Author: therawinformant

The BKI Investment Co Ltd (ASX: BKI) share price is up by 1.03% to $1.48 today, following the release of the company’s full year results. BKI Investment announced large declines across the board, citing difficult trading conditions. Profit was down 35% as several companies held by BKI announced the cancellation of dividends.

What does BKI do?

BKI is a research-driven listed investment company (LIC). Through BKI’s research driven, active management approach it invests for the long term in profitable, well managed companies that offer a compelling yield and growth opportunities. 

The company boasts 8.9% total shareholder returns over a 15-year period, beating its benchmark S&P/ASX 300 Accumulation Index by 0.5%. BKI has paid out over $700 million in dividends and franking credits to shareholders since listing in 2003. At the time of writing, BKI’s trailing dividend is 5.7%.

BKI’s full year results

Today, BKI released results from what it labels “a difficult year”. Some of the key points from the announcement include:

• Revenue down 14% to $46.7 million (excluding special investment revenue)
• Net operating profit after tax down 35% to $48.6 million (including special investment revenue)
• Earnings per share down 35% to 6.63 cents
• Total dividend for FY20 down by 29% to 6.945 cents a share.

BKI’s earnings were largely affected by a number of dividend cancellations for some of its largest holdings. These include Harvey Norman Holdings Limited (ASX: HVN), Sydney Airport Holdings Pty Ltd (ASX: SYD), Australia and New Zealand Banking Grp Ltd (ASX: ANZ) and Westpac Banking Corp (ASX: WBC). 

Despite this, BKI announced it would still be paying a special dividend of 1 cent per share. This was largely thanks to a special dividend received from the company’s holding in TPG Telecom Ltd (ASX: TPG).

While the results above may seem dire, they look to have largely already been priced in to the BKI Investment share price, given shares are up by more than 1% at the time of writing.

In terms of portfolio management, BKI made a number of sales across FY20, including exiting positions in Boral Limited (ASX: BLD) and Ampol Ltd (ASX: ALD) (formerly Caltex). It divested completely from ANZ following the bank’s failure to pay an interim 2020 dividend, as well as Challenger Ltd (ASX: CGF) and CIMIC Group Ltd (ASX: CIM).

BKI invested $128 million during FY20, with large investments in a number of ASX blue-chips such as BHP Group Ltd (ASX: BHP), Macquarie Group Ltd (ASX: MQG) and Transurban Group (ASX: TCL). 

Commenting on the FY20 results and the impact of COVID-19, BKI’s co-portfolio manager Tom Millner said:

We believe that every Australian company has been impacted by the COVID-19 economic crisis, and as we’ve already seen, it has had a direct negative impact on earnings, balance sheet strength and dividend distributions on many companies within our market. Unfortunately, the way we are viewing the broader economy suggests that the current situation may deteriorate over the next 6-12 months.

About the BKI share price

The BKI share price has had a rocky year, losing 13.74% in 2020 so far and underperforming the All Ordinaries (INDEXASX: XAO), which is down 10% in the same period. BKI shares are down 11.74% on this time last year.

More reading

• These ASX dividend shares are better than term deposits
• Brokers name 3 ASX shares to buy right now
• ASX 200 flat: Westpac class action, Rio Tinto Q2 update, travel shares sink
• Westpac share price on watch after being hit with flex commissions class action
• Why this fundie sees an ASX bank share recovery

Motley Fool contributor Daniel Ewing owns shares of Sydney Airport Holdings Limited. The Motley Fool Australia owns shares of and has recommended Challenger 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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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 shares are in the buy zone:

Afterpay Ltd (ASX: APT)

According to a note out of Morgan Stanley, its analysts have retained their overweight rating and $101.00 price target on this payments company’s shares. This follows Afterpay’s announcement of an agreement with Apple Pay and Google Pay for in-store payments in the United States. Morgan Stanley expects this to accelerate adoption and protect its first mover advantage in the rapidly growing buy now pay later market. I agree with Morgan Stanley and feel Afterpay would be a great buy and hold option.

BWX Ltd (ASX: BWX)

Analysts at Citi have retained their buy rating and $4.20 price target on this personal care products company’s shares following its equity raising and trading update. In respect to the latter, Citi notes that the company behind the Sukin brand delivered stronger than expected revenue and earnings growth in FY 2020. It also believes that management’s guidance for FY 2021 is conservative and suspects stronger growth could be achieved. I was impressed with BWX’s turnaround and feel it could be worth a closer look.

TPG Telecom Ltd (ASX: TPG)

A note out of Morgans reveals that its analysts have initiated coverage on the newly merged telco with an add rating and $9.12 price target. The broker notes that it has a strong position in the market with a number of popular brands. It appears to believe the combination of TPG Telecom and Vodafone Australia is a good one and is positive on its outlook. While not my top pick in the sector, I do think it could be worth considering.

