Author: therawinformant

Envirosuite Ltd (ASX: EVS) has today provided the market with a sales update that has propelled its share price higher. The Envirosuite share price has gained 14.3% to reach 16 cents.

The company also recently completed the acquisition of AqMB Holdings for a total consideration of $1.35 million that sent the share price up 11%.

What Envirosuite does

Envirosuite is an environmental management technology company that provides services through its software-as-a-service (SaaS) platform. The Envirosuite platform offers environmental monitoring, management and investigative capabilities. It is incorporated into a number of diverse operations from waste water treatment to large scale construction, open cut mines and port operations.

The company hosts more than 500 customers worldwide. Envirosuite’s clients include organisations in China, airports, and companies such as Rio Tinto Limited (ASX: RIO).

Sales update

This morning, the company released a sales update driving the Envirosuite share price strongly higher. Envirosuite reported robust sales and a strong pipeline despite the global impact of COVID-19.

Despite the downturn in economic conditions, the company was able to report sales orders totalling $14.5 million. This was for the period 1 March to 12 August following the completion of the company’s acquisition of EMS Bruel & Kjaer. Breaking down these sales, there was $8 million from new business and $6.5 million in renewal contracts.

Furthermore, the current sales order pipeline exceeds $30 million. The target percentage of recurring revenues to total revenue is 70% and the company is currently tracking above this at around 75% across both existing revenues and the sales order pipeline.

Envirosuite CEO, Peter White, was pleased with the results and commented:

“The robust sales to date and the strong pipeline provide validation of Envirosuite’s strategic acquisition of EMS. They also highlight the resilience of the Company’s business model and the essential role Envirosuite plays for its customers that continues even in the pandemic.”

What now for the Envirosuite share price?

Envirosuite has reaffirmed its positive earnings before interest, taxes, depreciation and amortisation (EBITDA) target to the end of Q3 FY21 and medium-term target of $100 million revenue thanks to high recurring revenues. If the company is able to deliver on these promises it is likely the Envirosuite share price will continue its strong current run.

Furthermore, the strong results announced today demonstrate the resilience of Envirosuite’s business sourced from multiple industry sectors and economic regions. Despite today’s rise, the Envirosuite share price is still down 27.3% in year-to-date trading. It has a current market capitalisation of around $164 million.

More reading

• The next battle facing these ASX stocks will come from within
• Broker sees top returns for iron ore miners BHP and Rio
• Has the ASX 200 finally taken off?
• ASX iron ore miners jump on broker upgrades
• Are ASX lithium shares the next big thing?

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.

The post Envirosuite share price surges 14% following sales update appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/3iv4LOG

The PM Capital Global Opportunities Fund Ltd (ASX: PGF) share price is up 4% after reporting its FY20 result.

Quick overview of PM Capital Global Opportunities Fund

PM Capital Global Opportunities Fund is a listed investment company (LIC). The job of a LIC is to invest in other shares. As the name might suggest, the LIC invests in global shares which it thinks are opportunities.

Fund manager business PM Capital, run by Paul Moore, operates this LIC. It aims to be invested in between 25 to 45 global companies. PM Capital has been investing for over 30 years.

FY20 result

The COVID-19 share market selloff caused PM Capital Global Opportunities Fund’s share portfolio to drop in value over the year. This caused its net revenue to drop to negative $22.1 million. It saw a net loss of $18.7 million.

The LIC disclosed that its portfolio’s net return after fees and expenses was a negative 6.4%, compared to the MSCI World Net Total Return Index return of 4.8%. However, looking at its 22-year track record shows clear outperformance of the MSCI, by 4.38% per annum.

Manager of PM Capital Global Opportunities Fund, Paul Moore, said that the LIC has been adding to its positions in resource businesses across various commodities including Freeport-McMoRan (copper), Newmont Mining (gold), Teck Resources (copper and zinc) and Boliden (zinc). It increased its positions in industrial stocks like Siemens and also re-established a position in Alphabet (Google).

