Author: therawinformant

At the small end of the market there are a number of companies which are growing at a very strong rate.

Three small cap tech shares that investors might want to get better acquainted with are listed below. Here’s how they have been performing:

Bigtincan Holdings Ltd (ASX: BTH)

Bigtincan is a growing provider of enterprise mobility software. This software allows sales and service organisations to increase their sales win rates, reduce expenditures, and improve customer satisfaction. Bigtincan has been experiencing strong demand for its platform in 2020 from some major companies such as Nike and Red Bull. This led to it growing its annualised recurring revenue (ARR) by 53% year on year to $35.8 million in FY 2020. Pleassingly, more of the same is expected in FY 2021, with management providing guidance for ARR of $49 million to $53 million. This is still scratching at the surface of a sales engagement platform market estimated to be worth $6 billion a year by 2021.

ELMO Software Ltd (ASX: ELO)

ELMO is a cloud-based human resources and payroll software company. Its increasingly popular software streamlines a range of processes such as employee administration, recruitment, remuneration, and payroll through a single a unified platform. ELMO currently has operations in both the ANZ and UK markets, which management estimates are worth $2.4 billion and $6.8 billion per year, respectively. In FY 2021, ELMO is aiming to deliver ARR in the range of $72.5 million to $78.5 million. This will be up 31.6% to 42.4% from FY 2020’s ARR of $55.1 million.

People Infrastructure Ltd (ASX: PPE)

People Infrastructure is a leading workforce management company. It provides innovative solutions to workforce challenges. Although the company was impacted by the pandemic in FY 2020, it was still able to deliver strong earnings growth. For the 12 months ended 30 June, the company reported normalised EBITDA of $26.4 million. This was up 49.2% on the prior corresponding period. And while it hasn’t been able to provide guidance for FY 2021, management remains focused on driving growth both organically and inorganically.

More reading

• 3 little-known ASX shares rated as buys by fundie
• 2 exciting ASX tech shares to buy right now
• The People Infrastructure Ltd (ASX:PPE) share price is up 250% since March
• 2 ASX tech shares growing strongly in 2020
• 2 ASX growth shares to buy in November

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 and recommends BIGTINCAN FPO and Elmo Software. The Motley Fool Australia has recommended BIGTINCAN FPO, Elmo Software, and People Infrastructure 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.

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Although the Australian share market has recovered strongly in recent weeks and is close to moving into positive territory for the year, not all shares have performed as positively.

Two ASX shares which are still trading materially lower than their 52-week highs are listed below. Are these beaten down shares in the buy zone?

Bravura Solutions Ltd (ASX: BVS)

Bravura Solutions is a provider of software products and services to the wealth management and funds administration industries. Its shares have fallen heavily this year and are down a disappointing 46% from their 52-week high. This has been driven largely by management’s underwhelming guidance for FY 2021. It has warned that the pandemic could lead to flat profits this year.

One broker that thinks investors should be taking advantage of the weakness in the Bravura share price is Goldman Sachs. It recently reiterated its buy rating and put a $4.50 price target on its shares.

The broker believes Bravura is well positioned due to its strong market position in existing product offerings (which have a high degree of recurring revenue), its emerging microservices ecosystem strategy, and strong net cash position. It believes the latter provides the company with the flexibility to invest in the new microservices ecosystem and pursue further acquisitions.

Telstra Corporation Ltd (ASX: TLS)

This telco giant has been in the news this week after announcing plans to split its business into three separate entities. This will comprises InfraCo Fixed, InfraCo Towers, and ServeCo. Management believes the restructure would enable the company to take advantage of potential monetisation opportunities for its infrastructure assets, which could create additional value for shareholders.

This plan has gone down well with investors and also with brokers. For example, Goldman Sachs has reiterated its buy rating and $3.60 price target on the company’s shares. It has also reaffirmed its forecast for a 16 cents per share fully franked dividend in FY 2021 and beyond. Which, based on the current Telstra share price, would provide investors with a 5.2% dividend yield.

