Author: therawinformant

The Regional Express Holdings Ltd (ASX: REX) share price is on the rise today after the company announced it has signed an agreement with PAG Regulus Holdings on funding for its domestic operations. At the time of writing, the Regional Express share price is trading at $1.51, up 2.7%.

What’s moving the Rex share price?

The Rex share price is edging higher on the company’s news that Asia-Pacific investment firm, PAG, will provide funds of up to $150 million. The injection of capital will support the launch of Regional Express’ domestic jet operations scheduled to commence on 1 March.

The investment will comprise of first ranking senior secured convertible notes. An initial funding tranche of $50 million will be drawn down towards early January 2021. Furthermore, the remaining balance will be available over the following 3 years.

Subject to shareholder approval, Regional Express will hold a vote on the deal at its AGM at the start of the new year. In addition, the Foreign Investment Review Board will also need to approve the proposed funding.

If permitted, and upon completion, PAG will nominate two of its directors to the Regional Express board.

What did management say?

Regional Express chair, Mr Lim Kim Hai, spoke about the partnership, saying:

PAG is a well-respected and highly successful investment group which manages more than USD40 billion on behalf of major global institutional investors.

Preparations for our domestic operations are proceeding to plan with our first Boeing 737 800NG aircraft delivered on 5 November 2020. Our crew will carry out training on the aircraft over the next 3 weeks before the CASA proving flight on 2 December 2020. We anticipate CASA approval shortly after. Five other similar aircraft will be delivered from next month to March 2021.

Once the initial services are well established, we aim to progressively grow our fleet to cover all the major cities in Australia.

Adding to Mr Hai’s comments, PAG chair and CEO, Mr Weijan Shan said:

We have been impressed with Rex’s established track record in regional aviation in Australia. Rex’s plan to provide Australia’s major cities with affordable and high-quality air travel is consistent with their disciplined and focused approach over the past 18 years. PAG is excited to partner with Rex on this expansion.

What’s been happening with the Regional Express share price

The Regional Express share price has come back strongly after being hit hard by COVID-19 lockdowns. Shares in the airline dropped to as low as 37 cents in March, before recovering to levels seen in 2019.

Regional Express considers itself as a competitive passenger airline for domestic routes, going up against Qantas Airways Limited‘s (ASX: QAN) QantasLink and Jetstar as well as Virgin Australia Holdings Ltd (ASX: VAH).

It’s worth noting that the Regional Express share price is now just 10% below its all-time high of $1.68 which it achieved back in October 2018.

More reading

• Global fund managers are bullish on these 3 things
• It’s official: Like it or not, millions will own Tesla stock soon
• SEEK (ASX:SEK) share price flat despite FY 2021 guidance upgrade
• Get real: 2 ASX dividend shares to boost your income stream
• Why a2 Milk, Crown, Immutep, & Suncorp shares are dropping lower

Motley Fool contributor Aaron Teboneras 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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With the S&P/ASX 200 Index (ASX: XJO) going above 6,500 points this week for the first time since February, ASX investors certainly have something to be happy about. The ASX 200 is now well and truly out of the ‘rut’ it was stuck in between June and October. By ‘rut’, I’m referring to the fact that the ASX 200 seemed to never get too far above, or below, the 6,000 point threshold for those 4 months.

Now the ASX 200 is seemingly pushing to greater heights this week. So I’m sure many an investor is wondering ‘where to next?’ for ASX shares, given we’re barrelling towards a new year.

Where are fundies investing for 2021?

Well, reporting in the Australian Financial Review (AFR) today sheds some light on this question. The AFR is covering the Bank of America’s monthly survey of more than 200 global fund managers (with a collective $784 billion in assets under management) for their views on how to position a share portfolio going forward. And the view is reportedly almost unanimous: “It’s time to go long or go home”.

The AFR reports that the fundies aren’t too concerned over the recent ‘second/third waves’ of coronavirus cases around the world. Although they do note it’s a risk. Instead, managers have “pulled forward their expectations for a credible vaccine to be announced from next February to next January. And are piling into trades that will benefit from the reopening of economies”. Bank of America says the “US election outcome and the announcement of promising results from vaccine trials” are behind the “switch in the psyche of investors”.

