Category: Stock Market

The Lovisa Holdings Ltd (ASX: LOV) share price is climbing again this morning after rocketing on Thursday. Yesterday’s surge came on the back of the company’s impressive FY22 first-half results, in which it also declared a monster dividend for shareholders.

The fashion jewellery retailer’s shares surged to an intraday high of $21.25 on Thursday, before settling back to $18.50, up 11.78% at market close. This morning, its shares are up 6.05% to $19.62 at the time of writing.

Late last year, the Lovisa share price hit an all-time high of $23.07 after the company received a positive broker upgrade.

Below we take a look at Lovisa’s latest financial performance and its huge interim dividend for investors.

What’s the deal with the Lovisa dividend?

In the half-year report for the 2022 financial year, Lovisa reported double-digit growth across key metrics.

In summary, revenue increased by 48.3% to $217.8 million over the previous corresponding period. 

Despite being impacted during the first quarter by temporary store closures across a number of markets, comparable store sales momentum continued. This resulted in equivalent store sales up 21.5% on H1 FY21, with 42 new stores opened during the period.

Overall, net profit after tax (NPAT) rose to $36.7 million, a lift of 70.3% compared to $21.5 million in the prior year.

Based on Lovisa’s robust performance, the board declared a 30% franked interim dividend of 37 cents per share. This represents an 85% increase from the 20 cents declared in the prior comparable period.

Management noted that the latest dividend reflects the strong cash outcome and balance sheet position for the first half.

Lovisa ended the calendar year with $52.7 million of net cash and no debt.

When can Lovisa shareholders expect payment?

While it’s a number of weeks away, Lovisa will pay the interim dividend to eligible shareholders on 21 April.

However, to be eligible, you’ll need to own Lovisa shares before the ex-dividend date which falls on Tuesday 8 March. This means if you want to secure the dividend, you will need to purchase Lovisa shares by Monday 7 March at the latest.

It is worth noting that on the ex-dividend day, the share price traditionally falls in proportion to the dividend amount.

And, in case you are wondering, the company is not offering a dividend reinvestment plan (DRP) to shareholders.

The post The Lovisa (ASX:LOV) dividend jumped 85%. Here’s what you need to know appeared first on The Motley Fool Australia.

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• Why Cimic, Lovisa, NextDC, and Nine shares are charging higher
• All that glitters: Lovisa (ASX:LOV) share price skyrockets 20% on high-profit earnings
• 3 buy-rated ASX growth shares
• 2 compelling ASX growth shares that are now great value: brokers

Motley Fool contributor Aaron Teboneras 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 Lovisa Holdings Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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As Russian troops stamp in uninvited to another sovereign nation, the thoughts of Australians are with the people of Ukraine.

The current generation has lived in relatively peaceful times as far as nation-to-nation invasions go, so this development is distressing.

As I write this article, the Russian military is expected to take over the Ukrainian capital Kyiv in a matter of hours.

While acknowledging the horrible human toll of what’s happening in eastern Europe, experts have been calculating what impact war could have on stock investments.

Their opinions could surprise you.

Shares are historically resilient

Montgomery Investment Management chief investment officer Roger Montgomery is horrified by the developments in Ukraine.

“I detest armed conflict,” he posted on the Montgomery blog.

“War should be avoided at all times and not prompted by immature despots, seeking acclaim they can only take to their grave.”

However, analysing past military conflicts show they didn’t wreak permanent damage to stock portfolios.

“Investors would be wise not to sell into the fear and weakness but instead, remember that there have been dozens, if not hundreds, of conflicts in the past and the stock market has survived,” said Montgomery.

“This of course is not to diminish the very real suffering at the hands of tyrants and dictators, which democratic allies should pull all stops to prevent.”

Montgomery recalled the outbreak of World War I when the NYSE was shut down on 1 August 1914 to prevent a liquidity calamity.

The exchange ended up, incredibly, closed for 4 months.

“It must have seemed grim for stock market investors, especially for anyone with capital tied up and locked down,” said Montgomery.

“After the stock market reopened in 1915, however, the Dow Jones Industrial Average (INDEXDJX: .DJI) rose more than 88%.”

In fact, 1915 ended up boasting the highest annual return for the Dow.

“From the start of World War I in 1914, until its end in 1918, the Dow Jones rose 43%, or about 8.7% annually.”

