Author: therawinformant

The SEEK Limited (ASX: SEK) share price is on course to start the week with a day in the red.

At the time of writing the job listings giant’s shares are down 3.5% to $20.92 following the release of an announcement.

What did SEEK announce?

This morning SEEK revealed that it has decided not to pay shareholders a final dividend for FY 2020. This mean the 13 cents per share interim dividend paid last month, which was down 46% on the prior corresponding period, will be the only dividend paid in FY 2020.

According to the release, the company believes it is better to preserve capital in an uncertain environment in order to fund its long-term growth strategy.

In addition to this, the company revealed that it has strengthened its balance sheet after completing its $75 million subordinated notes issue. The proceeds have now been received and have increased the covenant headroom under its existing senior syndicated debt facility.

Speaking of which, SEEK has also announced the extension of its debt maturity profile. This means that its earliest debt maturity is now November 2022.

At the end of FY 2020, SEEK was operating within its debt covenants and has strong liquidity. The latter includes borrower group cash and undrawn facilities totalling ~$593 million.

A decision not taken lightly.

SEEK’s CEO and Co-Founder, Andrew Bassat, advised that the decision to not pay a final dividend was a difficult one, but one that needed to be made.

He said: “The combination of our debt capital market transactions and the decision not to pay a final FY20 dividend increases our funding flexibility so we can continue to invest for the long term, even in this uncertain economic environment.”

“The dividend decision was not taken lightly but we believe it is the right trade-off to maximise returns for long-term shareholders. Once economic conditions improve, we intend to resume payment of dividends,” he concluded.

More reading

• Are ASX tech shares the only way to protect your portfolio against the coronavirus?
• The blue chip ASX shares to buy in August
• All Technology Index celebrates 6 months with stunning outperformance
• Where to invest $100,000 into ASX shares
• Buy and hold Cochlear and these ASX shares for strong long term returns

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.

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The Tabcorp Holdings Limited (ASX: TAH) share price has come under pressure following the release of its preliminary full year results and the announcement of a major impairment charge.

At the time of writing the gambling company’s shares are down 5.5% to $3.36.

What did Tabcorp announce?

This morning Tabcorp advised that it has been reviewing the carrying value of its assets and expects to incur non-cash goodwill impairment charges in the range of $1,000 million to $1,100 million in FY 2020.

According to the release, the non-cash goodwill impairment charges relate to its Wagering & Media and Gaming Services businesses.

Management advised that these reflect an assessment based on underlying assumptions which take into account the impact of the pandemic on these operations, the possible acceleration of retail contraction and long term uncertainty, and the level of competitive intensity and structural changes in the Wagering & Media business.

In addition to this, it believes a potential decline in consumer confidence and increased economic uncertainty could weigh on the businesses.

Though, it is worth noting that the goodwill impairment charges are non-cash in nature and will not impact the company’s financial covenants with its lenders.

As of the end of FY 2019, the book value of goodwill for these segments was $2,945 million. Which means they have lost over a third of their value now.

Tabcorp’s Managing Director and CEO, David Attenborough, said: “COVID-19 has materially impacted our Wagering & Media and Gaming Services businesses. We are facing into a challenging and uncertain environment, and the current operating conditions and those expected into the future are relevant factors in assessing the value of the goodwill in those businesses at this time.”

FY 2020 earnings update.

In addition to the above, the company provided the market with its expectations for FY 2020.

Management advised that earnings before interest, tax, depreciation, and amortisation (EBITDA) before significant items is expected to be in the range of $990 million to $1,000 million. This represents an 11% to 12% decline on FY 2019’s EBITDA of $1,124 million.

And on the bottom line, net profit before tax and significant items is expected to be in the range of $267 million to $273 million. This is a 31% to 32.5% decline year on year.

Mr Attenborough concluded: “We remain confident in the strength and resilience of Tabcorp’s diversified portfolio of assets and are pleased that integration is now substantially complete. We are focused on supporting our people and partners during these challenging times while ensuring that Tabcorp emerges strongly post COVID-19.”

