Author: therawinformant

The S&P/ASX 200 Index (ASX: XJO) fell by 0.6% today to 6,001 points.

COVID-19 restrictions continue to get stronger across the country. People travelling from NSW to Victoria will now have to quarantine in a hotel for 14 days. Meanwhile, Queensland has shut the border to NSW and ACT.

Telstra Corporation Ltd (ASX: TLS) asset sale

Australia’s biggest ASX 200 telco announced today that it has entered into an agreement to sell its data centre complex in Clayton, Victoria, to Centuria Industrial REIT (ASX: CIP) for $416.7 million.

The sale includes a triple-net lease-back arrangement which means Telstra will keep ownership of all the IT and telco equipment. Telstra will be responsible for the operations, upgrades, repairs, future capex spending and the security.

The lease is for an initial period of 30 years with two 10-year options for Telstra to extend the lease. Centuria said that the data centre complex had an initial yield of 4.2% and it had a gross lettable area of 26,139 square metres.

The 3.2 hectare complex is 25km from the Melbourne CBD and includes 10 buildings. It has Telstra’s newest 6.1MW data centre, its adjacent 6.6MW data centre and the associated energy centre.

Telstra CEO Andy Penn said: “As part of T22, we have an ambition to monetise up to $2 billion worth of assets to strengthen our balance sheet. This deal means we have no reached over $1.5 billion. Data centres are an incredibly important part of the digital ecosystem and we continue to own and operate world-leading facilities in Australia and overseas.”

The Telstra share price fell 2.3% today.

Centuria Industrial REIT FY20 result and capital raising

Centuria announced its FY20 result and a capital raising along with the Telstra data centre acquisition.

The ASX 200 share’s net rental profit, called the funds from operations (FFO), was $63.5 million for the year. This translated to FFO per unit of 18.9 cents, down from 19.3 cents.

The industrial real estate investment trust (REIT) announced a full year distribution of 18.7 cents per unit, up from 18.4 cents last year.

Its gearing reduced from 37.4% last year to 27.2% at 30 June 2020. The net tangible assets (NTA) per unit increased from $2.73 to $2.82 at the end of FY20.

In FY21 the REIT is guiding that FFO per unit will be 17.4 cents and the FY21 distribution will be 17 cents.

Not only did the ASX 200 share announce the acquisition, but it’s also buying a $16.4 million industrial facility in Smeaton Grange, NSW and a $14 million facility in Tullamarine, Victoria.

To fund all of these new properties it’s doing a fully underwritten entitlement offer of $340.8 million at an issue price of $3.15 per unit. That’s a 4.8% discount to the last closing share price yesterday.

Centuria Office REIT (ASX: COF) FY20 result

Another Centuria property fund also announced its result today.

Management said that the REIT performed well despite the difficult operating conditions because of COVID-19 impacts. Around 25% of its income is derived from Australian state and federal government tenants.

Its funds from operations rose by $24.2 million to $85.4 million. However, in per-unit terms FFO actually declined slightly to 18.6 cents. The distribution increased slightly to 17.8 cents, up from 17.6 cents. Distribution guidance for FY21 is 16.5 cents per unit.

The REIT’s NTA didn’t change, it was still $2.49 at the end of FY20. Gearing increased slightly to 34.5%.

Centuria Office Fund manager Grant Nichols said: “We believe COF provides quality, highly connected and affordable office space at a time when tenants are focused on their operating costs. Due to its high occupancy, strong underlying tenant covenants and an average building age of 15.9 years, COF remains well pleased to continue delivering attractive income returns to unitholders, with FY21 distribution guidance equating to a current distribution yield of around 9%.”

The forward distribution yield guidance may have been 9% when Mr Nichols delivered that statement, but the Centuria Office REIT share price rose 6.6% today, reducing the prospective yield for future buyers.

More reading

• Top broker warns Afterpay and these ASX stocks could disappoint on profit results
• Why the Netwealth Group share price leapt 33% in July
• 3 property shares I’d rather buy over an investment property
• The latest ASX stocks to be hit by broker downgrades today
• Top brokers name 3 ASX 200 shares to buy today

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Telstra 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 ASX 200 drops 0.6%, Telstra sells data centre for $416.7 million appeared first on Motley Fool Australia.