And that is resulting in cash positions being whittled to “15-year lows”. Where is this cash going? According to the report, there are 3 areas which are overwhelmingly popular amongst the fund managers: emerging markets, oil, and the S&P 500 Index (INDEXSP: .INX).

A triumvirate of opportunity?

Emerging markets refer to the economies (and stock exchanges) of countries outside the ‘advanced economies’ of the world. Specifically such as the United States, United Kingdom, Europe, Japan, Canada and Australia. As an example, a typical exchange-traded fund (ETF) covering emerging markets is the iShares MSCI Emerging Markets ETF (ASX: IEM). This ETF is weighted 40.56% to China, 12.67% to Taiwan, 12.52% to South Korea, 8% to India and 4.88% to Brazil.

Oil is an interesting choice as well. Oil prices and companies have been decimated in 2020 as a result of the pandemic. Many are sitting at multi-year share price lows. Take Woodside Petroleum Ltd (ASX: WPL). It’s currently trading at $21.77 after falling as low as $14.93 earlier in the year. Before 2020, you’d have to go back to 2005 to find similar pricing. It’s a similar story with global oil giants like Exxon Mobil Corporation (NYSE: XOM).

Finally, the S&P 500 is the flagship index for US shares. Thus, a bet on the S&P 500 could be construed as a bet on the US shares, especially the larger companies like Amazon.com Inc (NASDAQ: AMZN), Alphabet Inc (NASDAQ: GOOG)(NASDAQ: GOOGL) and Apple Inc (NASDAQ: AAPL).

More reading

• Why the Aventus (ASX:AVN) share price is rising today
• ASX 200 down 0.3%: Altium FY 2021 guidance, Crown drops, insurance shares sink
• 5 things to watch on the ASX 200 on Thursday
• ASX 200 rises again on Wednesday
• 2 ASX shares making all-time highs today

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Sebastian Bowen owns shares of Alphabet (A shares). The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Alphabet (A shares), Alphabet (C shares), Amazon, and Apple and recommends the following options: short January 2022 $1940 calls on Amazon and long January 2022 $1920 calls on Amazon. The Motley Fool Australia has recommended Alphabet (A shares), Alphabet (C shares), Amazon, and Apple. 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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This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

A lot of people have strong feelings about electric vehicle pioneer Tesla Inc (NASDAQ: TSLA), both as a company and as an investment. The Elon Musk-led company has generated plenty of controversy over its history, but its skyrocketing share price has left its automaker peers in the dust.

The stock’s amazing run has delivered 550% returns in just the past year, and more than 9,500% gains in Tesla’s roughly 10 years as a publicly traded company. That has resulted in a share price that many investors think is far too high to pay.

Yet even if you believe that Tesla isn’t a buy right now, you might still end up acquiring some of its stock soon. That’s because the company that manages one of the most-followed stock indexes in the world just decided to add Tesla to it.

Tesla is joining the S&P 500

S&P Dow Jones Indices is the entity behind the S&P 500 Index (INDEXSP: .INX). The popular benchmark contains roughly 500 of the largest and most influential US companies, but its membership is not static. S&P Dow Jones often adds new components and removes old ones to reflect changing factors like market capitalisation, takeover activity, and other corporate events.

For a long time, Tesla wasn’t eligible to be in the S&P 500 despite its large market cap. Many of the formal requirements for inclusion, such as a minimum share price and adequate share float, weren’t a problem for the electric automaker. The requirement that it took the longest for Tesla to meet was that it had to be profitable for four consecutive quarters and over a 12-month period.

Yet even when that happened earlier in 2020, S&P Dow Jones didn’t immediately pull the trigger. Some pundits cited issues with the quality of Tesla’s profits, boosted as they are by regulatory credits. Others pointed to the complexity of adding a company to the S&P 500 that was already as large as Tesla was.

