Author: openjargon

The Galan Lithium Ltd (ASX: GLN) share price is having a very tough start to the week.

At one stage, the ASX All Ords lithium stock was down 24% to a 52-week low of 22 cents.

Its shares have since recovered slightly but remain down by over 18% at 23.7 cents.

Why is this ASX All Ords stock crashing?

The catalyst for this decline has been the company receiving firm commitments for an equity raising of $14 million to institutional, sophisticated, and professional investors.

According to the release, these funds will be raised at 23 cents per new share, which represents a 20.7% discount to where the ASX All Ords share last traded.

In addition, participants under the placement will receive one new unlisted option for every two shares subscribed. The new options will have an exercise price of 35 cents each and have an expiry date of two years from their issue date. However, the new options will be issued subject to shareholder approval at a general meeting to be held in early to mid-July 2024.

Why is it raising funds?

Management notes that the equity raising will provide working capital headroom and financial flexibility for the ongoing development of the Hombre Muerto West (HMW) Phase 1 construction. This is whilst it finalises negotiations of alternative funding solutions, which includes debt and prepayment facilities that will enable the completion of HMW Phase 1.

HMW is a ~16 km by 1-5 km region on the west coast of Hombre Muerto Salar neighbouring Arcadium Lithium (ASX: LTM) to the east. It is currently comprised of twenty one mining tenements. The company highlights that geophysics and drilling at HMW demonstrated significant potential of a deep basin.

A binding offtake and financing agreement (pending due diligence) for Phase 1 production has been signed with Glencore plc. (LSE: GLEN). In March 2024 an updated mineral resource estimate was delivered totalling 7.9Mt of LCE @ 883mg/l Li.

The ASX All Ords’ lithium stock’s managing director, Juan Pablo Vargas de la Vega, was very pleased with the outcome of the capital raising. He commented:

We are delighted with the support for the Placement and welcome a number of new investors to the register. In addition, on behalf of the Board of Directors, I would like to thank our shareholders for their ongoing support. Funds raised from the Placement will allow the Company to further progress negotiations to complete the already advanced development of its 100% owned Hombre Muerto West lithium brine project in Argentina. We look forward to putting investors funds to work.

The post Why did this ASX All Ords stock just crash 24%? appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro owns Arcadium Lithium shares. 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.

S&P/ASX 200 Index (ASX: XJO) mining stocks are flying higher on Monday.

While the ASX 200 is up a very respectable 0.7% in early afternoon trade, Fortescue Metals Group Ltd (ASX: FMG) shares, BHP Group Ltd (ASX: BHP) shares and Rio Tinto Ltd (ASX: RIO) shares are all racing ahead of those gains.

Here’s how the three ASX 200 mining stocks are faring at the time of writing:

• The BHP share price is up 2.1% at $45.84
• The Fortescue share price is up 1.8% at $27.43
• The Rio Tinto share price is up 2.8% at $135.82

So, what’s spurring ASX 200 investor interest on Monday?

I’m glad you asked!

ASX 200 mining stocks eyeing bazooka Chinese stimulus

Today’s strong run for BHP, Fortescue, and Rio Tinto shares follow on some sizeable gains posted on Friday.

As we reported on the day, the ASX 200 mining stocks were catching tailwinds from the news that China’s government was upping its stimulus measures to get the nation’s struggling economy back onto its growth track.

Friday saw China kick off the sale of 1 trillion yuan (AU$210 billion) worth of ultra-long special sovereign bonds. Analysts expect a lot of that money will go to support China’s struggling property markets and infrastructure sector, both of which are ravenous steel consumers.

And the core ingredient for steel, of course, is iron ore.

Copper prices also lifted on Friday. Today, iron ore and copper are up once more.

The iron ore price is up 0.8% to US$117.40 per tonne, while the copper price is up 2.4% to US$10,668. That sees the red metal, the second biggest revenue earner for the ASX 200 mining stocks, up a whopping 30% over the past 12 months.

Today the miners are continuing to enjoy a lift with due thanks to China.

That’s because atop the $210 billion in bond sales, the People’s Bank of China moved to eliminate minimum mortgage interest rates alongside lowering the minimum down payment ratio for buyers by 5%.

Commenting on the government’s renewed efforts to boost the real estate sector, Chinese Vice-Premier He Lifeng said (quoted by The Australian Financial Review), “The property sector is related to the interest of the masses and the big issue of economic development.”

