Author: openjargon

It’s been an interesting day for the Westpac Banking Corp (ASX: WBC) so far this Wednesday. Westpac shares opened in the green this morning, starting out at $28 flat after closing at $27.89 yesterday. This ASX 200 bank stock even rose to hit a new 52-week high soon after trading commenced – $28.05.

But since then, investors have cooled their jets. At present, Westpac has dropped convincingly into the red. The bank is currently down a hefty 0.75% at $27.68 a share.

Investors can expect continued volatility in the Westpac share price tomorrow as well. That’s because tomorrow is the day that Westpac is scheduled to trade ex-dividend for its latest shareholder payment.

It was only on Monday this week that Westpac revealed its latest earnings report, covering the six months to 31 March.

As we covered at the time, these earnings were welcomed by investors. That was despite some less-than-rosy numbers. The bank reported a 4% drop in net operating income to $10.59 billion. As well as a 16% fall in net profits to $3.34 billion.

But it was probably Westpac’s capital return plans that gave investors something to cheer about.

For one, the bank announced a new $1 billion share buyback program. But it also revealed that its next interim dividend would come in at 75 cents per share. This payment will be fully franked of course. That’s a happy 7.14% rise over last year’s interim dividend of 70 cents per share.

Big dividends coming out of Westpac shares

It got better though. Westpac also surprised investors by pulling an additional special dividend out of its hat. In addition to that interim dividend of 75 cents per share, investors will also receive a special dividend of 15 cents per share. This payment will also come with full franking credits attached.

As my Fool colleague covered earlier this week, these dividends represent a payout ratio of 74% of Westpac’s earnings for the period.

If we combine these two dividend payments with Westpac’s final dividend of 72 cents per share that shareholders bagged back in December, we get an annual total of $1.62 per share. At the current Westpac share price, this would give the bank stock a weighty dividend yield of 5.85%.

However, if investors wish to see this cash arrive on their bank accounts but don’t yet own Westpac shares, time is running out.

That’s because the Westpac share price is scheduled to trade ex-dividend tomorrow, 9 May.

This effectively means that anyone who doesn’t own Wetpac shares as of the close of trade today will miss out on these latest dividends.

From tomorrow, any new Westpac investors will have to wait until the next dividend from Westpac is revealed before they receive a passive income paycheque.

As such, expect to see a big drop in the Westpac share price on the commencement of trading tomorrow to reflect this inherent loss of value.

For eligible Westpac investors, dividend payday has been set for 25 June next month.

The post Want the massive Westpac dividend? Here’s why you need to hurry appeared first on The Motley Fool Australia.

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More reading

• What are brokers saying about Westpac shares following the bank’s results?
• Here are the top 10 ASX 200 shares today
• Everything you need to know about the supersized Westpac dividend
• Westpac shares charge higher on half-year earnings beat and buyback
• Westpac share price on watch amid results, special dividend and $1b buyback

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 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.

In afternoon trade, the S&P/ASX 200 Index (ASX: XJO) is running out of steam and has slipped into the red. The benchmark index is currently down a fraction to 7,792.3 points.

Four ASX shares that are not letting that hold them back are listed below. Here’s why they are rising:

Flight Centre Travel Group Ltd (ASX: FLT)

The Flight Centre share price is up 1.5% to $20.86. This follows the release of a trading update this morning. The travel agent revealed that it expects to deliver record sales in FY 2024. Flight Centre CFO, Adam Campbell, advised that the company is on track to exceed the previous record total transaction value (TTV) of $23.7 billion it achieved in FY 2019. In addition, the company reaffirmed its profit guidance for the year. This will mean profit before tax (PBT) in the range of $300 million to $340 million for FY 2024. This is approximately triple FY 2023’s PBT of $106 million.

Nine Entertainment Co Holdings Ltd (ASX: NEC)

The Nine Entertainment share price is up over 1% to $1.51. This has also been driven by the release of a trading update. The entertainment and media company revealed solid performances across its businesses in FY 2024. This includes its Stan streaming service, which management “continues to expect growth in both revenue and EBITDA in FY24.” In addition, Nine’s Publishing business continues to benefit from the growth of digital audiences. This is expected to underpin digital subscription revenue growth in the low double digits in the second half.