S&P Dow Jones ended the speculation on Monday when it said it would add Tesla to the S&P 500, effective 21 December.

A couple of unusual things about Tesla’s addition to the S&P 500

However, the announcement wasn’t typical in a couple of respects. First, S&P Dow Jones didn’t announce which company Tesla will replace. It’s putting that decision off until we’re closer to the late-December rebalance date.

Also, S&P Dow Jones reached out to the investment community for guidance on precisely how to add Tesla. Given the company’s size – its market cap is above $420 billion – this move has the potential to cause a massive disruption to index-related trading. The index manager suggested the possibility of adding Tesla incrementally, possibly incorporating two separate dates on which portions of the final allocation would get put in the S&P 500.

You would’ve been better off buying earlier

The irony here is that index-fund investors who scoffed at buying Tesla earlier in 2020 are going to end up paying much higher prices for the shares. At the beginning of the year, you could’ve bought Tesla shares at a split-adjusted price of less than $100. As recently as June, Tesla stock was trading under $200 per share. But on Monday, Tesla closed above $400 per share – and it jumped more than $50 per share on the S&P 500 news.

However, index funds have no choice. If they want to track the S&P 500, they will need to own Tesla shares – regardless of the premium they’ll be paying to acquire them.

It’s not the end of the world

This isn’t the first time investors have had to accept index-fund additions they didn’t like. It happened with Facebook (NASDAQ: FB), but in hindsight, index investors have to be pleased with the returns the social media giant has generated for their funds.

Moreover, even at Tesla’s massive current size, its impact on your S&P 500 index fund won’t be all that big. Tesla will likely end up with a weighting of slightly over 1% in most of those funds. That will make it the biggest new addition ever – but it still doesn’t amount to a huge exposure to the automaker’s stock.

Tesla will continue to generate controversy, and it’s highly possible that the S&P addition will be the next event that triggers a massive feeding frenzy for the electric vehicle pioneer’s shares. In the end, though, what will matter is whether Tesla can convert on its amazing potential and expand into a business that justifies its industry-leading valuation.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

More reading

• Tesla (NASDAQ:TSLA) share price zooms 8% on S&P 500 news
• Average Aussie needs 22 weeks to earn what Elon Musk does in 5 minutes
• Here are the US shares that CommSec customers are buying
• Tesla Stock Jumps on News It Will Join the S&P 500
• Here are the shares Magellan has been buying recently

Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to its CEO, Mark Zuckerberg, is a member of The Motley Fool’s board of directors. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Facebook and Tesla. Dan Caplinger has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Facebook. 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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This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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The SEEK Limited (ASX: SEK) share price is trading broadly flat this afternoon after the release of its annual general meeting presentation.

What did SEEK speak about at its annual general meeting?

As well as giving investors a summary of its performance in FY 2020, the company provided an update on current trading conditions and its guidance for the new financial year.

In respect to current trading, SEEK revealed that its performance financial year to date has been far stronger than it was expecting.

According to the release, group revenues are well above the assumptions underlying its illustrative scenario provided with its FY 2020 results.

It notes that the SEEK ANZ, OES, and Zhaopin businesses have all performed well above these assumptions. And while the SEEK Asia is also performing better than expected, it is to a lesser extent compared to the other businesses.

Management notes that this revenue growth has been driven by a mix of rehiring of roles lost during previous months, and growth in some sectors.

The company’s Early Stage Ventures (ESV) segment continues to perform well, which has increased management’s conviction levels to re-invest.

FY 2021 guidance.

Management notes that forecasting remains challenging given the ongoing uncertainty in all markets caused by COVID-19 restrictions, overall business confidence, and FX rates.

Furthermore, its ad volumes have responded quickly to changes in COVID-19 restrictions, both positively and negatively, and yields are also sensitive to the sectors in which activity occurs.

Nevertheless, the company is providing guidance for FY 2021, based on a number of key high level assumptions.