More reading

• Is now the time to buy the Jumbo Interactive share price?
• 2 hidden ASX shares to benefit from coronavirus
• Top brokers name 3 ASX shares to buy next week
• Why UBS thinks now is the time to be buying this underperforming ASX 200 stock
• Tabcorp share price up 5% as CEO and chair succession plan announced

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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There was an easier way of generating oversized returns during the COVID market meltdown than picking winning ASX stocks.

It is a high-risk gamble to try to predict which stocks will race ahead of the S&P/ASX 200 Index (Index:^AXJO) during the extreme volatility.

Let’s be honest, not many would have dared pile into the Afterpay Ltd (ASX: APT) share price when it was sinking under $10.

Capital raising arbitrage

But some investors have found an easier way to make eye-watering returns. They just participate in every capital raising during the crisis as most ASX stocks that were desperately passing the can around are trading well ahead of their offer price.

In fact, data from Fresh Equities found that investors who jumped on the $8.5 billion in new share offers in May and June made an average of 59%, reported the Australian Financial Review.

There were 205 placements undertaken during the period with 76% (or 156 companies) trading ahead of their offer price.

Crumbs for retail investors

The share prices of 17 of these ASX companies have tripled in value, while more than 50 have doubled in value.  

Anecdotally, we can see why as several high-profile cap raises have come off spectacularly well. Perhaps too spectacularly as retail shareholders have been scaled down with the lion’s share of the discounted shares going to institutional investors.

The National Australia Bank Ltd. (ASX: NAB) share price is a classic example. The bank, the only one of the big four, raised capital at $14.15 a pop. While the stock tumbled off its highs recently, it’s still 25% above the raising price.

What’s more, management made a massive scale back of the SPP to retail shareholders due to overwhelming demand.

The same happened in the case of the Breville Group Ltd (ASX: BRG) share price and several others.

Biggest returns from smaller stocks

But the best returns were to be had in the small caps space, according to Fresh Equities. Small gold and silver miners were the best performers with average gains of 103%, thanks in large part to the surging prices of both commodities.

In second spot were miners outside of the precious metals space with average returns of 83% while technology came in third with 51%.

The strong performance of cap raise candidates is one reason why I believe we will be seeing more companies tapping investors on the shoulder during the August reporting season.

It’s a pity that professional investors will again get the upper hand over the rest of us despite ASIC’s efforts to make such transactions fairer to retail investors.

More reading

• Analysis: Is the Woolworths share price good value in August?
• AMP and 2 other ASX 200 shares to watch this week
• 5 things to watch on the ASX 200 on Monday
• Is the Afterpay share price a buy?
• These were the worst performing shares on the ASX 200 in July

Motley Fool contributor Brendon Lau owns shares of Breville Group Ltd and National Australia Bank Limited. Connect with me on Twitter @brenlau.

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

The post How these ASX investors made 60% in three months appeared first on Motley Fool Australia.

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It’s fair to say it was a disappointing week for ASX 200 shares. The S&P/ASX 200 Index (ASX: XJO) fell 2.0% to close at 5,927.80 points on Friday.

That result was driven by slumps from some of the biggest ASX 200 shares on the market.

One of those was AMP Limited (ASX: AMP) which plummeted 12.8% on Friday alone.

Last week, I was watching HUB24 Ltd (ASX: HUB), Commonwealth Bank of Australia (ASX: CBA) and Orocobre Limited (ASX: ORE).

After all 3 of those shares fell, find out why I’ve got my eye on AMP and 2 other ASX 200 shares in the week ahead.

AMP and 2 more ASX 200 shares to watch this week

The reason why I’m watching the AMP share price this week is because of Friday’s sharp drop.

That was driven by the wealth management company lowering its 1H20 profit guidance thanks to market volatility and coronavirus disruptions.

AMP expects to report underlying profit for retained businesses in the order of $140 million to $150 million. The Aussie wealth manager is still set to deliver $300 million of annual run-rate cost savings.

A 12.8% share price drop is a big deal for such a large ASX 200 share. That means I’d expect to see more volatility in the next week or so.

