Category: Stock Market

The Flight Centre Travel Group Ltd (ASX: FLT) share price will be one to watch next week.

On August 25, the travel agent giant will release its full year results for FY 2022.

Ahead of the release, let’s take a look to see what the market is expecting from the travel agent.

What is expected from Flight Centre in FY 2022?

According to a recent trading update, for the 12 months ended June 30, Flight Centre is expecting to post another large EBITDA loss of between $180 million and $190 million.

However, this will be a big improvement on its underlying EBITDA loss of $337.9 million from FY 2021.

This improvement was driven by a much stronger performance in the second half, with the company expecting to be breakeven on an underlying EBITDA basis for the six months to June 30.

What are analysts saying?

According to a note out of Goldman Sachs, the broker is expecting Flight Centre to deliver a result in the middle of its guidance range. It also expects the company’s cost outlook to be better than the market is forecasting.

It commented:

We expect FLT to report FY22 EBITDA loss at A$185.1mn, vs. guidance of A$180-190mn loss. We expect FY22 TTV to be at c. 43% of FY19 levels with EMEA and Americas leading recovery. In terms of activity type, we expect corporate travel to benefit from new account wins and strength in SME recovery.

We expect FLT to report revenue of c. A$1.1bn, c. 13% ahead of Visible Alpha Consensus Data. However, our operating cost outlook remains ahead of consensus outlook, and this remains the key focus area for us into FY22 results. Secondly, progress in corporate contract wins will be crucial to the longer term growth outlook for FLT. We expect corporate TTV to represent c. 53% of group TTV at full recovery in FY24 vs. 38% on a pre-COVID basis.

Is the Flight Centre share price good value?

Goldman is sitting on the fence with its rating on the Flight Centre share price. It currently has a neutral rating on its shares.

However, with a price target of $20.90, Goldman sees potential upside of 16% for investors over the next 12 months.

The post Own Flight Centre shares? Here’s what to expect from its FY22 results appeared first on The Motley Fool Australia.

(function() {
function setButtonColorDefaults(param, property, defaultValue) {
if( !param || !param.includes(‘#’)) {
var button = document.getElementsByClassName(“pitch-snippet”)[0].getElementsByClassName(“pitch-button”)[0];
button.style[property] = defaultValue;
}
}

setButtonColorDefaults(“#43B02A”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#43B02A”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()

More reading

• These are the 10 most shorted ASX shares
• Do experts think the Flight Centre share price is ready for imminent takeoff?
• Better ASX travel buy: Flight Centre or Webjet?
• Are we flying first class with Flight Centre shares?
• These are the 10 most shorted ASX shares

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Flight Centre Travel Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

from The Motley Fool Australia https://ift.tt/FvT4YiW

If you’re looking for ASX 200 shares to buy, then you may want to check out the two listed below.

Both have recently been named as buys by brokers. Here’s why they are bullish on them:

BHP Group Ltd (ASX: BHP)

The first ASX 200 share to look at is mining giant BHP. It released its full year results this week and impressed the market with its record operating profits and free cash flow. This allowed the company to reward its shareholders with a bumper US$3.25 per share fully franked dividend in FY 2022.

The team at Morgans were impressed with BHP’s performance. In response to the result, the broker has retained its add rating and $48.40 price target on the Big Australian’s shares.

Morgans commented:

A strong result from BHP, with earnings slightly ahead of expectations while positively surprising on both dividend and free cash flow (FCF) generation. […] Our long-term preference for BHP over RIO continues to pay dividends (literally), with BHP asserting itself as the better miner and with the stronger growth profile.

Westpac Banking Corp (ASX: WBC)

Another ASX 200 share that is rated as a buy is big four bank Westpac.

Australia’s oldest bank is Goldman Sachs’ top pick in the sector at the moment. The broker believes Westpac provides the best exposure to rising rates and feels that its shares offer the most upside potential.

Goldman currently has a conviction buy rating and $26.55 price target on the banking giant’s shares.

