Author: therawinformant

This morning, Coles Group Ltd (ASX: COL) joined the long conga line of ASX companies reporting their FY2020 earnings.

Investors didn’t seem to know what to think of the numbers, given the Coles share price rose after open before giving it all up… and then some. At the time of writing, Coles shares are down 1.37% to $18.67.

Coles did report some solid numbers, including revenue growth of 6.9% and net profit growth of 7.1% (you can read more about Coles’ earnings here). But it was the dividend announcement that caught my eye.

Coles has built a reputation as a solid (if not impressive) dividend share since it was kicked out of its former parent company Wesfarmers Ltd‘s (ASX: WES) nest back in November 2018. It’s been a welcome dividend share in many ASX income investors’ portfolio in a year that has seen ASX bank dividends dry up and a bevvy of other former dividend heavyweights slash, defer and cancel their payouts.

So today, Coles announced a fully franked, final dividend of 27.5 cents per share, which is a 14.6% increase on last year’s final dividend of 24 cents per share. With Coles’ February interim dividend of 30 cents per share, Coles will pay 57.5 cents per share in dividends in 2020.

That gives the Coles share price a trailing dividend yield of 3.08% (or 4.4% grossed-up with full franking credits) at today’s level.

Is the Coles share price a buy for dividends today?

A 3.08% dividend is nothing to sneeze at today, especially considering the lack of alternatives on the ASX right now and the record low interest rates investors are currently enjoying.

But how sustainable is this dividend? Well, Coles has an earnings policy when it comes to paying dividends, endeavouring to consistently pay out between 80-90% of its earnings as dividends. Based on Coles’ basic earnings per share for FY2020 of 71.3 cents, paying out 57.5 cents gives Coles a payout ratio of 80.65%.

That to me indicates there is plenty of room for the Coles dividend to grow over time, especially if Coles can continue to grow earnings by around 7% per annum into the future.

Of course, that payout ratio target was made in a pre-COVID world. As such, it might be jettisoned if the coronavirus pandemic weighs on the company’s costs in the months and years ahead. But on today’s earnings report, I think there are good signs that Coles will continue to be a dividend heavyweight in 2021 and beyond.

More reading

• ASX 200 up 0.2%: Westpac cancels dividend, Treasury Wine hammered, Coles impresses
• Coles share price on watch after strong FY 2020 result
• 5 things to watch on the ASX 200 on Tuesday
• 2 growing ASX dividend shares to buy next week
• Top brokers name 3 ASX shares to buy next week

Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of COLESGROUP DEF SET and Wesfarmers 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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On Monday I looked at three ASX shares that brokers have given buy ratings to this week.

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

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

Bendigo and Adelaide Bank Ltd (ASX: BEN)

According to a note out of the Macquarie equities desk, its analysts have retained their underperform rating and cut the price target on this regional bank’s shares to $6.00. This follows the release of its full year results which fell short of the broker’s expectations due largely to the pandemic. Macquarie doesn’t appear convinced that its performance will improve greatly any time soon and has revised its earnings estimates lower. The Bendigo and Adelaide Bank share price is changing hands for $6.36 this afternoon.

Domino’s Pizza Enterprises Ltd (ASX: DMP)

Analysts at Credit Suisse have retained their underperform rating but lifted the price target on this pizza chain operator’s shares to $53.19 ahead of its full year results release. Credit Suisse appears to have concerns over new store openings and expects this to weigh on its future growth. As a result, it doesn’t believe its shares deserve to trade at such a premium and has labelled them as expensive. The Domino’s share price is fetching $76.06 on Tuesday.

JB Hi-Fi Limited (ASX: JBH)

A note out of Citi reveals that its analysts have retained their sell rating but lifted their price target on this retailer’s shares to $44.80 following its full year results. According to the note, the broker was pleased with JB Hi-Fi’s performance in FY 2020 and felt it delivered a strong set of numbers. However, it suspects that its momentum may have peaked in July. And while it expects a strong first half result in FY 2021, it feels its second half growth could turn negative. The JB Hi-Fi share price is trading at $47.63 this afternoon.