But he believes that there is potential for good longer-term returns. Mr Moore said: “We feel the pandemic has not simply delayed our thesis, but the fiscal and monetary actions will have the effect of essentially making the thesis inevitable. The unknown factor is the timing. In the short-term, behavioural biases have not declined and their effects will be exaggerated by the weight of the index funds. This is why it is so important to have a longer time horizon so as to let the thesis play out to its full extent and in doing so profit from it. It is amazing how often – if one has patience – the conventional “wisdom” proves itself to be wrong.”

Shareholder returns

PM Capital Global Opportunities Fund announced two shareholder return initiatives.

The LIC has announced a final dividend of 2.5 cents per share, which is a 25% increase on FY19’s final dividend and the FY20 interim dividend. The full year dividend of 4.5 cents per share equates to a grossed-up dividend yield of 6.6% at the current PM Capital Global Opportunities Fund share price.

Income-focused investors will probably see the bigger payout as a welcome increase. Particularly as the RBA interest rate is now very low.

The LIC also announced an off-market equal access buy-back. It will buy up to 5% of the shares held by each shareholder at a price set at a 5% discount to the post-tax net tangible assets (NTA) (excluding deferred tax assets) at the close date which is 23 October 2020.

The PM Capital Global Opportunities Fund board believes this is an efficient way to allow shareholders to obtain value close to the NTA in circumstances where the shares are trading at a discount to the NTA.

Largest positions

At the end of FY20 its biggest positions were (in order): Apollo Global Management, Freeport-McMoRan, Bank of America, MasterCard, KKR & Co, Visa, Siemens, Oracle, JPMorgan Chase, Caixa Bank, Lloyds Banking Group, Howard Hughes, Ares Management, Sands China and ING.

Each of the above positions had a market value of more than $10 million at the end of FY20.

Current valuation

At the current PM Capital Global Opportunities Fund share price of $0.98, it’s trading at a 17% discount to the 7 August 2020 NTA of around $1.18.

More reading

• Top ASX dividend shares to buy in August 2020

Motley Fool contributor Tristan Harrison owns shares of PM Capital Global Opportunities Fund Ltd. 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.

The post Why the FY20 result sent the PM Capital Global Opportunities Fund share price up 4% appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/2DUskS6

The SEEK Limited (ASX: SEK) share price has come under pressure this week following the release of its full year results.

Since the start of the week, the job listings giant’s shares have fallen a disappointing 8.7%.

What happened in FY 2020?

For the 12 months ended 30 June 2020, SEEK delivered a 2.6% increase in revenue to $1,577.4 million but a 9% decline in earnings before interest, tax, depreciation, and amortisation (EBITDA) to $414.9 million.

While this result was largely in line with expectations and reasonably robust considering the tough trading conditions it is facing, its outlook for FY 2021 appears to have spooked investors.

For FY 2021, SEEK has suggested that its revenue could come in at ~$1,470 million and its EBITDA could be in the region of ~$330 million. This represents a decline of 6.8% and 20.5%, respectively, year on year.

Beyond this, management remains positive on its long term outlook and continues to target revenue of $5 billion later this decade.

Should you invest?

There’s no doubt that FY 2021 will be tough for SEEK because of the pandemic. However, I believe it is well worth sticking with the company and focusing on its very positive long term potential once the crisis passes.

One broker that agrees with this is UBS. This morning the broker put a buy rating and $22.00 price target on SEEK’s shares. This price target represents potential upside of 12.5% for its shares over the next 12 months.

According to the note, the broker has reduced its estimates to reflect its outlook but remains very positive on its prospects once trading conditions return to normal.

Another broker that is positive on the company is Credit Suisse. It has an outperform rating and $23.20 price target on SEEK’s shares currently.

I agree with both UBS and Credit Suisse and would suggest investors take advantage of the recent weakness in the SEEK share price to buy shares.

More reading

• 2 exciting high-growth ETFs to buy for high returns today
• ASX 200 drifts 0.1% lower, CBA reports solid FY20 result
• Is BetaShares Australia 200 ETF the best ASX ETF?
• Is the Seek share price a long-term buy?
• ASX 200 down 0.3%: CBA delivers $7.3bn cash profit, gold miners sink, SEEK’s outlook disappoints

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

The post Brokers remain bullish on the SEEK share price appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/2E1K3a5

Growth investment is one area that I find exchange-traded funds (ETFs) most useful. Sure, picking a single ASX winner like Afterpay Ltd (ASX: APT) is highly lucrative. But it’s also highly difficult to get in before ‘the crowd’.