Polynovo Ltd (ASX: PNV)

The Polynovo share price is up 7% to $2.27. Investors have been buying this medical device company’s shares following the release of a sales update. Polynovo advised that it had a record month of revenue in April thanks to strong growth across the business. The star of the show was its US business, which recorded monthly sales of A$6.9 million. This was an increase of 75% on the prior corresponding period. This ultimately led to Polynovo achieving record monthly group revenue of A$10.1 million, which represents a 68.6% increase on the same period last year.

QANTM Intellectual Property Ltd (ASX: QIP)

The QANTM share price is up 6.5% to $1.79. This has been driven by news that QANTM has received a takeover approach from rival IPH Ltd (ASX: IPH). It has made an unsolicited non-binding indicative proposal of 0.291 IPH shares and a fully franked special dividend of up to $0.11 cash per share. This implies an offer of $1.90 per share. This is a premium to another non-binding indicative offer that was tabled by Adamantem Capital. It offered to acquire QANTM for $1.817 per share by way of a scheme of arrangement.

The post Why Flight Centre, Nine Entertainment, Polynovo, and QANTM shares are pushing higher appeared first on The Motley Fool Australia.

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More reading

• This ASX 200 healthcare stock is rocketing 8% following a record month!
• ASX 200 stock slips after joining takeover contest with $250 million bid
• Flight Centre share price lifts off amid record full year sales prediction
• These are the 10 most shorted ASX shares
• Here are the top 10 ASX 200 shares today

Motley Fool contributor James Mickleboro 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 PolyNovo. The Motley Fool Australia has recommended Flight Centre Travel Group, IPH, and Nine Entertainment. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

As Warren Buffett said: “Whether we’re talking about socks or stocks, I like buying quality merchandise when it is marked down”.

Following a correction in global markets these past few weeks, plenty of “quality merchandise” now presents itself. I have one ASX 300 stock in laser focus.

Coal player Yancoal Australia Ltd (ASX: YAL) is my top ASX 300 stock pick for May. It’s been in the green lately, but at today’s share price of $5.91 apiece, the miner is still trading 14.5% lower than its all-time high of $6.91 in September 2022. This suggests there could still be plenty of value for investors.

Here, I’ll run through three tailwinds behind this ASX coal miner.

Strong demand for coal

Global coal demand is projected to grow from 2024 as major importers India and China extend their economic growth.

According to Trading Economics, China has announced plans to build an additional 70 gigawatts in coal capacity this year. It also built 47 gigawatts into its system last year.

For context, Australia generated 30.2 gigawatts of power in 2021, says the Department of Energy.

These policies spurred Trading Economics to forecast a coal price of $147 USD/metric tonne by FY 2025, 8% above the $136 USD/MT it trades now.

India also imported 25% more coal in 2023 vs 2022, tallying 1.23 billion tonnes by yearend. Around $495 million of this tonnage is set to be imported this year.

Subsequently, S&P Global has raised its outlook on coal pricing “as demand for Newcastle Australia thermal coal appears to be strengthening”.

It expects demand from India to “pick up” and that China imports will spike “while there are tightened safety inspections in its main coal mining provinces”.

All of this is excellent for Yancoal’s sales and earnings growth.

Attractive dividend yield

If this ASX 300 stock were to pay its last annual dividend at the recent price of $5.70 a share, investors would receive a 12.2% yield.

This mammoth cash return is due to the record thermal coal prices seen throughout 2022 and 2023. The company passed these through as dividends to its shareholders.

However, this latest dividend is not out of sync with the last three to four years of payments.

If coal prices remain as high as they are tipped to, it’s not unreasonable to expect a similar rate of dividends from Yancoal moving forward.

Commodity stocks are relatively ‘cheap‘

According to recent analysis by Crescat Capital macro strategist Tavi Costa, the “commodity-to-equity” ratio “remains at near historical lows”. This measures the value of the GSCI Commodity Index against the value of the MSCI World Equity Index.

Because of this, Costa believes we are “still in the very early stages” of a commodity cycle, the kinds of which “often evolve over long-term trends”.

“Conventional investment strategies are poised to undergo a significant restructuring, placing a prominent emphasis on investments in hard assets”, Costa added. And by hard assets, he means mining.

Yancoal is indeed cheap by relative standards. It trades at a price-to-earnings ratio (P/E) of 4.16 times, meaning investors are paying $4.16 for every $1 of the company’s earnings. In contrast, the P/E of the iShares Core S&P/ASX 200 ETF (ASX: IOZ) is 17.3 times at the time of writing.

If the S&P/ASX 200 is the benchmark, there could be relative value on the table.