Even the most catastrophic global events and stock losses can be recovered rapidly, according to Ritholtz Wealth Management director Ben Carlson.

“From the start of World War II in 1939 until it ended in late 1945, the Dow was up a total of 50%, more than 7% per year,” he said. 

“The relationship between geopolitical crises and market outcomes isn’t as simple as it seems.”

Remember, investing is for the long term

Switzer Financial founder Peter Switzer is reminding his clients that investing is for the long haul.

“They’re supposed to be patient long-term investors aiming for average returns of 7% or 8% a year over a decade,” he wrote on SwitzerDaily.

“A good portfolio can do that, despite the fact some years they could fall by 15% or even 20%… Then they can boom by 22% in a year, which was the case for lots of our clients after the coronavirus crash of the stock market resulted in a big rebound for stocks.”

Knowing that historically a rebound is to follow, Montgomery suggested investors to buy during uncomfortable times.

“It has, indeed, been wise, historically, to invest at the depths of the conflict when fear was at its extreme.”

The post What happens to stock markets when war breaks out? appeared first on The Motley Fool Australia.

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• 2 reasons the Nasdaq has led the market lower in 2022

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 Bruce Jackson.

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The Woolworths Group Ltd (ASX: WOW) share price has fallen 6.1% this year, hitting a 52-week low of $33.45 in late January.

At Thursday’s market close, Woolworths shares finished the day up 0.03% to $35.69.

The S&P/ASX 200 Index (ASX: XJO) has also shed 6.1% over the same time frame. Inflationary issues with incoming rate hikes and geopolitical tensions between Russia and Ukraine have likely contributed to the downfall.

Nonetheless, Woolworths released its half-year results for FY22 on Wednesday, with its share price pushing higher despite a softened performance.

Below we consider if it’s worth investing in the retail conglomerate’s shares for its latest interim dividend.

Woolworths recent dividend history

Since this time last year, Woolworths has paid total dividends to shareholders of $1.08 per share. This consists of FY21’s interim dividend of 53 cents per share and the final dividend of 55 cents per share.

Based on the current Woolworths share price, this translates to a dividend yield of around 3.23%. And this doesn’t include that all its dividends are fully franked which is an added bonus in offsetting future tax liabilities.

What about Woolworths’ latest interim dividend?

While Woolworths reported its results for the front-end of FY22, the board declared an interim dividend of 39 cents per share. Albeit, a reduction of 26.4% when compared to the prior corresponding period. This is scheduled to be paid to shareholders on 13 April. However, you must own Woolworths shares before the ex-dividend date on 3 March to be eligible for the dividend.

On a positive note, management noted that, in total, $3.2 billion is set to be returned to shareholders in FY22. This comprises $1.17 billion in dividend payments and the $2 billion off-market share buyback program completed in October 2021.

How is the Woolworths share price valued?

After the company delivered its half-year results to the ASX, a number of brokers weighed in on the Woolworths share price.

Analysts at Citi upgraded their view to “buy” from “neutral” with a 12-month price target of $40.30, up 3.3%. Based on the current share price, this implies a potential upside of almost 13%.

In addition, Jefferies also lifted its outlook on Woolworths to “buy” from “hold”, signalling a similar price of $40.00 per share, up 8.1%.

Macquarie, on the other hand, had a more bearish tone, reducing its rating by 4.5% to $38.20.

And lastly, Swiss investment firm, UBS slashed its rating by 2.9% to $34.00. This implies a 4.8% downside on the current Woolworths share price.

The post Should you buy Woolworths (ASX:WOW) shares now for the dividend yield? appeared first on The Motley Fool Australia.

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• The oil price has just hit an 8-year high. What might this mean for ASX shares?
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• These are some of the only ASX shares in the green today. Here’s why
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Motley Fool contributor Aaron Teboneras 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 Bruce Jackson.

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If you’re interested in gaining exposure to the mining sector, then the two ASX 200 shares listed below could be worth considering.

Here’s why analysts are positive on them right now:

Iluka Resources Limited (ASX: ILU)

The first ASX 200 mining share to consider is this mineral sands company. Goldman believes it could be a top option for investors due to the favourable outlook for mineral sands and its exposure to rare earths.

The broker recently explained: “We are Buy rated on mineral sands/rare earth producer ILU and add the company to our Conviction List (CL) on attractive valuation and compelling Zircon and TiO2 price upside and Rare Earth growth potential.”