These include COVID-19 restrictions remaining consistent with current conditions across key markets, hiring activity remaining broadly in line with current levels, the usual seasonal fluctuations, and its investment increasing above what was initially assumed to reflect its stronger revenue performance.

Based on this, SEEK is expecting its revenue to be in the order of $1,600 million in FY 2021 and EBITDA to be in the order of $400 million.

This compares to its previous illustrative FY 2021 guidance of revenue of ~$1,470 million and EBITDA of $330 million and FY 2020’s revenue of $1,577.4 million and EBITDA of $414.9 million.

SEEK’s chairman, Graham Goldsmith AO, commented: “As I look out over the coming years, whilst COVID-19 has created near-term economic challenges, this does not fundamentally change our long-term aspirations. I am confident that if our management team, led so ably by CoFounder and CEO Andrew Bassat, continue our long-term focus and execute well, we will unlock large new revenue pools and create significant long-term shareholder value.”

More reading

• 5 things to watch on the ASX 200 on Thursday
• 5 things to watch on the ASX 200 next week
• Why the SEEK (ASX:SEK) share price just hit a record high
• 3 ASX shares targeting huge growth in the 2020s
• Rising jobs and house loans place these ASX shares in focus

Motley Fool contributor James Mickleboro owns shares of SEEK Limited. The Motley Fool Australia has recommended SEEK Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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Let’s get real here.

If you’re hoping for more income in the year ahead by securing a pay rise, you’ll likely be disappointed.

According to the Australian Bureau of Statistics (ABS), the seasonally adjusted Wage Price Index (WPI) climbed a paltry 0.1% in the September quarter. Year-to-date, the average Australian’s wage has grown by just 1.4%. And that comes as unemployment has snaked up to 6.9%.

But meagre as the wage growth figures are, they don’t tell the whole story. That’s because these are nominal figures, not real. Meaning they don’t take inflation into account.

Excluding volatile items, the annual inflation rate comes in at 1.6%. Meaning real wages are actually going backwards.

So banking on a hefty pay rise to secure more income in 2021 looks to be a long shot. In fact, most of us will be lucky to bring home the same pay cheque, in terms of our real wages, as we earned this year.

Then how about a term deposit?

Though nothing is 100% safe, cash in the bank is about as close as you can get. Especially if you keep your deposits below $250,000 per authorised deposit-taking institution (ADI). That’s the amount the government guarantees to protect depositors via its Financial Claims Scheme (FCS).

Unfortunately, this isn’t 2012, when some term deposits were paying 5% interest and the inflation rate was less than 2%. Meaning your cash in the bank was earning you real returns of some 3% annually.

Current term deposits are broadly quoted around the 0.50% range. But a bit of googling tells me if you shop around you may be able to secure a 0.75% interest rate on a 1-year term deposit, with certain minimal balance requirements.

That’s pretty thin, even in nominal terms. But again, in real (inflation adjusted) terms, your deposit plus interest will be worth less 1 year from now than it is today.

Which brings us to ASX dividend shares. These are companies that pay out cash (or occasionally shares) from their profits to their shareholders.

Sometimes these dividends come partly or wholly franked. That’s when a company has already paid its corporate taxes (generally 30%) on the dividend profits its distributing. You can deduct the corporate tax rate from any taxes you may owe on the dividend payments you receive. If your tax rate is less than the corporate rate, you can even get money back from the ATO.

Very nice…

ASX dividend share #1

The first ASX dividend share (presented in no particular order) you may want to consider to lift your income stream is Brickworks Limited (ASX: BKW).

Brickworks specialises in property, investments, and building products for residential and commercial construction in Australia and the United States. It also has a major holding in Washington H. Soul Pattinson and Co. Ltd (ASX: SOL), which in turn has a significant stake in Brickworks. Brickworks also owns 50% of an industrial property trust with Goodman Group (ASX: GMG).

Importantly, at the current share price, Brickworks pay an annual dividend yield of 3.1%, 100% franked.

It also has a lengthy history of delivering capital gains. Despite shares plunging more 41% during the COVID-19-driven market panic earlier this year, Brickwork’s share price is up 1.2% for the year and 52% from its April lows. That compares to a 2.7% loss for the broader S&P/ASX 200 Index (ASX: XJO).

