Author: therawinformant

On Thursday the S&P/ASX 200 Index (ASX: XJO) was out of form and tumbled notably lower. The benchmark index dropped 1.2% to 5,883.2 points.

Will the market be able to bounce back from this on Friday? Here are five things to watch:

ASX 200 expected to rise.

The ASX 200 index is expected to rise on Friday despite some sizeable declines on Wall Street overnight. According to the latest SPI futures, the benchmark index is poised to open the day 21 points or 0.35% higher this morning. On Wall Street the Dow Jones fell 0.5%, the S&P 500 dropped 0.85%, and the Nasdaq tumbled 1.3% lower.

Tech shares to fall again?

The main drag on U.S. markets overnight was the tech sector once again. Tech giants Apple and Microsoft weighed heavily on the major indices and particularly the Nasdaq. Given how the Australian tech sector has a tendency to follow its lead, Friday could be another difficult day of trade for the likes of Afterpay Ltd (ASX: APT) and Nearmap Ltd (ASX: NEA).

Oil prices rise again.

Energy producers such as Santos Ltd (ASX: STO) and Woodside Petroleum Limited (ASX: WPL) could be on the rise today after oil prices pushed higher again. According to Bloomberg, the WTI crude oil price is up 2% to US$40.98 a barrel and the Brent crude oil price is up 2.6% to US$43.30 a barrel. This follows comments out of OPEC urging producers to comply with output cuts.

Gold price tumbles lower.

Gold miners including Evolution Mining Ltd (ASX: EVN) and Newcrest Mining Limited (ASX: NCM) could end the week in the red after the gold price tumbled lower. According to CNBC, the spot gold price is down 0.9% to US$1,952.30 an ounce. The precious metal dropped lower after the U.S. Federal Reserve offered no pointers on further potential stimulus.

Sydney Airport update.

The Sydney Airport Holdings Pty Ltd (ASX: SYD) share price will be on watch this morning when it releases its traffic numbers for the month of August. Last month the airport operator revealed that passenger numbers were down 91.8% in July compared to the prior corresponding period. It looks likely to be a similar story in August due to border restrictions.

More reading

• ASX 200 drops 1.2%, Mineral Resources (ASX:MIN) fell 9%
• What’s moving the Scentre (ASX:SCG) share price today?
• Why the Cyclopharma (ASX:CYC) share price surged to record high today
• ASX 200 gender inequality lets the team down
• 3 ASX growth shares I’d buy right now

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 Nearmap Ltd. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool Australia has recommended Nearmap 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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If you’re lucky enough to have $3,000 to invest into ASX growth shares, then I would suggest you consider putting these funds into the ones listed below.

Here’s why I think they could provide strong returns for investors over the 2020s:

BetaShares NASDAQ 100 ETF (ASX: NDQ)

Given the recent weakness on the Nasdaq index, I think this exchange traded fund would be a fantastic option for investors. It gives investors exposure to a group of the highest quality growth shares the world has to offer in a single investment. This includes the likes of Amazon, Apple, Facebook, Microsoft, Netflix, Nvidia, Tesla, and Google parent, Alphabet. Given the exceptionally positive long term growth prospects of the majority of companies in the fund, I believe it has the potential to outperform over the 2020s.

Bravura Solutions Ltd (ASX: BVS)

Another option to consider is Bravura Solutions. As with the Nasdaq 100 ETF above, I feel a sharp pullback in the Bravura share price has created a buying opportunity for investors. Especially given its very positive long term growth potential. Bravura is the financial technology company responsible for the Sonata wealth management platform. This popular wealth management platform allows advisers to connect and engage with clients via computers, tablets, or smartphones. Demand for the platform has been growing very strongly in the past few years and I expect more of the same once the pandemic passes. This should be supported by recent acquisitions, which have bolstered its offering and opened it up to new and lucrative markets.

ResMed Inc. (ASX: RMD)

A final growth share to consider buying is ResMed. It is a sleep treatment focused medical device company which I believe is well-placed for growth over the next decade. This is thanks to its high quality product portfolio and leadership position in a growing market. I believe ResMed’s masks and software-as-a-service solution are among the best on the market and likely to experience a surge in demand in the coming years as more and more people are diagnosed with sleep disorders. Management estimates that there could be upwards of 1 in 7 people impacted by sleep apnoea. However, the vast majority of these sufferers are undiagnosed at present.