More reading

• 2 cheap ASX shares to buy right now
• ASX 200 Weekly Wrap: ASX continues to climb, despite outage
• 2 ASX dividend shares with huge yields
• Why the Telstra (ASX:TLS) share price can go even higher from here
• 2 ASX dividend shares to buy today for income

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Bravura Solutions Ltd and Telstra 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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A great transition is underway and it’s prompted a leading broker to make a number of changes to its model portfolio.

The transition I am referring to isn’t from the Trump to Biden presidency, although that’s good news. It’s the move towards a COVID‐19 normal world as multiple promising vaccines are in the wings.

This is the key reason why the S&P/ASX 200 Index (Index:^AXJO) is rallying recently. But the types of ASX stocks that could outperform in 2021 might look very different from those leading the charge in 2020.

Changes to model portfolio

This is why Macquarie Group Ltd (ASX: MQG) made changes to the stocks it’s holding in its model portfolio. A model portfolio represents a group of stocks that the broker is recommending investors hold to beat the market.

“Stocks may pullback after recent gains, especially given rising cases in the US and Europe, but with multiple effective vaccines, we think investors should be positioning for the end of the pandemic,” said the broker.

Prepare for a jump in bond yields

One effect from a COVID-free world is rising bond yields, noted Macquarie. This is the key driver for the broker adding the Suncorp Group Ltd (ASX: SUN) share price, the Computershare Ltd (ASX: CPU) share price and NIB Holdings Limited (ASX: NHF) share price to its model portfolio.

“Effective vaccines reduce the need for more monetary easing,” explained Macquarie.

“This allows bond yields to catch up with the cycle. The ISM and copper/gold ratio imply yields should be closer to 2%.”

Why bond yields can climb further

While the 10-year US government bond yield has rallied hard recently, history shows it could still spike higher.

The broker pointed out that this has happened in 2013 and 2016 even after the 10-year yield jumped above its 200-day average.

“With US yields just above the 200 day, it is not impossible that US yields spike 50-100bps over the next 6-9 months,” said Macquarie.

“We would expect to see Australian and other global yields move with the US.”

ASX stocks impacted by rising yields

General insurer Suncorp, share registry services group Computershare and health insurer NIB are among the stocks that will benefit from a spike in bond yields. It’s worth noting that the CPU share price is most sensitive of the three to changes in yields.

On the flipside, Macquarie dropped three ASX stocks that will lose out from rising yields. These include the GPT Group (ASX: GPT) share price, the Graincorp Ltd (ASX: GNC) share price and the Evolution Mining Ltd (ASX: EVN) share price.

More reading

• Why ASX gold shares are the worst performers so far today
• 5 things to watch on the ASX 200 on Tuesday
• Fundie names 5 ASX shares with good growth prospects
• ASX 200 events this week that could move the market
• ASX 200 Weekly Wrap: ASX continues to climb, despite outage

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According to the United Nations, the global population aged 60 years stood at approximately 962 million in 2017.

This was more than twice as large as in 1980 when there were 382 million older persons worldwide.

The intergovernmental organisation is now expecting this figure to more than double again by 2050. At this point, it is projecting that the global population aged 60 years will reach almost 2.1 billion.

This population shift is widely expected to lead to increased demand for healthcare services over the next three decades. Which could be great news for Australian healthcare shares.

One that has been tipped as a big winner from this tailwind is Cochlear Limited (ASX: COH).

Why Cochlear?

Cochlear is a leading global hearing solutions company. It manufactures some of the highest quality and most popular cochlear implant hearing devices in the world.

While 2020 has been a difficult year because of the pandemic’s impact on elective surgeries, a recent update appears to demonstrate that the worst is now over for the company. Furthermore, with potentially effective COVID-19 vaccines not far away, 2021 looks set to be a significantly better year for Cochlear.

Looking further ahead, the expected increase in the over-60 population over the coming decades will be good news for Cochlear. This is because as people age, their hearing will invariably fade and require some form of assistance.

One broker that is positive on the company is Macquarie. It recently put an outperform rating and $241.00 price target on the company’s shares. Its research appears to show that Cochlear has been winning market share.

In addition to this, its survey of US audiologists shows that its products are the most highly rated in the industry. The broker feels this bodes well as activity levels recover from the COVID disruption.