More reading

• Why Alumina, BWX, Life360, & Perpetual shares are charging higher
• Openpay share price on the move as key metrics boom
• BWX share price storms higher after $40 million placement and strong FY 2020 growth
• Market close: ASX 200 drops 0.7% today
• How to pick an ASX 200 share market bubble

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended BWX Limited. 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.

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The Botanix Pharmaceuticals Ltd (ASX: BOT) share price surged more than 20% higher in early trade after the company released an announcement regarding a milestone achievement.

What did Botanix announce?

Prior to the market’s open this morning, Botanix reported that the company has completed a major milestone in the development of its BTX 15030 treatment. According to the company’s media release, Botanix has successfully completed an End of Phase 2 meeting for BTX 1503 with the Food and Drug Administration (FDA).

Completion of the Phase 2 meeting allows Botanix to construct a drug development plan and registration for BTX 1503. The company is now preparing to start designing Phase 3 clinical studies. According to the announcement, the FDA noted the excellent safety profile of BTX 1503 and allowed for several waivers that are normally required for dermatology drug registration.

Progression of the BTX 1503 Phase 3 study will remain pending until the completion of the company’s BTX 1702 clinical study and the lifting of COVID-19 restrictions. Due to the limitations imposed by the pandemic, Botanix does not expect large Phase 3 dermatology studies to commence until the end of 2020.

What does Botanix do?

Botanix is an ASX listed, synthetic cannabinoid company that develops pharmaceutical products through well-controlled randomised clinical trials. The company’s cannabinoid development platforms encompass 2 separate segments; dermatology and antimicrobial products.

According to Botanix, the company’s products utilise the unique, anti-inflammatory and antimicrobial properties of cannabinoids. Botanix currently has a pipeline of product candidates undergoing clinical trials.

The company’s BTX 1801 is an antimicrobial product that is currently enrolled in a Phase 2A study and is designed to prevent surgical site infections. Following today’s announcement, Botanix now has a drug development plan for its dermatology product BTX 1503 for acne treatment.

In its quarterly report released in late April, Botanix noted that restrictions associated with the COVID-19 pandemic have resulted in the delay and uncertainty of clinical programs.

Foolish takeaway

The Botanix share price was up more than 20% in early trade after hitting an intraday high of 6.5 cents. At the time of writing, however, the company’s shares have been sold down and are currently trading flat for the day at 5.3 cents.

More reading

• Brokers name 3 ASX shares to buy right now
• Kogan share price falls 7% on Federal Court Ruling
• Where to invest $1,000 into ASX shares immediately
• ASX 200 flat: Westpac class action, Rio Tinto Q2 update, travel shares sink
• Why Cann, Flight Centre, Helloworld, & Zip shares are dropping lower

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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The Kogan.com Ltd (ASX: KGN) share price has taken a dive of more than 7% (at time of writing) based on a Federal Court judgement.

The Federal Court decision

Kogan advised to the ASX today that the Federal Court upheld allegations by the Australian Competition and Consumer Commission (ACCC). The ACCC alleged Kogan breached Australian Consumer Law with respect to a four day promotion it conducted in June 2018. In the promotion, Kogan advertised that consumers could achieve a 10% price reduction at checkout using a coupon code.  

Kogan maintains, however, it never intended for the promotion to mislead consumers. As a result of today’s decision, a further hearing will be held concerning a penalty. 

The company is currently reviewing the decision and has advised it may provide an update when the review is finalised. 

Additionally, a business update will be provided towards the end of this month. 

Other recent updates

Kogan recently raised $20 million through a share purchase plan (SPP) announced 8 July 2020. According to its SPP booklet, Kogan intends to use the proceeds to provide financial flexibility to act quickly on future value accretive opportunities. 

The $20 million raised follows a successfully completed $100 million share placement announced last month. 

In its June Investor Presentation, Kogan announced it has approximately 2 million active customers. Additionally, it has increased its online market share significantly with strong growth in sales and earnings. 

About the Kogan share price

Kogan is an online retail business headquartered in Melbourne. It has a diverse offering with a portfolio of retail and service businesses. Some services it offers include mobile, internet, insurance and travel. Additionally it’s focused on providing affordable prices to consumers through its retail websites Kogan.com and Dicksmith.com.au.

As a result of the coronavirus pandemic, the Kogan share price, along with range of other online related businesses, have benefitted. In the past year, Kogan shareholders have been rewarded with a share price increase of over 214%. 

The Kogan share price is currently trading at $16.52 which represents a fall of 7.19% today. However, the price has rebounded somewhat after the initial shock of the announcement. It will be interesting to see how this announcement will weigh on the share price until the penalty is known. 

