Author: therawinformant

The Boral Limited (ASX: BLD) share price is under the spotlight this morning with its new chief executive taking a broom to its balance sheet.

The building materials supplier announced it will take a pre-tax impairment charge of $1.3 billion against its full year results.

Most of this relates to Boral’s disastrous US expansion under its former CEO Mike King.

3 key takeaways from the billion-plus impairment

The new head honcho, Zlatko Todorcevski, is wasting no time in clearing some very big cobwebs as his feet has only been under the deck for less than two months.

More than 90% of the impairment amount relates to assets within Boral North America including goodwill, intangible assets and Boral’s investment in the Meridian Brick joint venture.

The move is noteworthy for three reasons (outside the obvious impact to Boral’s bottom line). First, I have to wonder if Boral is setting the scene for a capital raising when it officially releases its full year profit results on 28 August (more on its results below).

Cap raise on the cards?

This downgrade stands in contrast to a surprising recent surge in US housing activity and the upbeat quarterly update from its peer James Hardie Industries plc (ASX: JHX).

Write-down casts long shadow over sector

Boral’s billion-plus impairment included a $123 million charge relating to it Australian operations. Management justified the decision by pointing to the significant decline in housing construction, particularly in New South Wales.

It also highlighted the slower pace of infrastructure construction than previously expected and weak construction activity in Western Australia and the Northern Territory.

This dour assessment could weigh on sentiment towards other stocks exposed to these markets. These includes the CSR Limited (ASX: CSR) share price, Lendlease Group (ASX: LLC) share price and GWA Group Ltd (ASX: GWA) share price, just to name a few.

Boral’s FY20 results early release

Boral also effectively pre-released its FY20 results, which will officially be announced this Friday. Management said that underlying FY20 earnings before interest, tax, depreciation and amortisation (EBITDA) will range between $820 million and $825 million.

Underlying net profit will come be at $175 million to $180 million and both figures exclude significant items like the write-down.

While the impairment is non-cash, don’t expect the group to pay a dividend. Management canned the idea of a final dividend payment after it paid an interim dividend of 9.5 cents in April.

More reading

• 2 ASX 200 bargains to buy this week
• Are Webjet and other ASX travel shares taking off?
• Last week’s worst performing ASX shares
• Fortescue and 2 more ASX 200 shares to watch this week
• G8 Education share price on watch after $239 million loss

Motley Fool contributor Brendon Lau owns shares of James Hardie Industries plc. Connect with me on Twitter @brenlau.

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 Fortescue Metals Group Limited (ASX: FMG) share price is pushing higher after the release of its full year results.

At the time of writing the iron ore producer’s shares are up 2% to $18.36.

How did Fortescue perform in FY 2020?

Fortescue certainly was on form in FY 2020 and delivered record shipments, revenue, earnings, and cashflow over the 12 months. Management advised that this reflects the successful execution of its integrated operations and marketing strategy, and strong customer demand.

For the 12 months ended 30 June 2020, Fortescue posted a 29% increase in revenue to US$12,820 million. This was driven by shipments of 178.2 million wet metric tonnes and a 21% lift in its average realised price to US$78.62 a tonne.

And combined with a small decrease in its C1 costs to US$12.94 per tonne, its earnings grew even quicker. Fortescue’s underlying earnings before interest, tax, depreciation and amortisation (EBITDA) increased 38% to US$8.4 billion.

On the bottom line, the mining giant’s net profit after tax lifted 49% to US$4.7 billion or US$1.54 (A$2.29) per share.

Bumper dividend for shareholders.

Fortescue continued to generate strong underlying cashflows during the year. Net cash from operating activities came in at US$6.4 billion, up 47% on FY 2019’s result.

Together with its strong balance sheet, this allowed the Fortescue board to declare a fully franked final dividend of A$1.00 per share. Combined with its interim dividend of 76 Australian cents per share, Fortescue has increased its full year dividend by 54% to A$1.76 per share in FY 2020. This represents a 77% payout ratio of FY 2020 net profit after tax, which is consistent with its policy of a payout ratio of 50 to 80% of net profits.

To be eligible for this dividend, investors will need to own its shares before the ex-dividend date of 31 August. It will then be paid to eligible shareholders on 2 October.

FY 2021 guidance.

In FY 2021 the company is expecting a similar level of iron ore shipments. It has provided guidance of 175 to 180 million tonnes.

