Author: therawinformant

I believe it is fair to say streaming providers such as Netflix have changed the entertainment industry. After eliminating the old Blockbuster video stores I went to as a kid on weekends, the growth in streaming subscriptions has been phenomenal. This growth has been even more pronounced in 2020 as a result of the coronavirus pandemic and associated lockdowns.

There are a number of ASX shares that are benefiting from the rise of this trend in Australia, including News Corp (ASX: NWS) and Telstra Corporation Ltd (ASX: TLS), which share ownership of Foxtel, and Nine Entertainment Co Holdings Ltd (ASX: NEC), which owns streaming service Stan.

Subscriptions surge in lockdown

According to a press release by Roy Morgan, subscriptions to streaming services have soared during lockdown, with providers such as Netflix, Foxtel, Stan, Disney+ and Amazon Prime all showing increases in subscribers.

There are now almost 15.74 million Australians with access to a service, which is an increase of 5.9% or 878,000 in just three months.

Netflix still has a market-leading position in the streaming services space, with 13.28 million Australians subscribed.

However, Foxtel also saw strong growth, with 658,000 new subscriptions since lockdown period commenced, representing a 13.6% increase and bringing total subscriber numbers to 5.5 million. I believe this growth was assisted by the return of sport on Foxtel’s Kayo Sports and the release of its new streaming service, Binge. Foxtel ownership consists of News Corp, with a 65% interest, and Telstra, with a 35% interest.

Nine Entertainment’s Stan also grew strongly during the period, increasing subscriptions by 729,000 to 4.43 million, which is a 19.7% increase in 3 months.

Roy Morgan insights

Commenting on the numbers, Roy Morgan CEO Michele Levine said:

The rate of growth is astonishing with Netflix gaining more viewers in this three month period than they gained over the previous twelve months and Foxtel experiencing its strongest growth in many years despite the lack of sporting content during this period….

After a bumper few months, the challenge now becomes retaining these new customers in the period ahead as Australia gradually re-opens – although Victorians still have some time to wait on that front. Foxtel launched Binge, its competitively priced alternative to Netflix and Stan, at the end of May and this new offering will be a key part of Foxtel’s strategy to attract new viewers in the months and years ahead.

Foolish takeaway

It will be interesting to see if these subscription numbers can be maintained and continue to grow, post-lockdown, for the streaming service companies.

In my view, Foxtel through its Kayo and Binge offerings may see continued growth, as customers explore the new content on Binge and tune in to the return of sport. I believe News Corp will benefit more from this exposure than Telstra, simply due to its larger share of ownership.

Additionally, embattled media share Nine Entertainment could potentially offset some of the coronavirus-induced decline in its advertising revenue with the strong growth in its Stan offering.

More reading

• How are 2019’s tech IPOs performing?
• Vocus and 1 other top quality ASX share to buy right now
• Why this leading fundie thinks ASX bank shares are undervalued
• 2 of the best ASX dividend shares to buy now
• 3 of the best ASX blue chip shares you can buy right now

Motley Fool contributor Matthew Donald 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 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.

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The A2B Australia Ltd (ASX: A2B) share price has risen by 1.89% at the time of writing. A2B was previously known as Cabcharge and is a leading provider of mobile payment processing technology and consulting, specifically to the taxi and limousine industries in Australia and internationally. In addition, the company provides taxi services and despatch management services.

What’s moving the A2B share price?

The A2B share price is on the move after the company announced a new partnership with Transport for NSW to provide a smartcard solution for the NSW Taxi Transport Subsidy Scheme (TTSS). The TTSS supports the mobility of 41,500 NSW residents who have a qualifying severe and permanent disability. The scheme is integral in supporting the independence of its members and their participation in the life of their communities.

A2B has been appointed to deliver a smartcard solution to replace the paper docket payment system currently in use. Consequently, A2B’s payment and data services will bring the TTSS into the digital age. 

The solution will provide new and useful insights through data, enabling Transport for NSW to better serve TTSS participants, an aspect of the partnership that A2B highlights as being particularly exciting.

Management commentary

Commenting on the new partnership, A2B CEO Andrew Skelton said:

Our team is happiest when the technologies we build are leveraged to provide accessible, dependable and equitable transport. The efficiencies and data insights that A2B’s technologies provide will enable Transport for NSW to continuously improve the TTSS for the benefit of communities throughout NSW… This partnership with A2B brings world class technology and data to the Taxi Industry component of the transport mix, and it’s an added bonus that the technology is being provided by an Australian payments company headquartered in Sydney.

