Author: therawinformant

The Cedar Woods Properties Limited (ASX: CWP) share price was up and down today but did manage to close out the day’s trade 1.4% up. This came following an announcement from the company around lunch time regarding an earnings and acquisition update. 

What did Cedar Woods announce?

Cedar Woods announced it expects FY20 net profit after tax (NPAT) to be in the $20 to $21 million range. The estimate reflects pandemic-related delay of significant settlements targeted to occur in June 2020.

Additionally, at the end of last month, Cedar Woods had an estimated $360 million in presales compared to $330 million at the same time last year. 

The Federal Government’s HomeBuilder package and the Western Australian state government incentives have resulted in an uplift in presales for Cedar Woods. 

Pleasingly, the group ended FY20 with a gearing percentage of 38% which is in the lower end of its target range of 20-75%. As a result, it’s well positioned to pursue growth opportunities. 

Also, Cedar Woods has secured conditional agreement to acquire 28.55 hectares of land in Burpengary, Queensland. This is located in a high growth area of Moreton Bay. However, this is subject to planning and board approval. An application has been lodged with the council. 

Audited FY20 results are scheduled to be released on 27 August 2020.

Other recent announcements

On 16 June 2020, Cedar Woods announced an extension to its $30 million finance facility for the Williams Landing Shopping Centre in Victoria that opened in December 2014. The centre comprises a Woolworths Group Ltd (ASX: WOW) supermarket, 21 specialty stores and 1,800 square metres of office space. In addition, the centre was expanded in 2017 with a childcare facility and additional retail space. 

The announcement of the $30 million finance facility is in addition the company’s $205 million corporate facility with a blend of 3 and 5 year terms. 

In a March market update this year, the company was unable to to confirm earnings guidance due to the effects of the coronavirus pandemic. However, the group maintained the strength of its balance sheet, low gearing and finance facilities. 

About the Cedar Woods share price

Established in Perth in 1987, Cedar Woods has grown to become a leading Australian property company. It develops residential communities and commercial developments. 

The group’s product mix includes land subdivisions in residential communities, medium and high-density apartments, townhouses in inner-city neighbourhoods and commercial developments. 

The company’s share price is currently trading at $5.06 which represents an increase of 1.4% for the day. Over the past year, the Cedar Woods share price has fallen 20.32% on the back of falling demand due to the pandemic. 

More reading

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• Is the Coles share price still attractive after it surged to a record high today?
• Which ASX shares will benefit from the second lockdown?

Motley Fool contributor Matthew Donald has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of Woolworths 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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One of the more consistent themes I hear regarding ASX bank shares is how Aussie investors seem to place a higher premium on them than investors in other countries do on their own banks. Everyone knows that most ASX investors love a good, fully franked dividend. And up until 2020, the ASX banks were a typical first port of call for this end.

But 2020 has brought a unique set of challenges to the ASX banks. In the face of the coronavirus pandemic, the dividends flowing from the banking sector have all but dried up. No doubt this is one of the key reasons we have seen ASX bank shares smashed over the course of the year. Commonwealth Bank of Australia (ASX: CBA) was a $91 stock early in the year. Today, it’s asking around $72. Westpac Banking Corp (ASX: WBC) used to be ~$26 back in February, today it’s $17.89. It’s a similar story with Australia and New Zealand Banking Group Limited (ASX: ANZ) and National Australia Bank Ltd (ASX: NAB).

But investors are still buying our banks, perhaps as a bet on the future of the Australian economy, or else in the hope that the dividends will return in their former glory in the next year or two. So in order to help anyone weighing up the investing case for any of the big four ASX banks, I thought we could look at how each bank is priced today, and compare said prices to some international banks to see how they measure up.

How are the ASX bank shares valued today?

The price-to-earnings (P/E) ratio can be a flawed metric, but I think it is useful in comparing companies within the same sector to see how the market values their earnings. So without further ado, let’s take a look at the big four.

On current prices, Commonwealth Bank is commanding a P/E ratio of 13.11.

Westpac is trading at a P/E of 13.38.

NAB is sitting at 16.19.

And ANZ is resting on 12.52.

Let’s now check out some of the largest banks over in the United States to see how they compare.

The largest US bank is JP Morgan Chase. On current pricing, JPMorgan is asking a P/E of 13.47.

Next, Bank of America is at 9.77.