By using an ETF to gain exposure to a high-growth industry or sector, you can somewhat mitigate the risk while still giving your portfolio the potential of high returns.

Let’s look at 2 high-growth ETFs that I think fit the bill.

High-growth ETF 1) BetaShares S&P/ASX Australian Technology ETF (ASX: ATEC)

This ETF is a relatively new addition to the ASX, only listing back in early March (unfortunate timing there). Even so, I think it’s one of the most exciting, high-growth ETFs available on the ASX. ATEC tracks a basket of ASX shares that mirrors the S&P/ASX All Technology Index (ASX: XTX). This index aims to hold only ASX shares that are, according to Betashares, “leading ASX-listed companies in a range of tech-related market segments such as information technology, consumer electronics, online retail and medical technology”.

Some of ATEC’s current top holdings include names many ASX growth investors would be familiar with, such as Afterpay, Xero Limited (ASX: XRO), Altium Limited (ASX: ALU) and Seek Limited (ASX: SEK). Even though ATEC has only been around a few months, it has already delivered a return of 23.55% since inception. The index it tracks has an average return of 17.8% per annum over the past 5 years. That’s a pretty good track record in my view and makes this fund one of the most exciting high-growth ETFs on the ASX.

2) BetaShares Asia Technology Tigers ETF (ASX: ASIA)

Another ETF from Betashares, this one also covers a basket of up-and-coming tech shares. But rather than holding ASX companies like Afterpay and Xero, ASIA instead tracks tech companies that operate in the Asian region (as the name implies). Most of the fund’s holdings (56.2%) come from China. But it also has significant exposure to Taiwan (20.9%), South Korea (17.3%) and India (5.1%) as well.

You might know some of this fund’s top holdings as well, which include Tencent Holdings, Alibaba Group, Samsung Electronics and JD.com.

ASIA has a few more runs on the board than ATEC but was still only incepted back in September 2018. Since then, it has delivered an average annual return of 27.77%. That’s a return I would be very happy to have collected! As such, I think this fund is another top high-growth ETF that I think would make an exciting addition to your ASX portfolio today.

More reading

• Brokers remain bullish on the SEEK share price
• 4 quality ASX shares to buy in August
• These soaring tech shares are making savvy investors rich
• ASX 200 drifts 0.1% lower, CBA reports solid FY20 result
• Is BetaShares Australia 200 ETF the best ASX ETF?

Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Xero. The Motley Fool Australia owns shares of and has recommended BetaShares Asia Technology Tigers ETF. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool Australia has recommended SEEK Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post 2 exciting high-growth ETFs to buy for high returns today appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/2E0yYGk

The Woodside Petroleum Limited (ASX: WPL) share price is down 0.49% after the company released its half year report to 30 June, 2020. At the time of writing, the Woodside share price is trading at $20.41.

What was in the announcement?

Woodside had operating revenue of US$1.91 billion in the first half of 2020. This was down from operating revenue of US$2.26 billion in the first half of 2019. The company produced 50.1 million barrels of oil in the first half of 2020.

Earnings before interest, tax, depreciation and amortisation (EBITDA) was US-$4.3 billion in the first half of 2020, this compared to positive EBITDA of US$1.46 billion in the first half of 2019.

Net profit after tax was US-$4.07 billion in the first half of 2020 compared to a positive net profit after tax of US$419 million in the first half of 2019.

Underlying net profit after tax, which excluded asset impairments and provisions for a loss generating contract, was US$303 million in the first half of 2020, compared to US$419 million in the first half of 2019.

Earnings per share for the first half of 2020 was US-$4.30 compared to 44.8 US cents in the first half of 2019.

The company declared an interim dividend of 26 US cents per share, representing 80% of underlying net profit after tax.