The Motley Fool’s own Edward Vesely recommended Brickworks in his advisory service, Dividend Investor, on 14 July this year. He cited the company’s diversified exposure to a variety of assets, its long track-record of success, and its 3.7% fully franked dividend yield as reasons to buy.

Since then Brickworks’ share price has gained 16.6%, hence the dividend yield has slipped to 3.1%. Nonetheless, Edward maintains his ‘buy’ recommendation for Brickworks’ shares.

ASX dividend share #2

The second dividend share you may want to consider to boost your income stream is Rural Funds Group (ASX: RFF).

Rural Funds is a real estate investment trust (REIT). It owns a broad portfolio of quality Australian agricultural properties spread across the country. The company has a proven track record of consistent share price growth going back to 2014. Year-to-date Rural Funds’ share price is up 35%.

Importantly, it’s also paid all 4 quarterly dividend payments during this difficult year that’s seen many companies suspend their dividend distributions.

Rural Funds is another one of Edward Vesely’s Dividend Investor recommendations.

In fact, Edward’s recommended it twice, first in August 2017 and again in August 2018. Atop its regular dividend payments, the Rural Funds share price is up 57.3% since his first recommendation and it’s gained 42.7% since the second time he tipped it.

Edward cites Rural Funds’ high quality and well-diversified assets, its proven and well-practiced growth strategy, and its strong balance sheet and reliable cash flows which support an attractive yield as reasons to buy. Rural Funds maintains its ‘buy’ rating in his Dividend Investor service.

At the current price of $2.58 per share, Rural Funds pays an annual dividend yield of 4.3%, unfranked.

More reading

• 2 ASX dividend shares with yields of 4%+
• Leading brokers name 3 ASX shares to sell today
• 3 ASX dividend shares with large yields and consistent payouts
• Why Afterpay, Goodman, MedAdvisor, & PointsBet shares are dropping lower
• These ASX dividend shares offer income investors attractive yields

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Brickworks, RURALFUNDS STAPLED, and Washington H. Soul Pattinson and Company 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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In afternoon trade the S&P/ASX 200 Index (ASX: XJO) is fighting back and is off its lows. The benchmark index is down 0.1% to 6,523.7 points currently.

Four ASX shares that are falling more than most today are listed below. Here’s why these shares are dropping lower:

A2 Milk Company Ltd (ASX: A2M)

The a2 Milk share price has continued its slide and is down 2% to $13.71. Investors have been selling the infant formula and fresh milk company’s shares since the release of an update at its annual general meeting this week. One broker that wasn’t overly impressed with the update was Ord Minnett. This morning it retained its lighten rating and cut its price target down to $13.20. It doesn’t expect a2 Milk to achieve its guidance in FY 2021.

Crown Resorts Ltd (ASX: CWN)

The Crown share price is down almost 2% to $9.47. The catalyst for this decline is news that the New South Wales Independent Liquor and Gaming Authority (ILGA) is blocking the opening of Crown Sydney due to money laundering concerns. The gambling regulator intends to wait until it has seen the final report from an ongoing inquiry, which is due in February. Crown intends to open its hotel facilities as normal.

Immutep Ltd (ASX: IMM)

The Immutep share price has sunk 8% lower to 27.2 cents. This follows the completion of an institutional placement this morning which raised $29.6 million at a discount of 24 cents per new share. The proceeds will be used to finance its LAG-3 related clinical program in immuno-oncology and autoimmune disease. This includes the ongoing clinical development of eftilagimod alpha and the expansion of the Phase II TACTI-002 study.

Suncorp Group Ltd (ASX: SUN)

The Suncorp share price is down almost 4% to $9.36. Investors have been selling Suncorp and other insurance shares after the NSW Court of Appeal ruled in favour of policyholders in relation to business interruption insurance. This means Suncorp will have to pay out businesses for the disruption caused by COVID-19. Suncorp recently advised that it had set aside $195 million for potential claims.