Wells Fargo is sitting on 29.09  (which looks like some kind of aberration in my view), while Citigroup is on 8.91.

Ok, that’s some of the US’s largest banks, but let’s branch out.

One of the United Kingdom’s largest banks is the Royal Bank of Scotland. It’s currently trading on a P/E ratio of 5.44. Another UK bank – Lloyds Banking Group – is asking 8.85 x earnings. One of the largest banks in Europe is ING. It has a P/E ratio of 6.

Foolish takeaway

It seems the ASX banks do command some kind of premium when we compare them to other banks around the world. This might have something to do with the substantial benefits that a typical fully franked bank dividend used to provide to Aussie investors. But with the prospects of near-term bank dividends looking bleak, I don’t see much of a reason to invest in any of the big four ASX bank share prices today.

More reading

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Motley Fool contributor Sebastian Bowen owns shares of National Australia Bank Limited and JPMorgan Chase. 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 are a lot of different types of investors out there.

Some investors have a focus on dividends, others are looking for growth, and some investors are searching for shares which they feel are undervalued.

Whichever type of investor you are, I feel one of the shares listed below will appeal to you. Here’s why I think they are worth considering:

Accent Group Ltd (ASX: AX1)

This footwear-focused retailer could be a top option for value investors. Although the pandemic is having a very negative impact on the retail sector, Accent has come out of it relatively unscathed. This is due to the popularity of its brands, its strong market position, and growing online business. I estimate that Accent will deliver earnings per share in the region of 10.5 cents in FY 2021. Based on the current Accent share price, this means investors will be paying just 12x forward earnings to own its shares. I feel this offers a compelling risk/reward for investors.

Telstra Corporation Ltd (ASX: TLS)

I think income investors ought to consider an investment in Telstra. I’ve been impressed with the way the telco giant has turned around its fortunes over the last 18 months and believe it is well positioned to return to growth in the near future. This is due to the return of rational competition in the telco industry, its cost-cutting and productivity plans, and its leadership position in the 5G market. Another big positive is that based on its free cash flow, it looks as though the dividend cuts are over and 16 cents per share is the bottom. This equates to a fully franked 4.6% dividend yield.

Xero Limited (ASX: XRO)

If you’re a growth investor then you might want to consider buying Xero. It is a cloud-based business and accounting software provider which has been growing at a rapid rate over the last few years. Pleasingly, I believe the quality of its software, its global expansion, and the shift to online accounting means Xero can continue this strong growth for a long time to come. Especially if it can win a decent share of the lucrative U.S. market. At the end of FY 2020, Xero had just 240,000 subscribers in North America. This compares to 914,000 in the much smaller ANZ market.

More reading

• Top ASX dividend shares to buy in July 2020
• Forget property! I’d buy these ASX dividend shares instead
• 3 must-buy ASX growth shares for July
• Why outperforming ASX retail stocks could be running out of puff
• 5 ASX shares with huge moats to own 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 Xero. The Motley Fool Australia owns shares of and has recommended Telstra Limited. The Motley Fool Australia has recommended Accent 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.

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The Appen Ltd (ASX: APX) share price may be trading lower on Friday, but it remains one of the best performers on the S&P/ASX 200 Index (ASX: XJO) in 2020.

Since the start of the year the artificial intelligence company’s shares have gained almost 60%.

This compares to a 10% decline by the benchmark ASX 200.

Why is the Appen share price up 60% in 2020?

Investors have been fighting to get hold of Appen’s shares this year after it continued its meteoric growth despite the pandemic.

In February Appen released its full year results and not only revealed stellar earnings growth for FY 2019 but forecast more of the same for FY 2020.

For the 12 months ended December 31, Appen posted revenue of $536 million and underlying EBITDA of $101 million. This was a 47% and 42% increase, respectively, on FY 2018’s result. Positively, the latter was also ahead of management’s upgraded guidance for EBITDA in the range of $96 million to $99 million.

The key driver of this was its Relevance segment. Once again it was the star of the show for Appen with a 37% increase in revenue to $430 million. This means it now accounts for 80% of its total revenue. And thanks to margin expansion, Relevance EBITDA increased 66% year on year.

Looking ahead, management revealed that it is forecasting underlying EBITDA in the range of $125 million to $130 million in FY 2020. This represents year on year growth of 24% to 29%. Pleasingly, this has since been reiterated twice over the last few months despite the pandemic.