The A2B share price

The A2B share price is currently trading up 1.89% on the back of this announcement, yet remains down by approximately 47% in year to date trading. This values the company at $97.55 million with a trailing 12-month dividend yield of 9.88%. After payment of its H1 FY20 dividend, A2B has a total liquidity position of ~$74 million. This includes $24.2 million of free cash.

More reading

• A2B share price jumps 5% on strong growth

Motley Fool contributor Daryl Mather 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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Australia’s top brokers have been busy adjusting their estimates and recommendations again, leading to the release of a large number of broker notes this week.

Three broker buy ratings that have caught my eye are summarised below. Here’s why brokers think these ASX 200 shares are in the buy zone:

Altium Limited (ASX: ALU)

According to a note out of Morgan Stanley, its analysts have retained their overweight rating and $40.00 price target on this electronic design software company’s shares. The broker has been looking through the second quarter update by its rival Cadence Designs. While it sees potential near term risks from the tough trading conditions the industry is experiencing because of the pandemic, it remains very positive on its long term outlook. I agree with Morgan Stanley and would be a buyer of its shares.

Nanosonics Ltd (ASX: NAN)

A note out of Morgans reveals that its analysts have upgraded this infection prevention company’s shares to an add rating with a $6.92 price target. The broker made the move on valuation grounds after a pullback in the Nanosonics share price. While the broker suspects that its full year results could be softer than expected due to the tough operating environment caused by the pandemic, it believes it is worth sticking with the company. Morgans believes Nanosonics is well-placed for long term growth thanks to its highly regarded trophon technology, upcoming product launches, and the growing importance of high level disinfection. I completely agree with Morgans and feel the recent share price weakness is a buying opportunity.

Newcrest Mining Limited (ASX: NCM)

Analysts at UBS have retained their buy rating and lifted the price target on this gold miner’s shares to $38.40 following its quarterly update. According to the note, Newcrest’s production for the June quarter came in ahead of its expectations and its costs were in line with its estimates. The broker also notes that drilling results at Haverion have been positive and the probability of the site being mined has increased. UBS doesn’t believe the market is factoring this into its valuation at present. I think UBS makes some good points and Newcrest could be a decent option if you’re wanting exposure to gold.

More reading

• Will the iron ore price crash by half by the end of 2020?
• ASX 200 sinks 1%: IAG cancels final dividend, tech shares tumble, IGO jumps
• Value stocks to rise on strong A$ and broker picks the cheapest ASX stocks to buy today
• Up 38% in July! Is the Orocobre share price a buy?
• Why the Polynovo share price could climb in August

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 Nanosonics Limited. The Motley Fool Australia has recommended Nanosonics 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 federal government’s latest budget makes for alarming reading! This is not because of the forecasted big budget black hole, but its expectations that the iron ore price will halve before the end of this calendar year.

The iron ore miners have been doing much of the heavy lifting on the S&P/ASX 200 Index (Index:^AXJO) as they are regarded as some of the safest stocks to buy during the COVID-19 mayhem.

That’s more than what can be said for the other major ASX sector – the banks. The National Australia Bank Ltd. (ASX: NAB) share price, Westpac Banking Corp (ASX: WBC) share price, Australia and New Zealand Banking GrpLtd (ASX: ANZ) share price and Commonwealth Bank of Australia (ASX: CBA) share price have underperformed in 2020.

Government’s bearish iron ore forecast

But can investors continue to count on our mining giants if the iron ore price is set to tank, as forewarned by the government?

Treasury is sticking to its US$55 a tonne price forecast for 2020. This price is free-on-board (FOB), which excludes the cost of shipping. The current spot price of around US$108 a tonne includes shipping, but if you strip that out, the implied spot FOB price is around US$100 per tonne.

The bearish prediction stands in contrast to the resilient price of the steel making ingredient, which hasn’t been impacted by the global coronavirus pandemic.

Threat to big ASX miners

Strong demand from China and supply disruptions from our iron ore competitor, Brazil, have given our miners an upper hand.

But the government isn’t willing to keep banking on these tailwinds and decided to take a far more conservative assumption, reported the Australian Financial Review.

If the government’s projections are right, the BHP Group Ltd (ASX: BHP) share price, Rio Tinto Limited (ASX: RIO) share price and Fortescue Metals Group Limited (ASX: FMG) share price are set to crumble.

The good news is that experts aren’t taking the budget forecast for iron ore seriously – certainly not as seriously as they are treating the $184 billion budget deficit the government is expecting in FY21.