More reading

• Why the Cyclopharma (ASX:CYC) share price surged to record high today
• 3 ASX shares to buy before this window of opportunity closes
• Why you should invest $5,000 into these ASX shares right now
• Interest rates to stay low for years? Buy these ASX dividend shares
• Buy BetaShares NASDAQ 100 ETF (ASX:NDQ) and these outstanding ETFs today

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 BETANASDAQ ETF UNITS and Bravura Solutions Ltd. The Motley Fool Australia has recommended BETANASDAQ ETF UNITS, Bravura Solutions Ltd, and ResMed Inc. 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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Fortunately in this low interest rate environment, there are plenty of quality dividend shares trading on the Australian share market.

Three which I would buy today are listed below. Here’s why I think they are top options for income investors:

Accent Group Ltd (ASX: AX1)

Accent is the company behind retail store brands such as Athlete’s Foot, HYPE DC, and Platypus. It was a positive performer in FY 2020 despite the pandemic and posted a 7.5% increase in net profit after tax to $58 million. I’m confident there will be more of the same over the coming years thanks to its expansion plans, strong online business, and its on trend offering. In FY 2021, I expect the company to pay a 9 cents per share fully franked dividend. Based on the current Accent share price, this equates to a 5.7% dividend yield.

Dicker Data Ltd (ASX: DDR)

Dicker Data is a wholesale distributor of computer hardware, software, and cloud solutions to a partner base of over 5,500 resellers. It distributes a wide portfolio of products from the world’s leading technology vendors. This includes Cisco, Citrix, Dell, HP, Lenovo, Microsoft, and other Tier 1 global brands. Demand for this offering has been strong in recent years, underpinning solid earnings and dividend growth. This has continued in FY 2020 and put the company in a position to increase its dividend materially. Based on the current Dicker Data share price, it offers a forward fully franked 4.6% yield.

National Storage REIT (ASX: NSR)

National Storage is a leading self storage operator and could be a great option for income investors. Although the company is expecting its earnings to be flat at best in FY 2021, I still expect it to provide investors with a generous yield. After which, I’m optimistic a combination of organic growth and its growth through acquisition strategy will support solid earnings and distribution growth in the years that follow. Based on the current National Storage share price, I estimate that it offers a forward 4.2% distribution yield.

More reading

• Top ASX dividend shares to buy in September 2020
• 2 high quality ASX dividend shares with generous yields
• Smash low interest rates with these ASX dividend shares
• Why I would buy Coles (ASX:COL) and this ASX dividend share
• Why Accent, Afterpay, Nine, & PointsBet shares are dropping lower today

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Dicker Data Limited. The Motley Fool Australia has recommended Accent Group. 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 S&P/ASX 200 Index (ASX: XJO) dropped by more than 1% today, falling to 5,883 points.

Here were some of the highlights from the ASX 200:

Biggest movers and shakers

At the bottom of the ASX 200 performance table the Mineral Resources Limited (ASX: MIN) share price fell by 9.4%.

There were businesses that dropped heavily. The Breville Group Ltd (ASX: BRG) share price fell by 7.5%, the Fortescue Metals Group Limited (ASX: FMG) share price dropped 6.4%, the Whitehaven Coal Ltd (ASX: WHC) share price declined by 5.5% and the Afterpay Ltd (ASX: APT) share price dropped 5.4%.

There were some businesses that saw gains. The ASX 200 leader was the Orora Ltd (ASX: ORA) share price which climbed around 3%.

Netwealth Group Ltd (ASX: NWL)

Fintech business Netwealth announced today that it was making a strategic investment and partnership with Xeppo. Initially, Netwealth is buying a 25% stake, though it has an option to increase its investment to 50%.

The ASX 200 business said that Xeppo specialises in connecting, matching and reconciling data from a wide range of sources to support the wealth management, accounting and mortgage industries.

Netwealth said that the investment, although not initially financially material, will enable and accelerate a number of key initiatives Netwealth has previously announced and is expected to create a unique and market-leading proposition for multi-disciplinary and integrates wealth practices.

Matt Heine, joint managing director of Netwealth, said: “A key element of Netwealth’s strategy is to expand and enrich the data which underpins our current and future technology and which sits at the core of our ‘whole of wealth’ and client portal offering.

“From our recent research, we found that advice firms on average use between 12 and 15 technology systems in their business, all of which have different data models, significant data discrepancies and often overlap from a features perspective. For example, the Netwealth platform captures customer details as does an advice firm’s CRM, planning software, fact find and client portal.

