Author: therawinformant

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.

Followers of Tesla Inc (NASDAQ: TSLA) were eagerly anticipating the company’s much-hyped ‘Battery Day’ on Tuesday, expecting news of major developments in the electric-car maker’s signature technology. What they got was a list of upcoming improvements and promises that may pay off one to three years down the road.

Disappointed shareholders began to question the company’s lofty valuation and sold off the stock. By 11.53 am EDT Wednesday morning, Tesla’s shares were down more than 9%, dropping below $400 for the second time this month.

What was announced…

Tesla CEO Elon Musk, who loves to talk at length about vehicle technology, outlined a number of upcoming improvements to the company’s battery tech, including:

• Eventual in-house manufacture of battery cells, currently sourced from Panasonic, resulting in reduced battery costs and fewer supply issues.
• “Tabless” batteries, which will increase cars’ range by 16% and boost cars’ power by an estimated 600%, while reducing cost per kilowatt-hour.
• Construction of a new North American cathode plant, which will reduce supply chain costs.
• Reductions in scarce metal nickel and removal altogether of conflict mineral cobalt from Tesla’s battery cathodes.

But the two biggest announcements were only tangentially related to batteries: the 2021 release of the $139,900 Model S “Plaid,” featuring the souped-up Plaid powertrain, and a goal of introducing a $25,000 Tesla model in three years. 

…and what wasn’t

There was no mention of the much-anticipated “million mile” battery technology, which would represent a significant upgrade to Tesla vehicles’ expected battery lifespans. There were also no major surprises, since gradual technical improvements and cost reductions were already widely expected and, arguably, priced into the automaker’s stock. 

In other words, the main reason “Battery Day” fell flat was that it didn’t really improve the thesis for buying the stock.

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

More reading

• Ecograf (ASX:EGR) share price moves after Tesla’s Battery Day presentation
• ASX investors were buying Tesla (NASDAQ:TSLA) and Snowflake (NYSE:SNOW) shares last week
• Should ASX investors follow Buffett and bet on oil shares?
• Tesla Weighs on Nasdaq — Will Investors Believe Musk This Time?
• ASX shares Tesla (NASDAQ:TSLA) needs to survive

John Bromels owns shares of Tesla. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Tesla. 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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This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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The Brickworks Limited (ASX: BKW) share price will be on watch this morning following the release of its full year results.

How did Brickworks perform in FY 2020?

For the 12 months ended 31 July 2020, Brickworks reported a 4% increase in revenue to $953 million and a 34% decline in earnings before interest and tax (EBIT) to $206 million.

On the bottom line Brickworks posted a 38% decline in underlying net profit after tax to $146 million. On a statutory basis, net profit after tax was up 93% to $299 million.

Brickworks’ statutory result includes a significant one-off profit in relation to its shareholding in Washington H. Soul Pattinson and Co. Ltd (ASX: SOL), triggered by the merger of its associate TPG Telecom Ltd (ASX: TPG) with Vodafone Australia.

Despite the decline in its underlying profits, the Brickworks board declared a final fully franked dividend of 39 cents per share. This was up 3% on the prior corresponding period and brought its full year dividend to 59 cents per share. This was a 4% increase on FY 2019’s dividend.

How did its businesses perform?

One of the main drags on the company’s performance in FY 2020 was the Australian Buildings Products business. It reported a 9% decline in revenue to $687 million and a 43% reduction in EBIT to $33 million. This was driven by challenges associated with the pandemic and headwinds due to declining market activity.

Things were better for its Building Products North America business. It delivered EBIT of $10 million, up 63% on the prior year. Though, this was largely the result of new acquisitions.

The company’s Property Trust business was a highlight in FY 2020. This was thanks almost entirely to its joint venture with Goodman Group (ASX: GMG), which helped the business report EBIT of $129 million for the year.  

