Jun.22 — Hong Kong Exchanges & Clearing Ltd. Chief Executive Officer Charles Li talks about the outlook for the market and China’s national security law. He speaks at the Bloomberg Invest Global Summit. (Excerpts)
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The Austal Limited (ASX: ASB) share price has surged 9.52% today after the shipbuilder announced a US$50 million agreement with the US Government. The US Department of Defense has entered into an agreement with Austal to maintain and protect its domestic shipbuilding and maintenance capacity.
Austal is a shipbuilder that designs, constructs, and supports defence and commercial vessels. The company produces high speed passenger ferries and passenger-vehicle ferries, as well as frigates, high speed military transport vessels and patrol boats. Austal operates from shipyards across the US, Western Australia, Vietnam, and the Philippines.
The new agreement is part of the US Government’s national response to COVID-19 and aims to protect and expand critical domestic shipbuilding capacity. Austal intends to use the funds to invest in the development of additional capacity for steel naval vessel construction at its shipyard in Mobile, Alabama.
Austal says it is likely to match the US$50 million investment, bringing the total investment to around US$100 million. The company reports that this should benefit US Navy shipbuilding and accelerate pandemic recovery efforts in the Gulf Coast region.
The Austal share price was crunched in the March correction, falling 47% to $2.31 at its lowest. Since then the Austal share price has regained much of this ground, with shares currently trading at $3.68. The Austal share price was also boosted by upgraded guidance last month along with a US$43 million contract modification last week.
In May, Austal increased its FY20 earnings guidance to group revenue of approximately $2 billion and group earnings before interest and tax of no less than $125 million (up from $110 million). The upgraded guidance was issued as a result of COVID-19 having a more limited impact on performance than anticipated, along with the sustained strength of the US dollar, and the award of a new vessel construction contract announced in May.
Commenting on the upgraded guidance, Austal CEO David Singleton said: “Austal’s continued strong performance across our shipyards in the USA, Australia, Philippines, and Vietnam during the COVID-19 pandemic has provided confidence to increase the Company’s FY2020 earnings guidance.”
In 1H FY20, Austal reported a 22% increase in revenue which reached $1.04 billion. The shipbuilder made a net profit after tax of $40.8 million, up 72% on the prior corresponding period. Austal finished the half with net cash of $152.4 million.
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Motley Fool contributor Kate O’Brien has no position in any of the shares mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Austal Limited. The Motley Fool Australia has no position in any of the stocks mentioned. 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.
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With the Australian share market home to a large number of quality growth shares, it can be hard to decide which ones to buy.
To narrow things down for you, I have picked out three top ASX growth shares which I think would be great buy and hold options. Here’s why I like them:
The first ASX growth share to consider buying and holding is this ecommerce company. Kogan’s shares have been on fire this year thanks to its explosive earnings and sales growth over the last few months. And while its shares are certainly not cheap, I believe they justify this premium because of its increasingly positive outlook thanks to the structural change that is happening in the retail industry. Another positive is that Kogan announced a $115 million capital raising earlier this month. It intends to use these funds to acquire businesses that add value and drive further growth.
Another growth share to consider buying is ResMed. It is a sleep treatment-focused medical device company which has delivered consistently strong earnings growth over the last decade. The good news is that I’m confident this positive form can continue over the next decade thanks to its high quality masks and software solutions and its growing market opportunity. Management has previously estimated that only ~20% of sleep apnoea sufferers have been diagnosed.
A final growth share to look at buying and holding is SEEK. I think the job listings giant has the potential to grow materially in the future. This is largely due to its growing Zhaopin business in China. Given its massive opportunity in the lucrative market, I expect the Zhaopin business to be the key driver of growth over the next decade. Another positive is that earlier today the company released a trading update which showed that trading conditions are improving. This could make it an opportune time to invest.
And here are more exciting shares which could be stars of the future…
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!
*Extreme Opportunities returns as of June 5th 2020
More reading
Motley Fool contributor James Mickleboro owns shares of SEEK Limited. The Motley Fool Australia owns shares of and has recommended Kogan.com ltd. The Motley Fool Australia has recommended ResMed Inc. and SEEK Limited. 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.
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