Why ASX investors shouldn’t worry

Treasury assumptions have a tendency to be overly pessimistic as the government has much more to gain by getting underestimating the iron ore price. This allows the Morrison government to under-promise and over deliver on its budget.

However, this doesn’t mean that the iron ore price won’t fall off its perch. Most analysts are pegging a price of around US$80 a tonne for the commodity for FY21.

Again, this isn’t something that worries me even though I’m overweight on the sector. If the iron ore price does drop by that 20%-odd amount, the sector looks fair value.

Big earnings upgrades possible

But if the iron ore price continues to defy expectations, this will lead to substantial earnings upgrades for the three major miners.

To give you an idea of the magnitude of the potential upgrade, the analysts at Macquarie Group Ltd (ASX: MQG) estimated that at the spot price, FMG’s earnings would be upgraded by around 79%, Rio Tinto by 39% and BHP is 24%.

But let’s not count our chickens just yet…

More reading

• Brokers name 3 ASX 200 shares to buy right now
• ASX 200 sinks 1%: IAG cancels final dividend, tech shares tumble, IGO jumps
• Value stocks to rise on strong A$ and broker picks the cheapest ASX stocks to buy today
• Buy NAB and this ASX dividend share for income
• Up 38% in July! Is the Orocobre share price a buy?

Motley Fool contributor Brendon Lau owns shares of Australia & New Zealand Banking Group Limited, BHP Billiton Limited, Commonwealth Bank of Australia, Fortescue Metals Group Limited, National Australia Bank Limited, Rio Tinto Ltd., and Westpac Banking. Connect with me on Twitter @brenlau.

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

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The Vicinity Centres (ASX: VCX) share price is down by 2.49% to $1.37 at the time of writing, after the group announced a portfolio net valuation decline of 11.3%.

Vicinity Centres is one of Australia’s leading retail property groups with a fully integrated asset management platform. It owns, operates and manages a portfolio of retail properties across the country, including both local and world-class shopping centres.

Why is the Vicinity Centres share price under pressure?

Weighing on the Vicinity Centres share price is an announcement of an independent valuation. This resulted in a net valuation decline for its overall portfolio of 11.3% or $1.79 billion for the 6-month period to 30 June 2020.

The announcement highlighted that, due to a lack of suitable transaction evidence as a result of COVID-19 impacts, the valuers addressed market conditions by focusing on underlying cashflow. For example, there has been a reduction in rental income as a ratio of property values. Furthermore, valuers made key assumptions including that rents will see lower growth in the short to medium term, and vacancies have increased.

In addition, Vicinity Centres has provided rent deferrals and waivers as a commitment to its tenants, which has impacted cashflow. Lastly, there has been an increase in capital spending on the company’s properties to ensure they remain relevant. 

Management commentary

Mr Grant Kelley, Vicinity Centres CEO and managing director, said: “We have independently valued our entire portfolio at 30 June 2020. While the overall portfolio net valuation decline was 11.3%, the results highlighted the resilience of our Flagship portfolio, affirming our strategy and weighting towards metropolitan markets with strong long-term fundamentals.”

Mr Kelly went on to say “We remain confident in our strategy of focusing on market-leading destinations, which we believe will deliver returns for investors over the medium to long term, and ensure our retailers have the best platform to reach consumers…”

The company has advised that customer visitation to many of its centres, particularly those that are less reliant on office workers or tourists, is close to pre-COVID-19 levels. Customer visitation across the portfolio is 68% of the prior year level, with 83% of stores trading. Excluding Victoria, portfolio customer visitation increases to 80%, with 95% of stores trading. 

Vicinity Centres share price

The company’s share price is down by 2.4% in today’s trade (at the time of writing). Year to date, the Vicinity Centres share price is down by 44.98% and is currently selling at a price-to-earnings ratio of 4.38. At this price, it has a trailing 12 month dividend yield of 11.79%.

More reading

• Why Afterpay, Evolution, IAG, & Vicinity Centres shares are dropping lower
• 4 trends to invest in before August earnings season
• Top brokers name 3 ASX 200 shares to sell right now
• Biggest dividend cuts in 10 years to hit ASX investors next month
• Will retail vacancies hurt the Vicinity Centres share price?

Motley Fool contributor Daryl Mather 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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At lunch on Friday the S&P/ASX 200 Index (ASX: XJO) is on course to record a sizeable decline. The benchmark index is currently down 1% to 6,032.7 points.

Here’s what has been happening on the market today:

Bank shares tumble.