More reading

• ASX 200 down 0.3%: Altium FY 2021 guidance, Crown drops, insurance shares sink
• IAG (ASX:IAG) shares halt trading after court rules COVID-19 claims valid
• Is the A2 Milk (ASX:A2M) share price a buy?
• 5 things to watch on the ASX 200 on Thursday
• ASX 200 rises again on Wednesday

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended A2 Milk. The Motley Fool Australia has recommended Crown Resorts 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 Aventus Group (ASX: AVN) share price has rallied after a quick dip on open today following a business update for the first quarter FY21 period. At the time of writing, the Aventus share price is up 1.96% to $2.60. In comparison, the S&P/ASX 200 Index (ASX: XJO) is slipping 0.1% to 6,522 points.

Aventus is a retail property company which owns and operates 20 large format retail parks across Australia. 

What’s driving the Aventus share price?

For the period ending October 31, Aventus advised that its portfolio remained 100% open for centre trading. Excluding Victoria, foot traffic increased by 9% over the prior corresponding period. Interestingly, half of the centres outside the Victorian state experienced double-digit foot traffic growth.

As coronavirus restrictions ease, Victoria has seen centre traffic lift 13% over the first 2 weeks in November. However, the company noted that the 6-day lockdown in South Australia may impact one of its centres.

In addition, occupancy rates have risen to 98.2% with minimal holdovers of 2.6%. More than 42 leasing deals were negotiated in the period.

Rent collection within the portfolio strengthened with roughly 90% of gross bill rent received. This translates to a 3% gain on the 4 months prior to first quarter FY21.

The development of its super centre in Caringbah, Sydney is complete and now 100% leased. An independent valuation report put the centre’s worth at $139 million, reflecting a 13% increase in book value.

FY21 guidance

Aventus indicated that the improved performance of its portfolio had restored confidence. To reward shareholders, the group said it would re-establish its dividend pay-out ratio approximately 90% of net income for the September quarter.

Provided that there are no unforeseen impacts due to COVID-19, Aventus forecasts guidance for FY21 to be at least 18.5 cents per security. This represents a minimum 2% growth compared to FY20.

What did the CEO say?

Commenting on the group’s performance, Aventus CEO Darren Holland said:

The Aventus portfolio continues to be resilient with cash collection improving to approximately 90% and traffic growing +9% in the last 4 months. Australians continue to spend more time and money at home – working, learning and entertaining – and this has driven strong sales growth to our large format retailers.

In September, we resumed distributions at a 90% pay-out ratio and today I am happy to announce that continued improvement in the operating performance of the portfolio has given Aventus confidence to provide an FY21 FFO guidance of at least 18.5 cents per security, implying at least 2% growth versus FY20.

Aventus share price summary

The Aventus share price has been climbing higher since dropping to its all-time low of $1.36 in March. The company is not far off its 52-week high of $3.06 achieved just before COVID-19 hit the Australian retail sector.

An incentive for shareholders in the current economic climate, Aventus has a dividend yield of 4.58% on today’s price.

More reading

• ASX 200 down 0.3%: Altium FY 2021 guidance, Crown drops, insurance shares sink
• 5 things to watch on the ASX 200 on Thursday
• ASX 200 rises again on Wednesday
• 2 ASX shares making all-time highs today
• ASX stock of the day: Redbubble (ASX:RBL) shares up 5% today

Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia has recommended AVENTUS RE UNIT. 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 Pro Medicus Limited (ASX: PME) share price is trading lower today despite the company announcing a major contract renewal with one of the largest private outpatient radiology providers in the United States. At the time of writing, the Pro Medicus share price has fallen 1.87% to $31.53, which is largely in line with the broader fall in healthcare sector shares today. 

What’s in the deal?

Health imaging company, Pro Medicus, today announced that its wholly-owned US subsidiary, Visage Imaging Inc., has signed a 5-year renewal contract with US-based, Zwanger Pesiri. The contract, which is constructed on a transaction-based licensing model, will see the ‘Visage 7’ technology continue to be used across all Zwanger Pesiri locations for the next 5 years.