Finally, also dragging on its results was its Investments business. It reported a sizeable 51% decline in EBIT to $51 million due largely to its stake in struggling coal miner New Hope Corporation Limited (ASX: NHC).

Outlook.

FY 2021 looks likely to be a better year for Brickworks.

Management notes that demand for its prime industrial property is strong thanks to the shift to online shopping.

It also advised that Building Products Australia has experienced an increase in orders and sales across most businesses in September. In addition, the company revealed that it has had feedback from homebuilders that activity is building across the country.

Over in North America, the company expects short term demand to be impacted due to COVID-19. However, thanks to cost cutting and efficiencies, it is expecting improved earnings once trading conditions normalise.

Management concluded: “The Company has a diversified portfolio of attractive assets and a robust balance sheet that provides resilience to any short-term challenges and economic uncertainty caused by the COVID-19 pandemic, whilst also providing strong growth prospects over the long term.”

More reading

• 3 ASX shares now trading at crazy cheap prices
• 5 things to watch on the ASX 200 on Thursday
• 4 ASX shares rated as strong buys by brokers
• 3 ASX dividend shares to buy for 2021
• Why everyone should have Brickworks (ASX:BKW) and 1 other ASX share

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Brickworks 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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Listed investment companies (LICs) are very similar to exchange-traded funds (ETFs), or real estate investment trusts (REITs).  In every case there is a standalone fund dedicated to a specific purpose. For example, the Charter Hall Retail REIT (ASX: CQR) is dedicated to convenience retail centres, including petrol stations. An example ETF would be the Magellan Global Equities Fund (ASX: MGE). This invests in 20 to 40 of the worlds largest companies. 

However, the difference between a REIT or ETF and an ASX LIC is the structure of the business. LICs are generally limited companies, while ETFs and REITs are explicitly trusts. There are a range of differences but for me the most important is that a LIC is like any other company. Therefore, you buy shares not units. Meaning, you buy a part of the company rather than a unit in the underlying assets. 

Hearts and Minds Investments Ltd (ASX: HM1)

Hearts and Minds is a great ASX LIC which listed during 2019. The fund managers forgo all fees, instead donating to leading Australian medical institutes.  It has a concentrated portfolio in 25-35 Australian and global securities. These are based on the highest conviction ideas from leading fund managers. 

In year to date trading, Hearts and Minds is up by 6.71% despite the coronavirus market crash in March. The company achieved a growth of 7.2%, compared to 3.4% in the MSCI World Net Total Return Index (AUD).

This LIC is currently trading at less than its net tangible assets (NTA) value per share of $3.71.

Ophir High Conviction Fund (ASX: OPH)

The Ophir High Conviction fund provides shareholders with a concentrated fund on companies outside of the S&P/ASX 50 Index (ASX: XFL). The company’s investment philosophy is very fundamental. That is, a bottom up approach to identify under-valued ASX shares. Particularly those with existing and proven business models and large, or growing, addressable markets. 

What originally attracted me to this ASX LIC is that both founders have all of their liquid investments here. In year to date trading, this ASX LIC’s share price is up by 21.69%. It is trading at a price to earnings ratio (P/E) of 11.08, and at a slight premium to its NTA per share of $2.98.

The Ophir LIC portfolio uses the S&P/ASX Mid Small Index (ASX: AXMSA) as a benchmark. In FY20 the LIC delivered a growth rate of 12.7% against a benchmark growth rate of -5.3%. 

WCM Global Growth Ltd (ASX: WQG)

WCM Global is a $200 million ASX LIC with an estimated NTA per share of $1.48 at the time of writing. This LIC also focuses on fundamental company analysis. However, it places a lot of value in the organisation’s moat, or competitive advantages. In FY20, the LIC delivered a return of 17.6% for the year. Outperforming its benchmark MCSI All-Country World ex Australia Index by 12.9%. 

