Author: therawinformant

The Telstra Corporation Ltd (ASX: TLS) share price could be moving back into the buy zone thanks to the Australian Government.

Why is the Telstra share price one to watch?

According to an article in the yesterday’s, Australian Financial Review (AFR), 5G technology is a hot political topic right now.

Prime Minister Scott Morrison and his Japanese counterpart, Shinzo Abe, reportedly discussed strengthening bilateral cooperation between the two countries on 5G. 

That bodes well for leading telecommunications companies like Telstra going forward. The Aussie telco is shaping up as a leader in the domestic 5G space.

In fact, TPG Telecom Ltd (ASX: TPG) Executive Chairman, David Teoh, said a combined Vodafone-TPG would be playing catch-up with Telstra and Optus. That comment was made back in March prior to the recently approved $15 billion merger.

If the virtual summit between Prime Ministers Morrison and Abe is anything to go by, that race could be heating up. 

According to the AFR, Japan has ‘vowed to close the gap’ on Asian rival China in the 5G space. That should be music to the ears of shareholders who have watched the Telstra share price fall 43.5% in 5 years.

How is Telstra tracking in the 5G space?

I think Telstra’s push to be a 5G leader has been partially catalysed by the disruption from NBN Co. Telstra is proudly the first provider to enable standalone, end-to-end 5G across Australia.

According to the Telstra website, 5G will be ten times faster than existing 4G networks. The telco is also forecasting 1/30th of the latency (i.e. lag) with 10 times the network capacity and scale. 

Those are some impressive numbers. The group’s 5G network push also coincides with the current trend towards more working from home arrangements.

The coronavirus pandemic has forced businesses to rethink how they work. Some aspects of lockdown restrictions could remain in place even as we emerge from the pandemic which could place an emphasis on fast network speeds at home. For those worried about COVID-19 and 5G, Telstra also debunked a lot of rumours on its website here.

Foolish takeaway

I feel strengthening Australian-Japanese relations is a good sign for the Aussie economy. Much of our success right now is heavily reliant on China with relations currently a little frosty.

If Telstra can continue to be a market leader in the 5G space, it could well capitalise on strengthened collaboration with Japan beyond 2020.

More reading

• Is the Telstra share price a buy?
• 3 strong ASX 100 shares for retirees to buy today
• 3 large cap ASX shares primed for expansion and M&A activity
• 3 ASX dividend shares to buy in July
• 3 ASX shares for growth, income, and value investors to buy today

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

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The Bellevue Gold Ltd (ASX: BGL) share price is on watch today after the company announced its intention to accelerate its project development with a significant capital raising. 

On Thursday, many prominent gold explorers on the ASX saw a rise in share price. For instance, the Hammer Metals Ltd (ASX: HMX) share price rose by 10%, Orecorp Ltd (ASX: ORR) experienced a 7.5% rise and Red 5 Limited (ASX: RED) saw its share price increase by 6.52%. 

The Bellevue share price begins trading today after being in a trading halt on Thursday pending this announcement. Bellevue is exploring and developing one of the highest-grade new gold discoveries globally consisting of 2.3 million ounces (Moz) at 10 grams per tonne (g/t). Equally important, is the fact that this discovery is located in the Wiluna Greenstone Belt. Other notable ASX gold miners including the likes of Northern Star Resources Ltd (ASX: NST) and Saracen Mineral Holdings Limited (ASX: SAR), as well as Hammer Metals, also operate within close proximity to this area.

Why is the Bellevue share price on watch?

Bellevue is undertaking raising $100 million via a fully underwritten share placement. Moreover, the placement issue price of $1.00 per share is at a 10.7% discount to the last closing price. The company will also undertake a non-underwritten share purchase plan (SPP) for all eligible shareholders to raise up to $20 million at the same issue price as the placement.

New shares issued under the placement and SPP will rank equally with existing fully paid Bellevue shares on issue. The record date was Wednesday 8 July, meaning any shares purchased after this date are ineligible to participate. 

The Bellevue project has a significant, and growing, mineral resource of 2.3 Moz of gold. In addition, there is existing infrastructure close to the high-grade resource. Therefore, the capital costs of development are expected to be low. To illustrate further, the high-grade core is 480,000 oz at 15.5g/t.

The company intends to use the funds for a range of activities. First, to grow the known 2.3 Moz resource further. At present, the resource has grown by ~75,000 oz per month. The discovery cost of this has been A$18/oz since since December 2017.

Second, ongoing exploration for further discoveries as all gold veins remain open in every direction. Third, to fund underground mine development and non process infrastructure.