On the one hand, you might pay 17.3 times P/E for the S&P/ASX 200 ETF to obtain a 3.6% yield, where “consensus is that ASX 200 earnings will drop by 3.7%” this year, according to the Australian Financial Review.

Or you could pay the 4.16 times P/E into a rising coal price for a likely greater than 12.2% dividend yield, given Yancoal’s payout history and current share price. Interesting.

The post Up 9% in a month, this ASX 300 stock is my top pick for May appeared first on The Motley Fool Australia.

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More reading

• ASX coal shares higher despite major superannuation fund walking away
• My top ASX dividend pick for 2024 is a passive income powerhouse
• 2 ASX passive income shares paying 8% and 13% yields
• Where I’d invest $5,000 in ASX shares now for $1,000 of dividend income

Motley Fool contributor Zach Bristow 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.

Two under-the-radar S&P/ASX 200 Index (ASX: XJO) shares are enjoying a strong run today after releasing some key market updates.

Shares in ASX 200 4×4 accessories manufacturer ARB Corp Ltd (ASX: ARB) closed yesterday trading for $38.66. In earlier trade today shares were trading for $39.78, up 2.9%.

The ARB share price has since given back some of those gains, currently up 1.2% at $39.11 a share.

The other stock enjoying a strong run on Wednesday is specialist insurance provider AUB Group Ltd (ASX: AUB).

The AUB share price closed yesterday at $29.36. At the time of writing, shares are up 2.3%, swapping hands for $30.04 apiece.

Here’s what’s stoking investor interest in these ASX 200 shares today.

What’s lifting the AUB share price?

The AUB share price is leaping higher today after the company provided some promising profit guidance.

The ASX 200 share said that due to favourable trading momentum, it expects FY 2024 underlying net profit after tax (NPAT) to come in near the top end of its previously forecast range of 161 million to 171 million.

Among the assumptions backing this guidance is that interest rates will remain unchanged over the period in its key operating jurisdictions.

The company’s group of retail and wholesale insurance brokers and underwriting agencies operate in around 570 locations globally.

The AUB share price is up 13% over 12 months.

ASX 200 share at Macquarie Conference presentation

As for ARB, the ASX 200 share looks to be getting a lift from the company’s presentation at the Macquarie Conference today.

Atop reporting on the company’s historic growth trajectory and recent new store openings, CEO Lachlan McCann said sales revenue in Q3 FY 2024 was up 6.4% year on year. Total sales over the nine months to March were up 2.1%.

As for the outlook, the company said that its aftermarket order book “remains strong”. And its export order book was said to be “trending positively”, with ARB achieving export sales growth of 2.1% in Q3 FY 2024.

The ASX 200 share also expects sales to original equipment manufacturers (OEMs) will keep growing in FY 2024 and into FY 2025 based on contracts it already has in place.

ARB could also receive some ongoing tailwinds, with new vehicle supply and lead times improving across the world.

In the quarter just past, the company reported sales growth across each of its Australian aftermarket, export, and OEM sales channels.

And McCann said the outlook is “trending positively, with favourable trading conditions expected to continue” into the first half of FY 2025.

With today’s intraday boost factored in, the ASX 200 share is up 20% over 12 months.

The post 2 under-the-radar ASX 200 shares leaping higher on key updates appeared first on The Motley Fool Australia.

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More reading

• Bell Potter says these ASX All ords shares can rise 15% to 35%
• 2 ASX passive income shares poised to pay a 9% yield
• Why is the Aussie Broadband share price slipping on Wednesday?
• This ASX 200 healthcare stock is rocketing 8% following a record month!
• ASX 200 stock slips after joining takeover contest with $250 million bid

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 ARB Corporation. The Motley Fool Australia has recommended ARB Corporation and Aub Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Are you on the hunt for big returns? If you are then it could be worth looking at the ASX All Ords shares listed below.

That’s because they have just been named as buys by analysts at Bell Potter and tipped to rise 16% to 40%.

Here’s what the broker is saying about these stocks:

Domain Holdings Australia Ltd (ASX: DHG)

Bell Potter was pleased with this property listings company’s quarterly update. Particularly given that listings are improving after a difficult period. It said:

Observed sales and total Buy listings data points on respective residential listings platforms have affected a reversal since flattening in March. Trends into Q4 appear to support growing new Buy listings for DHG based on increased total Buy listings (89% from 86% in Feb) improving concurrently with total R1m sales (86% from 66% in Feb) relative to REA which potentially imply DHG listings are gaining against its competitor via new listings replenishing sold stock at a quicker rate.