It commented:

We continue to see WBC as our preferred exposure to the A&NZ Financials reflecting: i) its strong leverage to rising rates, ii) while we think its A$8 bn FY24 cost target will now be unachievable, we still forecast a 7% reduction in underlying expenses, iii) its recent market update highlighted that the business is still investing effectively in its franchise, and iv) our 12-mo TP implies a 23% TSR, and we note the stock is trading at a 20% discount to peers, versus the historic average discount of 2%.

The post Brokers say BHP and this ASX 200 share are buys appeared first on The Motley Fool Australia.

(function() {
function setButtonColorDefaults(param, property, defaultValue) {
if( !param || !param.includes(‘#’)) {
var button = document.getElementsByClassName(“pitch-snippet”)[0].getElementsByClassName(“pitch-button”)[0];
button.style[property] = defaultValue;
}
}

setButtonColorDefaults(“#43B02A”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#43B02A”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()

More reading

• Here are the top 10 ASX 200 shares today
• Why has the Panoramic Resources share price surged 40% in a month?
• Why BHP, Life360, Tassal, and Temple & Webster shares are charging higher
• The BHP share price now trades on a fully franked dividend yield of 11%
• Everything you need to know about the latest BHP dividend

Motley Fool contributor James Mickleboro has positions in Westpac Banking Corporation. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Westpac Banking Corporation. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

from The Motley Fool Australia https://ift.tt/veq4Qp9

Are you in the process of building an income portfolio but don’t feel like you have sufficient funds to maintain a truly diverse portfolio? Then exchange traded funds (ETFs) could be a great option for you.

There are a number of ETFs that have been set up to give investors exposure to a collection of dividend shares through a single investment. Two that could be worth considering are listed below:

Vanguard Australian Shares High Yield ETF (ASX: VHY)

The first ETF for income investors to consider is the Vanguard Australian Shares High Yield ETF.

This ETF provides investors with low-cost exposure to companies that have higher than average forecast dividends. This is done with diversification in mind, with the fund restricting the proportion invested in any one industry to 40% of the total ETF and 10% for any one company.

Among the companies included in the fund are the big four banks and mining companies such as BHP Group Ltd (ASX: BHP) and Fortescue Metals Group Limited (ASX: FMG).

The Vanguard Australian Shares High Yield ETF currently trades with an estimated forward dividend yield of 5.9%.

BetaShares S&P 500 Yield Maximiser (ASX: UMAX)

Another ETF for income investors to look at this week is the BetaShares S&P 500 Yield Maximiser.

BetaShares notes that this ETF aims to generate attractive quarterly income and reduce the volatility of portfolio returns by implementing an equity income investment strategy over a portfolio of shares comprising the S&P 500 Index.

This index is home to 500 of the largest companies listed on Wall Street. Among the companies you’ll be investing in are the likes of Apple, Johnson & Johnson, Microsoft, and United Health.

At the last count, the BetaShares S&P 500 Yield Maximiser’s units were providing investors with a 6.2% distribution yield.

The post 2 excellent ASX ETFs to buy for dividends appeared first on The Motley Fool Australia.

(function() {
function setButtonColorDefaults(param, property, defaultValue) {
if( !param || !param.includes(‘#’)) {
var button = document.getElementsByClassName(“pitch-snippet”)[0].getElementsByClassName(“pitch-button”)[0];
button.style[property] = defaultValue;
}
}

setButtonColorDefaults(“#43B02A”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#43B02A”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()

More reading

• Goldman Sachs tips huge returns for the Goodman share price
• ‘Clearly under the radar’: Expert reveals hidden gem ASX share he’s holding
• Why these 2 ASX shares rocketed 40% last month
• 2 ASX 200 dividend shares to buy right now according to analysts
• How rising inflation can benefit ASX office REITs: fund manager

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has positions in and has recommended BetaShares S&P500 Yield Maximiser. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

from The Motley Fool Australia https://ift.tt/StxbOlR

The Goodman Group (ASX: GMG) share price dropped on Tuesday after the market gave a lukewarm response to the company’s full year results for FY 2022.