This ASX LIC provides access to a range of giant global technology companies. For instance, it includes companies like Shopify Inc (NYSE:SHOP), Tencent Holdings Ltd (HKG: 0700), and Mercadolibre Inc (NYSE:MELI). At close of trading on Wednesday, this ASX LIC is selling for a P/E of 9.32.

More reading

• 2 top ASX shares I’d buy with $2,000 right now
• Charter Hall Long WALE REIT (ASX:CLW) secures BP funding

Daryl Mather 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 Shopify. 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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Commonwealth Bank of Australia (ASX: CBA) chief executive Matt Comyn has dealt with many crises in his career.

He was promoted to CEO in the midst of the money laundering scandal in 2017. Then the next year he had to answer to the Royal Commission into the finance industry.

And this year he’s led Australia’s largest bank through the COVID-19 pandemic and a devastated economy.

But he never pretends that his troubles are anything close to what some ordinary Australians endure.

At a “Meet The CEO” event at the University of NSW, Comyn this week recalled his experience leading CBA’s response to the collapse of Storm Financial Limited.

Advice firm Storm Financial went under in 2009 with losses over $3 billion. The company had signed up vulnerable cash-poor clients to margin loans, which were issued by the CBA.

Storm customers, most of them elderly, together lost more than $800 million of their life savings.

Although it was Storm Financial that had provided inappropriate financial advice, CBA had to face angry clients after the collapse as they rightly sought answers.

Comyn, 9 years before he became chief executive, masochistically put his hand up to face the music on behalf of CBA.

After an intense creditors’ meeting ran 2 hours over in Brisbane, Comyn’s taxi had grown tired of waiting and was nowhere to be seen. It was 11.30pm on the outskirts of the city. 

Fortunately, one of the Storm Financial victims offered him a lift. 

“They’d lost their life savings. They were in their mid-60s – same age as my mum. They’d lost everything,” recalled Comyn.

“And he was [now] trying to do some work as a part-timer at a Subway store.” 

Never borrow to invest in volatile assets

The experience had a profound impact on Comyn.

He still rates the potential for personal devastation as the worst thing about his role as a bank CEO.

“Even when the bank hasn’t done anything wrong, just the sheer distress associated with people unable to pay back loans or being in a difficult situation – it’s tough to see that.”

Financially, Comyn can’t emphasise enough the risks of borrowing to invest.

“Actually seeing and meeting customers, you get a real appreciation of the dangers of debt and leverage,” he said.

“When things go wrong, unfortunately in banking the implications at a personal or a business level can be really severe.”

Margin loans, which fund stock purchases, can be especially lethal. 

Unlike home loans, when the value of the borrowed portfolio drops by a certain percentage the lender can call in the debt.

Incredibly, the Federal Court only fined Storm’s husband-and-wife directors Emmanuel and Julie Cassimatis $70,000 each.

More reading

• Why I would buy CBA (ASX:CBA) and this beaten down ASX share
• How ASX shareholders are dudded by quarterly reports
• BrainChip (ASX:BRN) and Afterpay (ASX:APT) were among the most traded shares on the ASX last week
• 2 ASX shares to buy today for house price rise
• CBA, Macquarie face new $167m dirty cash allegations

Motley Fool contributor Tony Yoo 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 Westpac Banking Corp (ASX: WBC) share price will be on watch this morning after the banking giant provided an update on its dealings with AUSTRAC in relation to its Anti-Money Laundering and Counter-Terrorism and Financing Act 2006 (AML/CTF) contraventions.

What did Westpac announce?

This morning Westpac announced that it has reached an agreement with AUSTRAC to resolve the civil proceedings that were commenced in the Federal Court on 20 November 2019.

According to the release, Westpac will pay a civil penalty of $1.3 billion for the contraventions, pending court approval.

As part of the agreement, Westpac has admitted to additional contraventions, which contribute to the agreed penalty.

Westpac’s Chief Executive Officer, Peter King, once again apologised for the bank’s failings and vowed to not let them happen again.