More reading

• ARB share price rallied to a two-year high on profit results and outlook
• Why Kogan and these ASX shares just hit record highs
• ASX 200 drops 0.8%, JB Hi-Fi jumps 4.5%
• Investing $1,000 in these ASX shares could be a smart move
• What recession? These ASX retail shares are raking it in

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Domino’s Pizza Enterprises 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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Something quite extraordinary happened last night (our time). One of the major United States share markets hit a new all-time high. Not a 52-week high, not a post-COVID crash high, an all-time high.

Yes, that’s right. Overnight, the Nasdaq Composite Index reached a high of 11,144.5 points intraday and closed at 11,129.73 points. That puts the Nasdaq more than 22% higher than where it started the year and more than 62% above its 23 March lows.

Other US market indexes aren’t quite at all-time highs though. The S&P 500 Index is still a few points off of its record, but still up 3.8% year to date. The Dow Jones Industrial Average is still down 3.55% for the year so far.

Even so, the fact that we have the Nasdaq at record highs, and the S&P 500 hot on its heels raises a number of questions for me.

Our own S&P/ASX 200 Index (ASX: XJO) isn’t quite at the same level. It’s still down 9% year to date, despite rising more than 33% since 23 March.

So, I’m just going to state the obvious here. The US has a share market that is reaching for all-time highs… in the midst of one of the worst economic climates in living memory. The coronavirus pandemic has ravaged countries and economies around the world, but the US is arguably in a worse-off state than most other countries. At the time of writing, it houses almost a quarter of confirmed global cases of COVID-19. Yet its markets are leading a global recovery. Is this sustainable?

Why the US markets matter to ASX investors

Sure, the US markets are perhaps at a strange level relative to their own economy (and arguably the global economy). But why should this matter to ASX investors?

Well, here’s why. The ASX is highly correlated to the performance of the US share markets – much more than most ASX investors would like to admit. It’s no coincidence that the US markets and the ASX both hit their pre-COVID highs back in February at almost the same time. Nor is it a coincidence that both markets found their bottom in March at the same time as well. It was the US Federal Reserve’s announcement of quantitative easing that sparked the move back into bull market territory on 24 March after all — for both the ASX and the US markets.

If US investors decide that things have run too far and a correction comes their way, you can bet we will feel the effects on our own ASX as well, judging by the high correlation both of our markets have seen throughout this year at least. And with markets at all-time highs in the US, I think this is a definite possibility, considering what is happening to the US economy. 

Foolish takeaway

It’s for this reason that I think ASX investors should be extremely vigilant right now. I myself am not selling everything. But I am taking profits off the table where I can, just to ensure a reasonable cash position is available if the markets do pull back. You might not share this sentiment, but remember that the time to make hay is while the sun is shining.

More reading

• Why Fortescue’s share price has surged 72% in 2020
• ASX 200 up 0.2%: Westpac cancels dividend, Treasury Wine hammered, Coles impresses
• New investors should do this before investing in ASX shares
• ARB share price rallied to a two-year high on profit results and outlook
• Is the Beach Energy share price a buy?

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 Treasury Wine Estates Ltd (ASX: TWE) share price plunged by as much as 17% in this morning’s trade, but has marginally recovered to currently sit at $10.71 at the time of writing.

This negative price movement has taken place in response to news reported by the Australian Financial Review that China is preparing to levy hefty import duties on Australian wine exports. Australia’s annual exports in wine are estimated to be over $1 billion in value, the large majority of which is conducted by Treasury Wine.

These added restrictions could be a significant headwind for the wine-maker, and this is seeing a largescale market sell-off of Treasury Wine shares.

What are the details?

China’s Ministry of Commerce landed the latest punch in the escalating tensions between Australia and China this morning, revealing it would investigate the alleged dumping of wine by Australian businesses.

It is believed that an anti-dumping complaint from the local Chinese wine industry sparked this investigation, which could profoundly limit Australian exports of wine to China in the coming months.

The AFR further reported that the dumping investigation would include all Australian imports of wine in containers of 2 litres or fewer.

As of May 2020, Global Trade Atlas estimated that Australia represented a whopping 37% of China’s imported wine by value, with France (27%) and Chile (13%) also featuring on the podium.

In response to the revelations, Treasury Wine cited in a market announcement they would cooperate with Chinese and Australian authorities on the matter, and that the company “has had a long and respectful relationship with China over many years through its team, partners, customers and consumers.”