The integrated industrial property company’s shares ended the day 0.5% lower at $20.55.

Is the Goodman share price good value now?

While the market didn’t respond overly positively to Goodman’s results, the team at Goldman Sachs was pleased. So much so, this morning the broker has reiterated its bullish view on the company’s shares.

According to the note, Goldman has retained its buy rating and $25.40 price target on its shares.

Based on the current Goodman share price of $20.55, this implies potential upside of approximately 24% for investors over the next 12 months.

What did the broker say?

Goldman was pleased with Goodman’s performance and believes it is well-placed to deliver further strong growth in FY 2023.

It commented:

GMG continues to demonstrate its strong platform and positioning as evident in today’s result, supported by our expectation of a strong outlook for the Industrial sector more broadly, with a number of favourable fundamentals underpinning future long-term demand for industrial space. We expect solid rental growth as demand for high quality logistics space continues to outpace available supply.

The broker also believes that management’s operating earnings growth guidance of 11% for FY 2023 could prove to be conservative. Particularly given management’s tendency to guide lightly to begin with and upgrade its guidance as the year progresses.

It explained:

Although the macro environment remains challenged, we believe there is upside risk to its conservative guidance as the Group has historically “Guided light”, coming in ahead of initial estimates. Given GMG’s preference to own, develop and manage high-quality industrial assets in key infill markets globally, we believe it is well-positioned to capture market rental growth, which when coupled with elevated investment demand for industrial assets will assist in contributing to AUM growth over time.

Goldman is expecting Goodman to deliver operating earnings per share growth of 16.7% in FY 2023.

All in all, the broker feels this and its positive long term outlook makes the Goodman share price good value at the current level.

The post Goldman Sachs tips huge returns for the Goodman share price appeared first on The Motley Fool Australia.

(function() {
function setButtonColorDefaults(param, property, defaultValue) {
if( !param || !param.includes(‘#’)) {
var button = document.getElementsByClassName(“pitch-snippet”)[0].getElementsByClassName(“pitch-button”)[0];
button.style[property] = defaultValue;
}
}

setButtonColorDefaults(“#43B02A”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#43B02A”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()

More reading

• Goodman share price drops despite beating FY22 earnings guidance
• 2 blue chip ASX 200 shares tipped as buys by experts
• 5 things to watch on the ASX 200 on Thursday
• Broker names 3 ASX 200 shares to buy and hold
• Here are the top 10 ASX 200 shares today

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

from The Motley Fool Australia https://ift.tt/exXdCDU

It’s not often investors come across an ASX share that the analyst community doesn’t have an opinion on.

So when you find a gem that no one else seems to have noticed, you run with it.

This is the situation Collins Street Asset Management chief investment officer Vasilios Piperoglou finds himself in.

“Astron Pty Ltd (ASX: ATR) is an interesting explorer and hopefully about to be producer,” he told a Reach Markets video.

“It’s interesting in so much as… it is clearly under the radar. Because no broker follows them yet.”

‘Tier-one asset in a tier-one jurisdiction’

Astron is a resources company that seeks to produce zircon and titanium from mineral sands mining activities.

The current focus is the Donald Mineral Sands Project in Victoria, which Piperoglou has high hopes for.

“They have a very large, I believe one of the world’s largest, undeveloped zirconium and rare earth projects.

“It has a potential 50-year mine life. You could argue it’s a tier-one asset in a tier-one jurisdiction.”

He added that Astron has all its approvals in place, except for the final mine site permit, which he expects early in the new year.

The company bought $18 million of water rights for the site a couple of years back, which have since doubled in value, according to Piperoglou.

“It’s ticked all the boxes, and they will be releasing their final DFS [definitive feasibility study] early next year.”