Also likely spurring interest in the ASX 200 mining stocks are reports that China’s central government will pressure local governments to purchase dwellings and transform these into lower cost housing.

“This is the most relaxed down payment policy ever in China. It signals the central government is really prioritising home buying demand,” Yan Yuejin, research director at E-house China Research and Development Institute said.

The post ASX 200 mining stocks flying higher on ‘most relaxed’ Chinese stimulus ever appeared first on The Motley Fool Australia.

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Motley Fool contributor Bernd Struben 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.

Elders Ltd (ASX: ELD) is one ASX All Ords stock performing surprisingly well today, considering its underwhelming FY2024 half-year results.

Ticking past midday, shares in the agribusiness are up 2.1% to $8.39. Meanwhile, the S&P/ASX All Ordinaries Index (ASX: XAO) is a more modest 0.6% higher in Monday afternoon trading.

It’s a hard one to rationalise after the downright demolition of company earnings compared to a year ago.

Annualising the company’s half-year statutory net profit after tax (NPAT), Elders would trade on a forward price-to-earnings (P/E) ratio of roughly 56 times earnings. The industry average is approximately 17.

So why are investors racing to buy more of this ASX All Ords stock today?

First-half shocker

Today’s numbers depict a bleak stretch at Elders for the six months ending 31 March 2024. Here are the key figures from the half-year results:

• Sales revenue down 19% from the prior corresponding period to $1,341.8 million
• Statutory net profit after tax down 76% to $11.6 million
• Underlying return on capital falling from 16.9% to 11.4%
• Underlying earnings per share (EPS) down 72% to 9.1 cents per share
• Total dividends per share down 22% to 18 cents per share (with 50% franking)

The weakness was attributed to four headwinds: challenging seasonal conditions, cautious client sentiment, softening crop input prices, and lower livestock prices.

Unexpected rainfall across eastern and southern Australia provided a boost in the second quarter. However, the recovery in the back half of the six-month period proved inadequate to make up enough ground.

Elders’ agricultural chemicals segment experienced the largest half-year decline in gross profits, falling 22.4% year-on-year. Lower crop protection and fertiliser sales were to blame. On a positive note, the company saw volume growth across all its products, suggesting increasing market share.

At the other end of the spectrum, the real estate services side of the business performed strongly, with gross profits increasing 22.5% year-on-year. An improvement in residential turnover and property management fees bolstered the segment.

Still, Elders is outperforming the broader ASX share market today on a massive profit slump. What gives?

What’s holding this ASX All Ords stock up today?

Investors might be focusing on future prospects today. Elders presented a possibly redeeming attribute for those with a longer-term view.

The outlook for the full year is more optimistic. Elders expect improved trading conditions in the second half, stemming from a better sentiment. In addition, livestock prices (such as cattle and sheep) are expected to stabilise.

Galvanising the ASX All Ords stock, management reaffirmed their guidance of $120 million to $140 million in underlying earnings before interest and taxes (EBIT) for FY24.

The Elders share price is up 17% versus a year ago.

The post Why is this ASX All Ords stock staying strong as profits crash 76% appeared first on The Motley Fool Australia.

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Motley Fool contributor Mitchell Lawler has positions in Elders. 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 Elders. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Telstra Group Ltd (ASX: TLS) stock has suffered a sizeable fall in the past year, down by around 15%, as the chart below shows.

By comparison, the S&P/ASX 200 Index (ASX: XJO) is trading close to all-time highs after rising 8% over the past year. Yes, Telstra shares have significantly underperformed, but I think this means the market is now undervaluing its prospects.

Let’s take a closer look at whether Telstra stock is an appealing investment at today’s prices.

Telstra stock valuation

One of the most popular metrics for judging the value of a business is profit.

I like to consider profit in earnings per share (EPS) terms rather than net profit after tax (NPAT) because I feel EPS is more relevant for investors given it’s measured in per-share terms.

Commsec estimates forecast Telstra to make EPS of 18.1 cents in FY24, 19.5 cents in FY25 and 21.8 cents in FY26, suggesting Telstra’s profit is forecast to be going in the right direction.

The current Telstra share price is valued at 20x FY24’s estimated earnings and 17x FY26’s estimated earnings.

I think these are very reasonable numbers, particularly for such a defensive ASX share. Most households and businesses use (and need) phones and an internet connection, ensuring ongoing demand for Telstra’s services – it’s not likely to see any major revenue volatility. And broadly speaking, investors are usually willing to pay a higher earnings multiple for a business if the profit seems resilient.