Management commentary

Bellevue Managing Director, Steve Parsons said the “…proceeds from the raising will help ensure we can unlock the full value of what is clearly an exceptional asset with extremely high grades and immense scope for further inventory growth”. He went on to say “By implementing our dual exploration and development strategy, we will seek to maximise our ability to create value for shareholders through both resource growth and project development”.

Bellevue share price

On Wednesday, the company’s share price was not far off all time highs and closed the day at $1.12, valuing the company at $766.7 million.

As a growing gold explorer, Bellevue has no current revenues and pays no dividends. At the time of writing, the gold price is trading at US$1808, just shy of the US$1884.20 all-time high reached in September 2011.

More reading

• 5 things to watch on the ASX 200 on Friday
• Why the Saracen share price has soared over 80% higher in the first half of 2020
• Top brokers name 3 ASX 200 shares to sell today
• ASX 200 drops 1.5% today, Afterpay falls 3%
• ASX 200 down 0.5%: Afterpay completes placement, big four banks tumble

Motley Fool contributor Daryl Mather owns shares of Bellevue Gold Ltd. 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 AVITA Therapeutics Inc (ASX: AVH) share price will be on watch on Friday after the release of its fourth quarter update.

How did AVITA perform in the fourth quarter?

For the fourth quarter of FY 2020, the regenerative medicine company delivered total global revenue of US$3.88 million.

This was driven almost entirely by its U.S. RECELL System sales of US$3.79 million. This was broadly flat on the global revenue of US$3.94 million and U.S. RECELL System sales of US$3.78 million it generated in the third quarter.

For the full year, total revenue was approximately US$14.32 million. This was an increase of US$8.78 million or 160% over FY 2019’s sales. U.S. RECELL System sales contributed approximately US$13.79 million, an increase of US$9.39 million or 213% year on year.

At the end of the quarter, AVITA had a cash balance of approximately US$73.84 million. This was a decrease of US$5.92 million or 7.4% from the end of the third quarter. This reduction includes costs of more than US$1 million relating to its redomiciliation to the United States and its preparation for U.S. GAAP compliance.

“Most challenging commercial conditions.”

AVITA Therapeutics’ Chief Executive Officer, Dr. Mike Perry, was pleased with the company’s performance after facing the “most challenging commercial conditions” since the launch of the RECELL System.

He said: “We are pleased with our fourth quarter results given the challenges and limited patient and facility access that we have experienced with the onset of the COVID-19 pandemic.”

“Like many others, this quarter we witnessed the most challenging commercial conditions since the RECELL System was launched in the U.S. in early 2019. While burns are not considered elective procedures, the incidence of burns was not immune to the impact of COVID-19 as nationwide protective (executive) orders drove a reduction in accidents resulting in burn injuries,” he added.

Dr Perry concluded: “Despite the tough macro environment, the clear benefits of the RECELL System including shortened length of hospital stays, together with less invasive and fewer surgeries, continues to resonate with hospitals, physicians, and patients, which is reflected in our results this quarter.”

Outlook.

Dr. Mike Perry appears cautiously optimistic on the future.

He commented: “As with many companies in the current pandemic environment, it is difficult to predict revenue and procedural volume over the coming months, but we are pleased with current utilization rates and our physician commitment.”

The company also highlighted a large number of opportunities it is pursuing for the RECELL System. This includes its use in treating vitiligo, the outpatient burn market, and an expansion into Japan.

More reading

• 3 innovative ASX shares to buy
• Why Avita, Brickworks, Fisher & Paykel Healthcare, & WiseTech Global are tumbling lower
• ASX stock of the day: Avita Therapeutics share price climbs 8.4% as company redomiciles
• ASX 200 up again, ASX retailers make big gains

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 Avita Medical Limited. The Motley Fool Australia has recommended Avita Medical 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 Jameson Resources Limited (ASX: JAL) share price rocketed up by 13.33% on Thursday after a bankable feasibility study (BFS) on its Crown Mountain project forecast a pre-tax net present value (NPV) of US$376 million and an internal rate of return (IRR) of 36.4%.

Jameson Resources has two coking coal projects in Western Canada: the 1.7Mtpa clean coal operation, Crown Mountain, located in the Elk Valley in southeastern British Columbia, and another project in the Peace River region of British Columbia.

What were the details of the bankable feasibility study?

The BFS on the company’s Crown Mountain project demonstrated that over the project’s 15-year mine life it will produce an average of 86% of premium low volume high coking coal, which combusts at lower temperatures. In addition, 14% Pulverised Coal Injection coal (PCI), this is injected directly into blast furnaces without an intermediate coking phase.