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If you’re looking to make some long term investments in the share market, then I think the three ASX shares listed below would be top options.

Here’s why I think they would be great shares to buy and hold:

a2 Milk Company Ltd (ASX: A2M)

I think this fresh milk and infant formula company’s shares could generate strong returns for investors over the next decade. This is thanks to the strong demand for its products in China and its relatively modest market share in the lucrative market. In addition to this, its strong pricing power, expansion opportunities for its fresh milk segment, and potential acquisitions should be supportive of its growth in the future. Overall, I think this makes it a great buy and hold option.

Cochlear Limited (ASX: COH)

Another top share to consider buying and holding is Cochlear. I think the leading provider of cochlear implantable devices for the hearing impaired has very strong long-term growth potential. This is due largely to its leading position in a market with high barriers to entry and positive tailwinds. In respect to the latter, I believe Cochlear will benefit greatly from ageing populations across the globe. After all, with hearing tending to fade as you age, a growing number of over 65s globally can only be a good thing for the company.

Kogan.com Ltd (ASX: KGN)

Kogan is a rapidly growing ecommerce company and Australia’s answer to Amazon. It has been a big winner from the shift to online shopping during the pandemic. And while this has resulted in its share price zooming materially higher, I would still be a buyer with a long term view. I expect more and more shopping to be made online over the next decade, which bodes well for Kogan given the increasing popularity of its website. Combined with potential value accretive acquisitions following its equity raising, I believe the future is very bright for this one.

More reading

• Here’s where Australians are spending – despite the recession
• Why Cochlear, NAB, Tabcorp, & Telstra shares are tumbling lower
• 2 of the best online shopping ASX shares to buy in August
• 3 ASX shares I’d buy if the ASX crashes again
• Top fund manager says A2 Milk could double or triple its market share

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 Cochlear Ltd. and Kogan.com ltd. The Motley Fool Australia owns shares of A2 Milk. The Motley Fool Australia has recommended Cochlear Ltd. and Kogan.com 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.

The post 3 top ASX shares that could be quality buy and hold options appeared first on Motley Fool Australia.

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Some of the shine may come off the record breaking Afterpay Ltd (ASX: APT) share price this profit reporting season.

The BNPL champ has been winning the hearts of ASX retail investors with some of the best returns on the S&P/ASX 200 Index (Index:^AXJO), but this goodwill will be put to the test this month.

Goldman Sachs warns that Afterpay is one of the six ASX stocks that are likely to unveil negative surprises when they hand in their earnings report card.

Risk of higher than expected costs

While attention will likely be on top-line measurements (such as customer growth, new merchant sign-ups, active users, etc), the risks comes from capex.

“There is still a risk we are under-estimating the cost investment that may be required to drive what we otherwise expect to be strong top line growth,” said the broker.

Having said that, the growth in the business is unlikely to disappoint given the strong momentum Afterpay is achieving.

On the other hand, let’s not also forget there’s a lot of good news priced into the Afterpay share price, which makes it vulnerable to any negative surprises.

Goldman rates Afterpay as “neutral” with a 12-month price target of $70.15 a share.

Turbulence ahead

Afterpay isn’t the only one carrying downside risk. The Qantas Airways Limited (ASX: QAN) share price is another that could make shareholder nervous.

The airline is guiding for a pre-tax profit of between breakeven and a small positive number excluding $2.8 billion in one-off charges.

But with the new stage four Victorian lockdowns and increasing cross border restrictions, it’s hard to imagine its outlook commentary being anything but sombre.

However, Qantas is still better placed than the Air New Zealand Limited (ASX: AIZ) share price.

“Recovery of domestic activity has been taken positively by the market,” said the broker.

“However, without international activity (incl Trans-Tasman) we believe the carrier will struggle to return to cashflow breakeven given structurally high operating cost base.”

Goldman’s recommendation on Qantas is “neutral” and Air New Zealand is “sell”. The broker’s price target on the flying kangaroo is $3.82, while the latter is NZ$0.90 (its dual listed).