“Working closely with Xeppo we can solve this challenge and enable systems to better connect and integrate with each other driving business efficiency and great client experiences.”

Heartland Group Holdings Ltd (ASX: HGH)

Heartland announced its FY20 result today.

It said that it generated net profit after tax (NPAT) of $72 million. It also said it made adjusted NPAT of $78.9 million (after removing the economic overlay of (pre-tax) $9.6 million) which was up 7.2%.

Its gross finance receivables was $4.6 billion, up 4.9%. The financial business said that its net interest margin (NIM) was 4.33%, flat compared to FY19. Net operating income increased by 13.2% to $235.3 million.

It declared a final dividend of 2.5 cents per share, taking the full year dividend to 7 cents per share. However, that was a reduction of 3 cents per share due to the restrictions imposed by the Reserve Bank of New Zealand.

In FY21 the company is expecting its net profit after tax for FY21 to be in the range of $83 million to $85 million.

Splitit Ltd (ASX: SPT)

Buy now, pay later business Splitit announced that it is forming a partnership with QuickFee Ltd (ASX: QFE). It will see ‘advice now, pay later’ interest-free instalments launched for accounting firms and law firms.

No applications are required as no new credit is being offered to clients. Splitit will be integrated directly into Quickfee’s payments portal. This service will initially be available to more than 1,000 accounting and law firms already using Quickfee.

Quickfee sees this as an opportunity because it expands its customer base to include smaller firms that typically fall outside of its credit risk framework. Advice businesses’ clients will be able to more easily access legal, accounting and financial advice.

Splitit said it was not able to determine how material this partnership will be.

The Splitit share price finished flat today.

More reading

• What’s moving the Scentre (ASX:SCG) share price today?
• Why the Cyclopharma (ASX:CYC) share price surged to record high today
• ASX 200 gender inequality lets the team down
• Why the Splitit (ASX:SPT) share price is on the move today
• Why City Chic, Fortescue, Nearmap, & Zip shares are dropping lower today

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of AFTERPAY T FPO and Netwealth. 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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How does an ASX share turn $100 into $1,000?

That’s a good question. Returns are what we’re all here for, at the end of the day. We all invest our hard-earned money into the share market because we hope to get even more money back in the future. And it’s not exactly uncommon for ASX shares to give investors the kind of returns it takes to turn $100 into $1,000 either (That’s a 10-bagger return, or 900% if you want to get technical). Some ASX shares have given investors this kind of return in 2020 alone. Just think of Sezzle Inc (ASX: SZL). If you bought $100 worth of Sezzle shares on 23 March this year, that $100 would be worth around $1,790 today.

But how does this actually happen? Well, first things first. Short-term share gains like Sezzle’s are extremely uncommon – 2020 has produced a few of them only because we’ve had a massive share market crash this year. Investors who invested at or near the bottom of this crash have enjoyed gains not normally available on an ‘average year’ on the share market. And investors who make a full-time habit of chasing these kinds of returns usually don’t go home wealthy at the end of the day.

But it’s still possible to turn $100 into $1,000 using ASX shares, even if it doesn’t happen in the space of 6 months.

A compounding miracle

How this happens is through the miracle of compound interest. Compound interest is one of the most misunderstood, yet powerful, forces you can harness in the world of investing. If an ASX company can grow its earnings at 20% per annum for 10 years, it might sound ok to your ears. But picture this: if a company that might have earnings of $50 million in 1 year, and grows this figure by 20% each year for 10 years, will end up with earnings of $310 million. If it continues this growth streak, even at a lower rate of 15% for another 10 years, it will be pulling in $1.25 billion.

Now, let’s assume that you bought $100 worth of this company’s shares and the shares trade at a consistent price-to-earnings (P/E) ratio. It would then take 14 years to turn your $100 worth of shares into $1,000. That might not sound like too much of a big deal. But the maths is the same no matter the amount. Say you had $1,000 initially invested in our wunderkind company. After 14 years, this would be worth $10,000. And if you had $10,000, then 14 years later you’d have $100,000. $100k? $1 million. You can see how quickly this would add up.

If you were lucky enough to have been invested in a company or 2 of this kind of calibre, you would be extremely wealthy before you knew it. Investing is about discipline, and accepting that compound interest will make you rich if you give it enough time. No wonder Einstein reportedly described it as the ‘8th wonder of the world’.