He said: “I would like to apologise sincerely for the Bank’s failings. We are committed to fixing the issues to ensure that these mistakes do not happen again. This has been my number one priority. We have also closed down relevant products and reported all relevant historical transactions.”

“This agreement is an important step in the court process. It provides more certainty to all our stakeholders as we continue to implement the measures in our Response Plan and complete the implementation of recommendations from the reviews that have been conducted,” he added.

What next for Westpac?

Mr King advised that the bank is busy implementing all the recommendations of the Advisory Panel Report on governance and accountability.

He explained: “We are strengthening our financial crime capability. We acknowledge the important role Westpac must play in protecting the integrity of the financial system. As part of this process we are improving our end-to-end financial crime risk management processes and have established clearer accountabilities for AML/CTF compliance.”

The chief executive advised that Westpac has been investing heavily in “its systems, processes, and controls to detect and report suspicious transactions.” This includes the recruitment of “about 200 financial crime people to the group.”

How does this penalty compare to expectations?

In its first half results, Westpac provided an estimate of a $900 million penalty.

As a result, the bank will increase the provision in its accounts for the year ending 30 September 2020 by a further $404 million to account for the higher estimated penalty and for additional costs. This includes AUSTRAC’s legal costs of $3.75 million.

More reading

• Buy these ASX dividend shares if the RBA cuts rates
• More pain ahead for savers and retirees as Westpac forecasts an October interest rate slash to just 0.1%
• CBA, Macquarie face new $167m dirty cash allegations
• Macquarie says ASX value shares will outperform growth stocks from here
• ASX 200 Weekly Wrap: ASX 200 snaps 4 week losing streak… just

Motley Fool contributor James Mickleboro owns shares of Westpac Banking. 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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I think that there are some ASX shares are trading really cheaply and could be worth buying today.

COVID-19 has caused a lot of volatility over the past seven months. Many businesses have recovered strongly from the crash like JB Hi-Fi Limited (ASX: JBH). However, some other ASX shares haven’t rebounded with the same vigour. I think they could be buying opportunities if you take a medium-term outlook:

Vitalharvest Freehold Trust (ASX: VTH)

Vitalharvest is a agricultural real estate investment trust (REIT) which owns some of the largest berry and citrus farms in Australia.

Those farms are exclusively leased to the biggest horticultural company in Australia, Costa Group Holdings Ltd (ASX: CGC).

Vitalharvest generates rent from Costa in two different ways. It receives fixed rental income and it also receives variable rent in the form of a 25% share of the profit generated by those farms.

The last couple of years have been tough for those farms because of the Australian drought and also individual issues like crumbly berries and fruit flies. Problems like that are going to happen now and again, but I think it’s very unlikely that all of those things will happen simultaneously again for the ASX share.

I believe it’s a good time to buy when there are problems for a cyclical business. Based on the net asset value (NAV) per unit of $0.91 at 30 June 2020, the Vitalhavest share price is trading at a 15% discount to the NAV. It also offers a distribution yield of just over 6%.

I think the ASX share’s variable earnings will return closer to normal in FY21 and the new manager could acquire more food-related properties that would deliver more consistent rental income.  

NAOS Small Cap Opportunities Company Ltd (ASX: NSC)

This is a listed investment company (LIC) that invests in small caps, as the name might suggest. Generally, it targets ASX shares with market capitalisations between $250 million and $1 billion.

Some of its investments include businesses like MNF Group Ltd (ASX: MNF), Macquarie Telecom Group Ltd. (ASX: MAQ), BSA Limited (ASX: BSA), FINEOS Corporation Holdings PLC (ASX: FCL) and Over The Wire Holdings Ltd (ASX: OTW).

I think the above list of names is a quality group of ASX shares that collectively should be able to do well over the next few years.

The LIC is committed to paying a solid dividend. So even if the net tangible asset (NTA) discount doesn’t materially close up, investors can still receive a solid return just from the dividend income.