In light of the above, the broker has lifted its earnings per share estimates and is now forecasting an “adj. EPS CAGR of ~26% b/w FY24-26.”

Bell Potter has retained its buy rating and $3.75 price target on the ASX All Ords share. This implies potential upside of 16% for investors.

Develop Global Ltd (ASX: DVP)

Another ASX All Ords share that has been given the thumbs up by Bell Potter on Wednesday is Develop Global.

It is a mineral exploration company with a focus on future-facing metals. In addition, it is a mining services provider which is currently working on the underground development of the Mt Marion Lithium Mine owned by Mineral Resources Ltd (ASX: MIN).

Bell Potter was reasonably pleased with a recent scoping study from the Pioneer Dome lithium project, noting that it “appears conservative.” Which is always a good thing when valuing a project based on forecast commodity prices. It said:

We believe the Study applies conservative average LOM SC6 price forecasts of US$1,393/t. Long-term SC6 prices applied to our Pioneer Dome asset model are US$1,600/t, yielding an unrisked NPV(10.5% real) of A$273m. For context, using the Study price outlook in our model yields an unrisked NPV(10.5% real) of A$215m.

Outside this, the broker believes the company is well placed for growth thanks to the development of another project, the Woodlawn Zinc-Copper Mine. It said:

DVP are advancing multiple critical mineral projects simultaneously, with each development representing an opportunity to transform the company’s earnings and FCF generation. The most advanced of these projects, Woodlawn, is expected to recommence production in 1H CY25; FID and announcement of a financing package are important upcoming catalysts.

Bell Potter has a buy rating and $3.20 price target on the ASX All Ords share. This implies potential upside of 36% for investors.

The post Bell Potter says these ASX All ords shares can rise 15% to 35% appeared first on The Motley Fool Australia.

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More reading

• Here are the top 10 ASX 200 shares today
• REA shares vs. Domain: Here’s Goldman Sachs’ verdict
• Here are the top 10 ASX 200 shares today
• These ASX 300 mining stocks could rise 25% to 50%

Motley Fool contributor James Mickleboro 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.

As inflation drives the cost of living higher, many are turning to passive income shares for returns.

Thankfully, as an Australian investor, you’re in the right place. There are plenty of ASX shares across all sectors paying chunky dividends to their shareholders, year after year.

As we’ve noted before, dividends hedge against inflation, offer tax advantages (thank you, franking credits!) and provide a second source of investment return.

Here are two passive income shares that experts think are fundamentally sound and poised to carry dividend yields of 9%.

Incitec Pivot Ltd (ASX: IPL)

First on the list of passive income shares is fertiliser and chemicals company Incitec Pivot.

The company recently returned a mammoth $500 million of cash to its shareholders following the sale of its ammonia manufacturing plant to CF Industries Holdings Inc (NYSE: CF) in 2023.

In response, shareholders received two returns – one a 15.57 cents per share equal capital reduction, followed by an unfranked special dividend of 10.17 cents per share.

This is great – but we are talking a trailing yield here. Can Incitec continue this trend?

The team at Atlas Funds Management believe so. After the plant sale, the fund manager is bullish on Incitec’s potential to return capital to shareholders.

“Additional capital returns could result from selling the Australian fertiliser operations as the company becomes a pure-play explosives company,” it said in a recent note.

The global explosives market is tipped to grow more than 6% per year from 2024 to 2030, reaching a value of $543 billion. Atlas’ view is another potential catalyst for Incitec after it posted its second-highest net profit after tax (NPAT) of $582 million in FY 2023.

A strong market and strong earnings are two flavoursome ingredients to any dividend recipe.

Atlas also said the company was “expected to conduct a $0.26 per share capital return”.

At the recent Incitec Pivot share price of $2.79 per share, this return of 26 cents equates to a 9.3% forward dividend yield, which cannot be ignored, in my opinion.

Accent Group Ltd (ASX: AX1)

A second contender on the list of passive income shares is footwear retailer Accent Group.

Accent boasts an extensive portfolio of well-known retail brands, including The Athletes Foot, Platypus, Glue Store, and Hype DC, just to name a few.

The company is well-positioned to continue its growth route after posting sales of $810.9 million in its H1 FY 2024 financial results.  Average sales were around $912,000 per store after it added 72 new sites in H2 FY 2023, bringing its total to 888 locations.