What this could mean for Treasury Wine’s earnings

This strips the wind from the wine-maker’s sails just after it presented better-than-expected full-year earnings for FY20 just last week. Its share price jumped about 10% off the results, which included net profits down 25%, but a dividend of 8 cents per share and positive signs of COVID-19 recovery in the Chinese market.

The optimism shown by the market has thus been short-lived, with all of the gains from last week stripped away following this dumping investigation. It’s too early to tell how this may affect Treasury Wine’s earnings for the coming 12 months, but higher tariffs and less bottles of wine being consumed in China suggest one thing – lower profit margins.

Treasury Wine may just have been caught in the political crossfire between Canberra and Beijing, similar to the barley and beef industries, but nonetheless today’s announcement has muddied the waters for the wine-maker’s future earnings outlook.

More reading

• ASX 200 up 0.2%: Westpac cancels dividend, Treasury Wine hammered, Coles impresses
• Why Bendigo and Adelaide Bank, Kogan, NAB, & Treasury Wine are dropping lower
• Take a look at last week’s best performing ASX shares
• Top brokers name 3 ASX shares to buy next week
• These were the best performing ASX 200 shares last week

Motley Fool contributor Toby Thomas owns shares of Treasury Wine Estates Limited. The Motley Fool Australia owns shares of and has recommended Treasury Wine Estates 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 Catapult Group International Ltd (ASX: CAT) share price has surged more than 5.7% higher today. The company has clawed its way back from a 50 cent low in March with the Catapult share price today an impressive rally of 290% since bottoming out.

This morning, the sports data provider revealed it had been awarded a major contract in Hungary – Catapult’s largest capital sale to date.

What does Catapult do

Catapult provides technology and data analysis software services to high-performance sporting organisations.

Services include wearable player technology, video analysis and an athlete management platform. Overall, the software as a service (SaaS) allows athletes and coaches to maximise performance in a variety of sporting contexts.

Why did the Catapult share price surge today?

Catapult has been awarded a major contract with BMSK Sport Közhasznú Nonprofit Kft in Hungary. The deal involves 16 sports academies and teams across 3 national sports over the next 4 years.

Catapult’s video analysis, player-worn technology, and its ClearSky GPS system will support the Hungarian academy’s football, handball and basketball teams.

The deal boosts its presence in the European market, where it has already established relationships with the French, Welsh, Romanian and Swedish football federations.

Catapult chief commercial officer Matt Bairos said:

The combination of video and wearable insights was a key contributor to the success of our tender response, and we remain uniquely positioned to offer new performance insights through combined solutions.

Should you invest?

Catapult has a few tailwinds going for it right now. Earlier this month, the company won a video exchange contract for 130 US college football teams. That, together with today’s deal, indicates plenty of business coming through the door.

In addition, the company reported in July it was cash flow positive a year ahead of schedule. This was driven by an improvement in the professional sports landscape globally after the impact of COVID-19. Sports organisations appear to be returning to business as usual, and that’s good news for Catapult’s unique product offering.

The movie Moneyball, about how data analysis spurred the Oakland A’s to a record 20-game winning streak, shows just how imperative data is in sports.

On top of that, large sports teams maintain fat budgets, and usually have the extra cash to outsource to companies like Catapult for data analysis. Whether COVID-19 will reverse this trend is a valid question, however. Fewer or no fans in the stadiums arguably restricts profits.

Overall, I think Catapult a highly attractive investment prospect.

If the company can keep signing big deals and reap the benefits of recurring client revenue, look out for the Catapult share price to grow in the years ahead.

More reading

• 3 ASX small cap shares with serious growth potential
• Why Catapult, Perseus Mining, Prospa, & Spark shares are dropping lower
• ASX stock of the day: Catapult share price leaps 15% on US college football contract
• Is this why the Catapult share price sank lower today?
• 3 exciting ASX growth shares to buy and hold

Toby Thomas owns shares in Catapult Group International Ltd. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Catapult Group International Ltd. The Motley Fool Australia has recommended Catapult Group International 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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Yesterday (overnight Aussie time) the tech-heavy Nasdaq Composite Index (NASDAQ: IXIC) gained 1.0% to reach yet another new record high.

Year-to-date, the index of predominantly leading tech shares is now up more than 22%. That was almost unimaginable in mid-March, after the Nasdaq had lost more than 30% in the COVID-19 market rout.