It is also forecasting flat to marginally higher costs of US$13.00 to US$13.50 per tonne. This is based on an exchange rate of 70 U.S. cents.

Capital expenditure is forecast to be US$3 billion to US$3.4 billion. This is inclusive of US$1 billion of sustaining, operational, and hub development capital, US$140 of exploration expenditure, and US$1.9 billion to US$2.3 billion for major projects. The latter includes its Eliwana, Iron Bridge, and Energy projects.

More reading

• Fortescue and 2 more ASX 200 shares to watch this week
• 5 things to watch on the ASX 200 on Monday
• 5 things to watch on the ASX 200 next week
• Fortescue share price higher after mineral resource upgrade
• Is now a good time to buy Fortescue shares?

Motley Fool contributor James Mickleboro 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 Star Entertainment Group Ltd (ASX: SGR) share price jumped 7.1% higher on Friday on the back of a solid full-year result.

Investors were bullish on the ASX wagering share to close out the week, but where is the Star Entertainment share price headed in 2020?

What did Star Entertainment report on Friday?

I think investors liked the group’s strong performance between July 2019 and February 2020.

Clearly, the coronavirus pandemic weighed on earnings in the back half of the year. State governments introduced sweeping restrictions which hurt revenues across Star’s casinos in Brisbane, Sydney and the Gold Coast.

Star reported a 22.8% decline in earnings before interest, taxes, depreciation and amortisation (EBITDA) to $430 million. However, there were strong signs for investors looking long-term given the first-half growth.

Despite a 46% drop in net profit, the Star Entertainment share price climbed higher as one of Friday’s top performers.

Tough trading conditions led the wagering group to stand down 90% of staff and focus on capital management in the short-term. No dividend was announced as management focused on maintaining solvency and liquidity in these uncertain times.

Is the Star Entertainment share price a gamble?

I certainly think the Star Entertainment share price is worth a look for $3.15 per share.

The ASX wagering group’s shares are up 23.5% in August but remain down 32.4% for the year. It’s not alone in feeling the COVID-19 pain but could be subject to further uncertainty.

I see a couple of issues facing Star Entertainment in the short-term. The first is the tight restrictions on operations with state governments unlikely to classify Star as an essential service anytime soon.

The broader, medium-term impact I see is the border closures. That’s particularly the case with international borders remaining shut given the significant revenue from international VIPs.

Both of these factors could weigh heavily on the Star Entertainment share price in 2020 and 2021. Earnings growth appears to be largely beholden to Federal and State government restrictions.

That creates some valuation uncertainty as future cash flows are very difficult to forecast. In my view, that makes Star Entertainment a strong buying opportunity or a potential falling knife.

Foolish takeaway

The Star Entertainment share price could be good value if it emerges on the other side of this with its balance sheet intact.

I do think the wagering group is a bit of a gamble given the uncertainty over the next 12-18 months.

However, that’s the case for many ASX shares in the current climate with significant potential upside from a quicker than expected recovery.

More reading

• ASX 200 flat: Suncorp surges higher, A2 Milk acquisition plans, TPG’s half year update
• Why a2 Milk, Coca-Cola Amatil, Star, & Suncorp shares are charging higher
• Star Entertainment share price rises 6% as profits fall due to shutdowns
• Why Tabcorp is the latest “conviction buy” recommendation from this top broker
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Motley Fool contributor Ken Hall 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 Webjet Limited (ASX: WEB) share price led the S&P/ASX 200 Index (ASX: XJO) leaders on Friday, climbing 11.8% higher. It wasn’t the only ASX travel share on the move last week as investors piled back into the big travel companies.

Why ASX travel shares are taking off

It seems odd that ASX travel shares would be back in vogue with tight coronavirus restrictions around the company.

The prospect of international travel in the near future is bleak with even New Zealand struggling to contain a new COVID-19 outbreak.

However, investors have been bullish on the Aussie travel companies in the past week or so. 

One big factor was the heavy losses in the Webjet share price after reporting a $143.6 million full-year loss. That saw the ASX travel share fall 12% lower on Thursday before rebounding strongly to close out the week.

It was a similar story for the Flight Centre Travel Group Ltd (ASX: FLT) share price. Shares in the Aussie travel group jumped 7.1% higher on Friday but remain down 68.4% for the year.

I think there’s a bit of momentum behind the recent moves with investors hedging their bets across the travel industry.

