    At present Bravura’s shares offer a 2% yield, Jumbo offers a 3.1% yield, and Kogan offers a 1.4% yield.

    I believe all three are well-positioned for long term growth thanks to favourable tailwinds, strong businesses, and massive market opportunities. This could make it worth buying them today for the dividends of tomorrow.

    And don’t miss out on the highly recommended dividend share below which continues to grow strongly…

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    James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Bravura Solutions Ltd and CSL Ltd. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends Jumbo Interactive Limited. The Motley Fool Australia owns shares of and has recommended Jumbo Interactive Limited and Kogan.com ltd. The Motley Fool Australia has recommended Bravura Solutions Ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

    The post Could these ASX shares be the future dividend stars that make you rich? appeared first on Motley Fool Australia.

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  • Why I think the Vicinity Centre share price could be a great buy on Tuesday

    thinking

    Across the past week, Vicinity Centres (ASX: VCX) shares are up by 14.5%. Vicinity is also easily the most traded large-cap share this week on the entire ASX. Last Monday, the real estate investment trust (REIT) announced its intention to carry out an immediate share placement worth $1.2 billion to take pressure off its balance sheet. Eligible investors were able to participate at an 8.1% discount to the last close price of $1.61 on 29 May 2020.

    It also plans an additional security placement for $200 million. Last Tuesday it followed this with an announcement that it would cancel its distribution payment for the 6 months to June 30 this year.

    The balance sheet

    The capital raising has had a large impact on the REIT’s balance sheet. Namely, it reduced the company’s gearing from 34.9% down to 26.6%. Net tangible assets per security (NTA) have reduced to $2.23 from $2.40 pre-placement. Lastly, the REIT is now sitting with cash and unused debt facilities valued at $2.6 billion. 

    This has clearly impressed investors who have piled into the share. It has also had an impact on several other REIT’s and real estate companies. 

    “Stay at home” orders and some forced closures have had a unique impact on Vicinity Centres. However, the company has announced that foot traffic is now 74% of the prior year, from a low of 50% in April 2020. Approximately 80% of stores across the portfolio are now trading, from a low of 42% in April 2020.

    While revenue is down for this period as the REIT moves to help its retailers, it is taking a raft of cost control measures.

    Most large-cap REIT’s on the ASX enjoyed share price gains during the week. At the time of writing this includes Mirvac Group (ASX: MGR), Scentre Group (ASX: SCG), Stockland Corporation Ltd (ASX: SGP) and GPT Group (ASX: GPT).

    The case for Vicinity Centres

    As is clear above, this REIT is very tightly managed and a good custodian of investors assets. It is currently selling at a price-to-earnings ratio of 5.62. This is lower than many of its large-cap real estate stablemates.

    At the current price, it has a twelve-month trailing average distribution yield of 9.23%. This is higher than its sector large-cap contemporaries. While it has cancelled the current distribution it has a prior record of paying a stable distribution every year.

    Over the medium term, I believe Vicinity Centres is the best value opportunity among all of the large-cap REIT’s and real estate developers. 

    However, one of the dirt cheap stocks in the report below might the one that you decide to buy today.

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    Another is a former stock market darling that is one of Australia’s most popular and iconic businesses. Trading at a significant discount to its 52-week high, not only does this stock offer massive upside potential, but it also trades on an attractive fully franked dividend yield of almost 4%.

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    As of 2/6/2020

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    Motley Fool contributor Daryl Mather has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Scentre Group. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

    The post Why I think the Vicinity Centre share price could be a great buy on Tuesday appeared first on Motley Fool Australia.

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