More reading

• What can you do when the ASX is down?
• Top brokers name 3 ASX shares to buy today
• Reasons to be confident and cautious as ASX shares are bouncing back
• 2 ASX healthcare shares to buy today
• 4 outstanding ASX 200 shares to buy with $4,000

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 Cochlear Ltd. The Motley Fool Australia has recommended Cochlear 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.

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The Nanosonics Ltd (ASX: NAN) share price has been a strong performer on Tuesday.

In afternoon trade the infection prevention company’s shares are up 3.5% to $6.71.

Why is the Nanosonics share price charging higher?

Investors have been buying the company’s shares today following the release of its annual general meeting update.

At the event, the company’s chairman and chief executive officer both spoke positively about the future.

Nanosonics Chairman, Maurie Stang, commented: “As we progress into FY21, notwithstanding our customers facing challenges in various markets, we are now seeing some very encouraging indicators that underscore our belief in the fundamentals of this business.”

This sentiment was echoed by CEO, Michael Kavanagh. While he notes that the company’s performance was impacted greatly by the pandemic in the fourth quarter of FY 2020, it has rebounded strongly from the crisis.

He explained: “We certainly do not believe that COVID-19 has negatively impacted the underlying fundamentals for the business and indeed the COVID-19 impacts experienced in the fourth quarter of FY20 have significantly reversed in the first 4 months of FY21.”

FY 2021 trading update.

During the first wave of COVID-19 in North America, Nanosonics struggled to gain access to hospitals.

Pleasingly, things have been very different during the second wave. Management notes that hospitals in the region appear better equipped to manage the impact of the pandemic now. As such, ultrasound procedure volumes requiring High Level Disinfection have not been impacted to the same degree as experienced in the first wave.

Though, management has warned that this does not guarantee that future waves will follow the same pattern in North America or other regions.

Nevertheless, as things stand, purchases of Consumables (Sonex/NanoNebulant) by end customers continued to recover in the first four months of FY 2021 as hospital departments reopened and ultrasound procedure volumes increased towards pre-fourth quarter levels.

Unit purchases of Consumables by end customers in the first four months of FY 2021 were up 4% compared with prior corresponding period and 25% compared with the last four months of FY 2020.

In addition to this, the company has continued to grow the footprint of its trophon product. It advised that the number of new trophon units installed globally was up 16% in the first four months of FY 2021 compared with the last four months of FY 2020.

It notes that this recovery was experienced in both North America, which was up 14%, and EMEA, which was up 64%.

Another positive is that the recovery in its new installed base growth means that GE Healthcare in North America will resume its purchasing of capital equipment by end of the first half.

Overall, management remains positive on the future, concluding: “Despite ongoing periods of uncertainty we remain optimistic about the future and investments in our growth agenda continue across the business.”

More reading

• 5 things to watch on the ASX 200 on Tuesday
• 5 things to watch on the ASX 200 next week
• Why the Nanosonics (ASX:NAN) share price is edging higher today
• The ASX shares to shine during AND after the COVID-19 recovery
• 2 top ASX healthcare shares that could be market beaters

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 Nanosonics Limited. The Motley Fool Australia has recommended Nanosonics 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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The Oil Search Ltd (ASX: OSH) share price is on a tear this month, up 48% so far in November. And it’s gaining again today, up 3% in afternoon trading.

November’s price action will come as a relief to longer-term shareholders, who watched Oil Search’s share price tumble 75% from 2 January through to the 23 March COVID-19 lows.

Despite November’s strong performance, the Oil Search share price remains down 46% year-to-date. 

By comparison, the S&P/ASX 200 (INDEXASX: XJO) is down 1% so far in 2020.

We’ll look at what’s driving November’s gains below. But first…

What does Oil Search do?

Oil Search operates all of Papua New Guinea’s oil fields. It owns 29% of the ExxonMobil-operated PNG LNG Project, a major exporter to Asian markets. The company also holds interests in the Elk-Antelope and P’nyang gas fields. And in 2018, Oil Search acquired and now operates a portfolio of oil leases in Alaska, United States.

Oil search counts some of the most successful oil and gas operators in the world as its joint venture partners. The company was established in Papua New Guinea in 1929, and shares first began trading in Australia in 1974.