Woodside CEO, Peter Coleman, commented on the results, stating;

“I would rate the external conditions created by the COVID-19 pandemic and oversupply in global oil and gas markets as the most difficult I’ve seen in nearly four decades in the industry.”

Woodside began 2020 in a strong financial position, built over the previous two years as we prepared for a period of increased capital spending. This position has been consolidated through the first half thanks to the strong performance of our high-reliability, low-cost operations.

Our balance sheet strength and disciplined approach to capital management ensures we can deliver appropriate returns to shareholders. It also allows us to progress our existing strategic growth plans, and provides optionality to pursue the right external opportunities, should they arise.

Woodside’s operational performance during the first half was nothing short of outstanding. In February, we successfully weathered Tropical Cyclone Damien – the most severe storm ever to pass over our Western Australian facilities – with very limited impact on production.

In the immediate wake of Damien, we faced the emerging challenge of COVID-19, requiring us to take swift and decisive action to protect our workforce, communities and operations, and ensure safe and secure gas supplies to customers in Western Australia and overseas.

The record production achieved in the half is a credit to our people’s ongoing commitment to sustained operational excellence, helping Woodside deliver underlying net profit after tax of $303 million, despite the challenging market conditions.”

About the Woodside share price

Woodside is a petroleum exploration and production company and is Australia’s largest oil and gas producer. Woodside has assets in Australia and abroad, with its countries of operation including Senegal, Myanmar, Timor-Leste and Canada.

The Woodside share price is up 36.7% since its 52-week low of $14.93, however, it has fallen 40.79% since the beginning of the year. The Woodside share price is down 38.23% since this time last year.

More reading

• 5 things to watch on the ASX 200 on Thursday
• 5 things to watch on the ASX 200 on Tuesday
• ASX 200 Weekly Wrap: Surging commodity prices snap ASX 200’s losing streak
• 5 things to watch on the ASX 200 on Monday
• Worley share price jumps on contract win and is my key pick in the sector

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.

The post Woodside share price edges lower on half year results appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/3gXmbmM

The Vection Technologies Ltd (ASX: VR1) share price rallied 50% after the company announced a partnership agreement. The Vection share price reached an intraday high of 5.4 cents before being sold down to its current price of 4.6 cents, at the time of writing.

Details on the Vection partnership agreement

Earlier today, Vection announced that the company has completed an Original Equipment Manufacturer (OEM) partnership agreement with integrated hardware solutions firm, JMC Group.

JMC is a global provider of integrated technology solutions and is an end-to-end partner with Dell Technologies Inc. The partnership with JMC will see Vection integrate its end-to-end software solutions to the global sales program at Dell.

Vection’s announcement noted that the partnership and integration between hardware and software for virtual reality is key to the development of automation. The company’s management noted that the partnership will play a critical role in bringing together disruptive software and hardware technology.

In addition, the partnership agreement will see the company collaborate with JMC on marketing activities for Vection’s software product suite.

What does Vection do?

Vection is an Australian-based software company that focuses on real-time technologies for industrial organisations.

The company boasts a software suite including its virtual reality platform, FrameS, its real-time 3D platform, Mindesk, and augmented reality software called Trainer Creator. According to Vection, the company’s solutions are aimed at helping industries transition into the fourth industrial revolution known as Industry 4.0. Industry 4.0 involves the automation of traditional manufacturing and industrial processes.

Despite a challenging trading environment induced by the COVID-19 pandemic, Vection recently released a solid quarter of cash receipts. The company reported cash receipts for the June 2020 quarter of $577,000 and also reported $2.8 million in cash receipts for FY20.

According to Vection, the company’s focus over the next six months is to expand its software-as-a-service (SaaS) solutions to the healthcare, education and automotive sectors. Vection also has an ambitious goal of achieving 50% growth in annual recurring revenue (ARR) by June 2022.

In addition to the company’s recent partnership with JMC, Vection also boasts OEM distribution with other notable companies including; Logitech, Hewlett-Packard, Intel and Volvo.

About the Vection share price

As mentioned, at the time of writing the Vection share price had been sold down from its intraday high and is now trading 27.8% higher for the day at a 4.6 cents. It is 130% higher in year-to-date trading.