What about the future?

The good news is that Appen still has a very long runway for growth, which is why I think it would be a fantastic buy and hold option despite its strong gains in 2020.

A company presentation from last year advised that the AI market is expected to grow to be worth between US$169 billion and US$191 billion per annum by 2025.

This is great news for Appen because an estimated 10% of spending in this market goes towards the data labelling it specialises in. That means Appen’s addressable market could be worth US$17 billion to US$19 billion in five years. Which, as you can see above, is many times greater than the revenue it is currently generating.

Given the quality of its services and its strong relationships with major tech companies, I believe it is in a great position to capture a growing slice of this market. In light of this, I feel confident Appen shares will be market beaters over the 2020s. 

More reading

• Are these the best ASX tech shares to buy right now?
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• Is Altium still a leading ASX 200 tech share to buy?
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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of 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 Viva Leisure Ltd (ASX: VVA) share price stormed more than 6% higher in early trade after the company released a market update. It has since dropped back slightly, sitting at $2.06 at the time of writing.

What did Viva Leisure announce?

Viva released a positive market update earlier today informing shareholders on the company’s recent performance. According to the announcement, Viva’s facilities have been trading above management’s expectations following their re-opening.

The listed gym operator announced that 94% of its locations are either operating or undergoing scheduled refurbishment and will re-open shortly. Viva also informed the market that operations in the Melbourne metro area account for only 4% of the company’s membership portfolio and are not operating due to government COVID-19 lockdown restrictions. However, 3 of the company’s operations in regional Victoria are still open and operating as they aren’t affected by the restrictions.

Viva also reported that membership levels have recovered to 98% of pre-COVID-19 levels. According to the company’s management, the significant recovery in membership is above its expectations. Viva currently has 95,400 operating members and around 10,000 memberships suspended due to restrictions. The company also provided an update on landlord arrangements, with Viva successfully negotiating waiver and deferral arrangements with over 75% of its landlords.

How has Viva performed in 2020?

Viva Leisure is an ASX-listed gym operator with 100 health clubs in Australia. Pre-COVID, the company reported a 52.7% increase in revenue for the first half of FY20 and a 79.8% increase in earnings before interest, tax, depreciation and amortisation.

The government restrictions and lockdown period saw all of the company’s operations in Australia close for around 10 weeks. As a result, Viva reported a 100% reduction in revenue over the period from April to May 2020. The company was forced to cancel all casual shifts and reduce its permanent staffing in late March.

In early June, Viva completed a $25 million equity raising in order to provide the company with financial strength and flexibility to function. The company also reported that funds will be used for strategic acquisition opportunities and to accelerate refurbishments at existing locations.

Foolish takeaway

The Viva share price stormed more than 6.1% higher in early trade after hitting an intra-day high of $2.09. Since then the company’s share price has been sold-down and is currently trading more than 4% higher for the day at around $2.06.

More reading

• Fund managers have been buying these ASX shares

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.

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Is the REA Group Limited (ASX: REA) share price a buy?

The real estate property portal business saw its share price fall 43% from 21 February 2020 to its low of $65 on 23 March 2020. Since then it has risen 64% to today’s $106.60.

Where to now for REA Group? It’s being priced as though conditions have almost returned to normal.

The worst of the COVID-19 period across Australia saw a severe drop in the number of property listings, as you’d expect.

FY20 third quarter

When REA Group announced its profit for the quarter ending 31 March 2020, the company also revealed that residential listings were down 33% across the country with Sydney showing an 18% fall and Melbourne with a 27% fall.

Obviously REA Group is quite dependent on volume for generating its earnings. And the earnings should be important for the direction of the REA Group share price.

In that third quarter of FY20, REA Group said that national listings were down 2% over the three months due to COVID-19. This led to revenue after broker commissions dropping 4% to $640.2 million, operating earnings before interest, tax, depreciation and amortisation (EBITDA) falling 3% to $390.8 million and free cash flow declining 14% to $195.2 million.

REA Group did what it could to offset the problems such as ‘digital inspections’ with digital video tours and 3D tours.

However, some measures that the company announced will cause lower earnings in the short-term. It gave customers subscription discounts and also increased the advertising duration which will extend the revenue recognition period. However, cost reductions will help with offsetting the revenue reduction. FY20 fourth quarter operating expenses are expected to be 20% lower than the fourth quarter in FY19.