I’m mildly bullish on the Corporate Travel Management Ltd (ASX: CTD) share price right now. The big difference here is that I think business travel will rebound much more quickly than leisure.

That means Corporate Travel earnings could outperform its peers in the short to medium-term. State borders remain shut but intra-state flights continue to run between regional hubs.

The ASX travel share jumped 4.5% higher on Friday and is now down 33.3% for the year. However, the momentum factor is also strong, with Corporate Travel shares up 57.9% since the start of August.

Momentum isn’t exactly a long-term play, but I think it certainly helps in the current environment. 

Corporate Travel’s share price fell lower after its full-year results announcement on Wednesday but investors were back buying by the end of the week.

Foolish takeaway

ASX travel shares have been rocketing higher despite tight restrictions across the country.

However, the share market is forward-looking which means investors are pricing in the short-term negative impacts.

That could mean now is a good time to snap up ASX travel companies like Webjet for a good price and hold for the long-term.

More reading

• 2 ASX 200 bargains to buy this week
• Boral cops $1.3bn body blow to profits could signal impending cap raise
• Last week’s worst performing ASX shares
• Fortescue and 2 more ASX 200 shares to watch this week
• G8 Education share price on watch after $239 million loss

Motley Fool contributor Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Corporate Travel Management Limited and Webjet Ltd. The Motley Fool Australia has recommended Flight Centre Travel Group 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 Mcgrath Ltd (ASX: MEA) share price is on watch this morning following the release of the company’s full year 2020 financial results. The McGrath share price has had a rocky year so far with its shares falling more than 42% lower in year-to-date trading.

Why is the McGrath share price on watch?

McGrath recorded a strong turnaround in profitability during FY 2020, with underlying earnings before interest, taxes, depreciation and amortisation (EBITDA) of $3.7 million recorded. This compared with a loss of $6.4 million recorded in FY 2019. However, it should be pointed out that this year’s result did include $2.2 million worth of government grants related to COVID-19.

McGrath also managed to recorded a solid 11% increase in revenue to $91.69 million for the full financial year. In addition, the group recorded an impressive 31% increase in sales per agent for the 12 month period. This result was achieved despite the negative impact of the coronavirus pandemic on the wider Australian residential property sector during the fourth quarter. 

Solid balance sheet

McGrath ended FY 2020 with a strong balance sheet. It had no debt on its books as at 30 June, and had $17.3 million of cash in hand. McGrath estimates that its rent roll was worth around $52.2 million at this time. $38.5 million of this amount the company noted, was not reflected on the balance sheet.

What contributed to McGrath’s improved performance?

Investors will be watching the McGrath share price closely this morning after the company announced its turnaround followed a series of strategic moves implemented during FY 2020. The company’s headquarters was moved to a new technology hub in Pyrmont. Also, a new CRM system was rolled out across McGrath’s nationwide company-owned and franchised offices, and a new website was launched. In addition, McGrath successfully acquired four company-owned offices, which complemented new franchise offices that were added during the year.

McGrath management commented on the results stating, “We are pleased with the $10 million turnaround, a return to after-tax profit and further strengthening of our balance sheet with $17.3 million in cash. Our business performed significantly better than the market during the year and we have a strong platform on which to build in 2021, notwithstanding the ongoing impacts of COVID.”

What’s next for the McGrath share price?

During FY 2021, McGrath will look to further consolidate its nationwide operations while focusing on further recruitment of suitable agents. There will also be a strong focus on further improving cost control and updating legacy systems.

McGrath did not provide revenue guidance. However, the group noted that it expects to see a decline in residential property prices over the coming months. Government support and record low interest rates, the company noted, are anticipated to minimise this trend. Also, McGrath anticipates some softness in rental yields throughout FY 2021.

The McGrath board decided to not pay an FY 2020 dividend due to the uncertain economic environment surrounding COVID-19.

The McGrath share price was trading at 19 cents at the market’s close on Friday. Whilst having recovered 18.8% from its March low, the McGrath share price is still trading 50% lower than its 52-week high.

More reading

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Motley Fool contributor Phil Harpur 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 Ecofibre Ltd (ASX: EOF) share price is on watch this morning after an impressive earnings report. It produces non-psychoactive hemp products for distribution in the United States and Australia. The company’s primary product is cannabidiol (CBD) which is used to create nutraceutical products. Other products in this category include dietary supplements, vitamins, fortified dairy products, and citrus fruits and many others. 