The BFS reaffirms the robust economics of the project. First, the amount of waste removal required before extracting the coal is low, giving it a low strip ratio. Second, the project can operate at competitive operating costs through one of three deep water ports on the west coast of British Columbia.

The low life of mine costs are helped by ready availability of a skilled labour force without the requirements of having to build camp infrastructure, and excellent local vendor support.

Furthermore, there are opportunities to extend the life of mine through additional exploration, as well as opportunities to optimise the production. If the company undertakes either of these options it will increase the NPV and IRR of the investment. 

Some of the production optimisation options include increased utilisation of processing plant hours via optimised maintenance, low cost Chinese steel sourcing to reduce construction costs, and further evaluation of contract mining to extract the coal.

Jameson Resources is currently considering all options presented to determine the level of funding required. The current BFS proposes an owner-operator model, requiring purchase or lease of heavy mobile assets and all facilities. 

The company is considering various sources of funding. These include equity, debt, the use of contractors (to reduce overall pre-production capital requirements) and pre-paid offtake from the project.

About the Jameson Resources share price

The Jameson Resources share price jumped by 13.33% in Thursday’s trading to close at 17 cents per share, valuing the company at $44.84 million. Jameson Resources shares are down around 10%, year to date, and 20.93% down on this time last year. 

More reading

• Bellevue share price on watch due to project acceleration
• AVITA Therapeutics share price on watch after Q4 update
• Zip share price surges 30% in a week. Are we calling bubble yet?
• 2 quality ETFs I’d buy today
• RPMGlobal share price up following acquisition of mining software company

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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The Zip Co Ltd (ASX: Z1P) share price surged 10.38% yesterday in another massive day for ASX payments shares. Zip shares closed at $6.07 on Wednesday but exploded to $6.70 at market close yesterday afternoon.

Yesterday’s incredible move means that the Zip share price is now up around 31% since 29 June, just over a week ago.

BNPL, Zip shares rocket ever higher

Zip isn’t the only ASX company making moves in the buy now, pay later (BNPL) space. Other ASX payments shares were also driving ASX investors into a frenzy yesterday. Sezzle Inc (ASX: SZL) shares shot up a stupendous 42% just yesterday, whilst Splitit Ltd (ASX: SPT) shares have doubled over the past month.

Zip’s arch-rival Afterpay Ltd (ASX: APT) has also been leaving investors giddy. Fresh from its short-but-sweet capital raising, Afterpay shares were up more than 12% yesterday and hit a share price above $74 in intraday trade. Like Zip, Afterpay is also up around 30% since 29 June. Happy New Financial Year indeed!

BNPL shares have attracted many growth and momentum investors since the S&P/ASX 200 Index (ASX: XJO) market low was hit on 23 March this year. On that day, Zip shares bottomed out at $1.05 and Afterpay at $8.01. That means anyone lucky enough to pick up Zip or Afterpay shares on that day would today be looking at a 538% and 826% gain, respectively, on yesterday’s share prices.

Are we in a payments bubble?

It’s hard to see these sorts of share price movements and not think we are now in ‘bubble territory’. Of course, bubbles are usually only completely evident after the inevitable ‘pop’.

So, what do we know right now about ASX payments shares? Yes, they are in a powerful tailwind of shifting consumer preferences. Yes, they are all growing fast (some more than others).

But we don’t know how this sector is going to look in 10 years’ time. Could Zip bulldoze Afterpay? Could Afterpay buy out Openpay Group Ltd (ASX: OPY)? It’s very early days in this space, and right now the market is treating every payment company like they have already achieved domination. I’m sure at least one of the companies named in this article will be a lot larger and a lot more dominant in this field in a decade’s time. But I’m equally certain that not all of them will be.

Foolish takeaway

If you’re absolutely convinced that one of these companies has what it takes to win this game, by all means, continue to invest according to your bullish thesis. But if you’re not sure, perhaps it would be wise to stay on the sidelines and watch this space for now. Missing out on a winner is tough, but losing permanent capital on a failed investment thesis is a lot tougher.

More reading

• Is the Woolworths share price a buy?
• 5 things to watch on the ASX 200 on Friday
• ASX 200 rises 0.6% today, Afterpay share price hits $75
• Why the Saracen share price has soared over 80% higher in the first half of 2020
• The embattled ASX 200 stocks that could deliver a dividend surprise

Sebastian Bowen 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 AFTERPAY T FPO. The Motley Fool Australia has recommended Sezzle Inc. 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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Exchange-traded funds (ETFs) are a great way to quickly invest into a group of businesses.