Who knows what it will be worth in the future

Collins Street Asset Management gained exposure to Astron after recently issuing it with convertible notes.

Regardless of this or buying shares directly, Piperoglou reckons investors are in for a good time.

“The brokers have not cottoned onto the company… With these types of companies, it’s very hard to put a valuation.”

But how much upside does the Collins Street team think Astron shares have?

“What do we think Astron is worth on a per-share basis? I actually don’t know,” said Piperoglou.

“We haven’t done a precisely specific NPV [net present value] ourselves. The reason being, we think it’s at multiples to what it currently is.”

The Astron share price has climbed 18.75% so far this year. 

The Hong Kong company is listed as a CHESS depositary interest, which means one ASX stock represents one actual share.

The post ‘Clearly under the radar’: Expert reveals hidden gem ASX share he’s holding appeared first on The Motley Fool Australia.

(function() {
function setButtonColorDefaults(param, property, defaultValue) {
if( !param || !param.includes(‘#’)) {
var button = document.getElementsByClassName(“pitch-snippet”)[0].getElementsByClassName(“pitch-button”)[0];
button.style[property] = defaultValue;
}
}

setButtonColorDefaults(“#0095C8”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#0095C8”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()

More reading

• Why these 2 ASX shares rocketed 40% last month
• 2 ASX 200 dividend shares to buy right now according to analysts
• How rising inflation can benefit ASX office REITs: fund manager
• 5 things to watch on the ASX 200 on Wednesday
• ‘Green premium’: What could it mean for the Vulcan Energy share price?

Motley Fool contributor Tony Yoo has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

from The Motley Fool Australia https://ift.tt/1IQf6Zr

Despite the doom and gloom pervading over 2022, July was actually a great month for ASX shares.

In fact, the S&P/ASX 200 Index (ASX: XJO) shot up 6% for the month.

During such a boom period, there are bound to be some ASX shares that reaped massive returns.

But which ones were one-offs and which are set to continue their flight upwards?

One way to figure this out is to see which rising stocks the professional investors are retaining in their portfolios.

Here are a couple of July stars that Glenmore Asset Management is holding onto:

An ASX share that’s yet to reach the pinnacle

Investment distributor Pinnacle Investment Management Group Ltd (ASX: PNI) saw its share price rocket 42.4% upwards in July.

Glenmore portfolio manager Robert Gregory said in a memo to clients that the company did make an announcement to the ASX during the month.

“Pinnacle provided a market update, stating that ten affiliates had crystallised performance fees for FY22 totalling $57.1 million, [with] Pinnacle’s share being $16.4 million.”

But still, that update was not worth in itself a 40% increase in this ASX share’s market capitalisation.

“Whilst this news was obviously positive in the sense it shows outperformance across a number of Pinnacle’s funds, the strong rally in Pinnacle’s stock price in July was, in our view, more driven by improving investor risk appetite to equity market linked growth stocks.”

Glenmore is holding onto Pinnacle shares, expecting more of the same. 

Macquarie analysts agree with Gregory’s team, just last week rating it as ‘outperform’.

Who doesn’t love it when a share price skyrockets for no reason

Stocks for financial services provider MA Financial Group Ltd (ASX: MAF) lifted 36.7% in value over July.

Unlike Pinnacle, MA Financial didn’t even have to say anything for this to happen.

“MA Financial did not release anything company specific during July, however, as was the case with Pinnacle, the company benefited from improving risk appetite towards growth stocks, particularly in the asset management sector,” Gregory said.

Analyst coverage for this ASX share is sparse, but on CMC Markets at least the team at Ord Minnett agrees with Gregory. It rates the stock as a strong buy.

Late last month The Motley Fool reported Perennial Partners also liked the look of MA Financial.

“Perennial noted it sees notable upside — possibly between 50% and 100% — in many of its small-cap holdings, including MA Financial, over the medium term.”

Gregory noted that both stocks ended the 2022 financial year at dirt-cheap levels.