More reading

• Why the Sezzle share price is zooming 8% higher today
• BNPL shares like Afterpay (ASX:APT) and Zip (ASX:Z1P) are soaring today. Here’s why
• The Sezzle (ASX:SZL) share price has now fallen 45% in 2 weeks as air continues to go out of the BNPL sector
• Are higher P/E ratios really here to stay?
• 3 exotic ASX tech ETFs you might want to add to your portfolio today

Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends Sezzle Inc. The Motley Fool Australia has recommended Sezzle Inc. 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 MGM Wireless Limited (ASX: MWR) share price bounced today as the company announced that Amazon.com, Inc. (NASDAQ: AMZN) would be selling MGM’s Spacetalk device on its platform. The MGM Wireless share price flew 6.25% higher in intraday trade, before closing flat for the day at 16 cents.

What MGM Wireless does

MGM Wireless is a software company that designs and develops technology and wearable devices for connections between families, schools and society.

In 2017, the company shifted to wearables, developing the market leading ‘Spacetalk’ children’s smartphone watch, which is now the significant share of the overall business. Spacetalk is a mobile phone built into a smartwatch designed just for kids from the age of 5 to 12. It allows two-way phone calls and SMS messaging for children to a parent-controlled list of contacts, among other GPS tracking features.

The subscription based ‘AllMyTribe’ mobile app enables parents to manage their devices.

Amazon deal

Amazon will initially sell the Spacetalk device on Amazon.co.uk. Impressively, Amazon.co.uk is the most visited ecommerce website in the UK reaching 51% of the population, receiving 453 million total visits in August 2020, with Consumer Electronics and Technology being the highest audience interest category. With the UK population beimg 3 times that of Australia, this opportunity opens up a huge market for MGM Wireless as it seeks to expand its footprint.

In addition to building out this new sales channel on Amazon.co.uk, the company continues to invest in other online and brick-and-mortar sales and distribution channels in the UK. In August 2019, Sky began selling Spacetalk through Sky Mobile on monthly plans. Closer to home, MGM Wireless boasts sales partnerships with companies such as TPG Telecom Limited (ASX: TPG).

What now for the MGM Wireless share price

The MGM Wireless share price has not had a good year so far, falling a huge 45%. Shareholders will be hoping that this deal with Amazon provides the impetus to turn its fortunes around as it seeks to return to its former highs of 30 cents. The MGM Wireless share price is currently trading at 16 cents.

More reading

• 3 ASX shares to buy before this window of opportunity closes
• Better buy: Amazon vs Netflix
• Amazon’s Luxury Stores just dealt another blow to department stores
• Better buy: Slack Technologies vs Microsoft
• Apple, Amazon, Microsoft are bigger than EVERY unicorn combined

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Daniel Ewing 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 Amazon 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 Amazon. 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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If you’re approaching retirement and currently constructing an investment portfolio for this next stage in your life, then I think the ASX 200 shares listed below would be worth considering as candidates.

I believe these ASX shares have positive outlooks and are well-positioned to grow their earnings and dividends over the long term. Here’s why I like them:

Coles Group Ltd (ASX: COL)

The first share to consider buying for a retirement portfolio is Coles. I think it would be a great core holding because of its strong business model, attractive yield, positive long term outlook, and defensive qualities. In respect to the latter, this year Coles has proven that it can perform no matter what the economy throws at it.

Despite the pandemic and the bush fires, it reported a 6.9% increase in sales to $37.4 billion and a 7.1% lift in net profit after tax to $951 million in FY 2020. The good news is that I’m confident there will be more of the same over the rest of the 2020s. All in all, this could make the Coles share price a long term market beater.

Goodman Group (ASX: GMG)

Another of my favourites for a retirement portfolio is Goodman Group. It is a global industrial property company that owns, develops, and manages modern industrial real estate including logistics facilities, warehouses, and business parks in strategic locations throughout 17 countries. 

I’m a big fan of the company due to its gateway city strategy. This strategy means Goodman focuses on investing in and developing high quality industrial properties in strategic locations. These are close to large urban populations and in and around major gateway cities globally. This is where demand is strong and transformational changes are driving significant opportunities for its business. Given this strategy and its outstanding property portfolio, I believe Goodman is well-placed to deliver solid earnings and distribution growth over the next decade and beyond. 

More reading

• Bolster your portfolio with these outstanding ASX blue chip shares
• 2 top ASX dividend shares I would buy for income this week
• Beat an RBA rate cut with these ASX dividend shares
• 3 ASX dividend shares to buy in a downturn
• 4 of the best ASX 200 shares to buy in September

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of COLESGROUP DEF SET. 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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You can give yourself a payrise by investing in the ASX dividend shares that I’m going to talk about in this article.