Growth metrics are going the right way

Generally, I only like to invest in businesses if they have compelling long-term outlooks. After all, if profit isn’t growing, it’s unlikely a company’s share price and dividends can sustainably grow either.

In my opinion, there are a couple of important metrics that can help drive Telstra’s profit growth.

Mobile subscriber growth is a very useful part of the company’s success. Australia’s ongoing population growth is helping increase the number of people needing a mobile service. As the business with the biggest and arguably best mobile network, Telstra is attracting a steady stream of new subscribers.

Over the 12 months to 31 December 2023, Telstra saw an increase of 625,000 mobile services in operation, which represented a 4.6% year-over-year increase.

How much subscribers pay for their subscriptions can also impact earnings, measured with the average revenue per user (ARPU) metric. The HY24 period saw Telstra’s ARPU increase by 3.4%, excluding a prepaid one-off from product migration (ARPU was 2.1% growth year over year including the one-off).

These two metrics helped Telstra’s overall HY24 earnings before interest and tax (EBIT) increase by 10.8% to $1.6 billion, while the net profit after tax (NPAT) went up by 11.5% to $0.9 billion, and EPS grew 12% to 8.4 cents.

Telstra’s T25 strategy aims to increase its underlying EPS at a compound annual growth rate (CAGR) in the “high teens” to FY25. If the company achieves this goal, I think it will boost shareholder returns (via both the dividend and share price).

My verdict on Telstra stock

With a grossed-up dividend yield of 7% and the huge ongoing growth in demand for data, I think Telstra has a very promising future as a defensive play. The low Telstra share price in May hasn’t been seen since 2021. I’d call the telco a compelling buy right now based on its strong market position and the positive outlook for earnings.

The post Should you buy Telstra stock on a pullback? appeared first on The Motley Fool Australia.

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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 positions in and has recommended Telstra Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The Core Lithium Ltd (ASX: CXO) share price is having another day to forget on Monday.

Shares in the All Ordinaries Index (ASX: XAO) lithium stock closed on Friday trading for 16.5 cents apiece. In late morning trade today, shares are swapping hands for 15.5 cents apiece, down 6.2%.

For some context, the All Ords is up 0.6% at this same time.

The Core Lithium share price is underperforming the benchmark and most of its lithium peers following a major new leadership announcement.

Here’s what we know.

CEO appointment fails to lift Core Lithium share price

As you’re likely aware, March saw the rather abrupt departure of former Core Lithium CEO Gareth Manderson. The company’s CFO, Doug Warden, was appointed as interim CEO.

Today, the Core Lithium share price has failed to ignite on the news that Paul Brown will take over the helm commencing on 4 June.

The board noted Brown’s 25 years of experience in the Australian resources industry. That includes his prior leadership roles with ASX rare earths miner Hastings Technology Metals Ltd (ASX: HAS), Mineral Resources Ltd (ASX: MIN), and Fortescue Ltd (ASX: FMG).

Brown is currently serving as the CEO of Perth-based Hastings, and he was said to have played a vital role in delivering significant mining operations during his stint with Fortescue and Mineral Resources.

What did management say?

Commenting on the new leadership appointment intended to turn the battered Core Lithium share price around, chair Greg English said, “Paul is an outstanding executive with 25 years’ experience in the Australian mining industry and a proven track record of operating and delivering across different commodities.”

English also alluded to restarting lithium mining at the company’s flagship Finniss project in the Northern Territory, which was paused in January due to plunging lithium prices.

“Paul’s lithium mining and operations experience makes him the ideal person to lead Core as we prepare to restart mining at Finniss in a cost efficient and sustainable way,” he said.

English added:

The board’s priorities in selecting a new CEO were identifying someone with lithium mining experience who will consider all options for the restart of mining operations to guide Core’s activities in response to the low price lithium environment.

Brown offered some optimistic words for the ASX lithium stock’s outlook.

“Core is an excellent company with the potential to grow into a significant lithium company,” he said.

Brown continued:      

I will focus on an operational review of the Finniss Lithium Project and the opportunities for the exploration program to grow resources.

I look forward to working with the Core senior team to transform the way we work as we look to continually improve and develop a sustainable lithium project.

Undoubtedly, he has his work cut out for him.