The company reported a 42% increase in top line revenues, and an eye watering 119% increase in net profit after tax (NPAT). The year of the coronavirus pandemic has been a foundational year for this innovating company. Indeed, it has built the infrastructure it needs to grow rapidly into a very large addressable market.

Why is the Ecofibre share price on watch?

The Ecofibre share price is likely to see an impact after announcing top line revenue reached $50.7 million in its first full year as a publicly listed company. In fact, the company’s gross margin was 76%. This is the margin between revenue and the cost of producing the product. With the addition of all other operating costs, the NPAT margin was 25.9%. These large margins clearly show the high value nature of this business. Moreover, the company was able to achieve a return on equity (ROE) of 20.9%, while increasing net assets by 48.9%.

The company has a range of subsidiaries. However, most importantly for the Ecofibre share price is Ananda health. This is the leading nutraceutical product manufacturer in retail pharmaceutical sales channel in the United States. Moreover, Ananda health recently signed a deal with CVS Pharmacy, the largest retail pharmacy company in the US. This speaks highly of the quality of Ananda Health products.

Within Australia, all Ananda hemp products are available under the Special Access Scheme (SAS) and Authorised Prescriber scheme. Health practitioners are prescribing the product for a range of conditions. In fact, a close friend of mine with multiple sclerosis is using it.

Ecofibre food products are available at Woolworths Group Ltd (ASX: WOW) stores under the ‘Macro’ brand, and through selected IGA stores under the Ananda Food brand. In addition, these products are sold wholesale to food manufacturers and other distributors. This revenue stream is still unprofitable, but it has improved on FY19. 

New revenue streams

The company commercialised its new Hemp Black line of clothing in FY20. This project started off 2 years ago with technology development at Thomas Jefferson University. Even without the sustainability impacts, hemp fibre is lightweight and absorbent, and has three times the tensile strength of cotton. 

In April, the subsidiary was ready to launch with Yoga wear to demonstrate the quality and functionality of its technologies. However, fortunately it pivoted to masks and neck gaiters to help in the fight against coronavirus. As a result, the subsidiary broke even in FY20. On 29 July, the company announced the acquisition of a portfolio of companies under the business TexInnovate, an advanced textile manufacturer. This gives Hemp Black capabilities throughout the value chain. TexInnovate also brings a number of clients with it. 

Alongside the financial information above, I think this is another demonstration of the managerial capability of Ecofibre. As well as its ability to pivot rapidly. Patents are pending on clothing and mask designs, as well as many patents over the fabric and processes the company has developed. 

Foolish Takeaway

I think the Ecofibre share price is a growth opportunity for ASX investors. It is the sector leader in the very important retail pharmacy channel for its nutraceutical product. This sector that is likely to be worth greater than $722 billion globally by 2027. This gives it a first mover advantage in a wide open market; just as Afterpay Ltd (ASX: APT) had in Australia in the beginning. Furthermore, the company is committed to continue with clinical testing and research. 

For me personally, the actions of management so far give me a strong sense of their competence and business acumen. I believe they are very well positioned for growth in a range of areas, although I am not sure about the food revenue stream. Regardless of that, the company is valued at $919.97 million and has a price to earnings ratio of 63.36. I think the high earnings multiple is justified, and I see this as a strong growth candidate over the next 12 months and beyond.

More reading

• ASX 200 Weekly Wrap: Blue chips, earnings drag ASX lower
• 5 blue chip ASX 200 shares a beginner can use to start a share portfolio
• Meet the latest ASX stock that’s more than doubled its full year COVID-19 earnings
• Woolworths share price higher on acquisition news
• These 3 ASX stocks just got upgraded by top brokers to “buy” today

Motley Fool contributor Daryl Mather has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of AFTERPAY T FPO and Woolworths 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 Australian share market ended last week slightly lower. Uncertainty over economic recovery both domestically and abroad, as well as geopolitical tensions with China, dampened sentiment despite some better than expected earnings results. The S&P/ASX 200 Index (ASX: XJO) ended the week 0.2% lower while the All Ordinaries Index (ASX: XAO) performed marginally better, down just 0.02% for the week. 

Earnings season has laid bare the economic damage of the coronavirus pandemic. The Westpac Banking Corp (ASX: WBC) share price slumped after the bank cancelled its interim dividend. BHP Group Ltd (ASX: BHP) shares also fell after the miner’s profit and dividend came in below expectations. Let’s take a look at some of the worst performing shares on the ASX last week. 