Other potential profit season disappointers

Other stocks on the August reporting season “sin list” include the Boral Limited (ASX: BLD) share price, the Charter Hall Group (ASX: CHC) share price and Transurban Group (ASX: TCL) share price.

Building materials supplier Boral could be a capital raising candidate as the new CEO looks to restructure the troubled group.

Meanwhile, the market may be underestimating the risk of write-downs from property group Charter Hall due to the COVID-19 fallout.

Finally, the hard lockdown in Melbourne is bound to have a material impact on toll road operator Transurban.

More reading

• ASX 200 drops 0.6%, Telstra sells data centre for $416.7 million
• Why the Netwealth Group share price leapt 33% in July
• The latest ASX stocks to be hit by broker downgrades today
• Top brokers name 3 ASX 200 shares to buy today
• Why the Treasury Wine share price is sinking today

Motley Fool contributor Brendon Lau has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of AFTERPAY T FPO and Transurban 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.

The post Top broker warns Afterpay and these ASX stocks could disappoint on profit results appeared first on Motley Fool Australia.

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Retail trade increased 2.7% in June following a 16.9% rise in May as Aussies continued to spend despite the recession. The spending figures bumped up in June when physical stores reopened after being closed in the first round of coronavirus lockdowns.

But online retailers are also experiencing very solid demand. It seems government measures, including JobKeeper and JobSeeker, along with early access to superannuation withdrawals, have supported spending across the economy. 

Despite the continued spending by consumers, purchasing patterns have shifted – we are buying different things in different ways. Products that make lockdown more comfortable have been in strong demand, including home furnishings, electronics, entertainment, and DIY supplies.

Consumers are increasingly sourcing their purchases online as movement outside the home is restricted. We take a look at 3 ASX retailers where consumers are spending. 

Kogan.com Ltd (ASX: KGN)

Online-only retailer Kogan has seen a surge in sales since the pandemic first hit, with its faith in the digital channel paying off. Kogan retails everything from electronics, to toys, to homewares, and sells exclusively online.

The company saw sales surge in April and May, a trend that continued in June. It has now been four years since Kogan listed on the ASX at $1.80 a share, and since then the company has delivered four consecutive years of significant growth in sales and earnings. Shares are now trading at $19.02 with more than 2 million customers shopping at Kogan in the last 12 months alone. 

Adairs Ltd (ASX: ADH) 

Adairs is an omni-channel home furnishings retailer selling bed linen, manchester, soft furnishings and home accessories. Although it operates more than 160 physical stores across Australia and New Zealand, Adairs also has a strong online presence.

In the 24 weeks to 14 June 2020, Adairs grew online sales by 92.6%. Store sales grew 5.3% over the same period despite store closures between March and May. This gave total growth for the period of 27.4%, driven by consumers looking to upgrade their surroundings as they spend more time at home. The Adairs share price has surged in line with its sales, and quadrupling from its March low. 

Temple & Webster Group Ltd (ASX: TPW)

Temple & Webster Group Ltd is an online only furniture and home accessories retailer which has seen stellar growth in the digital commerce boom.

Unaudited full year results show EBITDA up nearly 500% to $8.5 million as sales grew by 74% to $176 million. Many consumers stuck working from home have taken the opportunity to splurge on some new furnishings, giving Temple & Webster a 77% boost in active customer year on year. The Temple & Webster share price has surged accordingly, up more than 400% since March.

More reading

• ASX marching higher despite COVID-19: Where should you invest?
• 2 of the best online shopping ASX shares to buy in August
• 3 ASX shares I’d buy if the ASX crashes again
• ASX shares that could get a boost from Victoria’s shutdown
• Reporting season metrics to watch for JB Hi-Fi

Kate O’Brien has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Kogan.com ltd and Temple & Webster Group Ltd. The Motley Fool Australia has recommended Kogan.com ltd and Temple & Webster Group 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.

The post Here’s where Australians are spending – despite the recession appeared first on Motley Fool Australia.

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Although the market is dropping lower on Wednesday, that hasn’t stopped the Breville Group Ltd (ASX: BRG) share price from continuing its positive run.

In afternoon trade the appliance manufacturer’s shares were up almost 3% to a new record high of $26.99.