Some ETFs have quality business holdings but not much diversification of industry like Betashares Global Cybersecurity ETF (ASX: HACK). Other ones may have acceptable diversification but don’t offer strong growth potential like BetaShares Australia 200 ETF (ASX: A200) (due to the high exposure to large ASX banks).

I think the below two ETFs offer a good combination of growth and diversification:

iShares Global 100 ETF (ASX: IOO)

The biggest businesses in the world didn’t become the largest by having a poor product or having rubbish financials.

This ETF is invested in the biggest 100 businesses in the world. These businesses have spent many years, or many decades, at the top of their industry.

Big businesses have strong economic moats, robust balance sheets and enviable brand power. A good way to think about how strong the moat of a business is how much you’d have to spend building your own business to beat that company. Could you beat Microsoft’s dominance with $10 billion? Or even $100 billion? Google (Alphabet), one of the world’s best tech businesses, has to offer its office products for free to get people to use them over Microsoft.

Here are some of the biggest holdings within the ETF today: Microsoft, Apple, Amazon, Alphabet, Johnson & Johnson, Proctor & Gamble, JPMorgan Chase and Intel.

There are plenty of large non-US holdings like Nestle, Roche, Samsung, Novartis, Toyota and Astrazeneca.

As you can see, there’s a diverse group of businesses within the ETF. But it has a large allocation to information technology at 28.2%, much higher than the next highest exposure of 15% to consumer discretionary. IT businesses are some of the brightest share prospects because of how the world is going increasingly technological. Tech shares also usually have high profit margins.

Over the past year this ETF has returned 11.80% per annum. The ETF has been around a fairly long time so we can view its longer-term performance – over the past 10 years it has returned an average of 12.57% per annum.

I think this ETF is a great investment option and its management fee is just 0.40% per annum.

BetaShares Global Quality Leaders ETF (ASX: QLTY)

This ETF tracks an index that consists of 150 international shares outside of Australia that have ranked highly for quality.

What does ‘quality’ mean? Shares are ranked using a combination of factors – return on equity (ROE), debt to capital, cash flow generation ability and earning stability.

When you look at businesses through multiple quality screens you will likely end up with a high quality list of shares. The best of the best. Focusing on quality hopefully means producing better long-term returns than other global share benchmarks.

As of this week, the biggest holdings within the ETF are: Adobe, Nvidia, Apple, Accenture, Intuit, Facebook, Vertex Pharmaceuticals, L’Oreal and Alphabet (Google).

This ETF also has a large allocation to IT, the sector had a 34% weighting at the end of May 2020. Healthcare had a 23.6% allocation, consumer discretionary had a 11.3% weighting and industrials had an 11% weighting.

Has it managed to outperform? Well the ETF isn’t that old yet, so we can only look at a short time frame. Over the past year it has made a net return of 18.45%, that’s after the 0.35% management fee. Vanguard MSCI Index International Shares ETF (ASX: VGS) has returned 5.24% over the past year. BetaShares Global Quality Leaders ETF shows a strong return after the COVID-19 pandemic and recovery. 

Foolish takeaway

I really like both of these ETFs. They are the type of investments that could be your only investment holding for many years and perform well. Or they could be used to add high-quality diversification to your existing portfolio.

Out of the two options I’d probably go for BetaShares Global Quality Leaders ETF. Its holdings are high quality, it has a slightly lower management fee than the iShares Global 100 ETF and it owns more shares which should give better diversification.

More reading

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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of BETA CYBER ETF UNITS. The Motley Fool Australia has recommended Vanguard MSCI Index International Shares ETF. 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 RPMGlobal Holdings Ltd (ASX: RUL) share price closed trading yesterday up by 3.09% to $1.00, following the announcement of an acquisition by the company.

What was the acquisition?

According to the announcement, RPMGlobal will acquire 100% of Revolution Mining Software, a private company based in Canada. Revolution Mining Software has more than 6 years experience developing and selling its flagship ‘Schedule Optimisation Tool’, which is a mine scheduling optimisation software solution for tier one miners.  

The tool emerged following research from the non-profit organisation Mining Innovation, Rehabilitation and Applied Research Corporation (MIRARCO). The organisation is based at Laurentian University in Canada and has a reputation for solving complicated mining industry problems. 

According to the announcement, the software is the only strategic financial optimisation tool for underground mines that enables planners to improve productivity and profitability by optimising the net present value (NPV) of the mine schedule.

Commenting on the acquisition, RPMGlobal CEO and managing director Richard Mathews stated:

We are very pleased to have concluded negotiations to to acquire Revolution Mining Software and are really looking forward to welcoming Lorrie and the rest of the Revolution team into the RPM family. We will invest in their industry leading scheduling optimisation tools to deliver innovative solutions that add real value to our customers.