Treasury Wine Estates Ltd (ASXL: TWE) 

The Treasury Wine Estates share price fell 22.82% last week to close the week at $9.91. The winemaker has become embroiled in geopolitical tensions with China, which has accused Australia of dumping cheap wine in the country. China has moved to impose significant import duties on Australian wine and is investigating all Australian wine imported in containers of two litres or less.

China is a priority market for Treasury Wine Estates, which said it would cooperate with any requests for information received from Chinese or Australian authorities. 

Treasury Wine Estates had a difficult FY20 with NPAT falling 25% to $315.8 million. The fall reflected challenging conditions in the US wine market and the impact of COVID-19 on trading across all geographies. A final dividend of 8 cents per share was declared, taking full year dividends to 28 cents per share, a 26% decline in FY19. Treasury Wine Estates says it is positioning for the next phase and was optimistic about its ability to return to sustainable profit and margin growth over the medium to long-term. 

Unibail-Rodamco-Westfiield (ASX: URW) 

The Unibail-Rodamco-Westfield share price fell 12.89% last week to finish the week at $3.21. Rumours began circulating about a rights issue by the shopping centre operator last week. The company was forced to issue an announcement stating no decision had been taken. Deleveraging is a priority for Unibail, which has taken a number of steps to strengthen its balance sheet and liquidity in response to the pandemic. The second dividend installment was cancelled, non-essential capital expenditure deferred, and the development pipeline reduced. 

Unibail has disposed of €4.8 billion in assets since 30 June 2018 and intends to sell an additional €4 billion of assets in the next couple of years. Management continues to weigh the merits of potential strategies to strengthen the company’s financial profile, but Unibail says no decision has been made. Having been forced to close its shopping centres for an average of 67 days from March, Unibail saw recurring earnings per share decline 27.2% in 1H20. 

Cooper Energy Ltd (ASX: COE) 

The Cooper Energy share price fell 10% last week to close the week at 36 cents. Cooper Energy is an oil and gas company supplying customers like AGL Limited (ASX: AGL) and Origin Energy Ltd (ASX: ORG). Cooper Energy announced an agreement with APA Group (ASX: APA) last week to work together to complete commissioning of the Orbost Gas Processing Plant. The agreement provides a practical and commercial way forward for both entities to deliver much needed additional gas to south-east Australia. 

Commissioning of the plant has taken much longer than anticipated. But despite the plant’s variable processing rates and 21 days offline, the company was able to deliver a 61% increase in gas revenue in the June quarter. Quarterly production was up 118% giving FY20 production of 1.56 million boe, a 19% increase. A substantial increase in production is expected in FY21 through improvements to output thanks to the plant upgrade. 

Resolute Mining Limited (ASX: RSG) 

The Resolute Mining share price dropped 9.88% last week to finish the week at $1.14. The gold miner issued an operational update during the week after Mali president Ibrahim Keïta resigned. Resolute’s Syama Gold Mine is located in the country. The president’s resignation and the subsequent dissolution of government follows action by the military seeking to resolve the recent political crisis. Resolute advised that operations at the Syama Gold Mine were continuing as normal with no impact on production. Resolute has operated the mine since 2003 under the well-established mining laws of Mali. 

In the June quarter, Resolute produced a total of 107,183 ounces of gold, placing the company in a strong position to deliver full year guidance of 430,000 ounces of gold. The gold price has outperformed in 2020, and was trading close to $2850 an ounce earlier this month. It has since pulled back, and is now trading below $2750 an ounce. Plans are in place to improve production and deliver lower costs at Syama in the second half while exploration opportunities are evaluated. 

GWA Group Ltd (ASX: GWA) 

The GWA Group share price fell 9.42% last week to close the week at $2.50. The industrial company delivered its full year result last week revealing a drop in earnings and profits. The company’s top line was significantly impacted by lower construction activity and the impact of the COVID-19 pandemic. Earnings before interest and taxes EBIT from continuing operations declined 8% to $71.8 million. The lead to a 12% decrease in net profit after taxes from continuing operations, which was down to $44.9 million. Statutory profit, which was $94 million in FY19, fell to $43.9 million in FY20. However FY19 results included $50.8 million profits from the sale of the door and access systems business. 

CEO Tim Salt said: “While markets were challenging and compounded by the unforeseen impact of COVID-19, our focus continues to be on controlling those elements within our control.”