AMP aside, I’m also watching the Super Retail Group Ltd (ASX: SUL) share price.

The Super Retail share price shot up 9.5% on Friday after also providing updated earnings guidance. This time, however, it was good news for shareholders.

Super Retail saw positive sales growth from its Supercheap Auto, Rebel and BCF stores. Outdoor clothing retailer Macpac saw total sales drop 5.0%, with total sales growth for the group of 4.2%.

Investors piled into the ASX 200 retail share which is now up 150.9% since the bottom of the March bear market.

However, the Aussie retailer’s shares are still down 11.4% for the year and could have more upside.

Finally, I’m watching St Barbara Ltd (ASX: SBM) this week. The Aussie gold share fell 2.9% on Friday as investors became more bullish on an economic recovery.

However, even if we see a strong earnings season, I think market volatility is here to stay.

That means the perceived safety of ASX 200 gold shares like St Barbara could be attractive to investors. St Barbara shares are trading at a price to earnings (P/E) ratio of 19.6 and could be a good value buy for gold exposure.

More reading

• Analysis: Is the Woolworths share price good value in August?
• How these ASX investors made 60% in three months
• These were the worst performing ASX 200 shares in July
• 5 things to watch on the ASX 200 on Monday
• Top ASX Stock Picks for August 2020

Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Hub24 Ltd. The Motley Fool Australia owns shares of and has recommended Super Retail Group Limited. The Motley Fool Australia has recommended Hub24 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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July was a shaky month for the S&P/ASX 200 (ASX: XJO). Rising coronavirus infections in Victoria put a cap on previous gains with the index ending the month 29.9 points down. Despite the disappointing performance of the index overall, as always, there were some outperformers. Here we take a look at the top performing ASX 200 shares in July. 

ALS Ltd (ASX: ALQ) 

The ALS share price gained more than 29% in July to finish the month at $8.49. The share price gained ground throughout the month as the company reported a creditable FY20 result. ALS operates in the industrials sector providing diagnostic and testing services across the life sciences, commodities, engineering and infrastructure sectors. Revenue from continuing operations increased 10% in FY20 to $1.8 billion, and underlying net profit after tax increased 4.3% to $189 million. This was within guidance despite the impact of the coronavirus in the final quarter. 

ALS says the resilience of its business leaves it well positioned to withstand the impact of the current economic environment. The company has a strong capital position and diverse business interests. The long term strategy of organic and disciplined acquisition growth remains on track. Bolt on acquisition opportunities that arise in the current climate will be assessed in accordance with this strategy. The strength of the balance sheet gave ALS the confidence to declare a final dividend of 6.1 cents per share, franked to 70%. Added to the half year dividend of 11.5 cents, this gives a full year payout ratio of 45%. 

Netwealth Group Ltd (ASX: NWL)

The Netwealth Group share price gained 33.89% over the month to finish July at $12.01. Netwealth is a wealth management business with investment platforms for wealth professionals and personal investors. In FY20 Netwealth saw record annual net inflows of $9.1 billion. Funds under administration increased 35% to $31.5 billion after a negative market movement of $0.9 billion for the year. In the March quarter, funds under administration saw net inflows of $3.2 billion, more than double its nearest competitor. 

Netwealth has advised it expects performance for FY20 to slightly exceed previous guidance of $116 – $120 million revenue and $58 – $62 million earnings before interest, tax, depreciation and amortisation (EBITDA). It reports that the current pipeline of new business continues to be positive although subject to market disruption. The company has a positive outlook given its strong cash flows, no debt, and growing market share. 

Orocobre Limited (ASX: ORE) 

The Orocobre share price rose 28.57% in July to close the month at $2.97. Orocobre is a lithium and borax miner with operations in Argentina. COVID-19 resulted in the closure of Orocobre’s Olaroz lithium facility for several weeks with production levels lower upon reopening thanks to biosecurity measures. Production for the June quarter of 2,511 tonnes was a reduction of 27% compared to the prior corresponding period. Sales volumes and revenue were also down as lithium prices remained at record lows with demand from China subdued. 

