Stock Pick

  • Macron Needs More than $17 Billion to Save Airbus

    Macron Needs More than $17 Billion to Save Airbus(Bloomberg Opinion) — The Covid-19 pandemic has brought the usually resilient aerospace industry to its knees. Air passenger traffic has collapsed by 90% in Europe and isn’t likely to get back to pre-virus levels for several years. Airlines are fighting for survival and have grounded their fleets. Passenger-jet makers Airbus SE and Boeing Co., after years of briskly building planes to meet booming demand, are slashing investments, jobs and production in a world where nobody wants new aircraft. Their suppliers are equally suffering.Nothing like this has been seen since the “Boeing Bust” of the early 1970s, when defense cutbacks, airliner belt-tightening and a consumer recession led to losses and bailouts across the industry. Boeing survived, but its hometown of Seattle was scarred by layoffs. A billboard was put up to reflect the mood: “Will the last person leaving Seattle turn out the lights.”French President Emmanuel Macron is understandably keen to avoid this kind of bust hitting Toulouse, where Airbus and other aerospace firms such as Latecoere SACA are based. His administration this week unveiled a string of measures, totaling 15 billion euros ($17 billion), to support the aviation industries, including loan guarantees, wage subsidies for furloughed workers and an investment fund for small businesses.For all the government’s talk of creating new, greener aircraft of the future, this is really about protecting the economy and strategic pride: There are 300,000 aerospace jobs in France, and the industry is a key export that posted a trade surplus of 31 billion euros in 2019.One has to wonder, though, whether even $17 billion is enough. Almost half the aid will go to Air France-KLM, in the form of loans and guarantees, in return for a reduction in carbon emissions and services on its domestic routes. Although the state has asked the carrier to be a “good customer” of Airbus, you can’t really force an airline to keep buying planes in a demand-led recession. As for the rest of the package, while it does offer some form of safety net for workers and engineers, it’s unlikely to offset the need for cuts. Jefferies analysts expect net aircraft orders (orders minus cancellations) at Airbus and Boeing to be -1,500 this year and zero the next. There’s also the risk that the scale of the damage, along with greater state intervention, will fan the flames of trade wars. We aren’t yet at the stage of nationalizations like that of Britain’s Rolls-Royce Plc in the 1970s, but the current combination of central-bank and fiscal stimulus does point to ever-more government nudging of supply and demand if the sector’s woes get worse.Boeing was recently in line to receive a whopping $60 billion in U.S. government aid — which it ended up turning down, but it may not have that luxury next time. In Europe, politicians are increasingly keen to invoke “sovereignty” on the world stage as a reason to step in to boost domestic industry, especially with Donald Trump imposing trade tariffs in response to a 16-year spat over aircraft subsidies. “We don’t intend to be the world’s village idiots,” French Finance Minister Bruno Le Maire said on Tuesday, referring to global protectionist trends.To be sure, there are some glimmers of hope out there, and for Airbus in particular. It can at least claim to be in a relatively stronger position than Boeing, which was at a “huge disadvantage” going into this crisis, according to Teal Group’s Richard Aboulafia. Airbus’s hugely successful A320 single-aisle planes look well placed for a world of downsizing, where less is more. Boeing, meanwhile, has the unenviable baggage of high debt levels and the huge reputational damage of the MAX aircraft catastrophe.But trying to preserve Airbus’s lead may clash with the reality that aerospace recoveries are slow and painful for everyone. Nick Cunningham, an analyst at Agency Partners, expects aircraft deliveries to remain depressed for years, with none of the usual growth levers — such as emerging-market demand — helping. Supply chains have been strained by the virus, and the wheels of visa-free travel in Europe still aren’t turning. Aerospace jobs and technological assets are worth fighting for, but they’re not saved yet.This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Lionel Laurent is a Bloomberg Opinion columnist covering Brussels. He previously worked at Reuters and Forbes.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

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  • Afterpay share price up 7%, ASX 200 edges higher

    ASX 200

    The S&P/ASX 200 Index (ASX: XJO) managed to slightly rise by 0.06% today to 6,418 points.

    Australia continues to do well with the coronavirus, though it’s not eliminated from every state yet.

    Afterpay Ltd (ASX: APT) share price continues to soar, helping the ASX 200 rise

    The buy now, pay later sector continues to perform strongly.

    The ASX 200 instalment payment company saw its share price rise another 7.5% to $54.50. The market is becoming even more confident on the company’s future despite the ongoing wider coronavirus issues.

    Afterpay wasn’t the only one to rise in the sector. The Zip Co Ltd (ASX: Z1P) share price went up 3.4% and the Sezzle Inc (ASX: SZL) share price went up 7.5%.