You would receive a 7.43% dividend yield as passive income in buying Accent shares today – assuming no changes to the company’s dividend, of course.

But we don’t get paid for what’s already happened. What’s to come?

Both JP Morgan and Bell Potter Securities have price targets of $2.20 per share on Accent following a sharp pullback in its stock. Analysts at JP Morgan see the company opening another 20 stores in the second half of FY 2024. This would bring its total to more than 900.

Meanwhile, Bell Potter believes this passive income share could pay dividends of 13 cents apiece this year, bringing the yield to 7.1%. But with the dividend franked at 100%, this brings the gross yield above 10%.

Investors would receive a 19.6% return if the company were to hit the $2.20 price target from today. This rises to 26.6% total return if Accent pays the 13 cent dividends per share this year. Under this scenario, a $1,000 investment would be valued at $1,260.

The post 2 ASX passive income shares poised to pay a 9% yield appeared first on The Motley Fool Australia.

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More reading

• Almost ready to retire? I’d buy cheap ASX dividend shares for income
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• 5 top ASX dividend stocks to buy in May

Motley Fool contributor Zach Bristow 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 Accent Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The Aussie Broadband Ltd (ASX: ABB) share price is in the red today.

Shares in the S&P/ASX 300 Index (ASX: XKO) telco closed yesterday trading for $3.93.

After opening higher, shares have since given back those gains and are trading for $3.90 apiece, down 0.8%.

For some context, the ASX 300 is up 0.2% at this same time.

This comes following the release of Aussie Broadband’s trading update for the three months ending 31 March (3Q FY 2024).

Here are the highlights.

Aussie Broadband share price dips despite growth

The Aussie Broadband share price is slipping today, despite the company reporting it had added 18,788 broadband services during the quarter.

The company flagged its Enterprise & Government segment as a strong performer, adding new clients across the retail, food, and local government sectors.

The quarter also saw Aussie Broadband successfully complete its acquisition of software communication network provider Symbio. The company expects Symbio will achieve its FY 2024 earnings before interest, taxes, depreciation and amortisation (EBITDA) contribution in line with prior guidance.

Over the three months, Aussie Broadband’s non-binding indicative offer to acquire 100% of the shares of Superloop Ltd (ASX: SLC) was rejected by the Superloop board. This resulted in the disposal of 37.6 million Superloop shares, which in turn resulted in a one-off gain for Aussie Broadband of $13.4 million, after transaction costs and before tax.

The ASX 300 telco reaffirmed its FY 2024 EBITDA guidance of $116 million to $121 million. This includes the four-month contribution from Symbio.

What did management say?

Commenting on the results leaving the Aussie Broadband share price on the flat side today, managing director Phillip Britt said, “We are pleased to have welcomed Symbio into the Group. This successful acquisition represents Aussie’s continued strategic investment into our Wholesale and E&G market segments.”

Britt added:

The group continues to assess other strategic investments to advance our ongoing growth ambitions. We expect to see further market consolidation and will look to participate in that where value can be created, and it makes strategic sense to do so.

While the outcome of negotiations with Origin was disappointing, I remain confident in our growth trajectory. We have a number of strategies in place to deliver on our growth agenda, which we are in the process of executing.

Britt also noted the award-winning year the company has had.

“Our customer service continues to be recognised as market leading. Aussie Broadband was the first business to win three awards in a single year from Roy Morgan,” he said.

Despite today’s dip, the Aussie Broadband share price remains up more than 27% over 12 months.

The post Why is the Aussie Broadband share price slipping on Wednesday? appeared first on The Motley Fool Australia.

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• ASX 300 stock down 24% since March now offers ‘compelling value’

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 Aussie Broadband. The Motley Fool Australia has recommended Aussie Broadband. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Polynovo Ltd (ASX: PNV) shares are having a great session.

In morning trade, the ASX 200 healthcare stock is up 8% to $2.29.

This means the company’s shares are now up approximately 35% since the start of the year.

Why is this ASX 200 healthcare stock rocketing?

Investors have been scrambling to buy the company’s shares this morning in response to the release of a very positive trading update.

According to the release, Polynovo had a record month of revenue in April thanks to strong growth across the business.

Polynovo advised that its US business recorded monthly sales of A$6.9 million, which was an increase of 75% on the prior corresponding period.