“ILU is trading at a >50% discount to RE peers and >10% discount to min sands/pigment peers on an EV/EBITDA basis. Iluka recently released a larger-than-expected maiden resource on the Wimmera rare earth (RE) & zircon deposits in Victoria containing over c.1Mt of rare earth oxides (REO) and 10.6Mt of zircon. The Wimmera deposit is an important part of ILU’s rare earth growth strategy,” Goldman added.

Goldman Sachs has a conviction buy rating and $12.50 price target on Iluka’s shares.

South32 Ltd (ASX: S32)

Another ASX mining share that could be in the buy zone is South32. The team at Morgans is positive on the diversified miner.

In response to its half year results, its analysts commented: “The diversified miner is enjoying robust prices across its basket of metals, allowing it to increase its dividend, upsize its buyback and strengthen its balance sheet.”

“We see S32 as a key ex-iron ore / ex-WA mining exposure in Australia, offering investors diversified base metals exposure at an attractive multiple. [..] While ‘late to the party’, we expect S32’s share price to continue to re-rate as it completes its accretive copper acquisition and continues to enjoy cycle high FCF. We maintain our Add rating with S32 a preferred exposure in the mining sector,” it added.

The broker currently has an add rating and $4.90 price target on its shares.

The post Brokers name 2 ASX 200 mining shares to buy appeared first on The Motley Fool Australia.

More reading

• Iluka Resources (ASX:ILU) share price slips despite ‘excellent’ full-year results
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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 Bruce Jackson.

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The Appen Ltd (ASX: APX) share price was sold off on Thursday following the release of the artificial intelligence data services company’s full year results.

The company’s shares ended the day a massive 29% lower at $6.11.

This means the Appen share price is now down a very disappointing 70% from its 52-week high.

Is the Appen share price weakness a buying opportunity?

The team at Bell Potter has been running the rule over Appen’s results and has given its verdict on its shares.

Unfortunately for any investors thinking that the Appen share price could now be an absolute bargain buy, its analysts aren’t convinced and are suggesting that investors keep their powder dry for the time being.

According to the note, Bell Potter has retained its hold rating and slashed its price target by 41% to $6.75.

What did the broker say?

Bell Potter notes that Appen’s full year results fell short of expectations.

It said: “Underlying EBITDA of US$77.7m was 4% below our forecast and the low end of the US$81-88m guidance range (which Appen had previously guided to). The miss was driven by both lower revenue than forecast (US$447.3m vs BP US$455.1m) and EBITDA margin (17.4% vs BP 17.8%). Operating cash flow was down 17% to US$53.9m and the cash conversion rate decreased from 103% to 77%. The final dividend of A5.5c 50% franked, however, was in line with our forecast.”

The broker also points out that Appen is not providing guidance for FY 2022 but has provided longer term targets. And while the latter has led to Bell Potter increasing its revenue forecasts slightly, it has taken a hammer to its earnings estimates due to weaker margins.

Bell Potter explained: “We have upgraded our revenue forecasts by 2% and 5% in 2022 and 2023. Our forecast revenue growth is now in the low double digit percentages which is below the mid teens growth required to double revenue by 2026. We have, however, downgraded our underlying EBITDA forecasts by 13% and 14% in 2022 and 2023 due to reductions in our margin forecasts to around 16% in both periods.”

The post Is the Appen (ASX:APX) share price meltdown a buying opportunity? appeared first on The Motley Fool Australia.

More reading

• ASX wipes out $73 billion as Russia invades Ukraine
• Why Appen, City Chic, Flight Centre, and Life360 shares are sinking
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• ASX 200 (ASX:XJO) midday update: Appen and Life360 crushed, Flight Centre posts $188m loss
• Appen (ASX:APX) share price crashes 17% after FY21 guidance miss

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. owns and has recommended Appen Ltd. The Motley Fool Australia owns and has recommended Appen Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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There are two leading ASX growth shares revealed in this article that have been sold off.

Not only are there the terrible events in Ukraine affecting the market, but inflation and interest rates have also been a major feature in investors’ minds since the start of the year.

At the time of writing, the S&P/ASX 200 Index (ASX: XJO) has fallen 8% from the start of the year. However, just yesterday the ASX 200 dropped 3% as Russia started its invasion of Ukraine.