The big four banks are all dropping notably lower on Friday and weighing on the performance of the ASX 200. The worst performer in the group is the Westpac Banking Corp (ASX: WBC) share price with a 1.3% decline. Investor sentiment in the sector may have taken a hit today after Bank of Queensland Limited (ASX: BOQ) increased its COVID-19 provisions. The regional bank also warned that there is considerable economic uncertainty and it will continue to monitor the impacts of COVID‐19 on its portfolio and the collective provision prior to finalising its year end position.

Tech shares drop lower.

It has been a disappointing end to the week for Australia’s leading tech shares. The likes of Altium Limited (ASX: ALU), Appen Ltd (ASX: APX), and Afterpay Ltd (ASX: APT) are all deep in the red at lunch. This appears to have been driven by a selloff on the tech-focused Nasdaq index overnight. In addition to this, news that ecommerce giant Shopify has signed an agreement with Affirm for its own buy now pay later offering could be putting further pressure on the Afterpay share price.

IAG cancels its final dividend.

The Insurance Australia Group Ltd (ASX: IAG) share price is sinking lower on Friday after the release of an a trading update. The insurance giant revealed that the second half of FY 2020 has been extremely tough. As a result, it expects to post a pre-tax loss on shareholders’ funds income of $181 million. This is down sharply from a profit of $227 million in FY 2019. In light of this, it advised that it will not be paying a final dividend.

Best and worst ASX 200 shares.

The best performer on the ASX 200 on Friday has been the IGO Ltd (ASX: IGO) share price. It is up 4.5% at lunch after a strong gain by the spot nickel price overnight. The worst performer on the index has been the Evolution Mining Ltd (ASX: EVN) share price with a 6% decline. This morning analysts at Credit Suisse downgraded the gold miner’s shares to a neutral rating with a $6.00 price target.

More reading

• Brokers name 3 ASX 200 shares to buy right now
• Will the iron ore price crash by half by the end of 2020?
• Why Afterpay, Evolution, IAG, & Vicinity Centres shares are dropping lower
• Why Alcidion, Bubs, IGO, & Next Science shares are pushing higher
• Should Afterpay shareholders be concerned about Shopify’s BNPL launch?

James Mickleboro owns shares of Westpac Banking. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Altium. The Motley Fool Australia owns shares of AFTERPAY T FPO and Appen 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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The DroneShield Ltd (ASX: DRO) share price soared by as much as 26% earlier this morning after announcing it had received an order from a European Ministry of Defence customer. The DroneShield share price has since retreated and is currently up by 12.90% to 12 cents per share.

The group is a worldwide leader in drone security technology. It seeks to respond to the growing issue of drones used for unethical purposes. 

What did the company announce?

The company announced an order for its RadarZero portable counterdrone system from a significant European military force.

According to the company, the $100,000 in sales proceeds is an order for evaluation. It’s expected this will lead to additional deployment. However, the sale is subject to pending relevant export approvals. 

DroneShield CEO, Oleg Vornik, commented:

The importance of this sale is several-fold. First, this is our first order from this European military. Secondly, this is the first sale of radar-only fixed site system powered by DroneShieldComplete, demonstrating the modularity of our offering. DroneShield is both a sensor manufacturer and an integrator, with the customer having ability to add further sensor loads to acquired system, which DroneShieldComplete supports.

The DroneShieldComplete command-and-control system is a user interface with a rich reporting functionality of drone threats. Additionally, the RadarZero enables detection and tracking of enemy drones.

Other recent updates

Today’s news follows an announcement yesterday informing the market the company had been awarded a United States Air Force contract. The amount of the contract is approximately US$200,000.

On 22 July 2020, DroneShield released its quarterly report for the period ended 30 June 2020. In the report, the company stated cash inflows from customers and grants were approximately $2.1 million, which represented a quarterly record. 

The report also noted a substantial increase in US government business and confirmed the company was working towards executing a $70–$85 million Middle Eastern bid. It was also the first approximate breakeven quarter for the company. DroneShield also revealed it has won a four-year framework agreement to supply European Union police forces with DroneGun Tactical. 

The company’s order book is approximately $3.4 million and it has a high conviction pipeline of approximately $85 million. Furthermore, the company could benefit further from Australia’s increased defence budget spend of approximately $270 billion as announced by the Prime Minister on 30 June 2020, after already receiving several orders from the Department of Defence.

About the DroneShield share price  

The DroneShield share price is currently up by 12.90% to 12 cents per share at the time of writing, however, remains 28% down on this time last year.

More reading

• DroneShield share price surges 25% on US Air Force contract

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.

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