The contract announced today follows another significant contract win Pro Medicus inked earlier this month, when it announced a 7-year deal worth $10 million with one of the largest university hospitals in Germany, LMU Klinikum. In that deal, the Visage 7 technology was to be deployed throughout LMU Klinikum’s radiology and sub-specialty imaging departments. 

What did management say?

Commenting on the deal today, Pro Medicus Chief Executive, Dr Sam Hupert said:

We are very pleased to have played such a key role in Zwanger Pesiri’s growth over the past 5 years. We believe our solution provides the best return on investment of any system in the market from both financial and clinical perspectives. We think the results we achieved at Zwanger Persiri is validation of that.

Zwanger Pesiri was also pleased with the contract renewal, with chief, Dr Steve Mendelsohn, echoing Hupert’s sentiment:

We have had a great partnership with Visage over the preceding 5 years. The speed and capabilities of their software is unrivalled in the market. Since implementing it 5 years ago, we have experienced significant increases in radiologist productivity and clinical accuracy which has underpinned our substantial growth over that time.

Pro Medicus provides healthcare imaging software and services to hospitals, diagnostic imaging groups and other health related entities in Australia, North America and Europe. The company has more than 30 years’ experience in providing radiology information systems and imaging technology. 

How is the Pro Medicus share price performing in 2020?

After explosive growth in 2019, the Pro Medicus share price has been able to successfully navigate the impacts of COVID-19 in 2020. Pro Medicus shares have increased by more than 41% to $31.53 in 2020. As a comparison, the S&P/ASX 200 Health Care Index (ASX: XHJ) has risen by 12% this year. Pro Medicus commands a market capitalisation of $3.4 billion.

More reading

• This cheap ASX share is supplying US giants: fundie
• 2 ASX growth shares to buy this month
• These were the best performing ASX 200 healthcare shares in October
• Why the Pro Medicus (ASX:PME) share price rocketed 22% higher last month
• I plan to invest heavily in ASX shares next week

Eddy Sunarto has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends Pro Medicus Ltd. The Motley Fool Australia owns shares of and has recommended Pro Medicus 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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Respected fund manager Wilson Asset Management (WAM) has recently identified two ASX shares that it owns in its portfolio.

WAM operates several listed investment companies (LICs). Some focus on larger companies like WAM Leaders Ltd (ASX: WLE) and WAM Research Limited (ASX: WAX).

There’s also one called WAM Capital Limited (ASX: WAM) which targets “the most compelling undervalued growth opportunities in the Australian market.”

The WAM Capital portfolio has delivered investment return of 16.1% per annum since inception in August 1999, before fees, expenses and taxes. This gross return outperformed the S&P/ASX All Ordinaries Accumulation Index return of 7.8% per annum.

These are the two ASX shares that WAM Capital outlined in its most recent monthly update:

Nine Entertainment Co Holdings Ltd (ASX: NEC)

WAM Capital described Nine Entertainment as Australia’s largest locally owned media company. The ASX share owns and operates television, video on demand, print, digital and radio assets. Some of its highest-profile assets include streaming service Stan, as well as the news outlets of the Australian Financial Review and the Sydney Morning Herald. It also owns a significant stake of Domain Holdings Australia Ltd (ASX: DHG).

The WAM investment team believes that Nine Entertainment stands to benefit from increased advertising expenditure in the lead up to the Christmas period, as consumer confidence improves following the announcement that lockdown restrictions would be relaxed in Victoria.

By FY24, Nine is focused on achieving a $230 million cost reduction (compared to FY19). The majority of this will come from programming, production and distribution.

It wants 60% of its earnings before interest, tax, depreciation and amortisation (EBITDA) to come from digital businesses, Nine is aiming for more than 35% of its group revenue to come from subscription and around 30% of its revenue to come from video on demand.

The Nine Entertainment share price has risen by 184% since the COVID-19 low on 23 March 2020.