But the remarkable rebound is indicative of the resilience of companies like Apple Inc. (NASDAQ: AAPL). Although Apple’s share price dropped 0.3% yesterday, its 53% share price surge this year has seen it hit a market cap of US$1.96 trillion (A$2.72 trillion). And it’s helped drive the Nasdaq to regular new record highs.

All this has been buoyed, of course, by the fiscal and monetary stimulus global governments have provided to keep their economies afloat during the pandemic.

It’s also a good reminder that — unless you have a crystal ball to pinpoint the highs and lows — buying quality shares and holding them for the longer-term is the best way, in my opinion, to build your wealth. Far too many investors would have sold their shares near the March lows only to sit on the sidelines and watch share prices rebound before buying back in at a heavy loss.

ASX tech shares also shooting higher

The US may be home to the biggest tech shares in terms of market cap. But you’ll find a growing number of high performing tech shares on the ASX as well.

In fact, the top 3 performing shares on the S&P/ASX 200 Index (ASX: XJO) for 2020 to date are all technology related.

Topping the list is fintech company Afterpay Ltd (ASX: APT). Year-to-date, Afterpay’s share price is up 158%.

Coming in a close second is biotech company Mesoblast Limited (ASX: MSB). Mesoblast’s share price is up 151% so far in 2020.

That almost makes data centre operator Nextdc Ltd‘s (ASX: NXT) 82% share price gain in 2020 seem mediocre. (It’s not!)

And a look at how the BetaShares S&P/ASX Australian Technology ETF (ASX: ATEC) share price has been doing shows that ASX tech shares have broadly been booming since March.

The BetaShares S&P/ASX Australian Technology ETF holds some of Australia’s largest tech companies. Since its 23 March low, the ATEC share price is up 92%. (I can’t give you the year-to-date figure, as the fund only listed on the ASX on 4 March.)

That covers technology shares for today. Any guesses on what the next best performing shares are involved with?

If you said ‘mining’, give yourself a gold star. The top 10 performing shares on the ASX 200 this year so far are all tech or mining companies.

Why Bank of America has a buy rating on BHP and RIO shares

Fortescue Metals Group Limited (ASX: FMG)’s 72% share price leap in 2020 puts it in 7th place on the ASX 200 top earners board.

BHP Group Ltd (ASX: BHP) and Rio Tinto Limited (ASX: RIO), on the other hand, don’t even make the top 20 list. At least, not yet.

The BHP share price is up 2.3% year-to-date, while the Rio Tinto share price is up 1.2%.

But after raising its forecasts for iron ore prices through 2024, Bank of America sees value in both mining giants.

In its 7 August note, Bank of America stated (as quoted by the Australian Financial Review):

We remain at buy for Vale, BHP and Rio and recently raised price objectives on all based on strong free cash flow and the better iron ore pricing outlook.

China’s voracious appetite for iron ore has continued into 2020, with government stimulus playing a key role in this further growth. Yet it is natural for that growth to eventually taper off, as China’s steel consumption per capita is already higher than other regions.

Our forecasts assume 0.4 per cent steel production growth in 2021 and a 0.4 per cent drop in 2022, which temper global iron ore needs ahead. To be fair, China’s demand has continued to surprise us, and in recent years our forecasts have proved conservative, so further upside risk to our outlook is possible.

Noting that Vale has some of the world’s lowest cost iron mines, Bank of America cautioned that, while it doesn’t expect this to occur, “If Vale were to ramp up to its full potential, it could single-handedly result in global oversupply.”

Bank of America’s price target for Rio Tinto is $123 per share. At time of writing, the Rio Tinto share price is $1021.77.

Bank of America’s price target for BHP is $44 per share. BHP’s share price is currently $39.68.

More reading

• New investors should do this before investing in ASX shares
• Nextdc and 2 other thriving ASX tech shares to buy
• BHP share price on watch as final dividend slashed by 30%
• If you invested $10,000 in Afterpay shares in March, this is how much you’d have now
• The Starpharma share price jumps on new partnership deal

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

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The 5G Networks Ltd (ASX: 5GN) share price has fallen 5.56% following the release of the company’s FY20 results. At the time of writing, the 5G Networks share price had fallen to $1.87 after closing yesterday’s trade at $1.98.