More reading

• Invest like Warren Buffett and buy and hold these excellent ASX shares
• Why outperforming ASX retail stocks could be running out of puff
• 3 ASX shares to buy before earnings season
• These 2 ASX retail shares have surged higher in 2020
• Where I would invest $5,000 into ASX shares in July

Matthew Donald 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. The Motley Fool Australia has recommended 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.

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If you have $1,000 sitting in a bank account and no immediate use for it, I would suggest you consider putting it to work in the share market.

After all, the potential returns on offer in the share market are vastly superior to the interest rates being offered by the big four banks right now.

Three top ASX shares that I would buy with these funds are listed below. Here’s why I like them:

a2 Milk Company Ltd (ASX: A2M)

This New Zealand-based fresh milk and infant formula company could be a great place to invest $1,000. I’m a big fan of the company due to its ongoing expansion in North America and the increasing demand for its infant formula products in the China market. The latter has been a key driver of growth in FY 2020 and looks set to underpin a very strong full year result in August. The good news is that I believe there’s still plenty more growth to come thanks to its relatively small market share in China and differentiated brand. It also has the opportunity to accelerate its growth through acquisitions thanks to its sizeable cash balance.

CSL Limited (ASX: CSL)

I think this biotherapeutics giant would be a great place to invest $1,000. I believe CSL is one of the highest quality companies Australia has produced and well-placed for long term growth. It is made up of two businesses – CSL Behring and Seqirus. CSL Behring is the global leader in plasma therapies and Seqirus is the second biggest in the influenza vaccines industry. I believe both businesses have strong long-term growth potential due to favourable industry dynamics, their leading products, and burgeoning research and development pipelines. And with the CSL share price down over 18% from its high, now could be an opportune time to invest.

Jumbo Interactive (ASX: JIN)

Another ASX share to consider buying with that $1,000 is online lottery ticket seller Jumbo. It is best-known as the operator of the Oz Lotteries website. It has been benefiting greatly from the shift to online gambling in the Australian market and looks well placed to capitalise on the same trend internationally. Jumbo is targeting $1 billion in ticket sales through its platform by FY 2022. This will be triple what it achieved in FY 2019. While this is an ambitious target, I think it could achieve it thanks to its Powered by Jumbo Software as a Service (SaaS) offering.

More reading

• Why these excellent ASX healthcare shares could be long-term market beaters
• Why the Pointsbet share price is outperforming today
• 5 ASX shares with huge moats to own today
• Why the A2 milk share price gained 38% in the first half of 2020
• Broker warns Afterpay and these ASX stocks are caught in an overcrowded trade

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 CSL Ltd. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends Jumbo Interactive Limited. The Motley Fool Australia owns shares of and has recommended Jumbo Interactive Limited. The Motley Fool Australia owns shares of A2 Milk. 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 having a bit of a subdued day. The benchmark index is currently trading roughly flat at 6,011.7 points.

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

Westpac class action.

The Westpac Banking Corp (ASX: WBC) share price is edging higher today despite being hit with another class action. This morning the banking giant confirmed that it has been named in a class action brought by law firm Maurice Blackburn in relation to allowing automotive dealerships to charge customers flex commissions on car finance. Flex commissions allowed automotive dealerships to set the interest rate on car loans above a base rate set by the bank and take a cut of the difference. Westpac intends to defend the claim.

Rio Tinto Q2 update.

The Rio Tinto Limited (ASX: RIO) share price is pushing higher on Friday after the release of its second quarter update. During the second quarter Rio Tinto reported 86.7Mt of Pilbara iron ore shipments, bringing its first half shipments to a total of 159.6Mt. This was a 1% and 3% increase, respectively, on the prior corresponding periods and puts it on track to achieve its full year guidance.

Travel shares tumble.

It has been another disappointing day of trade for travel and tourism shares such as Flight Centre Travel Group Ltd (ASX: FLT), Qantas Airways Limited (ASX: QAN), and Webjet Limited (ASX: WEB). They are all trading notably lower at lunch. This could be due to the New South Wales government announcing that COVID-19 restrictions will be extended to restaurants, bars, cafes, and clubs.

Best and worst ASX 200 shares.

The best performer on the ASX 200 index on Friday has been the Abacus Property Group (ASX: ABP) share price with a gain of almost 4%. This morning Ord Minnett retained its accumulate rating and lifted its price target to $3.10. The worst performer on the index has been the Flight Centre share price with a 4.5% decline. This follows broad weakness in the travel sector.

More reading

• Why Cann, Flight Centre, Helloworld, & Zip shares are dropping lower
• BlueScope’s earnings to halve as it takes $200m write-down
• Rio Tinto share price on watch after Q2 production update
• Westpac share price on watch after being hit with flex commissions class action
• Why this fundie sees an ASX bank share recovery

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Webjet Ltd. The Motley Fool Australia has recommended Flight Centre Travel 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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In late morning trade the S&P/ASX 200 Index (ASX: XJO) has given back its early gains and is heading lower. At the time of writing the benchmark index is down 0.1% to 6,006.1 points.