Widespread delays to lithium expansion projects were announced during the June quarter. Over the longer term, these delays may put pressure on pricing, lifting it from current lows. Demand for lithium, which is a key component in batteries used in electric vehicles (EVs), is also likely to increase thanks to government support. In Germany and France, sales of EVs grew 100% year on year in May due to increased government subsidies. While the lithium market experienced a setback as a result of COVID-19, Orocobre thinks the long term outlook is positive, buoyed by regulatory incentives and the broader shift to environmentally friendly alternatives. 

Fortescue Metals Group Limited (ASX: FMG) 

The Fortescue Metals share price gained 25.7% last month to finish July at $17.41. One of the largest iron ore companies in the world, Fortescue reported record shipments for FY20. Iron ore shipments were 47.3 million tonnes for the June quarter and 178.2 million tonnes for the full year. This exceeded top end guidance of 177 million tonnes and was 6% higher than FY19. Lower costs increased revenue realisation, with average revenue of US$79 per dry metric tonne in FY20. 

Fortescue ended FY20 with cash on hand of $4.9 billion at 30 June 2020 and net debt of $0.3 billion. $2 billion was spent on capital expenditure during FY20 as major projects achieved key milestones. CEO Elizabeth Gaines said, “The entire Fortescue team has delivered strong results for the June quarter…(having) delivered record annual shipments of 178.2mt, while maintaining our industry leading cost position of US$12.94/wmt”. Fortescue has provided FY21 guidance for shipments of 175 – 180 million tonnes. 

Mineral Resources Limited (ASX: MIN) 

The Mineral Resources share price gained 21.59% in July to close the month at $25.74. Mineral Resources is a mining services company with a portfolio of operations across multiple commodities. Services are provided to clients in Western Australia and the Northern Territory, with the company operating mine sites in the Pilbara and Goldfields, and shipping through Utah Point and Esperance. Mineral Resources was not materially impacted by COVID-19, and reported a record breaking June quarter for the iron ore business.

Total iron ore production of 4.2 million wet metric tonnes (wmt) was 22% higher than Q3 FY20. Iron ore shipments for the quarter were 4.4 wmt, up 53% from Q3 FY20. Over the full year, shipments of 6.7 million wmt were in line with guidance. Mineral Resources’ Mt Marion Lithium Project achieved record production of 146,000 wmt during the June quarter. The company also sold its non-core manganese assets to Resources Development Group Ltd (ASX: RDG) during the June quarter and in return received equity equivalent to a 75% shareholding in RDG. 

Foolish takeaway 

These five ASX shares were the top performing ASX 200 shares in July 2020. Miners feature heavily in the list with the iron ore price soaring in July. Iron ore reached levels not seen since August 2019 due to concerns around supply disruptions in Brazil and rising demand from China. The price rise has supported the share price of ASX iron ore miners, including some of July’s top performers.

More reading

• These are the 10 most shorted shares on the ASX
• These were the worst performing ASX 200 shares in July
• Top brokers name 3 ASX shares to sell next week
• These were the best performing shares on the ASX 200 in July
• Here’s how to start investing with $5k

Motley Fool contributor Kate O’Brien has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of Netwealth. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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With interest rates at record lows and likely to remain at these levels for some time, I believe the share market is the best place to earn a passive income.

But which ASX dividend shares should you buy? Here are two dividend shares I would pick up today:

Coles Group Ltd (ASX: COL)

The first ASX dividend share that I would consider buying is Coles. Since the supermarket giant was spun out of Wesfarmers Ltd (ASX: WES) back in 2018, it has been onwards and upwards for its shares. So much so, they recently reached a new record high. The good news is that I don’t believe it is too late to invest.

I’m confident Coles can grow its earnings and dividend at a solid rate over the next decade thanks to its defensive earnings, refreshed strategy, expansion opportunities, and its focus on automation. In addition to this, recent lockdowns in Victoria look likely to give its sales a huge boost in the first quarter of FY 2021. Based on the current Coles share price, I estimate that its shares offer a fully franked 3.3% FY 2021 dividend.