At the current Naos Small Cap share price it’s trading at a 18% discount to the pre-tax NTA at 31 August 2020. It also offers a grossed-up dividend yield of around 10%.

Brickworks Limited (ASX: BKW)

Brickworks could be one of the best value industrial ASX shares at the moment.

Looking at the projected earnings for FY22, the Brickworks share price is trading at around 11x FY22’s estimated earnings.

The company has a number of exciting factors that could make it a good buy today. Firstly, the industrial property trust that it owns half of is building two large warehouses for Coles Group Limited (ASX: COL) and Amazon. Completing these buildings will lead to a large increase in the asset value of the trust and will generate more rental income.

Whilst there is currently COVID-19 difficulties for the Australian and US economies, I expect that FY22 could be a good year for construction as economies rebound. This may be good news for Brickworks’ various building products divisions like bricks, precast, roofing and so on.

Finally, the ASX share is heavily invested in quality investment house Washington H. Soul Pattinson and Co. Ltd (ASX: SOL) which has been growing its asset value and dividend for Brickworks for decades. I think that Soul Patts could keep growing for many more decades to come.

As a bonus, Brickworks hasn’t cut its dividend for four decades and it currently offers a grossed-up dividend yield of 4.4%.

More reading

• 5 things to watch on the ASX 200 on Thursday
• 4 ASX shares rated as strong buys by brokers
• 3 ASX dividend shares to buy for 2021
• Why everyone should have Brickworks (ASX:BKW) and 1 other ASX share
• ASX 200 Weekly Wrap: ASX 200 snaps 4 week losing streak… just

Tristan Harrison owns shares of NAO SMLCAP FPO and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Over The Wire Holdings Ltd. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends FINEOS Holdings plc. The Motley Fool Australia owns shares of and has recommended Brickworks, COSTA GRP FPO, MNF Group Limited, and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia owns shares of COLESGROUP DEF SET. The Motley Fool Australia has recommended FINEOS Holdings plc and Over The Wire Holdings 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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On Wednesday the S&P/ASX 200 Index (ASX: XJO) found its legs and managed to storm notably higher. The benchmark index raced a whopping 2.4% higher to 5,923.9 points.

Will the market be able to build on this on Thursday? Here are five things to watch:

ASX 200 to sink lower.

The ASX 200 looks likely to give back a lot of yesterday’s gain on Thursday. According to the latest SPI futures, the benchmark index is poised to drop 60 points or 1% lower at the open. This follows another selloff on Wall Street overnight which saw the Dow Jones fall 1.9%, the S&P 500 drop 2.4%, and the Nasdaq index crash 3% lower. The latter decline could be bad news for the local tech sector. 

Oil prices drop lower.

Energy producers such as Santos Ltd (ASX: STO) and Oil Search Limited (ASX: OSH) could be on the slide today after oil prices softened. According to Bloomberg, the WTI crude oil price is down 0.65% to US$39.54 a barrel and the Brent crude oil price has fallen 0.7% to US$41.44 a barrel. Demand concerns continue to weigh on prices.

Gold price sinks lower.

Gold miners Evolution Mining Ltd (ASX: EVN) and Saracen Mineral Holdings Limited (ASX: SAR) could have a tough day ahead of them after the gold price continued to sink lower. According to CNBC, the spot gold price has fallen 2.1% to US$1,866.00 an ounce. The strengthening U.S. dollar is weighing heavily on the price of the precious metal.

Brickworks FY 2020 result.

The Brickworks Limited (ASX: BKW) share price will be one to watch today when it hands in its full year results. The building products and property development company had a tough first half to FY 2020. It posted a 1% increase in total revenue to $449 million and a 37% decline in underlying net profit after tax to $100 million. However, trading conditions in the United States have improved over the last few months, which could have boosted its second half performance.

Soul Pattinson result.