Four shares that have fallen more than most today are listed below. Here’s why they are dropping lower:

The Cann Group Ltd (ASX: CAN) share price has crashed 16% lower to 69 cents. This morning the cannabis company announced a heavily discounted $24.3 million capital raising. These funds were raised at $0.40 per new share, which represents a 51.2% discount to its last closing price. Cann advised that the proceeds from capital raising will be used to fund its business while it pursues near-term growth opportunities It also revealed that it is gaining strong commercial momentum and is forecasting FY 2021 revenues of $15 million.

The Flight Centre Travel Group Ltd (ASX: FLT) share price is down 4.5% to $10.27. The domestic travel market was dealt a blow this morning when the New South Wales government announced that COVID-19 restrictions will be extended to restaurants, bars, cafes, and clubs. A number of other notable travel and tourism companies have dropped lower with Flight Centre today.

The Helloworld Travel Ltd (ASX: HLO) share price has fallen 7.5% to $1.82. This follows the completion of its institutional placement and entitlement offer this morning. Helloworld raised gross proceeds of approximately $41.6 million at an offer price of $1.65 per new share. This represents a discount of 16% to its last close price. The proceeds of the equity raising will provide it with balance sheet liquidity through to 2022.

The Zip Co Ltd (ASX: Z1P) share price is down a further 6% to $5.58. Investors have been selling the payments company’s shares this week after they were downgraded by a leading broker. UBS downgraded Zip to a sell rating with a $5.70 price target. As the Zip share price has now fallen below this target price, I suspect it might start to find support from buyers.

More reading

• Cann Group share price tanks on discounted capital raising
• How to pick an ASX 200 share market bubble
• Why the Zip Co share price sank 11% lower today
• Helloworld Travel unveils $50 million capital raising
• Top brokers name 3 ASX 200 shares to sell right now

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 ZIPCOLTD FPO. The Motley Fool Australia owns shares of and has recommended Helloworld Limited. The Motley Fool Australia has recommended Flight Centre Travel 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 BlueScope Steel Limited (ASX: BSL) share price fell this morning after management forecasted earnings to more than halve and a circa $200 million write-down.

Shares in the steel products maker slipped 0.6% to $11.32 when the S&P/ASX 200 Index (Index:^AXJO) gained 0.2% at the time of writing.

But it may not be its earnings guidance or the large provisioning that’s knocking the wind out of the BlueScope share price.

Earnings weakness not the main drag

Management expects underlying earnings before interest and tax (EBIT) to come in around $560 million for FY20 with $260 million of this attributed to the COVID-19 affected June half. This compares to the $1.4 billion it posted in FY19.

That’s actually not too bad given the economic hit from the coronavirus pandemic on countries that the group operates in.

Further, analysts were expecting the last financial year to be weak anyhow. For instance, Credit Suisse pencilled in a net profit of $318.7 million for FY20 when BlueScope reported an underlying net profit of $966.3 million in FY19.

Write-down is no surprise

I doubt anyone would be surprised by the write-down of its underperforming businesses too when so many others are doing the same. Woodside Petroleum Limited (ASX: WPL) and Origin Energy Ltd (ASX: ORG) are but to recent examples.

I believe it’s the sombre outlook that’s weighing on the stock instead.

Uncertain outlook

Management warned that steel spreads in North America and Asia have weakened since the start of this financial year compared to the average achieved in the 2HFY20.

“Further, while at this point orders and despatches in Australia remain stable and North Star is despatching near full capacity, there is a high level of uncertainty in the current environment,” said BlueScope in its ASX statement.

This isn’t only due to COVID-19 directly impacting on demand, supply chains and operations, but the broader economic fallout that’s expected to dampen demand for its products.

Management said it will provide more details on trading conditions when it releases its full year results on 17 August.

Shiny side to BlueScope’s results

On the bright side, the $100 million that BlueScope’s holding on its balance sheet should provide it enough firepower to get through the turmoil.

Its US North Star business is also performing better than expected with utilisation rates staying above 90% through the second half of FY20. This is despite the shutdown of key industries like automobile from mid-March to mid-May.

BlueScope’s Building Products Asia & North America is also surprisingly resilient with its second half result coming in at around the same as the first half.

I think the stock is cheap despite the uncertain outlook. Having said that, I don’t think the BlueScope share price will be going anywhere till management provides a further update in a month’s time.

More reading

• Why this fundie sees an ASX bank share recovery
• Are Transurban shares a hot buy today?
• 5 things to watch on the ASX 200 on Friday
• Market close: ASX 200 drops 0.7% today
• The ASX tech ETF you can buy and hold forever

Motley Fool contributor Brendon Lau owns shares of BlueScope Steel Limited. 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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