More reading

• 4 quality ASX shares to buy in August
• Broker reveals its expectations for the Mesoblast FDA meeting
• Why the rise of electric vehicles could benefit ASX mining shares
• If an ASX share announces a demerger, here’s why you should listen
• The Atomos share price has raced 27% so far this week and is still gaining ground

Motley Fool contributor Nikhil Gangaram 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.

The post Vection share price rockets 50% on partnership appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/3ajInoE

Are you aiming to make some additions to your portfolio in August? If you are, I would suggest you consider one of the four ASX shares listed below.

I believe all four have the potential to generate strong returns for investors over the 2020s. Here’s why I would buy them for the long term:

a2 Milk Company Ltd (ASX: A2M)

I believe a2 Milk Company would be a great ASX share to own. This is due to the insatiable appetite for its infant formula in China and its relatively modest market share in the lucrative market. In addition to this, the company is sitting on a mountain of cash and has just hired a new CEO with experience in mergers and acquisitions. I suspect it could accelerate its growth with acquisitions in the future.

Altium Limited (ASX: ALU)

Altium is an electronic design software provider which could have a very bright future ahead of it. This is due to its exposure to the Internet of Things and artificial intelligence booms. Global technology spending on both is expected to grow at a rapid rate over the next decade. This should lead to increasing demand for its award-winning software.

REA Group Limited (ASX: REA)

Another share to consider buying is REA Group. It is the owner and operator of the realestate.com.au website and several international equivalents. I believe it is a great buy and hold investment option due to the quality and strength of its business model and its positive long term outlook. And although market conditions are tough currently, I remain confident its growth will accelerate once the crisis passes.

Xero Limited (ASX: XRO)

Xero is a leading cloud-based business and accounting software provider. I think it could be a great long term option due to the quality of its product and the continued shift to online accounting. This year it surpassed 2 million subscribers, but this is still only a small portion of its massive global market opportunity. This gives Xero a significant runway for growth over the next decade.

More reading

• 2 ASX shares that every investor should own
• Is BetaShares Australia 200 ETF the best ASX ETF?
• Whatever happened to WAAAX shares?
• These ASX stocks could be the next reporting season heroes
• Top brokers name 3 ASX 200 shares to buy 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 and recommends Altium. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Xero. The Motley Fool Australia owns shares of A2 Milk. The Motley Fool Australia has recommended REA 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.

The post 4 quality ASX shares to buy in August appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/30Pg9z2

It certainly has been an eventful week for the Mesoblast limited (ASX: MSB) share price.

After hitting a record high of $4.88 on Tuesday, the biotechnology company’s shares crashed as low as low as $3.06 on Wednesday.

On Thursday things are looking a lot better, with the Mesoblast share price up 8% to $3.32 in afternoon trade.

Why has the Mesoblast share price been so volatile?

This volatility has been caused by the company’s impending meeting with the Oncologic Drugs Advisory Committee (ODAC) this evening. That meeting is to discuss its remestemcel-L product candidate as a treatment for paediatric steroid-resistance acute graft versus host disease (paediatric SR-aGvHD).

This is a major event as the ODAC is a key player in the regulation of cancer drugs and plays a big role in whether a drug gets approval or not.

Ahead of that meeting the U.S. Food and Drug Administration (FDA) released a briefing document which cast doubts on whether or not it will receive approval from the regulator.

Is it game over?

This morning analysts at Lodge Partners have released a note discussing the FDA’s briefing note and their expectations for the meeting.

It commented: “There will be two sessions to discuss Mesoblast’s cellular therapy during the Oncologic Drugs Advisory Committee (AdCom) Meeting on Thursday, 13 August (US Eastern Time). While this is unusual, we note that where cellular therapies are concerned this seems to be the US Food and Drug Administration’s (FDA) standard practice now.”

This will involve a session on product characterisation in the morning and then a session on clinical trial evidence in the afternoon. And while its briefing notes have been quite harsh, the broker doesn’t appear to believe it is game over just yet.