“Both PNI and MAF commenced July from a starting point of very cheap valuations, following material sell-offs during 1H of 2022.”

The stocks each pay out a handy income too. Pinnacle’s dividend yield is currently above 3% and MA Financial gives out about 2.6%.

The post Why these 2 ASX shares rocketed 40% last month appeared first on The Motley Fool Australia.

(function() {
function setButtonColorDefaults(param, property, defaultValue) {
if( !param || !param.includes(‘#’)) {
var button = document.getElementsByClassName(“pitch-snippet”)[0].getElementsByClassName(“pitch-button”)[0];
button.style[property] = defaultValue;
}
}

setButtonColorDefaults(“#0095C8”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#0095C8”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()

More reading

• 5 things to watch on the ASX 200 on Wednesday
• ‘Green premium’: What could it mean for the Vulcan Energy share price?
• Can the Macquarie share price get back over $200 this year?
• Here are the top 10 ASX 200 shares today
• Are Coles shares an ASX buy ahead of the company’s earnings next week?

Motley Fool contributor Tony Yoo has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended PINNACLE FPO. The Motley Fool Australia has positions in and has recommended PINNACLE FPO. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

from The Motley Fool Australia https://ift.tt/spm8V3E

If you’re looking for dividends shares with good yields to buy, then you may want to look at the two listed below.

Here’s why analysts rate these ASX 200 dividend shares highly:

Coles Group Ltd (ASX: COL)

The first ASX dividend share that analysts rate as a buy is supermarket operator Coles.

Thanks to its strong market position, defensive qualities, positive exposure to inflation, and its refreshed strategy, Coles has been tipped to grow its earnings and dividend at a solid rate in the coming years.

Citi, for example, recently lifted its estimates on the belief that Coles’ sales will be boosted from rising inflation. It is now forecasting double digit earnings growth in both FY 2023 and FY 2024.

In light of this positive outlook, the broker has put a buy rating and $21.00 price target on its shares.

As for dividends, Citi is expecting fully franked dividends per share of 65 cents in FY 2022 and 75 cents in FY 2023. Based on the current Coles share price of $18.97, this will mean yields of 3.4% and 3.95%, respectively.

Telstra Corporation Ltd (ASX: TLS)

Another ASX dividend share to look at is telco giant Telstra.

It recently impressed the market with its solid full year result and surprise dividend increase. For the 12 months ended 30 June, Telstra delivered underlying earnings before interest, tax, depreciation and amortisation (EBITDA) of $7,256 million. This was up 8.4% year over year.

Pleasingly, management remains confident in its outlook and reiterated its FY 2023 underlying EBITDA guidance of $7.8 billion to $8.0 billion. This represents growth of 7.5% to 10%.

The team at Morgans was pleased with its results. In response, the broker retained its add rating and lifted its price target on the company’s shares to $4.60.

In respect to dividends, the broker is expecting fully franked dividends per share of 16.5 cents in both FY 2023 and FY 2024. Based on the current Telstra share price of $4.10, this will mean yields of 4% for investors.

The post 2 ASX 200 dividend shares to buy right now according to analysts appeared first on The Motley Fool Australia.

(function() {
function setButtonColorDefaults(param, property, defaultValue) {
if( !param || !param.includes(‘#’)) {
var button = document.getElementsByClassName(“pitch-snippet”)[0].getElementsByClassName(“pitch-button”)[0];
button.style[property] = defaultValue;
}
}

setButtonColorDefaults(“#43B02A”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#43B02A”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()

More reading

• Are Coles shares an ASX buy ahead of the company’s earnings next week?
• Here are the 3 most heavily traded ASX 200 shares on Tuesday
• ‘Strong growth’: Expert names 2 ASX shares to buy for the long run
• Own Telstra shares? How the telco is tackling inflation pressures
• ‘Strongest tailwinds in a decade’: Morgans tips Telstra shares as a buy

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has positions in and has recommended COLESGROUP DEF SET and Telstra Corporation Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

from The Motley Fool Australia https://ift.tt/Dqw7IWO

Ask a Fund Manager

The Motley Fool chats with fund managers so that you can get an insight into how the professionals think. In part two of this edition, we’re joined by Grant Nichols, fund manager of the $2.4 billion Centuria Office REIT (ASX: COF), Australia’s largest listed pure-play office real estate investment trust (REIT). Today, Nichols explains two tailwinds the office market could receive from rising inflation.