With the above in mind, these two ASX growth shares are two that have seen a heavy sell-off:

Altium Limited (ASX: ALU)

Altium is a leading electronic PCB software design business. During this decade, it is looking to dominate the industry and influence the sector the way the Microsoft was able to with its office software.

The Altium share price fell by over 4% yesterday and has dropped almost 30% since the start of the year.

It’s making rapid progress in transitioning its subscriber base onto its cloud offering called Altium 365, which offers a high level of accessibility and collaboration for engineers. Altium 365 now has 19,700 monthly active users (up 54%) since August and over 7,700 monthly active accounts (up 29% since August).

The recent FY22 half-year result showed a return to strong double-digit growth. Revenue rose 28% to US$102 million. Octopart – an electrical part search engine – saw revenue growth of 105% to US$22 million. Octopart was helped by the tailwinds from the global electronic parts shortage.

Annual recurring revenue (ARR) is rising quickly. It rose 43% year on year and now represents 74% of total revenue.

Margins are rising again. The underlying earnings before interest, tax, depreciation and amortisation (EBITDA) margin increased from 30.6% to 34.1% year on year. This helped operating cash flow rise 78% to US$33 million. Profit after tax grew by 38% to US$23 million.

Altium points to the growing growth of the internet of things (IoT) with a rapid rise in the number of connected devices. This is a helpful tailwind.

The ASX growth share is now expecting revenue to grow by between 18% to 20% in FY22, with ARR growth of 23% to 27%. The EBITDA margin is expected to be between 34% to 36%.

Xero Limited (ASX: XRO)

Xero is a leading cloud accounting software business.

The Xero share price dropped 5.5% yesterday. It has now fallen by 36% since the start of the 2022 year.

Some brokers, like Macquarie, are now seeing good long-term value in Xero after such a steep decline.

The business continues to grow at a fast pace. Global subscriber growth is driving the annualised monthly recurring revenue (AMRR) higher. In the first half of FY22, AMRR rose 29% to $1.13 billion thanks to a 23% rise of total subscribers to 3 million and a 5% rise of the average revenue per user (ARPU) to $31.32.

Australia saw 124,000 net subscribers to reach a total of 1.24 million subscribers at the end of the half, whilst UK subscribers saw 65,000 net additions taking the total to 785,000. The ‘rest of the world’ segment is quickly growing revenue too. South Africa is seeing “strong progress”, which is scaling from a large base of subscribers.

Xero’s gross profit margin is now 87.1%, after increasing from 85.7% in the prior corresponding period. The ASX growth share is focused on investing in product development and partnerships to help drive cloud-based software adoption. The digitisation of tax compliance is another tailwind for the business.

The post 2 top ASX growth shares that have been heavily sold off appeared first on The Motley Fool Australia.

More reading

• Analysts see huge upside potential for these beaten down ASX tech shares
• 5 things to watch on the ASX 200 on Friday
• The oil price has just hit an 8-year high. What might this mean for ASX shares?
• Even the Woodside (ASX:WPL) share price isn’t immune to today’s sell-off. Here’s why
• ASX wipes out $73 billion as Russia invades Ukraine

Motley Fool contributor Tristan Harrison owns Altium. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and has recommended Altium and Xero. The Motley Fool Australia owns and has recommended Xero. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The tech sector has come under significant pressure this year. While this is very disappointing, it could have created a buying opportunity for patient long-term focused investors.

Here are two beaten ASX tech shares that could be in the buy zone:

Life360 Inc (ASX: 360)

The first beaten down ASX growth share to look at is Life360. It is a location-based services provider based in San Francisco, United States with 33 million+ monthly active users. Its shares were sold off on Thursday following the release of its full year results, which means the Life360 share price is now down 50% in 2022.

In response to its results, this morning Bell Potter put a buy rating and $10.00 price target on its shares. This is more than double where its shares trade today. Its analysts remain very positive on the company’s future and continue to forecasts very strong growth in the coming years.

Bell Potter commented: “We have updated each valuation used in the determination of our price target for the forecast changes as well as market movements and time creep. We have also removed the premium in EV/Revenue valuation and increased the WACC in the DCF from 8.4% to 8.7% due to the uncertainty around any impact on Tile and also the potential US listing and any associated raising. The net result is a 26% decrease in our PT to $10.00 which is still a large premium to the share price so we keep the BUY.”