Lodge Partners notes that the FDA’s issue is that it believes Mesoblast doesn’t have a reliable potency assay. It also goes hard on Mesoblast by raising the failed trials run by remestemcel-L’s previous owner, Osiris Therapeutics, which were negative.

In respect to the latter, the broker believes it should be “possible for Mesoblast to navigate the issues raised by the Osiris’ trials and those surrounding how the company defined the historical controls.”

However, it does have concerns with its product characterisation issues, which it feels the FDA has “something they can hold the company up on, if they want to.” Though, it notes that “Mesoblast has spent USD tens of millions, probably over USD100m, on manufacturing and you would expect them to have gotten it right.“

With any drug, efficacy will remain an incredibly important issue. The ODAC will ultimately be looking at data to see if it supports the efficacy of remestemcel-L in paediatric patients with steroid-refractory aGVHD.

Lodge Partners commented: “Appropriately argued by Mesoblast, we believe the AdCom panel for the clinical evidence session will vote that the available data DOES support the efficacy of remestemcel-L in pediatric patients with steroid-refractory aGVHD.”

Though, it has warned that the FDA could ask Mesoblast to conduct a further clinical trial to prove its efficacy.

Should you invest?

I would suggest investors keep their powder dry until the FDA has made its decision to approve remestemcel-L or not.

While the Mesoblast share price is likely to rocket higher if the ODAC meeting goes well, it could just as easily crash lower if things don’t go in the company’s favour.

More reading

• Down 37% in 2 days! Is the Mesoblast share price a buy?
• Why Mesoblast, Northern Star, SEEK, & WiseTech Global shares are sinking lower
• Is the CSL share price the best ASX biotech buy right now?
• ASX 200 rises 0.5%, Mesoblast plunges
• Mesoblast share price crashes 29% lower on FDA doubts

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.

The post Broker reveals its expectations for the Mesoblast FDA meeting appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/2PNhSP1

Climate change is the catalyst for a global shift from internal combustion engine cars to electric vehicles. As a result, increased demand for materials needed to produce electric vehicles could reward investors in ASX mining shares over the long term.

The Australian Renewable Energy Agency (ARENA) and the Clean Energy Finance Corporation published an Australian Electric Vehicle Market Study which found electric vehicles were expected to match petrol vehicles on upfront price and range by mid 2020s.

Building electric vehicles

The materials needed to build electric vehicles include lithium, cobalt, rare earths, graphite, manganese, copper, aluminium, and nickel.

A battery pack in a Chevy Bolt, for example, would require 8% copper, 6% cobalt, 5% nickel, 5% manganese and 2% lithium.

As more electric vehicles are manufactured, demand for these resources could soar, potentially boosting mining company profits depending on operational efficiency.

ASX mining shares that could benefit

After some digging, here are the ASX mining shares that I think could benefit from a rising demand for electric vehicle materials.

Oz Minerals Limited (ASX: OZL) could gain from the increased demand for copper. It’s 2019 Annual and Sustainability Report states: “Short to medium term global copper demand is forecast to be higher than copper mine supply due to existing new uses of copper such as for electric vehicles. Increase in copper demand will increase the company’s cash flow position and enables the company to pursue its growth pipeline to create value across all stakeholders.”

Mining giant BHP Group Ltd (ASX: BHP) is could also be in to win from a surge in demand for copper. BHP is the world’s top copper producer as reported in February this year, with a 57.5% interest in Escondida copper mine in Atacama Desert in Chile.

Lynas Corporation Ltd (ASX:LYC) could gain from a higher demand for rare earths. The rare earths are “essential inputs” to​ high growth global manufacturing supply chains, including digital age technologies and green technologies such as electric vehicles and wind turbines, according to the ASX mining share.

Galaxy Resources Limited (ASX:GXY) has lithium assets that could benefit from the rise in electric cars. And South32 Ltd (ASX: S32) produces nickel. Lithium and nickel are key components in electric vehicle battery packs.