The great thing about some ASX businesses is that they can continue to pay solid dividends (or distributions) to shareholders even if there is a recession in the economy and even if there is volatility.

Some ASX shares can continue to pay attractive dividends to investors for many years to come.

I believe these ASX dividend shares are attractive ideas to boost your income:

WAM Leaders Ltd (ASX: WLE)

WAM Leaders is a listed investment company (LIC) which targets large shares on the ASX.

One of the main benefits of a LIC is that it can make investment returns and turn that profit into dividends for shareholders. Normal companies make profit from selling products or services. LICs make their profits with investment profits.

WAM Leaders has been steadily growing its dividend for a few years now. The LIC was formed in May 2016 and it started paying a dividend in FY17. The ASX dividend share’s portfolio has made an average return of 10.6% (before fees, expenses and taxes) per annum since inception, outperforming the S&P/ASX 200 Accumulation Index by 3.5% per annum.

The LIC is currently undertaking a capital raising. WAM Leaders has announced the board’s intention to increase its FY21 interim dividend to 3.5 cents per share, which would be a 7.7% increase compared to the FY20 interim dividend.

At the current WAM Leaders share price it’s offering a forward grossed-up dividend yield of at least 8.1%.

Vitalharvest Freehold Trust (ASX: VTH)

Vitalharvest is an agricultural real estate investment trust (REIT) which owns large citrus and berry farms in Australia, some of the biggest in the country.

The ASX dividend share generates rent in two different ways. It receives fixed rent for the farms. It also receives variable rent from its tenant, Cost Group Holdings Ltd (ASX: CGC). The variable rent comes from a profit-share agreement where Vitalharvest receives 25% of the profit from those farms.

The FY20 variable component was the lowest it has been in years, yet Vitalharvest was still able to pay a distribution which equates to a 6.1% distribution yield at the current Vitalharvest share price. That’s a good yield in my opinion.

I expect the ASX dividend share’s distribution can grow organically as variable returns to normal as the drought lifts and demand for food increases.

I’m excited by the new manager’s plans to buy food-related assets which could provide more consistent rent like food storage buildings and food processing properties.

The ASX dividend share is currently trading at a 14% discount to the Vitalharvest net asset value (NAV) at 30 June 2020.

Pacific Current Group Ltd (ASX: PAC)

Pacific is a business that is an asset management outfit which helps its investment partners by using its resources like capital, institutional distribution capabilities and operational expertise to help partners excel.

Excluding non-cash impairments, Pacific had a strong FY20 result with underlying earnings per share (EPS) rising by 18% to $0.51. This gave the board the confidence to increase the full year dividend by 40% to $0.35. That was after a final dividend of $0.25 per share.

If the company’s net profit can keep going up then I think the dividend could continue to rise. In FY20 alone its funds under management (FUM) grew by 52% (excluding boutiques sold and acquired during the year) to $93.3 billion. If it can grow its FUM by more than 10% a year then the dividend could continue to grow nicely over the coming years as well.

At the current Pacific share price it offers a grossed-up dividend yield of 8.25%.

Foolish takeaway

I like each of these ASX dividend shares. Pacific could produce good market-beating returns if its FUM keeps rising. WAM Leaders offers nice diversification and decent returns, whilst Vitalharvest offers an alternative investment into agriculture for ASX investors.

More reading

• ASX dividend share WAM Leaders (ASX:WLE) flags dividend boost
• 2 top ASX shares to buy for income and growth
• Top ASX dividend shares to buy in September 2020
• 3 ASX dividend shares I’d buy with $3,000 today
• 3 ASX shares now trading at crazy cheap prices

Motley Fool contributor Tristan Harrison 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 Unibail Rodamco Westfield (ASX: URW) share price closed today’s trade down 5.33% to $3.02 per share. This comes after the commercial real estate giant released details of its 9 billion euro (A$14.5 billion) reset plan.

Unibail’s share price is now down to new 52-week lows. Like almost every retail share, Unibail got knocked down during the COVID-19 market rout earlier this year, falling 58% from 18 February through 18 March.

Unlike many of its peers, though, the Unibail share price hasn’t recovered from the selloff. In fact, it’s gone the other way, down another 30% from 18 March. Year-to-date, Unibail’s share price is down 73%.