Why is the Oil Search share price surging this month?

Several factors could be driving the Oil Search share price up this month. The company’s 19 November announcement of a 33% increase in its contingent resources in its Alaskan Pikka oil field. The rising price of crude oil. And increasing expectations that crude prices could hold onto recent gains, or continue to climb higher.

As Ryan Fitzmaurice, commodities strategist at Rabobank, explains (quoted by Bloomberg):

The overall ‘risk-on’ sentiment is being driven by more positive vaccine news this weekend, and oil prices in particular are being propelled higher by aggressive ‘short’ covering, especially in the ICE Brent contract… The oil market will [also] be focused on the OPEC+ meeting which is set for next week and which will likely begin to garner a great deal of attention as the week goes on.

Brent crude prices kicked off November at US$37.46 per barrel. Today Brent is trading for US$46.55 per barrel, a price increase of 24%.

Oil Search’s profits (and hence share price) are leveraged to the price of oil. Meaning when the price of oil goes up or down, the Oil Search share price is likely to rise and fall by a greater margin. That’s because the company’s fixed costs largely remain the same, regardless of the price of oil. So, any big increase, like the 24% price rise in November, lands almost entirely on the bottom line.

As Fitzmaurice points out, the next big determiner for the Oil Search share price will be the outlook for the global crude supply. We should know more about that following the upcoming OPEC+ meeting next week.

More reading

• 5 things to watch on the ASX 200 on Tuesday
• Top brokers name 3 ASX shares to sell next week
• Why the Oil Search (ASX:OSH) share price is the worst performer today
• Why Kogan, Oil Search, Orica, & Soul Pattinson shares are dropping lower
• ASX 200 up 0.1%: CBA’s APRA update, Mesoblast rockets, Oil Search sinks

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. 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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The Skyfii Ltd (ASX: SKF) share price is soaring higher today after the company held its annual general meeting (AGM). At the time of writing, shares in the tech minnow have risen 6.52% to a price of 24 cents.

This comes after a strong 6 months for the company, which has seen its share price rise 56%, taking its market cap to a total of $88 million.

What Skyfii does

Skyfii is a global software and data services company that aims to transform the way that organisations collect and use data. The tech provider currently operates across 35 countries and 5 continents and has delivered its solutions to a total of over 10,000 venues to date. Its clients range in size from small hospitality and retail stores to large stadiums and airports.

The company’s software has applications with monitoring social distancing and contact tracing, making it applicable during the pandemic. In order to do this the company processes billions of data points every month. These data points are captured both physically and virtually in order to assist businesses in improving customer and employee experience.

Skyfii annual general meeting

This morning Skyfii chair Andrew Johnson and CEO Wayne Arthur addressed shareholders at the company’s AGM.

The pair highlighted Skyfii’s strong financial growth in FY20, with operating revenue growing an impressive 44% and recurring revenue also increasing by 72% over the year. Despite its small market capitalisation, the software provider also posted positive operating earnings before interest, tax, depreciation and amortisation (EBITDA) of $2.1 million and also expects another positive result in FY21.

It was also noted that Skyfii has successfully completed two accretive acquisitions this year: Beonic Technologies, which will add over 300 blue-chip clients, and the retail optimisation solution, Blix.

Notably, Skyfii has poured money into improving its product suite throughout the year, which currently includes artificial intelligence (AI) video analytics, managed services and drone AI.

The results of the meeting clearly impressed shareholders as the Skyfii share price is surging upwards.

Outlook

While a revenue goal was not mentioned in the AGM, the speakers highlighted some areas of focus for the remainder of Skyfii’s year.

They outlined that there would be increased investment into marketing activities to continue to drive quality leads across all markets. This comes with a particular focus on integrating corporate offices, universities and grocery stores into its customer base.

Furthermore, the company announced that it would remain focused on cash management in light of the uncertainty surrounding COVID-19. However, if acquisition opportunities present themselves then the company indicated it is likely to act.

More reading

• ASX stock of the day: Skyfii (ASX:SKF) shares shoot the moon

Motley Fool contributor Daniel Ewing has no position in any of the stocks mentioned. 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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On Monday I looked at three ASX shares that brokers have given buy ratings to this week.