The company’s cost out program has delivered $5 million savings in FY20 and further short-term cost reduction delivered an additional $10.5 million in savings. 

More reading

• Fortescue and 2 more ASX 200 shares to watch this week
• G8 Education share price on watch after $239 million loss
• These ASX shares were top performers last week
• ASX 200 Weekly Wrap: Blue chips, earnings drag ASX lower
• 5 things to watch on the ASX 200 on Monday

Motley Fool contributor Kate O’Brien has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Treasury Wine Estates Limited. The Motley Fool Australia owns shares of APA 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 St Barbara Ltd (ASX: SBM) share price is one to watch this morning as the Aussie gold miner reported a 24% drop in underlying net profit after tax (NPAT).

Why is the St Barbara share price on watch?

St Barbara reported total gold production up 5.4% to 381,887 ounces at an all-in sustaining cost (AISC) of $1,369 per ounce, up 26.8% from the year prior.

The Aussie gold miner sold 381,105 ounces of gold at an average realised price of $2,123 per ounce, generating sales revenue of $827.7 million.

Lower output from the group’s Leonara and Simberi operations were offset by strong production from St Barbara’s Atlantic Gold acquisition.

This comes as global gold prices continue to surge to new record highs amid the uncertainty created by the coronavirus pandemic.

Gross profit and earnings before interest, tax, depreciation and amortisation (EBITDA) both jumped 26.1% higher to $442.9 million and $415.7 million, respectively.

However, a significant increase in depreciation and amortisation expenses affected the company’s bottom line, resulting in underlying NPAT of $108.5 million.

Cash contribution from operations totalled $273.2 million with net operating cash flow climbing 16.1% to $279.5 million.

The St Barbara share price has been rocketing higher this year and is up 24.2% prior to this morning’s open. The group’s FY20 return on equity came in at 10% with a 7% yearly change in closing share price.

The Aussie miner reported a $98 million net cash position as at 30 June 2020. That comprises cash and term deposits of $450.5 million offset by $307 million of debt.

Dividend

All eyes will be on the St Barbara share price this morning as management announced a 4 cents per share (cps) final dividend.

Including the 4 cps interim dividend, St Barbara will pay out a full-year dividend of 8 cps. Based on Friday’s closing price of $3.39 per share, that translates to a dividend yield of 2.4% per annum.

Outlook

Unlike many ASX companies this earnings season, St Barbara did provide FY21 guidance.

The Aussie gold miner expects gold production of 370,000 to 410,000 ounces this financial year. St Barbara is forecasting an AISC of $1,360 to $1,510 per ounce for those production levels.

Sustaining capital expenditure of $97 million to $115 million is expected with growth capital of $49 million to $57 million. Management is expecting exploration expenditure of between $30 million to $35 million.

COVID-19 continues to present challenges with St Barbara citing a focus on liquidity and capital management in the short-term.

More reading

• Expert warns that record-breaking gold price is facing painful correction
• Up 21% in a month, is the Northern Star share price a buy?
• Why this ASX miner that’s missing the rally is one of my key picks for FY21
• Leading fundie says the ASX gold share boom is just beginning
• Should you buy ASX gold shares or FAANG stocks in August?

Motley Fool contributor Ken Hall 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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It was another wild ride for the S&P/ASX 200 Index (ASX: XJO) last week as the benchmark index edged 0.2% lower to 6,111.20 points. There were a number of ASX 200 shares under pressure as the August earnings season continued to surprise.

Here’s why I’m keeping an eye on Fortescue Metals Group Limited (ASX: FMG) and 2 more ASX 200 shares in the week ahead.

Why I’m watching Fortescue and 2 more ASX 200 shares

I think this could be a good week for the Fortescue share price. Fortescue is set to announce its full-year results on Monday and I’m hoping for a strong result.

Iron ore prices have been surging and fellow miner BHP Group Ltd (ASX: BHP) reported a solid result in its iron ore segment.

The Fortescue share price is up 66.9% this year but could break its current all-time high of $18.92 on the back of a strong annual report.

Other than Fortescue, I think the buy now, pay later (BNPL) industry is worth watching. Both Afterpay Ltd (ASX: APT) and Zip Co Ltd (ASX: Z1P) are reporting their results on Thursday.

The Afterpay share price is certainly one to watch after the ASX 200 fintech share rocketed to a new all-time high of $82.00 last week.