This morning the Washington H. Soul Pattinson and Co. Ltd (ASX: SOL) share price could be on the move when it releases its full year results. The investment house is expected to release a messy set of results due to the TPG Telecom Ltd (ASX: TPG) merger with Vodafone Australia. It recently advised that the estimated financial impact of derecognising TPG as an associate is expected to be an after-tax profit in the range of $1,120 million to $1,170 million. It also received special dividends of $120.9 million from TPG during the merger process.

More reading

• 3 ASX shares now trading at crazy cheap prices
• ASX 200 jumps 2.4% higher, numerous shares rise
• Here’s why the Elders (ASX:ELD) share price is at a new high today
• Why the Flight Centre (ASX:FLT) share price and Webjet (ASX:WEB) share price are taking off
• 3 great ASX blue chip shares I’d buy

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Brickworks 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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With Westpac Banking Corp (ASX: WBC) tipping the Reserve Bank to cut the cash rate to 0.1%, it could be about to get even harder for income investors.

The good news is that the share market is here to save the day with a number of top dividend shares offering superior yields.

Two which I think would be top options for investors today are listed below. Here’s why I would buy them:

Aventus Group (ASX: AVN)

The first ASX dividend share to look at buying is Aventus. It is a retail property company which specialises in large format retail parks. Despite the retail property sector struggling during the pandemic, Aventus’ high weighting to every day needs has allowed it to navigate these tough trading conditions and continue its growth.

Last month the company released its full year results and revealed a 4.2% increase in funds from operations (FFO) to $100 million. This allowed the Aventus board to declare an 11.9 cents per security distribution for the year. Based on the current Aventus share price, this equates to a generous 5% yield.

Rural Funds Group (ASX: RFF)

A second ASX dividend share to buy is this agriculture-focused property group. Rural Funds is the owner of 61 properties across five agricultural sectors. I’m a big fan of the company due to its long leases and blue chip customer base. At the end of the last financial year, the company’s weighted average lease expiry (WALE) stood at a lengthy 10.9 years and approximately 78% of its revenue was coming from corporate or listed tenants such as wine giant Treasury Wine Estates Ltd (ASX: TWE).

Rural Funds was also on form during the pandemic and reported an 8% increase in property revenue to $72 million in FY 2020. Looking ahead, management reaffirmed its plan to grow its distribution by 4% in FY 2021 and intends to pay shareholders 11.28 cents per share. Based on the current Rural Funds share price, this works out to be a 4.8% yield.

More reading

• More pain ahead for savers and retirees as Westpac forecasts an October interest rate slash to just 0.1%
• Where to invest your BHP (ASX:BHP) dividends
• CBA, Macquarie face new $167m dirty cash allegations
• Macquarie says ASX value shares will outperform growth stocks from here
• ASX 200 Weekly Wrap: ASX 200 snaps 4 week losing streak… just

Motley Fool contributor James Mickleboro owns shares of Westpac Banking. The Motley Fool Australia owns shares of and has recommended RURALFUNDS STAPLED and Treasury Wine Estates Limited. 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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Shares of Codan Limited (ASX: CDA) have hit a new all-time high today. The Codan share price closed at $11.57, up 8.13% for the day and just off of the new all-time high of $11.65 recorded earlier this afternoon.

It’s another winning notch on Codan shareholders’ belts today. The Codan share price is now up 60% for 2020 so far, and up 194% since 23 March. Over the past 5 years, Codan shares have delivered more than 1,000%.

What does Codan do?

Codan is a supplier and manufacturer of mining equipment, communications equipment and metal detection services. It’s been around since 1959, but hasn’t always been a winner for ASX investors. Between November 2003 and February 2016, Codan shares lost 50% of their value. That’s a long wait for a decent return. But anyone who held on would be thanking their lucky stars today, that’s for sure.

Investors have been buying Codan shares in earnest since the company announced earlier in the month it had won a US$10 million contract to supply tactical communications equipment to “a large African government” for its Codan Communications division. This contract includes the supply of Codan’s Sentry-HTM radios as well as other accessories.