Foolish Takeaway

When electric vehicles match the cost of a standard internal combustion engine cost, we could see a dramatic surge in demand in Australia and globally. As a result, the materials required by manufacturers could increase the earnings of ASX mining shares. And an investment in mining companies in the supply chain could reward long-term investors looking to gain exposure to the electric vehicle industry.

More reading

• If an ASX share announces a demerger, here’s why you should listen
• The next battle facing these ASX stocks will come from within
• The BHP share price is up 10% in a month: Is it too late to invest?
• ASX gold miners on watch after gold price crashes lower
• Broker sees top returns for iron ore miners BHP and Rio

Motley Fool contributor Matthew Donald 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.

The post Why the rise of electric vehicles could benefit ASX mining shares appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/3kE5A9O

Mergers, demergers, acquisitions, stock splits… it’s all very exciting stuff. When an ASX share announces a fundamental change to its company structure, we investors are pretty much trained to sit up and listen. And fair enough too. Investing shouldn’t just be about sifting through annual reports or numbers on a spreadsheet. Investors are human too, and who doesn’t like a bit of drama every now and again. And that’s what mergers and demergers bring us. It’s the financial equivalent to a celebrity marriage (or divorce).

So let’s talk about demergers today.

Although demergers have been largely shunted off the table in 2020 thanks to the coronavirus pandemic, there were a few in the works last year. Notably, Woolworths Group Ltd (ASX: WOW) had plans last year to spin-off its Endeavour Drinks businesses (containing the BWS and Dan Murphy’s bottle shop chains as well as some pubs/hotels). I have a hunch that was behind the Woolworths share price climbing more than 24% in 2019.

But why would a demerger cause investors to destroy the buy button, and revalue a company as mature as Woolworths by almost a quarter higher?

Well, it’s because, in the past, most demergers have been raging successes, and investors know it.

Coles and Wesfarmers shares: a successful demerger

Take the recent demerger of Coles Group Ltd (ASX: COL) from its old parent company Wesfarmers Ltd (ASX: WES). Prior to November 2018, Coles was a wholly-owned subsidiary of Wesfarmers after the conglomerate bought it out back in 2007. But Wesfarmers decided to let Coles fly the nest and listed Coles shares at $12.49 on 20 November 2018. All existing Wesfarmers shareholders received one share of Coles for every Wesfarmers share owned. On the first day after Coles hit the boards, Wesfarmers shares were asking roughly $31.50.

Fast forward to today, and the Coles spin-off has been hailed as highly successful for Wesfarmers shareholders. Coles shares have raced almost 50% higher since they first flew the nest. Just today, in fact, Coles has clocked a new record high of $19.26 per share.

Meanwhile, Wesfarmers shares have also performed very well. They are also up close to 50% since November 2018 and are going for $47.31 at the time of writing.

And both of these companies have been paying substantial, fully franked dividends to shareholders along the way as well.

Coles and Wesfarmers isn’t the only recent demerger success story either. BHP Group Ltd (ASX: BHP) and South32 Ltd (ASX: S32) split up back in 2015 at the strong encouragement of shareholders. Both have performed well on their own since. Ditto with the old Fairfax Media (now part of Nine Entertainment Co Holdings Ltd (ASX: NEC)) and Domain Holdings Australia Ltd (ASX: DHG).

Foolish takeaway

All evidence points to a demerger being a potentially lucrative process to benefit from. I myself considered buying Wesfarmers shares before the Coles spin-off, but I decided against it as I thought Wesfarmers was too expensive at the time — in hindsight a foolish (and not the good kind of Foolish) decision. So next time an ASX company announces a demerger, be sure to pay attention.

More reading

• Why the rise of electric vehicles could benefit ASX mining shares
• Fiji Kava share price soars 90% on Blackmores subsidiary agreement, trade paused
• The next battle facing these ASX stocks will come from within
• Brokers have upgraded 3 ASX shares to the buy zone. Here’s why
• Coles shares vs Woolworths shares. Which is a better buy?

Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of COLESGROUP DEF SET, Wesfarmers Limited, and Woolworths Limited. The Motley Fool Australia has recommended Nine Entertainment Co. Holdings 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.

The post If an ASX share announces a demerger, here’s why you should listen appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/3gRaWfy