By comparison the S&P/ASX 200 Index (INDEXASX: XJO) is down 12% in 2020.

What does Unibail Rodamco Westfield do?

Unibail is among Europe’s largest commercial real estate companies, owning retail and office complexes. It has assets in Europe, the United Kingdom and the United States of America.

Unibail acquired Australian shopping centre operator Westfield Corporation, created by the split of Westfield Group, in 2018, which then saw Unibail shares list on the ASX.

What reset plan did Unibail announce?

Unibail said its 9 billion euro reset plan will strengthen its balance sheet and give it increased financial flexibility to pursue its long-term strategies.

The deleveraging plan includes a fully underwritten 3.5 billion euro capital raising the company plans to use straight away to pay down its debt obligations.

Unibail also stated it will limit cash dividends through scrip and a lower payout ratio. A measure it expects will save 1 billion euros in cash over the next 2 years. It also plans to cut its non-essential operating capital expenditures and development by 800 million euros.

By the end of 2021, Unibail expects to complete 4 billion euros worth of disposals. On the European front, approximately half the disposals are retail assets with the other half offices. It also plans to reduce its US regional mall footprint in the near term. The company stated that 1 billion euros of disposals are already well advanced.

The reset plan is intended to maintain Unibail’s strong investment grade credit rating, as well as a sustainable capital structure with a loan to value (LTV) ratio below 40%> It’s also aiming to keep the net debt/earnings before income, taxes, depreciation and amortisation (EBITDA) ratio below 9 times.

Commenting on the announcement, Christophe Cuvillier, group CEO, said:

URW’s immediate priority, as announced on July 29, is to deleverage, primarily through asset disposals. However, given the uncertainties around the duration of the COVID-19 pandemic and the recovery, we have decided, as a matter of prudent management, to substantially strengthen our balance sheet, in order to maintain a robust investment grade credit rating and to ensure flexibility in a world that is unpredictable and requires agility…

On the operational front, we see continued improvement in footfall and tenant sales, and are making steady progress in our tenant negotiations. As the environment remains challenging, we believe today’s announcement, including the fully underwritten capital raise, is an important step to ensure URW is best positioned for the future.

With a tough year behind it, the Unibail share price will be one to watch as the reset plan unfolds.

More reading

• Last week’s worst performing ASX shares
• ASX 200 Weekly Wrap: Blue chips, earnings drag ASX lower
• These were the worst performing ASX 200 shares last week

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 Scentre Group (ASX: SCG) share price is rising today as the company priced US$3 billion worth of hybrid notes. The Scentre share price is trading 2.64% higher to $2.33, whilst also leading the number of securities traded on the S&P/ASX 200 Index (ASX: XJO) at the time of writing.

What Scentre does

Scentre is a leading Australian real estate investment trust (REIT). The retail property group owns and operates the well-known Westfield properties across Australia and New Zealand. These properties are some of the most highly regarded retail assets in the region and enjoy hundreds of millions of customer visits each year.

As a result of the COVID-19 pandemic the Scentre share price has seen a sharp decline so far this year, falling a huge 40%. This is woeful in comparison to the smaller 11% drop in the All Ordinaries Index (ASX: XAO) index.

Why is the Scentre share price rising today?

The Scentre share price is rising today as the company announced that they have priced US$3 billion of subordinated hybrid notes in the US market. The hybrid note issue comprises:

• US$1.5 billion 60-year, non-call 6-year subordinated notes with a coupon of 4.75%, and
• US$1.5 billion 60-year, non-call 10-year subordinated notes with a coupon of 5.125%

This is the group’s inaugural issuance of hybrid notes, which diversify its sources of capital and are expected to be a long-term feature of Scentre’s funding moving forward. As a result, Scentre now has sufficient long-term liquidity to cover all debt maturities to early 2024. Liquidity is important in today’s uncertain times and thus the news is likely driving the Scentre share price higher.

Following the issuance, Scentre will reduce its indebtedness including borrowings under the its revolving bank facilities. Scentre will aim to make distribution in early 2021 from surplus net operating cash flows.

What now for the Scentre share price?

Scentre shareholders will be pleased with the news that regional Victoria is set to emerge from lockdown. Furthermore, as Australia and New Zealand continue to control the pandemic, the Scentre share price continues to trade at a very cheap price. In saying that, ASX shares don’t fall for no reason and investors will be expecting lower future earnings as the pandemic has hit shopping centres hard.

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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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