Vanguard Australian Shares High Yield ETF (ASX: VHY)

Another option for income investors to consider buying is the Vanguard Australian Shares High Yield ETF. This exchange traded fund has a focus on high yield shares and is invested in a total of 66 of them. I like this as it provides diversity, which has certainly proved to be as important as ever during the pandemic.

Among its holdings you will find the big four banks, BHP Group Ltd (ASX: BHP), Coles, and Telstra Corporation Ltd (ASX: TLS). At present, I estimate that the Vanguard Australian Shares High Yield ETF offers a FY 2021 dividend yield somewhere in the region of 4% to 5%.

More reading

• 5 things to watch on the ASX 200 on Monday
• Top ASX Stock Picks for August 2020
• Here’s how to start investing with $5k
• Is the Woolworths share price in the buy zone?
• Buy these ASX ETFs for dividends in August

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Telstra Limited. 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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Every Monday I like to look at ASIC’s short position report to find out which shares are being targeted by short sellers.

This is because I believe it is well worth keeping a close eye on short interest levels as high levels can sometimes be a sign that something isn’t quite right with a company.

With that in mind, here are the 10 most shorted shares on the ASX this week according to ASIC:

• Myer Holdings Ltd (ASX: MYR) remains the most shorted share on the Australian share market with short interest of 11.9%. With more and more spending shifting online, short sellers appear to believe Myer’s prospects of a successful turnaround are dwindling.
• Speedcast International Ltd (ASX: SDA) has short interest of 11.7% again. This communications satellite technology provider’s shares have been suspended since February after its debt load became too much and led to it declaring itself bankrupt.
• Inghams Group Ltd (ASX: ING) has 9.7% of its shares held short, which is up slightly week on week. The poultry company’s shares have come under pressure amid concerns that its performance in FY 2020 could be impacted by an unfavourable sales mix because of the pandemic. Increased feed costs could also weigh on margins.
• Webjet Limited (ASX: WEB) has seen its short interest fall slightly week on week to 9.6%. Short sellers appear to believe that the online travel agent’s shares are overvalued based on its medium term outlook because of difficult travel markets.
• Orocobre Limited (ASX: ORE) has seen its short interest surge higher week on week to 8.25%. Last week the lithium miner revealed that it has cut its operating costs to their lowest on record. However, this is still higher than the price it is commanding for its lithium.
• CLINUVEL Pharmaceuticals Limited (ASX: CUV) has seen its short interest remain flat at 8%. Last week this biopharmaceutical company released its fourth quarter update and revealed a 20% decline in cash receipts compared to the prior corresponding period. Lockdowns led to softening sales of its SCENESSE product.
• Nearmap Ltd (ASX: NEA) has seen its short interest fall to 7.8%. Short sellers appear to be closing positions after the aerial imagery technology and location data company’s performance remained solid during the pandemic.
• Bank of Queensland Limited (ASX: BOQ) has seen its short interest fall to 7.8%. Last month the regional bank lifted its coronavirus provisions and warned that there could be more to come. Short sellers appear confident that the worst is not over for the bank.
• Zip Co Ltd (ASX: Z1P) has short interest of 7.7%, down slightly week on week. Short sellers may be targeting the buy now pay later provider due to a recent rise in bad debts. Though, it is worth noting that forward indicators are pointing to these easing.
• Galaxy Resources Limited (ASX: GXY) has re-entered the top ten with short interest of 7%. Rock bottom lithium prices are weighing heavily on Galaxy’s profits and look unlikely to improve any time soon due to oversupply issues.

More reading

• These were the best performing ASX 200 shares in July
• Top ASX Stock Picks for August 2020
• Top brokers name 3 ASX shares to sell next week
• These were the best performing shares on the ASX 200 in July
• Will the coronavirus kill cash?

James Mickleboro owns shares of Galaxy Resources Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Nearmap Ltd. and ZIPCOLTD FPO. The Motley Fool Australia owns shares of and has recommended Webjet Ltd. The Motley Fool Australia has recommended Nearmap Ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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