The Motley Fool: In the first part of our interview, you mentioned that uncertainty around future interest rate hikes is the biggest issue among ASX REIT investors. Have rocketing inflation and fast-rising interest rates impacted the office market dynamics already?

Grant Nichols: The direct market, not so much. Though obviously, the COF unit prices have been impacted by the outlook for interest rates.

In terms of the recent transactions that we’re seeing in the direct market, they’re still quite strong. It really hasn’t translated yet. I think you may see moderation in the amount of commercial property sales from this point for the next six to 12 months, until we get that consensus on interest rate levels I mentioned earlier.

Inflation potentially may generate some change to office markets on two fronts.

First, real estate is a very good inflation hedge. At the moment, there’s concern about rising interest rates. But potentially, investors haven’t seen that parallel to real estate offering protection from inflation. If we do get sustained inflation, that should translate to higher rents. And I think that’s where the market has not completely made this connection.

The other potential benefit from rising inflation on office markets is that it will probably wind back supply. At the moment we’re seeing a pretty dramatic increase in construction costs and interest rates. That will make future developments more difficult.

So, the economic rents that will be required to make new product will be much higher than they have been in the past. So, you probably will see a moderation in supply, which will be good for existing landlords.

MF: How do you see that playing out over the next 12 to 24 months?

GN: Like everyone else, we’re trying to gauge what the outlook is, and we look at the other economic outlooks as much as we possibly can. We’ve got our own internal Treasury team who do a lot of research on interest rates.

For FY23, we have put out a forecast of what we perceive will be our floating rate interest rate. And we have made that pretty conservative.

We’ve adopted a 3% average interest rate for FY23. Now we adopted a conservative rate, because we don’t want to see rates increase above that and to not be able to meet our forecasts. We’re hoping that interest rates may not get to that level, but we certainly have that level of protection implied.

MF: Are you adjusting your REIT’s investment and leasing strategies in the office markets with higher inflation and interest rates in mind?

GN: That’s a good question, particularly in regards to inflation.

As I mentioned previously, we haven’t seen a material change in the direct market in terms of levels or investors. But for tenants, we’re already starting to see a change in their behaviours.

If you think about construction costs, it not only impacts the supply of new buildings. There’s also an impact on tenant fit-outs. For a tenant to move in the market, if they’re going to undertake a new fit-out, it’s becoming materially more expensive than it was previously.

There are probably two impacts here.

Firstly, tenants don’t have to move. They’re probably going higher with renewals in the medium term to avoid having to undertake fit-outs. And we’re seeing tenants willing to pay a higher rent to get a better quality accommodation.

Secondly, if they are going to move, they’re probably going to look for space that already has an existing fit-out in place. Or at least a partially built fit-out. Because the most expensive component of a fit-out is joinery. So, if you just need to get furniture, you’ve got an advantage in terms of reducing that cost.

The benefits to COF, as an existing landlord with existing built office buildings, is we’re highly occupied. So that opportunity for renewal, I think, is going to be enhanced.

Also, if we do have vacant space, we generally do have fit-outs that we can revive, refurbish and repurpose, which is giving us a leasing advantage over other spaces that don’t have fit-outs in place. That’s really a key driver for tenants in the market who are considering moving. If they can reduce that fit-out cost, they will take it.

That’s something we’re doing across our portfolio, trying to re-use and re-adapt fit-outs where we can.