RPM was born from the understanding that mine planning needs to be built on sounds economics and the Revolution Mining product strategy is completely aligned with that core value.

Following the transaction, all of Revolution Mining Software’s employees will move into the RPMGlobal business.

The transaction will be paid for with RPMGlobal’s existing cash reserves and consists of an upfront payment of CAD$500,000, along with a 2 year earn-out agreement. The acquisition is set to be finalised on 31 July 2020.

About the RPMGlobal share price

RPMGlobal has been listed on the ASX since 2008. It is a provider of mining software solutions, advisory services and professional development to the mining industry. RPMGlobal has worked with mining companies in 125 different countries over the last 50 years. 

Last week, RPMGlobal announced that it expects to finish the 2020 financial year with a total contracted value of software subscriptions of $34.5 million. The company also announced that its recurring revenue from software subscriptions was $12.7 million per year.

In the first half of the 2020 financial year, RPMGlobal had revenue of $41.1 million, a 5% decline on the same period in 2019.

The RPMGlobal share price is up 92.3% from its 52 week low of $0.52. It has returned 17.65% since the beginning of the year. The RPMGlobal share price is up 66.67% since this time last year.

More reading

• Zip share price surges 30% in a week. Are we calling bubble yet?
• 2 quality ETFs I’d buy today
• Is the Woolworths share price a buy?
• 5 things to watch on the ASX 200 on Friday
• Why Domino’s and Nanosonics shares could be fantastic buy and hold options

Chris Chitty has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of RungePincockMinarco Limited. The Motley Fool Australia has recommended RungePincockMinarco 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 Woolworths Group Ltd (ASX: WOW) share price has increased by 11% in the past year. The Woolworths share price gain has significantly outperformed the S&P/ASX 200 Index (ASX: XJO), which has seen a 11% fall over the same period.

Woolworths Group owns the largest supermarket in Australia by market share, along with a number of other businesses including Big W, ALH Group and Endeavour Group Limited, which consists of Dan Murphy’s, BWS, Cellarmasters and Langton’s. 

Here’s a closer look at the current supermarket landscape, and whether the Woolworths share price is a buy.

The rise of Aldi

According to Roy Morgan’s Fresh Food and Grocery Report, Woolworths has a 32.9% market share compared to Coles Group Ltd (ASX: COL)‘s 26.6% share. However, Aldi’s market share is rapidly rising.

Commenting on the breakdown, Roy Morgan CEO Michele Levine stated:

Aldi has increased its market share from 6.7% in 2011, to 12.4% today. While it is still a fair way behind Australia’s two supermarket giants, to put this growth in perspective, Aldi is now approaching half of the market share held by Coles Group.

Aldi’s 12.4% market share puts it at a approximately a third of Woolworths’ market share – growth that must be concerning for Woolworths and Coles.

Financial performance

In its recent trading update released 23 June 2020, Woolworths announced Q4 sales growth to date in its supermarkets in Australia and NZ was up 8.6% and 15.1%, respectively. At that time, Big W and Endeavour drinks sales growth in Q4 had also risen by 27.8% and 21.4%, respectively. In addition, Woolworths highlighted it expects to report earnings before interest and tax of between $3,200 million and $3,250 million, however, this is subject to finalisation and before significant items are taken into account.

The strong sales growth has helped give the share price a boost. However, the sales growth experienced this year could be from the panic buying that is taking place and only be over the short term.   

Furthermore, the group is looking to decrease supply chain costs in the business by developing automated distribution centres in Moorebank Logistics Park, Sydney. This is expected to cost $700–$780 million in technology and fitout over the next 4 years. While this addresses costs in the business, my concern is around whether the sales growth Woolworths has experienced is sustainable over the long term, in what is a very competitive landscape.

Foolish takeaway 

In my view, Woolworths’ market-leading position in the supermarket space could be eroded by the likes of retail giant Aldi over the long term. While groceries are essential items, consumers are offered many choices.

At the current Woolworths share price of $38.21, I personally believe that an investment in the tech space could offer more income and growth over the long term.

More reading

• Zip share price surges 30% in a week. Are we calling bubble yet?
• 5 things to watch on the ASX 200 on Friday
• ASX 200 rises 0.6% today, Afterpay share price hits $75
• Why the Saracen share price has soared over 80% higher in the first half of 2020
• The embattled ASX 200 stocks that could deliver a dividend surprise

Motley Fool contributor Matthew Donald has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of COLESGROUP DEF SET and 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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