Xero Limited (ASX: XRO)

Another beaten down ASX growth share to look at is Xero. On Thursday, this cloud accounting platform provider’s shares dropped to a 52-week low of $91.81. When the Xero share price hit this level, it meant it was down over 40% from its highs.

One broker that is likely to see this as a buying opportunity is Goldman Sachs. Its analysts currently have a buy rating and $158.00 price target on its shares. This implies potential upside of ~70% for investors over the next 12 months.

Based on its forecasts, Goldman believes Xero will almost double its revenue and operating earnings from FY 2021 to FY 2024.

The post Analysts see huge upside potential for these beaten down ASX tech shares appeared first on The Motley Fool Australia.

More reading

• 2 top ASX growth shares that have been heavily sold off
• ASX wipes out $73 billion as Russia invades Ukraine
• 5 ASX 200 shares tumbling to 52-week lows today
• Why Appen, City Chic, Flight Centre, and Life360 shares are sinking
• ASX tech shares have been smashed today as market hits 3-week low

Motley Fool contributor James Mickleboro owns Life360, Inc. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and has recommended Life360, Inc. and Xero. The Motley Fool Australia owns and has recommended Xero. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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If you’re an income investor on the lookout for some new additions, then you may want to check out the two ASX 200 dividend shares listed below.

Here’s why these giants could be in the buy zone:

Commonwealth Bank of Australia (ASX: CBA)

The first ASX 200 dividend share to consider is Commonwealth Bank. Australia’s largest bank could be a top option due to its leadership position in the sector, the economic rebound from COVID, and the improving outlook for interest rates.

While some analysts believe Commonwealth Bank’s shares are expensive, the team at Bell Potter appear to believe they deserve to trade at a premium and continue to see value in them at the current level. So much so, the broker recently upgraded its shares to a buy rating with a $108.00 price target.

Bell Potter is positive on its outlook, it commented: “Despite the misgivings of the market and especially COVID-19’s Omicron strain, CBA sees FY22 as a strong year. The unemployment (and underemployment rate) are the lowest since 2008 and Australian household accumulated savings are stronger than ever (likewise the rate at which wage growth in anticipated). Inflation is likely to increase in due course (and that’s a good thing for all banks) while non-mining investment including infrastructure continue to hold up reasonably well. The bank has again bounced back from its lows and is on its way back to its usual top line growth potential.”

As for dividends, the broker is forecasting fully franked dividends per share of $3.87 in FY 2022 and $4.07 in FY 2023. Based on the current CBA share price of $94.71, this will mean yields of 4.1% and 4.3% respectively.

Wesfarmers Ltd (ASX: WES)

Another ASX 200 dividend share to look at is Wesfarmers. This conglomerate has one of the highest quality retail portfolios in Australia, which is supported by a range of industrial businesses and even a lithium mining operation.

The team at Morgans is positive on Wesfarmers. In response to its recent half year update, the broker retained its add rating but trimmed its price target slightly to $58.50.

It said: “Despite ongoing uncertainty in the operating environment, we think WES is well-placed to benefit when conditions improve and continue to view the stock as a core portfolio holding for long-term investors.”

In respect to dividends, the broker is forecasting fully franked dividends of $1.62 per share in FY 2022 and then $1.81 per share in FY 2023. Based on the current Wesfarmers share price of $47.75, this will mean yields of 3.4% and 3.8%, respectively.

The post Analysts name 2 ASX dividend giants to buy appeared first on The Motley Fool Australia.

More reading

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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 owns and has recommended Wesfarmers Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Domino’s Pizza Enterprises Ltd (ASX: DMP) share price has fallen heavily this week.

Since the start of the period, the pizza chain operator’s shares have lost over 20% of their value.

Why is the Domino’s share price sinking this week?

The main driver of the Domino’s share price weakness has been the release of a half year result that fell short of expectations.

In case you missed it, Domino’s reported an 11.1% increase in network sales but a 5.3% decline in underlying net profit after tax to $91.3 million. This earnings miss was driven largely by its underperformance in Asia.

Is this a buying opportunity?

The team at Morgans believe the weakness in the Domino’s share price is a buying opportunity for investors.

According to a note, the broker has upgraded the company’s shares to an add rating, albeit with a reduced price target of $115.00.