The Core Lithium share price is down a painful 86% since this time last year.

The post Why did the Core Lithium share price just crash 6%? appeared first on The Motley Fool Australia.

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Motley Fool contributor Bernd Struben 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.

The All Ordinaries Index (ASX: XAO) is up a solid 0.5% on Monday, with one ASX All Ords share doing plenty of the heavy lifting.

Shares in the sports betting company closed Friday at 45.5 cents. In morning trade today, they rocketed to 57.0 cents, up a blistering 25.3%. After some likely profit-taking, they are currently changing hands for 51.5 cents apiece, up 13.2%.

Any guesses?

If you said Pointsbet Holdings Ltd (ASX: PBH), give yourself a virtual gold star.

Here’s what’s boosting the ASX All Ords share today.

Why is the ASX All Ords share soaring?

The Pointsbet share price is leaping higher after the company management announced upgraded earnings guidance for the full 2024 financial year (FY 2024).

The boosted outlook follows ongoing strong year-to-date trading in H2 FY 2024 and increased operational efficiency and productivity.

The ASX All Ords share now expects its normalised earnings before interest, taxes, depreciation and amortisation (EBITDA) loss for the full year to be in the range of $4 million to $6 million. That compares to prior FY 2024 guidance of a full-year EBITDA loss of $9 million to $14 million.

Pointsbet highlighted the “significant improvement” from the $49 million normalised EBITDA loss it reported for FY 2023 for its continuing operations.

Commenting on the improved earnings outlook that’s sending the ASX All Ords share rocketing, Pointsbet CEO Sam Swanell said, “Today’s guidance upgrade is a result of the Company’s continued strong trading performance together with improved efficiency and productivity.”

Swanell added:

It is particularly notable to see that the company has been able to continue to deliver such impressive results, whilst simultaneously undertaking a complex technical and operational migration, separation, and re-organisation, with the recent completion of the sale of the US business.

We continue to invest for further growth, in particular in our core technology and product capabilities and our outsized marketing investment. This is driving our market share growth and setting the Company up for further success in FY 2025 and beyond.

How have Pointsbet shares been tracking

The Pointsbet share price charts of the past year can be somewhat deceiving, as shareholders will have fared better than the charts indicate.

That’s because the ASX All Ords share has twice engaged in some sizeable capital returns to its shareholders over the year.

The last big share price plunge on 30 April came after Pointsbet shares traded ex-capital return for the 39 cents per share (totalling $127 million) that eligible shareholders received for the company’s sale of its United States operations.

The post Guess which ASX All Ords share just rocketed 25% on an earnings upgrade appeared first on The Motley Fool Australia.

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Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended PointsBet. 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.

Star Entertainment Group Ltd (ASX: SGR) shares are in a trading halt this morning as speculation gathers around potential bidders.

If true, the board might need to channel their inner Kenny Rogers: “Know when to hold ’em, know when to fold ’em, know when to walk away and know when to run”. Both the former CEO and chair already decided to run, but will the struggling casino operator finally fold to an opportunistic offer?

With the Star Entertainment share price locked at 45 cents apiece today, we might have an answer sooner rather than later.

‘Hard Rock’ or a hard place?

The proposition of taking control of Star at all-time lows appears to have prompted some action over the weekend. With its back up against the wall, the embattled Australian casino operator might have a way out of the web of worries it has walked into.

Star confirmed the rumours this morning. As stated in its release, the company has received interest from “a number of external parties regarding potential transactions”. Although none are yet at a stage of ‘substantive discussions’.

The release refrained from naming any names. However, word on the grapevine is that a fellow casino and hotel company on the other side of the world is one of those interested in taking over this troubled $1.3 billion ASX-listed business.

The Australian Financial Review reported that Hard Rock Hotels and Casinos is the suspected company inspecting Star shares for potential.

While not confirmed, it’s believed the United States-based company wants to revitalise Star with a rebranding, converting it into more of an entertainment precinct than a casino pure-play. This comes after people from Hard Rock met with Star stakeholders about a month ago.

Agreeing to a takeover when your share price is at its lowest ever would be a tough pill for shareholders to swallow. But it might be the backstop investors need to prevent further value destruction. As my colleague Sebastian Bowen penned earlier this month, Star losing its license could devastate the company.

Hope for higher Star shares

There’s always a silver lining. In this situation, the positive is multiple parties are taking a look.