MF: ASX REITs are often sought out for their income certainty, with COF paying a trailing, unfranked dividend yield of 9.9%. But rising interest rates have seen share prices retrace. What are your thoughts?

GN: The uncertainty with interest rates is creating some volatility at the moment. The more important aspect is where neutral rates will end up.

From the economists we’re talking to and forecasts we’re seeing, including those from the RBA, there’s some indication that the neutral interest rate over the medium term will be between 1.5% and 2.5%. I think commercial property, generally, is going to be a really attractive proposition going forward.

If the interest rate does moderate between that 1.5% to 2.5% rate, I think the current softness in equity markets relating to REITs is completely overshooting the valuation in capital value.

A lot of REITs in the market are trading at a discount to NTA [net tangible assets]. So, if that’s where rates do moderate, I don’t think it will have the impact on valuation that the equity markets are currently pricing.

***

Tune in tomorrow for part three of our interview, where Centuria’s Grant Nichols discusses the threats and opportunities ahead for Australia’s commercial office sector. If you missed part one, you can find that here.

(You can find out more about the Centuria Office REIT (ASX: COF) here.)

The post How rising inflation can benefit ASX office REITs: fund manager appeared first on The Motley Fool Australia.

(function() {
function setButtonColorDefaults(param, property, defaultValue) {
if( !param || !param.includes(‘#’)) {
var button = document.getElementsByClassName(“pitch-snippet”)[0].getElementsByClassName(“pitch-button”)[0];
button.style[property] = defaultValue;
}
}

setButtonColorDefaults(“#43B02A”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#43B02A”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()

More reading

• This is the biggest issue for investors in ASX office REITs in 2022: fund manager
• Why did this $1.1 billion ASX 300 share just sink 9%?

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

from The Motley Fool Australia https://ift.tt/JY5v3pA

On Tuesday, the S&P/ASX 200 Index (ASX: XJO) was on form again and charged higher. The benchmark index rose 0.6% to 7,105.4 points.

Will the market be able to build on this on Wednesday? Here are five things to watch:

ASX 200 expected to rise

The Australian share market looks set to continue its winning streak on Wednesday following a decent night of trade in the United States. According to the latest SPI futures, the ASX 200 is expected to open the day 11 points or 0.15% higher this morning. On Wall Street, the Dow Jones rose 0.7% and the S&P 500 climbed 0.2%, but the Nasdaq dropped 0.2%.

Oil prices fall again

Energy producers such as Beach Energy Ltd (ASX: BPT) and Woodside Energy Group Ltd (ASX: WDS) could have a tough day after oil prices pulled back again overnight. According to Bloomberg, the WTI crude oil price is down 3.5% to US$86.51 a barrel and the Brent crude oil price has fallen 3.2% to US$92.08 a barrel. This was driven by the release of economic data that raised concerns about a potential global recession. In addition, the market is waiting to see if a deal will be reached to allow more Iranian oil exports.

CSL FY 2022 results

All eyes will be on the CSL Limited (ASX: CSL) share price this morning when the biotherapeutics giant releases its full year results. According to a note out of Goldman Sachs, its analysts are forecasting revenue of US$10,903 million, EBIT of US$3,094 million, and a constant currency net profit after tax of US$2,295 million.

Gold price lower

Gold miners Evolution Mining Ltd (ASX: EVN) and Northern Star Resources Ltd (ASX: NST) could have a poor day after the gold price traded lower overnight. According to CNBC, the spot gold price is down 0.4% to US$1,790.40 an ounce. A firmer US dollar weighed on the precious metal.

Santos first half results

The Santos Ltd (ASX: STO) share price will be one to watch on Wednesday when the energy producer releases its first half results. According to a note out of Citi, its analysts are expecting a bumper profit. The broker is forecasting a net profit after tax of US$1,333 million, which will be a massive increase from US$354 million a year earlier. This is being driven by sky high oil prices and the Oil Search merger.