5G Networks is a licenced telecommunications carrier operating in Australia. It currently owns and operates a nationwide, high-speed data network with points of presence in all major Australian capital cities.

FY20 results

Financial highlights for 5G Networks included achieving earnings before interest, taxation, depreciation and amortisation (EBTIDA) of $6.3 million which represents 96% growth compared to the prior corresponding period (pcp) before acquisition and share option costs.

Other highlights include 16% recurring revenue growth compared to the pcp from the continued migration of customers to higher margin annuity services. This has resulted in strong operating cash flow generation of $7.5 million which is 700% higher than the pcp.

Revenue from ordinary activities was down 3.6% to $49.325 million in FY20 compared to $51.155 million in the pcp. Additionally, the net loss decreased 63% in FY20 to $1.545 million from $4.141 million in the pcp.

Basic earnings per share was -2.29 cents per share in FY20 compared to -7.77 cents per share in FY19. Analysts estimated earnings per share of 1 cent. 

5G Networks’ gross margin has improved to 15% as a result of synergy realisations because of acquisitions.

Successful share placements by 5G Networks of $18.2 million in June and $3.9 million in July 2020 have provided a strong capital position for the company to pursue further acquisitions and strategic capital expenditures.

Additionally, 5G Networks will pay a 1 cent dividend for the year ended 30 June 2020, payable on 16 October 2020.

Outlook

Managing Director, Joe Damase, said:

Our focus for acquisitions this year has been on data centre services and after completing the Melbourne Data Centre purchase in FY19 we progressed to acquire Pyrmont data centre and then St Leonards, both in Sydney, NSW. The synergies from these acquisitions will continue to flow into FY21, which builds the key foundations for supporting our fibre optic rollout.

This infrastructure project will inter-connect 90 leading data centres to our on-net fibre backbone across Australia.

5G Networks has provided guidance for FY21. Revenue will be between $60 million and $65 million and EBITDA is expected to be between $8 million and $8.5 million before material acquisitions. 

About the 5G Networks share price

5G Networks owns and manages critical infrastructure, 24 hours a day, 7 days a week. These are connected via 100Gb links to over 100 data centres, global networks and the company’s cloud platform. 

The 5G Networks share price has rallied 76% higher over the past year. It is also 143% higher in year-to-date trading.  

More reading

• Why 5G Networks and these ASX shares just hit record highs

Matthew Donald has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends 5G NETWORK FPO. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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If you’re looking for a way to beat the low interest rates on offer with term deposits, then the ASX dividend shares listed below could help you achieve this.

I believe both dividend shares are great options for income investors right now. Here’s why I would buy them:

Commonwealth Bank of Australia (ASX: CBA)

The first ASX dividend share I would buy is Commonwealth Bank. While I think all the big four banks are in the buy zone after recent pullbacks, my preference remains CBA. This is due to the quality of its operations and its strong management team. Another positive was its recent full year results which I felt were very robust given the difficult trading conditions. The bank also finished the period with a strong balance sheet, which appears to have left it well-placed to successfully ride out the current crisis.

While estimating what dividend the bank will pay next year is difficult given the pandemic and the potential for APRA to place restrictions on payments again, I would expect something in the region of $3.00 per share in FY 2021. Based on the Commonwealth Bank share price, this equates to a generous fully franked 4.2% yield.

National Storage REIT (ASX: NSR)

Another dividend share to consider buying right now is National Storage. I think this storage giant could be a good option for income investors due to its attractive valuation and generous yield. Although the company is inevitably going to be impacted by the pandemic, I don’t believe this impact will be as bad as many of its real estate peers.

In light of this, I’m optimistic National Storage will be able to continue paying a decent distribution during the crisis. After which, I believe it will then return to growing it modestly each year once trading conditions return to normal. Based on the current National Storage share price, I estimate that it offers a 4.4% FY 2021 distribution yield.

More reading

• Fund managers have been selling these ASX shares
• Is the Commonwealth Bank share price a long-term buy?
• ASX shares to buy with $10,000 in August
• These were the highlights of ASX reporting season last week
• Take a look at last week’s worst performing ASX 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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In early afternoon trade the S&P/ASX 200 Index (ASX: XJO) is offs its highs but remains in positive territory. At the time of writing the benchmark index is up 0.1% to 6,081.3 points.