Unfortunately, not all shares are in favour with them right now. Three that have just been given sell ratings are listed below.

Here’s why these brokers are bearish on these ASX shares:

Ampol Ltd (ASX: ALD)

According to a note out of Goldman Sachs, its analysts have retained their sell rating and $23.30 price target on this fuel retailer’s shares. Goldman was pleasantly surprised by Ampol’s announcement of a $300 million off-market share buyback. It thought the company may delay capital returns due to the difficult trading conditions and Lynton refinery closure. However, this isn’t enough for a change of rating by the broker. It continues to see value elsewhere and sees downside risk to consensus estimates. The Ampol share price is trading at $30.04 this afternoon.

Commonwealth Bank of Australia (ASX: CBA)

A note out of Morgan Stanley reveals that its analysts have retained their underweight rating and $68.50 price target on this banking giant’s shares. This follows news that APRA will reduce the banking giant’s operational risk overlay. While this is a positive and will lift its CET1 capital ratio well above APRA’s unquestionably strong benchmark, the broker continues to believe that the bank’s shares are overvalued at the current level. The Commonwealth Bank share price is fetching $80.95 on Tuesday.

Zip Co Ltd (ASX: Z1P)

Analysts at Citi have retained their sell rating and $6.55 price target on this buy now pay later provider’s shares. According to the note, the broker believes Zip is well-placed to deliver strong growth in the near term. This is expected to be driven by its increased investment in the US and UK markets, as well as the growing adoption of the payment method by merchants. However, the broker has concerns about increasing competition and the impact this could have on margins. In light of this, it feels there is downside risk to medium term estimates. The Zip share price is now trading below this price target at $6.29.

More reading

• ASX 200 rises again on Monday
• Will the Liberty IPO damage the Commonwealth Bank (ASX:CBA) share price?
• Why Ampol, Cann, Fortescue, & Mesoblast shares are surging higher
• ASX 200 up 0.7%; Zip trading update, Ampol buyback, IAG sinks
• Zip Co (ASX:Z1P) share price pushes higher on trading update

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 ZIPCOLTD FPO. 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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The Challenger Ltd (ASX: CGF) share price is on the move today. Challenger shares are up 5.94% at the time of writing to $5.71 a share.

Today’s moves come on top of what has been a great month at the tail end of a wild year for Challenger.

Challenger shares are up 18% over the past month. However, they also remain down more than 30% year to date, and more than 44% off the highs we saw in February. Even worse for shareholders, Challenger’s all-time high of $14.17 that we saw back in December 2017 is a distant memory. The shares are still down 60% from that level on today’s prices.

What does Challenger do?

Challenger is an asset manager at its core. It has four divisions: Challenger Life, CIP Asset Management, Fidante Partners and Accurium.

CIP is an institutional funds management business that works in fixed income, real estate and derivative strategies. According to the company, its Fidante division “invests in and forms long-term alliances with talented professionals to create, grow and support specialist, boutique funds management businesses”. Accurium provides self-managed super funds (SMSFs) with assistance and services for clients in, or transitioning to, retirement phase.

However, it’s the Challenger Life division that is the company’s crown jewel. For one, it contributes the lion’s share of income to Challenger. Net income from the Life division was $639 million in FY2020, out of a total of $797 million for the Challenger Group. That’s just over 80%.

Challenger Life is an annuity provider. An annuity is a secure, guaranteed income that is paid for your lifetime, or for a fixed term. You basically pay a lump sum of cash to Challenger, and in return receive a fixed income stream for the terms agreed upon. Challenger takes this capital, invests it and then keeps any gains above what is required to pay out in annuity payments as profit.

Annuities – a double-edged sword

The appeal of Challenger’s annuities has increased in recent years (sales were up 13% in FY20). However, the same factors at play here are making it harder for Challenger to generate profits. Let me explain.

The appeal of an annuity, as opposed to owning dividend-paying ASX shares, for example, is the certainty. Although an ASX dividend share might offer, say, a trailing 5% dividend yield, there is no guarantee that the company will continue to pay the same yield, year in, year out. That inherent uncertainty does not suit some investors, who might prefer a lower, but safer yield. That’s where companies like Challenger come in.