Based on the current Domino’s share price, this implies potential upside of 43% for investors over the next 12 months.

What did the broker say?

While the broker was disappointed with Domino’s performance during the first half, it remains positive on the future.

Morgans is forecasting “an 18.0% 5-year cumulative average growth rate of EPS between FY20 and FY25F.” This is expected to be underpinned by a combination of steady same store sales growth, its ongoing store rollout, and the inclusion of the new market of Taiwan.

The broker also highlights that Domino’s has the balance sheet capacity to make acquisitions that could bolster its growth.

Overall, its analysts believe the risk/reward on offer now is attractive, particularly for a company of its quality.

Morgans concluded: “DMP has de-rated substantially from a high of $165 in September last year to close at $86 today [$80.52 now]. Even after the de-rating, it remains a premium multiple stock, but in our opinion the growth potential of the business warrants this status. ROIC is set to accelerate in the years ahead. We think investors should take their opportunity to build a position in this high quality business at the current attractive entry point. We upgrade to ADD.”

The post ‘Attractive entry point’: Broker upgrades Domino’s (ASX:DMP) shares appeared first on The Motley Fool Australia.

More reading

• 5 ASX 200 shares tumbling to 52-week lows today
• Why Australian Ethical, Domino’s, Scentre, and St Barbara shares are falling
• Slow down: Why the Domino’s (ASX:DMP) share price is sinking 16%
• ASX 200 (ASX:XJO) midday update: Woolworths impresses but Domino’s crashes after earnings miss
• Domino’s Pizza (ASX:DMP) profit nosedives: how will market digest result?

Fetching Disclosure…

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The green division of Fortescue Metals Group Limited (ASX: FMG), called Fortescue Future Industries (FFI), may soon be launching a new green initiative.

Fortescue’s founder and Chair Andrew Forrest is scheduled to speak at the Queensland Media Club in Brisbane later today. According to reporting by The Australian, it is possible that a new investment in renewable energy in Queensland may be announced.

What is Fortescue Future Industries?

Fortescue says that FFI is taking a global leadership position in green energy and green technology, leading the effort to decarbonise hard-to-abate sectors.

FFI is investing to create a global portfolio of green energy projects to supply 15 million tonnes per year of renewable green hydrogen by 2030.

The green division is working on a number of initiatives to help Fortescue decarbonise as well as helping the world decarbonise in various other ways.

For example, it has recently successfully completed the first phase of studies with Incitec Pivot Ltd (ASX: IPL) to convert the Gibson Island ammonia production facility to be powered by green hydrogen. The next phase is to progress the project to a front end engineering design study to refine cost, schedule, permitting and commercial agreements.

In terms of decarbonising its operations, it has recently progressed rail decarbonisation initiatives with the arrival of two additional ‘four stroke’ locomotives for testing on a blended ammonia fuel system, and in January 2022 announced the purchase of two battery electric locomotives for delivery in 2023.

In January 2022, Fortescue announced that it had entered into an agreement to acquire Williams Advanced Engineering (WAE). WAE will be vertically integrated into Fortescue and will be managed via FFI which will utilise WAE’s critical technology and expertise in high-performance battery systems and electrification to accelerate the decarbonisation of Fortescue’s iron ore operations.

How does Queensland factor into FFI’s plans?

Queensland was the location of the first announced Fortescue Future Industries global green energy manufacturing (GEM) centre in Gladstone, Queensland. The first stage of development is an electrolyser manufacturing facility with an initial capacity of two gigawatts per annum with an investment of up to US$83 million by FFI.

The GEM will be the first in a series of centres that will “transform regional Australia through the manufacture of equipment that is critical to the generation of renewable energy and green hydrogen”. Not only will there be electrolyser manufacturing, but also wind turbines, solar photovoltaic cells, long-range electric cabling, electrification systems and associated infrastructure.

Subject to customer demand, as orders firm for both electrolysers and the associated green industry, the investment could be up to US$650 million.

The Australian reported that the theme of the media lunch in Brisbane is “Queensland’s green energy future” which will be about ways to make the state a green energy powerhouse.

The post Could Fortescue (ASX:FMG) be about to announce its next major green initiative? appeared first on The Motley Fool Australia.

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Motley Fool contributor Tristan Harrison owns Fortescue Metals Group Limited. 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 Bruce Jackson.

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