Online retail sales have exploded during the coronavirus pandemic which has been good for Afterpay earnings. There are high expectations for the Aussie company in August but I’m hoping they can deliver this week.

Speaking of retail, the Scentre Group (ASX: SCG) share price is on my watchlist. The ASX 200 real estate investment trust (REIT) owns and operates Westfield shopping centres across Australia and New Zealand.

Unlike the online sector, bricks and mortar retail sales have been hit hard by COVID-19 restrictions. The Scentre share price has dropped 46.5% this year and is under pressure coming into the August earnings season.

I don’t have high expectations for strong funds from operations (FFO) or asset valuations. However, if Scentre management can chart a potential recovery and provide a strong growth outlook, the ASX 200 REIT share could be on the move.

More reading

• Last week’s worst performing ASX shares
• Afterpay share price on watch after announcing European expansion
• G8 Education share price on watch after $239 million loss
• These ASX shares were top performers last week
• ASX 200 Weekly Wrap: Blue chips, earnings drag ASX lower

Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of ZIPCOLTD FPO. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool Australia has recommended Scentre 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 Afterpay Ltd (ASX: APT) share price will be on watch on Monday after it announced its expansion into mainland Europe.

What did Afterpay announce?

This morning Afterpay announced that its wholly owned subsidiary, Clearpay, has entered into a share purchase agreement with NBQ Corporate to acquire 100% of the shares outstanding in Pagantis SAU and PMT Technology SLU (collectively, Pagantis).

According to the release, the two parties have agreed a minimum consideration of 50 million euros. This comprises an upfront payment of 5 million euros in cash upon completion and a deferred consideration of 45 million euros in cash, payable 3 years post completion.

The deferred consideration can exceed 45 million euros, with any excess being payable in cash or Afterpay shares, provided the equity value of Pagantis exceeds 45 million euros three years post completion.

Completion of the acquisition is expected to occur in or before December 2020. It remains subject to Bank of Spain regulatory approval for the proposed change of control.

What is Pagantis?

Pagantis provides a range of buy now pay later and traditional credit services across Spain, France, and Italy. It also has regulatory approval to operate in Portugal. The addressable ecommerce market in these four countries exceeds 150 billion euros or $247 billion.

It has ~1,400 active merchants and ~150,000 active customers. Merchants and customers that are relevant to Clearpay’s European launch strategy will be invited to transition onto the re-configured product upon launch in the third quarter of FY 2021.

Why Europe?

Afterpay revealed that it is expediting its expansion into new markets to capitalise on strong consumer and merchant demand and to increase its global footprint. And it has identified the European Union (EU) as the next logical step for its international expansion. This is due to its large millennial population, vast fashion and beauty retail markets, and significant debit card usage.

Management estimates that the total addressable ecommerce market in the EU exceeds 300 billion euros or almost half a trillion dollars.

As rival Zip Co Ltd (ASX: Z1P) did with its U.S. expansion, the company believes acquiring its way into this new market is the best option. It feels it will both accelerate and de-risk the roll out of its Clearpay branded platform across the EU market.

It also notes that the acquisition provides a fully staffed and experienced team, an existing technology stack and intellectual property, as well as an immediate regulatory right to operate across all EU member states (subject to regulatory approval).

Management also advised that the expansion into the EU is consistent with demand from its marquee global retailers. It notes that the ability to service its retailers in all their key markets strengthens its relationships and contributes to its competitive moat.

Management commentary.

CEO And Managing Director, Anthony Eisen, commented: “Our momentum to date has given us the confidence to expedite our expansion into new global regions. Entering into such internationally relevant markets like the US and the UK and seeing our growth outpace what we experienced in our more mature Australian market, validates the appeal of our product on a global scale.”

“Acquiring Pagantis provides us with the necessary regulatory licencing, resourcing and infrastructure to expedite the launch of Afterpay into key countries in Southern Europe and beyond,” he added.

Mr Eisen concluded: “The new markets we will be entering will provide our global retailers with the opportunity to offer Afterpay in more regions and for us to provide a whole new customer base with access to our differentiated and customer centric model.”

More reading

• Fortescue and 2 more ASX 200 shares to watch this week
• 2 of the best ETFs for investing in ASX shares
• Why Afterpay and these ASX shares just hit record highs
• Top brokers name 3 ASX shares to buy next week
• 5 things to watch on the ASX 200 next week

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of ZIPCOLTD FPO. The Motley Fool Australia owns shares of AFTERPAY T FPO. 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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