But it’s not much easier for annuity-style businesses to generate the necessary yield to fund these payments. In the days of yore, investors looking for guaranteed income would turn to cash or fixed-interest investments. but in a world of near-zero interest rates, these kinds of investments don’t have the chops to put real, meaningful returns on the table. As an example, the current running yield for a 10-year Australian government bond is currently just 0.88% per annum.

So whilst Challenger’s annuities are increasing in popularity, the company’s ability to generate returns above the level it costs to provide the annuities is shrinking. 

Why are Challenger shares on the rise today?

Because of the nature of its business model, Challenger is a very cyclical stock. Thus, it tends to outperform the broader share market in good times, and underperform in bad times. That’s because the market knows Challenger has a lot of money invested in assets itself, so a rising market is likely to translate into rising profits for the company, and vice-versa.

But Challenger also released some good news to the markets today as well. In a release this morning, Challenger told investors that S&P Global Ratings has completed their annual ratings review and reaffirmed Challenger’s Life business with an ‘A’ rating, and a ‘stable outlook’. It has also reaffirmed the Challenger Group’s rating at ‘BBB+’, also with a ‘stable outlook’. This has positive ramifications for the interest rates which Challenger can borrow money and issue bonds at.

This positive news is likely to be contributing to the Challenger share price appreciation we are seeing today.

More reading

• Top fundie, Wilson, names ASX shares to buy
• 3 ASX shares rated as buys by brokers
• These were the best performing shares on the ASX 200 in October
• ASX 200 Weekly Wrap: ASX snaps winning streak… just

Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Challenger 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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The Cardinal Resources Ltd (ASX: CDV) share price is surging higher today on news the company has received an unsolicited takeover bid. The conditional, off‐market takeover offer at $1.05 per share is from a Ghana incorporated company, and is the third takeover bid Cardinal has received this year. 

At the time of writing, the Cardinal share price has lifted higher than the actual offer price, up 5.94% to $1.07. 

What happened today

Mineral explorer Cardinal says it received a bid of $1.05 per share in the form of cash from Engineers & Planners Company Limited, a company incorporated in Ghana.

The bidder’s statement advised the offer was conditional upon 50.1% minimum acceptance by Cardinal shareholders, as well as regulatory approvals. These approvals include the Foreign Investment Review Board in Australia, as well as approvals in Ghana by the relevant authorities.

Cardinal has advised its shareholders to take no action at this time while the board considers the proposal. 

Other recent takeover bids for Cardinal

Earlier in the year, Cardinal was embroiled in a takeover battle for the company by two overseas-based miners – Shandong Gold (SHA: 600547) from China, and Russian company Nord Gold. 

In June, Cardinal received a takeover bid from Hong Kong-based Shandong Gold at an offer price of 60 cents per share, valuing the company at around $300 million. The Chinese company, which is the second-largest gold producer in China, then increased its offer price for Cardinal to $1 a share in September. This was meant to outbid another interested party Nordgold, a Russian gold miner which had previously increased its own offer from 60 cents to 90 cents a share.

Today’s price of $1.05 represents a 5% premium to the last offer price from Shandong Gold of $1, which the board at the time unanimously recommended shareholders to accept. 

About Cardinal Resources

Cardinal is a West African gold‐focused exploration and mining company that holds interests in tenements within Ghana, West Africa. The company is focused on the development of the Namdini Gold Project, and released its feasibility study on 28 October 2019 which concluded that it had an ore reserve of approximately 5.1 million ounces.

The Cardinal share price has more than doubled in 2020. It began the year at 31 cents before rising to today’s price of $1.07. The company currently commands a market cap of $575 million. 

More reading

• Why fund manager optimism is at almost 3-year highs
• Why ASX, Kogan, Myer, & Northern Star shares are dropping lower
• Could Citi’s forecast spell good news for the Lendlease (ASX:LLC) share price?
• PayGroup (ASX:PYG) share price rocky following half year results
• Why ASX gold shares are the worst performers so far today

Motley Fool contributor Eddy Sunarto has no position in any of the stocks mentioned. 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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