Balance sheet

Many businesses have had to do a capital raising to ensure that their balance sheets remain strong during this tough period. But these capital raises have been done at a low share price, which dilutes existing shareholders. Raisings from the likes of Webjet Limited (ASX: WEB) and Qantas Airways Limited (ASX: QAN) were necessary but existing shareholders will now only get a smaller share of the earnings when they recover.

Thankfully, REA Group hasn’t had to raise capital because of its strong balance sheet. At 30 April 2020 it had low levels of debt and a cash balance of $135 million. It also entered into an additional $149 million debt facility as well as a $20 million overdraft facility with National Australia Bank Ltd (ASX: NAB).

In short, REA Group is in a great financial position and shouldn’t need to raise capital.

So is the REA Group share price a buy?

A balance sheet is important for a business, but it isn’t the main thing in my opinion. Apple has a fantastic balance sheet, but there’s more to Apple than its huge cash pile.

The renewed Melbourne lockdown will make it harder for REA Group to bounce back quickly if listings remain lower in Victoria for the next few months. The Sydney property market could also come under pressure if COVID-19 gets out of control there.

REA Group is now trading at 44x FY21’s estimated earnings. I don’t think that represents good value in the current share market because it relies on there being a return to normal listing activity. If there are numerous forced property sellers over the next six months due to jobkeeper and payment holidays coming to a close thenperhaps  REA Group may see that required activity bounce.

But the combination of lower listings volume and more attractive listing options for vendors makes me believe that, at today’s share price, I don’t think REA Group is going to be a market-beating buy in the medium-term. If I had to go for something property related it would be Brickworks Limited (ASX: BKW).

More reading

• 3 high quality blue chip ASX shares Warren Buffett might buy
• Is the REA Group share price in the buy zone?
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• Where to invest $10,000 into ASX shares in July

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Brickworks and Webjet Ltd. 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.

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The Azure Minerals Limited (ASX: AZS) share price has rocketed higher today after the mineral exploration company announced acquisition plans. Azure announced that it is set to acquire a number of high quality gold and nickel projects in Western Australia. Since the announcement, the Azure Minerals share price has soared 24% to 16 cents.

What does Azure Minerals do?

Azure Minerals is a mineral exploration company focused on the development of nine mineral projects in Mexico and now in Australia. The company maintains a primary focus on developing the high grade, zinc, lead, silver Oposura project in Mexico, with full scale production expected by early to mid 2021.

The company often looks to leverage partnerships with major resource companies to develop advanced stage projects with potential for large scale, long life mining operations. 

What has caused the Azure Mineral share price to move today?

Azure has entered into tenement sale and joint venture agreements with entities controlled by the Creasy Group on several Western Australian gold and nickel projects. These projects include;

• The Turner River gold project (70% Azure/30% Creasy Group). It is located adjacent to De Grey Mining Limited (ASX: DEG)‘s Mallina project. The project hosts 12 kilometres of very fertile strike zone for gold discovery.
• The Andover nickel and copper project (60% Azure/40% Creasy Group). The mine hosts nickel-copper mineralisation discovered by the Creasy Group in 2018, however there has been no drilling since the initial discovery in 2018.
• The Meentheena and Coongan gold projects (70% Azure/30% Creasy Group). The Meentheena site has been drilled for epithermal gold mineralisation and has been explored by Creasy Group since 1994.

Commenting on the background to the acquisition, Azure’s managing director Mr. Tony Rovira said: “Due to the severity of the COVID-19 pandemic in Mexico and the uncertainty of future field operations, Azure sought gold and nickel projects in Western Australia to enable the Company to continue exploration activities.”

Azure Minerals capital raise

Another factor pushing the Azure Minerals share price up today is the news it has received binding commitments from institutions and investors to raise $4 million. The raise will occur at 10 cents per share via a share placement. The money will be put to use supporting the initial exploration activities on the new Western Australian projects.

About the Azure Minerals share price

With the Azure Minerals share price up to 16 cents today, the company continues its resurgence this year. The share price is up by 60% from this time last year, which is impressive considering the almost 10% drop in the All Ordinaries (INDEXASX: XAO) across the same period.

More reading

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• ASX 200 Weekly Wrap: Rocketing BNPL shares fail to stop ASX 200 slide
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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.

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