When the Breville share price reached that level, it meant it was up a massive 53% since the start of the year.

Why is the Breville share price on fire in 2020?

Investors have been buying Breville shares this year after its strong growth continued during the pandemic.

A trading update in May, which accompanied its $104 million equity raising, revealed that Breville was performing very strongly during the second half of FY 2020, despite the pandemic and store closures.

Between January 1 and April 30, Breville’s revenue was up 32% on the prior corresponding period. Sales grew 25% in March and 21% in April.

Although the company hasn’t provided an update since, the general consensus is that Breville has continued to perform in line with these growth rates over the last three months.

One broker that appears confident that this is the case is Morgan Stanley.

What did Morgan Stanley say?

Last month the broker initiated coverage on Breville with an overweight rating and $28.00 price target.

It notes that the coronavirus pandemic has been a positive for Breville’s business. With restaurants closed and consumers stuck at home, they have been cooking more at home and buying kitchen appliances.

Coffee machines are also believed to be in demand with consumers, who seemingly can’t get through their workday at home without a latte or two.

Is it too late to invest?

Based on the current Breville share price, there is still a little bit of upside left before it reaches Morgan Stanley’s price target.

Not that the broker necessarily thinks it will stop there. Its analysts have suggested the Breville share price could reach $62.00 by FY 2030.

This is based on the assumption it captures a big enough slice of a global serviceable market worth $10 billion.

It commented: “This assumes that BRG can capture 33% of the total revenue opportunity, or A$3.1bn at an EBIT [earnings before interest and tax] margin of 16.2%. We then apply a terminal EBIT multiple of 15.5x, in-line, with BRG’s five-year average.”

Breville is due to release its full year results on 13 August 2020.

More reading

• This is the only ASX sector tipped to report earnings growth this reporting season
• How these ASX investors made 60% in three months
• These ASX 200 consumer discretionary shares are bucking the economic cycle
• Why Audinate, Breville, Zip Co, & Zoono shares are sinking lower today
• ASX 200 flat: Big four banks and travel shares push higher, Breville tumbles lower

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 Why the Breville share price is up 53% in 2020 and hit a record high today appeared first on Motley Fool Australia.

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If you have $10,000 sitting in your savings account, then now could be a good time to consider investing it into the share market.

With the share market still down materially from its February highs, I believe there are plenty of gains ahead for investors over the coming years.

Here are three top ASX shares that I would invest these funds into:

Altium Limited (ASX: ALU)

This electronic design software company could be a great place to invest the $10,000. Although Altium’s shares are not conventionally cheap, I believe they are good value based on its growth profile. Altium provides an award-winning printed circuit board (PCB) design software platform, Altium Designer, which I believe could experience increasingly strong demand over the next decade thanks to the Internet of Things (IoT) and artificial intelligence (AI) booms. Over the coming years the company is aiming to dominate the market. Given the quality of its offering, I believe it will achieve this.

NEXTDC Ltd (ASX: NXT)

Another option for a $10,000 investment is NEXTDC. It is another tech share which looks expensive on paper but could prove to be good value over the long term. Especially if the cloud computing boom continues to accelerate. This is because as cloud computing use increases, demand for NEXTDC’s innovative data centre outsourcing solutions and connectivity services is likely to increase and drive strong earnings growth.

Xero Limited (ASX: XRO)

I think Xero would be a great option for investors. Although its shares have been on fire over the last few years, I believe its growth story is only getting started. This is because of the opportunity its high quality software has to become the platform of choice for small and medium sized businesses across the globe. The key to this will be the company conquering the massive United States market. Although progress in the lucrative market has been slower than many would like, I believe it is worth remembering that this is a marathon and not a sprint.

More reading

• This is the only ASX sector tipped to report earnings growth this reporting season
• 2 ASX tech shares to buy and hold beyond 2026
• Want to invest $3,000 into ASX blue chips?
• Why I would invest $50,000 into these excellent ASX shares
• Why I would buy NEXTDC and these stellar ASX growth shares

James Mickleboro owns shares of NEXTDC Limited. 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 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 Where to invest $10,000 into ASX shares immediately appeared first on Motley Fool Australia.

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