As we’ve seen before, a bidding war can ensue when two or more bidders want an asset bad enough. If the ASX-listed casino operator is fortunate, this might be how the Star share price puts some distance between itself and the recently set all-time low of 38 cents a pop.

For now, shareholders will need to sit tight for further details to be revealed.

The post Are Star shares now rolling the dice on a rescue bid? appeared first on The Motley Fool Australia.

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Motley Fool contributor Mitchell Lawler 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.

BHP Group Ltd (ASX: BHP) shares are charging higher today.

Shares in the S&P/ASX 200 Index (ASX: XJO) mining giant closed up 0.8% on Friday trading for $44.89. In morning trade on Monday, shares are swapping hands for $45.87 apiece, up 2.2%.

For some context, the ASX 200 is 0.5% at this same time.

This comes amid another uptick in copper and iron ore prices, and as the clock ticks down on BHP’s takeover bid for Anglo American (LSE: AAL). The alarm is set for 5pm United Kingdom time this Wednesday (early Thursday morning Aussie time).

You see, to move past 22 May, UK regulations stipulate the ASX 200 miner must be involved in two-way negotiations with Anglo, in which case they can ask for more time to strike an agreement. Alternatively, BHP could also come out with an unconditional offer free of any conditions.

So, should investors expect BHP shares will encompass Anglo American?

We’ll look at what the experts are saying below.

First, a quick recap.

ASX 200 miner eyeing expanded copper footprint

On 26 April, BHP shareholders learned the miner had made a conditional offer to acquire Anglo American for approximately $60 billion.

BHP is primarily interested in Anglo American’s copper assets. The red metal is forecast to remain undersupplied for years despite strong demand growth due to the global electrification push. A successful takeover would see BHP become the world’s top copper producer.

However, Anglo American’s board swiftly rejected the initial offer as undervaluing the company’s growth prospects.

BHP shares made headlines again on 14 May, when the miner returned with an improved takeover bid valued at some $64 billion.

This too was rejected by the Anglo American board.

In the days that followed, investors learned that Anglo American’s CEO Duncan Wanblad is now planning to divest its platinum and diamond businesses and sell its Queensland-based coal mines, potentially to ward off BHP’s takeover attempt.

BHP has also flagged its intentions to likely sell off some of Anglo’s assets, like its platinum and iron ore projects in South Africa.

So, with the clock ticking on a momentous acquisition, what can ASX 200 investors expect?

What’s ahead for BHP shares and Anglo American?

Commenting on the prospect of BHP shares enveloping Anglo American’s assets, Josh Gilbert, market analyst at eToro said, “We might see a third and final offer from the world’s largest miner.”

But that’s likely to be the final deal.

“BHP CEO Mike Henry has already expressed his frustration at a deal not being met, so the next offer is likely to be the last,” Gilbert said.

He noted that despite a difficult past few years “with poor acquisitions, weaker commodity prices, and operating failures”, Anglo American “has quality copper mines that the competition wants”.

And it’s relatively cheap compared to many of its peers.

According to Gilbert:

The business trades at 11 times forward price to earnings, in line with its long-term average and lower than broader markets, showing there isn’t much optimism priced into shares right now. 

The bottom line is that this acquisition still may not come to fruition. BHP needs to come to the table with a better offer. However, savvy investors will know that if copper prices keep rising, China’s housing crisis improves, and BHP can stay financially disciplined, the business will likely be in a better position years from now. 

Liberum Capital says there are three ways that BHP shares will acquire Anglo American. All of which come with a cost.

According to Liberum (quoted by The Australian Financial Review):

We see three ways to get it over the line 1) a big premium – market talking up at least £30/share, but requires another 35 per cent bump in the offer 2) a radical change in structure – perhaps a BHP/Glencore joint bid for all assets 3) more time – if Duncan [Wanblad] doesn’t deliver on his plans, BHP’s offer will likely stay on the table.

Liberum added that regardless of the short-term outcome, Anglo American shares and BHP shares are now closely linked:

Anglo American shares will be tied to BHP’s performance going forward and if … Wanblad fails to deliver material progress on the proposed restructuring plans over the next 18 months, or if Anglo American shares do not outperform BHP, then shareholders will be looking for BHP to come back with an offer.

BHP shares are up 2% over the past year.

The post BHP shares charging higher as the clock ticks down on the Anglo American takeover appeared first on The Motley Fool Australia.

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Motley Fool contributor Bernd Struben 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.