Four shares that have climbed more than most today are listed below. Here’s why they are charging higher:

The Cochlear Limited (ASX: COH) share price has jumped 8.5% higher to $215.37. This follows the release of the hearing solutions company’s full year results this morning. Cochlear reported a 6% decline in sales revenue to $1,352.3 million. This was driven by a 7% decline in Cochlear implant unit sales over the 12 months following COVID‐19‐related surgery deferrals. Investors may have been expecting a much worse sales result.

The Kogan.com Ltd (ASX: KGN) share price is up 6% to $21.79. Investors appear to have been taking advantage of a pullback in the ecommerce company’s shares yesterday and snapping them up. This follows the release of Kogan’s full year results release on Monday. That release revealed a 39.3% increase in gross sales to $768.9 million and a 57.6% increase in adjusted EBITDA to $49.7 million in FY 2020.

The Megaport Ltd (ASX: MP1) share price has jumped 10% to $14.50. This follows the release of an announcement by the network-as-a-service provider after the market close on Monday. That announcement revealed the upcoming release of Megaport Virtual Edge. This product innovation will allow customers to tap into Megaport’s platform to deploy and extend network functions in real time, without deploying hardware.

The Northern Star Resources Ltd (ASX: NST) share price is up over 4% to $14.85. Investors have been buying the gold miner’s shares after a decent rise in the gold price and a positive announcement. The latter relates to its KCGM joint venture. According to the release, KCGM reserves have increased by 102% from 5.5M ounces to 10.8M ounces. Management notes that this underpins strong growth in forecast production and long mine life visibility.

More reading

• ASX 200 up 0.2%: Westpac cancels dividend, Treasury Wine hammered, Coles impresses
• Warren Buffett is dumping banks and buying gold, should you?
• New investors should do this before investing in ASX shares
• Why the Saracen share price is shooting higher today
• Megaport share price on watch following release of latest product innovation

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends MEGAPORT FPO. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Cochlear Ltd. and Kogan.com ltd. The Motley Fool Australia has recommended Cochlear Ltd., Kogan.com ltd, and MEGAPORT 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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The Westpac Banking Corp (ASX: WBC) share price is down 3.58% today after the company released an update for the quarter to 30 June 2020. At the time of writing, the Westpac share price had fallen to $16.97 after closing yesterday’s trade at $17.60.

What was in the announcement?

Westpac announced unaudited statutory net profit of $1.12 billion in the June quarter of 2020. This was against an average statutory net profit of $595 million in the previous two quarters.

Unaudited cash earnings for the June quarter were $1.32 billion. This was higher than an average of $497 million in the previous two quarters. According to Westpac, this increase was mainly due to lower impairment charges and lower insurance claims following major storms and bushfires in the previous two quarters.

Westpac recorded an impairment charge of $826 million, stating that it was “further increasing provisions and provisioning cover”. According to Westpac CEO, Peter King, this was part of a prudent approach to managing impairments.

The bank had a net interest margin of 2.05% in the June quarter. 

Westpac had a common equity, tier 1 capital ratio of 10.80% at 30 June 2020 and according to Mr King, the company maintained its strong balance sheet. 

The bank’s board decided not to pay a dividend for the first half of 2020, stating; “Given Westpac’s desire to retain a strong balance sheet and the ongoing uncertainty in the operating environment, the Board has now decided it is prudent not to pay a First Half 2020 dividend.” It said that it would consider a dividend when finalising its annual results which, for Westpac, will run until the year ending 30 September 2020.

Mr King commented on the outlook for Westpac, stating, “While there have been some signs that the economy is performing better than early expectations, significant uncertainty remains, particularly given the unpredictability of COVID-19 outbreaks and their local impacts.”

About the Westpac share price

Westpac is one of Australia’s big four banks and was founded in 1817, making it Australia’s oldest bank. Westpac has over 13 million customers and offers consumer banking, business and institutional banking along with wealth management.

In July, Westpac announced a plan to bring 1,000 jobs back to Australia, this came as home lending processes and call centres were strained following the outbreak of the coronavirus. 

The Westpac share price is up 25.98% since its 52-week low of $13.47, however, it has fallen 29.85% since the beginning of the year. The Westpac share price is down 39.46% since this time last year.

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Motley Fool contributor Chris Chitty 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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