Bapcor Ltd (ASX: BAP)

WAM Capital explained that Bapcor provides vehicle parts, accessories, equipment, service and solutions to the Asia Pacific region. In October, the company announced the September quarter revenue had increased 27% on the prior corresponding period, with retail revenue up 47% and specialist wholesale revenue up 45%.

In that recent trading update, Bapcor CEO Darryl Abotomey spoke of the company’s defensive qualities: “The automotive market is a resilient industry and historically has performed strongly in difficult economic circumstances. Recent trading is another example of its resilience assisted by the increase in sales on second hand cars, reduction in use of public and shared transport modes as well as government stimulus.”

The WAM investment team said that Bapcor has benefited from an increase in domestic travel, reduced usage of public transport and increased second-hand car sales. WAM Capital said the ASX share has a strong balance sheet and it believes it’s well placed to make earnings accretive acquisitions.

Bapcor is expecting to deliver a “strong” first half, however the second half remains unclear, and given the current economic uncertainties and any potential restrictions, it wasn’t in a position to provide a forecast of earnings for FY21.

It’s going to keep investing in its various businesses, including through information technology, marketing, process and system upgrades and capital investment in facilities to increase its footprint and to drive improved efficiencies. Bapcor said these investments will grow the cost base, but will assist driving profit growth in the future.

The Bapcor share price has risen 121% since the market low of 23 March 2020.

More reading

• Why REA Group (ASX:REA) share price is trading lower after AGM
• Top fundie, Wilson, names ASX shares to buy
• ASX 200 Weekly Wrap: ASX continues to hit post-COVID highs
• These were the worst performing ASX 200 shares last week
• 3 top ASX dividend shares to buy

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Bapcor. 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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At lunch on Thursday the S&P/ASX 200 Index (ASX: XJO) is on course to end its winning streak. The benchmark index is currently down 0.3% to 6,509.9 points.

Here’s what is happening on the market today:

Altium AGM update.

The Altium Limited (ASX: ALU) share price has edged lower following the release of its annual general meeting update. At the event, the electronic design software provider revealed that it is continuing to be impacted by COVID-19. However, it has been seeing positive signs in the last two months and is gaining confidence about the strength of its second half performance. FY 2021 guidance has been reaffirmed as revenue of US$200 million to US$212 million and operating earnings of US$76 million to US$89 million.

Crown share price drops lower

The Crown Resorts Ltd (ASX: CWN) share price has dropped lower this morning amid concerns over the opening of its new Crown Sydney operation. Yesterday the New South Wales Independent Liquor and Gaming Authority (ILGA) said it would delay the opening of Crown Sydney due to money laundering revelations. The gambling regulator intends to wait until it has seen the final report into an ongoing inquiry, which is due in February.

Insurance shares hit by COVID ruling.

A number of insurance companies such as QBE Insurance Group Ltd (ASX: QBE) and Suncorp Group Ltd (ASX: SUN) are dropping lower today. This follows news that the NSW Court of Appeal has ruled in favour of policyholders in relation to business interruption (BI) insurance. The Court held that certain policy exclusions referencing the “Quarantine Act and subsequent amendments” cannot be read as references to the Biosecurity Act and cannot be relied on in relation to COVID-19 BI claims.

The best and worst ASX 200 performers.

The best performer on the ASX 200 on Thursday has been the ALS Ltd (ASX: ALQ) share price with a 7.5% gain. This morning Macquarie retained its outperform rating and lifted the price target on the testing services company’s shares to $10.65. The worst performer has been the QBE share price with a 4% decline following the aforementioned court verdict.

More reading

• Why ALS, BlueScope, FlexiGroup, & Perpetual shares are charging higher
• IAG (ASX:IAG) shares halt trading after court rules COVID-19 claims valid
• Altium (ASX:ALU) share price pushes higher following AGM update
• 2 ASX growth shares predicting big growth this decade
• 5 things to watch on the ASX 200 on Thursday

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 Altium. The Motley Fool Australia has recommended Crown Resorts 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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