The post 5 things to watch on the ASX 200 on Wednesday appeared first on The Motley Fool Australia.

(function() {
function setButtonColorDefaults(param, property, defaultValue) {
if( !param || !param.includes(‘#’)) {
var button = document.getElementsByClassName(“pitch-snippet”)[0].getElementsByClassName(“pitch-button”)[0];
button.style[property] = defaultValue;
}
}

setButtonColorDefaults(“#0095C8”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#0095C8”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()

More reading

• ‘Green premium’: What could it mean for the Vulcan Energy share price?
• Can the Macquarie share price get back over $200 this year?
• Here are the top 10 ASX 200 shares today
• Why has the Northern Star share price climbed 20% in a month?
• Are Coles shares an ASX buy ahead of the company’s earnings next week?

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended CSL Ltd. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

from The Motley Fool Australia https://ift.tt/sHhctKz

The Vulcan Energy Resources Ltd (ASX: VUL) share price has taken a battering, shedding almost 16% year to date.

But there could be new hope on the horizon for the zero-carbon lithium producer. The company says it’s developing products that may sell at a ‘green premium’ in the future.

Vulcan Energy describes the phenomenon as the market paying more for commodities produced in a low-emission environment.

The company has outlined how its products fit into the green premium paradigm. It said its zero-carbon lithium products are currently being used to slash emissions in the production of electric vehicles and lithium-ion batteries.

Vulcan Energy has embraced comments in a sustainability report published by FitchSolutions on Monday. The report states that “zero-carbon lithium products will sell at a premium compared with [lithium from] hard rock mine output”.

FitchSolutions lithium sustainability report

The report found Western nations are willing to pay more for zero-carbon lithium due to the rising urgency of implementing environmental and social governance (ESG) policies to fight climate change. It forecast this will force companies to fight for a limited supply of low-carbon materials which, in turn, will lead them to trade at premium prices.

Vulcan Energy estimates traditional lithium production methods from hard rock mines will produce approximately 1.05 billion tonnes of CO2, or 3% of the world’s estimated annual CO2 emissions, to meet the demand for electric vehicles.

Due to governmental pressures, lithium exploration companies will be forced to adopt more carbon-neutral extraction techniques in the future, the report said. It asserted Western governments are set to favour direct lithium extraction (DLE) technology as the preferred production method due to its smaller carbon footprint.

DLE, which extracts lithium from geothermal waters, has also led to exploration in areas outside conventional hard rock mining sites, the report said. It cited the Californian Energy Commission’s estimate that geothermal areas surrounding the Salton Sea in California could support 40% of the world’s lithium demand.

However, the report concludes by noting the green premium of lithium could be short-lived over the long run if exploration activities find enough of it that can be extracted via DLE techniques.

Vulcan Energy share price snapshot

Certainly, a green premium would be welcome news for the Vulcan Energy share price. It’s down almost 32% in the past 12 months.

That’s well below the S&P/ASX 200 Index (ASX: XJO) which has lost around 6.3% over the same period.

At the current share price, Vulcan Energy has a market capitalisation of $1.3 billion.

The post ‘Green premium’: What could it mean for the Vulcan Energy share price? appeared first on The Motley Fool Australia.

(function() {
function setButtonColorDefaults(param, property, defaultValue) {
if( !param || !param.includes(‘#’)) {
var button = document.getElementsByClassName(“pitch-snippet”)[0].getElementsByClassName(“pitch-button”)[0];
button.style[property] = defaultValue;
}
}

setButtonColorDefaults(“#43B02A”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#43B02A”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()

More reading

• Can the Macquarie share price get back over $200 this year?
• Here are the top 10 ASX 200 shares today
• Are Coles shares an ASX buy ahead of the company’s earnings next week?
• Here are the 3 most heavily traded ASX 200 shares on Tuesday
• Shopping Centres Australasia share price slips on FY22 results

from The Motley Fool Australia https://ift.tt/2xugi41