Further, the company released its FY20 annual report this morning as well. Although Codan already announced its FY20 earnings back in August, the company did reiterate many of its stellar financial results, including 40% growth in net profits after tax, 29% sales growth and an annual dividend of 18.5 cents per share (up from 14 cents in FY19).

Interestingly, Codan has benefitted enormously from the soaring gold price in 2020. It notes that its Minelab division (which sells gold detection products) saw revenue growth of 30% for FY20

Why is the Codan share price hitting the roof?

Although it’s not clear, I estimate that today’s share price moves are the result of the optimistic guidance Codan included in today’s annual report. Back in August, the company gave no concrete guidance for FY21, which Codan reiterates today. However, the company did state the following:

Codan remains well-positioned for another successful year in FY21. Whilst it is too early for the board to give profit guidance, there are a number of factors that are relevant when considering the outlook for FY21:

• strong start to the year and in line with FY20
• demand for our metal detection products remains strong
• Minelab will benefit from a full year of Vanquish sales and the release of a new gold detector
• current travel restrictions will make it more difficult for Tactical Communications to conduct business development activities and close orders with new customers

It’s for these reasons, as well as existing general positive sentiment for the company, that I think explains Codan’s share price rise today. Hopefully, Codan can continue to keep its new-found growth streak alive

More reading

• ASX 200 drops over 2%, tech and oil fall
• Why BrainChip, Codan, IPH, & Nufarm shares are climbing higher today
• Codan (ASX:CDA) share price charges higher on major new contract win
• Why Codan’s share price has leapt 33% higher so far in August
• These ASX shares were top performers last week

Motley Fool contributor Sebastian Bowen 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 Ecograf Ltd (ASX: EGR) share price went through big moves today, opening at 18 cents and soaring to 24 cents at midday before dropping again to close at 18 cents. This follows today’s presentation at the Benchmark Minerals Battery Day, and comes in the wake of Tesla‘s Battery Day in the US yesterday.

What did Ecograf announce?

Ecograf reported that its vertically integrated graphite business was poised for development. The company plans to produce 20,000 tonnes per annum of purified graphite for lithium-ion batteries. 

With each electric vehicle requiring 27 kilograms of purified natural graphite, Ecograf cited a claim that the electric vehicle market is forecast to drive 700% growth in graphite demand by 2025.

Ecograf said it produced a high quality, cost-competitive alternative to existing battery graphite, which uses toxic materials. 

As a result, the company is producing the first commercial battery graphite purification facility outside China. The initial commercial production plant will produce 5,000 tonnes per annum of graphite, which will be expanded to 20,000 tonnes by 2022.

What’s the plan?

Ecograf’s initial graphite production facility will be constructed in Western Australia. The company said that Australian government funding support and debt financing was in progress.

The company has a long term sales plan through thyssenkrupp AG, a German conglomerate that supplies car manufacturers.

When Ecograf reaches production of 20,000 tonnes of graphite per year, it anticipates annual earnings before interest, tax, depreciation and amortisation (EBITDA) of US$35 million.

Ecograf also explained a plan for recycling waste generated during the lithium battery production process into usable materials. The company cited a report from Tesla Inc (NASDAQ: TSLA) which said battery cell manufacturing could result in production losses of up to 30%. Ecograf plans to recover and reuse these materials. The company has goals to lower the cost of battery production while lowering carbon emissions.

It is currently awaiting the outcome of a US$60 million debt financing proposal for the development of 60,000 tonne per annum natural flake graphite mine in Tanzania. The mine is expected to produce EBITDA of US$44.5 million per year.

About the Ecograf share price

The graphite production and processing company has been listed on the ASX since 2019. The Ecograf share price is up 500% since its 52-week low of 3 cents, and has increased 125% since the beginning of the year. The Ecograf share price is up 100% since this time last year.

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Chris Chitty 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 Tesla. 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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