    Christmas in June for shareholders of Harvey Norman Holdings Limited (ASX: HVN) investors

    The Harvey Norman share price rose by 7.3% today after the company made two announcements.

    Firstly, the ASX 200 retailer revealed a retail trading update. Australian franchisee total sales are up 17.5% in the FY20 second half to 31 May 2020.

    Looking at the company-operated stores overseas sales in this half-year to date in Australian dollar terms, Northern Ireland and Singapore suffered sales declines of 38.2% and 21.7% respectively. New Zealand sales were down 7.3% and Slovenia and Croatia sales were down by 5.5%. Malaysia sales were up 1.3% and Ireland sales were up 25.4%.

    In the other announcement, Harvey Norman announced a special fully franked dividend of 6 cents per share to be paid on 29 June 2020.  

    Kogan.com Ltd (ASX: KGN) capital raising

    The ASX 200 ecommerce business has gone into a trading halt to do a capital raising.

    Kogan is looking to raise $100 million from institutional investors and another $15 million from regular investors.

    The money will be used to fund potential acquisitions that the company may make where Kogan can utilise its efficiencies and digital model. Two recent acquisitions have been Dick Smith and Matt Blatt.

    The raising will be done at a share price of $11.45 per share.

    5 stocks under $5

    We hear it over and over from investors, “I wish I had bought Altium or Afterpay when they were first recommended by The Motley Fool. I’d be sitting on a gold mine!” And it’s true.

    And while Altium and Afterpay have had a good run, we think these 5 other stocks are screaming buys. And you can buy them now for less than $5 a share!

    Learn More

    *  Extreme Opportunities returns as of June 5th 2020

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    Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of AFTERPAY T FPO and ZIPCOLTD FPO. The Motley Fool Australia owns shares of and has recommended Kogan.com ltd. The Motley Fool Australia has recommended Sezzle Inc. 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 Afterpay share price up 7%, ASX 200 edges higher appeared first on Motley Fool Australia.

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  • 2 ASX shares to buy to benefit from the cloud computing boom

    cloud shares

    One investment theme that I think could be well worth gaining exposure to is cloud computing.

    Cloud computing is the on-demand availability of computer system resources such as data storage and computing power without direct active management by the user.

    It is because of the cloud that you can watch Netflix on demand wherever you are, do your accounting on the go, and have Zoom meetings with colleagues.

    And as you might have noticed, particularly during the pandemic, more and more software and services are going to the cloud.

    This shift to the cloud is expected to accelerate in the coming years. So much so, research by Statista shows that the size of the public cloud computing services market is expected to grow from US$227.8 billion in 2019 to US$354.6 billion by 2022. This is an increase of almost 56% in just three years and is unlikely to stop there.

    The good news for Australian investors is that there are a couple of quality shares which have direct exposure to the cloud.

    I believe this bodes well for their future growth and could make them great long term investments. Here’s why I like them:

    Megaport Ltd (ASX: MP1)

    The first ASX share you can buy to gain exposure to the cloud computing boom is Megaport. It offers scalable bandwidth for public and private cloud connections, metro ethernet, and data centre backhaul. As of the end of March, Megaport was serving 1,777 customers out of 329 data centres globally. Both its footprint and customer numbers have been growing at a rapid rate over the last couple of years and look likely to continue thanks to the growing cloud usage.

    NEXTDC Ltd (ASX: NXT)

    Another way to gain exposure to cloud computing is through NEXTDC. It is one of the world’s most innovative data centre operators with a total of 9 centres across 5 capital cities. Its customers are supported by more than 550 partners that form its highly skilled and network-rich partner ecosystem. The company believes this makes it Australia’s only truly channel centric data centre solutions provider, offering complete service neutrality. Demand for capacity within its centres has been growing at a rapid rate over the last few years. I expect this trend to continue and drive strong earnings growth as it scales.

    And here are more exciting shares which could be destined for big things…

    5 ASX stocks under $5

    One trick to potentially generating life-changing wealth from the stock market is to buy early-stage growth companies when their share prices still look dirt cheap.

    Motley Fool’s resident tech stock expert Dr. Anirban Mahanti has identified 5 stocks he thinks are screaming buys. And you can buy them now for less than $5 a share!

    Learn More

    *  Extreme Opportunities returns as of June 5th 2020

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    James Mickleboro owns shares of NEXTDC Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of MEGAPORT FPO. The Motley Fool Australia has recommended MEGAPORT FPO. 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 2 ASX shares to buy to benefit from the cloud computing boom appeared first on Motley Fool Australia.

    from Motley Fool Australia https://ift.tt/2XLIyo1

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