The Rest of the World business grew almost as quickly. It delivered monthly sales of A$2.4 million, which was an increase of 68.2% over the prior corresponding period. This reflects strong growth in the UK and Ireland, ANZ, Hong Kong, and Germany.

Including a small contribution from BARDA revenue, this ultimately led to PolyNovo achieving record monthly group revenue of A$10.1 million. This represents a 68.6% increase on the same period last year.

The ASX 200 healthcare stock’s chair, David Williams, was very pleased with the company’s performance and its sales trajectory. He said:

Rest of World sales are very pleasing, coming off a low base. The direction is clear, and with new geographies and new patient applications I couldn’t be happier. It’s hard to contain my excitement when I see first time orders into Turkey, Abu Dhabi and Ukraine as I think of the lives we are saving.

This sentiment was echoed by the company’s CEO, Swami Raote. He said:

We are grateful for the manner in which clinicians are helping us with insights, innovation, education and adoption beyond difficult burns to other areas in plastic and reconstructive surgery. Our global impact continues to accelerate, with 42,000+ patients treated across 39 countries.

What is PolyNovo?

PolyNovo is a medical device company focused on advanced wound care that designs, develops, and manufactures dermal regeneration solutions. These solutions are developed using its patented NovoSorb biodegradable polymer technology.

The key NovoSorb BTM product is a dermal scaffold for the regeneration of the dermis when lost through extensive surgery, trauma or burn.

It is a novel range of bio-resorbable polymers that can be produced in many formats including film, fibre, foam, and coatings. The ASX 200 healthcare stock notes that its unique properties provide excellent biocompatibility, control over physical properties, and a programmable bio-resorption profile.

Based on today’s sales update, it seems to be growing in popularity with end users.

The post This ASX 200 healthcare stock is rocketing 8% following a record month! appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro 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 PolyNovo. 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 S&P/ASX 200 Index (ASX: XJO) is higher this morning, but the same can’t be said for this ASX 200 stock.

Shares in IPH Ltd (ASX: IPH) are faltering this morning after the intellectual property services provider revealed a takeover bid for one of its peers. The bid, worth roughly $250 million, is being met with a 0.7% decline to $6.11 in the IPH share price.

Which competitor is this ASX 200 stock buying?

Few people have likely heard of QANTM Intellectual Property Ltd (ASX: QIP). At just shy of a $250 million market capitalisation, it’s not quite in the ‘big leagues’ of the ASX. However, that hasn’t prevented the company from receiving its fair share of interest this year, setting the share price into motion.

On 27 February, QANTM cleared the air amid media speculation that it was subject to an offer. Indeed it was. A non-binding indicative proposal from UK-based international intellectual property (IP) firm Rouse International Holdings, aka Rouse.

The interest didn’t stop there either.

Two weeks later, QANTM was fielding yet another offer. This time from Adamantem Capital, an Australian private equity firm that manages around $1.4 billion worth of assets, offering $1.817 per share.

Rouse has since dropped out of the running. But a new contestant has now entered the fray, with fellow ASX-listed IPH lobbing a bid at QANTM this morning.

As per the release, IPH is putting forward a scheme of arrangement of 0.291 IPH shares and a fully franked special dividend of up to 11 cents per share in cash for each QANTM share. In simplified terms, it values QANTM at $1.90 apiece.

QANTM extended its exclusivity period with Adamantem to 15 May 2024 on Monday.

Why?

A quick look at IPH’s balance sheet might give some pause for thought.

The ASX 200 stock is saddled with over $500 million in debt as of 31 December 2023, with about $126 million in cash and cash equivalents. The company is already highly leveraged at a debt-to-equity ratio of approximately 81%.

So, what’s the rationale here?

IPH CEO Dr Andrew Blattman explains the thinking behind the offer, stating:

Pursuing strategic and financially accretive M&A [mergers and acquisitions] has long been a core pillar of IPH’s growth strategy and we are regularly assessing a range of potential transactions across the regions in which we operate. We believe that the time is right for a combination of QANTM and IPH and we see a compelling strategic rationale to the acquisition which will support a range of benefits to shareholders, employees, and clients.

Furthermore, Blattman expressed excitement about the potential to increase the company’s presence in Asia if the takeover is successful.

While the ASX 200 stock might be down, shares in QANTM are up 7.4% on today’s news.

The post ASX 200 stock slips after joining takeover contest with $250 million 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 recommended IPH. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.