Category: Stock Market

At lunch on Tuesday, the S&P/ASX 200 Index (ASX: XJO) is on track to record a strong gain. The benchmark index is currently up 1.3% to 7,201.7 points.

Here’s what is happening on the ASX 200 today:

Macquarie’s record quarter

The Macquarie Group Ltd (ASX: MQG) share price is charging higher today following the release of its third quarter operational update. According to the release, the investment bank had a record quarter for the three months ended 31 December. The key drivers of its growth were its market-facing businesses, Commodities and Global Markets and Macquarie Capital. Their combined profit contribution was up “substantially” on the prior corresponding period. This is also the case on a year to date basis.

Suncorp half year results ahead of expectations

The Suncorp Group Ltd (ASX: SUN) share price is also storming higher today following the release of its half year results. The banking and insurance giant reported a net profit after tax of $388 million. While this was down 20.8% year on year, it was notably better than the market was expecting. According to a note out of Morgans, its analysts were expecting a first half net profit after tax of $300 million. Whereas the market consensus estimate was $286 million.

Nanosonics shares crushed

The Nanosonics Ltd (ASX: NAN) share price is sinking today after revealing that its sales deal with GE Healthcare in North America will be revised from today before coming to an end in June. The new sales model will see Nanosonics manage all inventory, ship, install and train the new trophon customers. These changes are expected to impact the company’s revenue by $13 million to $16 million in FY 2022. This is due to anticipated growth in the second half being deferred to FY 2023 as the transition to the new sales model is implemented. Nanosonics will also incur costs from building up its direct sales capabilities.

Best and worst ASX 200 performers

The best performer on the ASX 200 on Tuesday has been the Flight Centre Travel Group Ltd (ASX: FLT) share price with a 6% gain. This appears to have been driven by optimism over Australia’s international border reopening. The worst performer has been the Nanosonics share price with a 9% decline following its update.

The post ASX 200 (ASX:XJO) midday update: Macquarie and Suncorp impress appeared first on The Motley Fool Australia.

More reading

• Suncorp (ASX:SUN) share price spikes after ‘strong underlying momentum’ in 2021
• Why is the Nanosonics (ASX:NAN) share price crashing 16%?
• This is how we’ll know the share market has bottomed
• Macquarie (ASX:MQG) share price on watch following ‘record quarter’
• 2 ASX shares at a golden buying opportunity right now

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 Nanosonics Limited. The Motley Fool Australia owns and has recommended Nanosonics Limited. The Motley Fool Australia has recommended Flight Centre Travel Group Limited and Macquarie Group 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 Charter Hall Long WALE REIT (ASX: CLW) share price is bumping higher today, trading 1.54% in the green at $4.935 at the time of writing.

The real estate investment trust (REIT) released its half-year results for the period ending 31 December 2021 in an update today, detailing several investment highlights in the process.

As part of its progress this half, the property giant also increased its dividend by 5% on the same time last year. Let’s take a closer look.

Charter Hall share price rises as operating earnings lift 6%

The company outlined several financial and operational highlights for the period, including:

• Operating earnings of $97.8 million, or 15.31cps, up 5.6% on the prior corresponding period (pcp)
• Statutory profit of $589.6 million for the half
• Distributions of 15.24 cents per share, up 5.1% on pcp
• Net tangible assets (NTA) of $5.89, up 12.8% from $5.22 on pcp
• A $523 million net property valuation uplift – 8.3% higher than for 1H FY22.
• Balance sheet gearing of 30.8% and look through gearing of 38.1%

What else happened this quarter for Charter Hall?

During the half, Charter Hall completed $923 million of new property acquisitions. The company notes these additions enhance portfolio quality, sector diversification, and strengthen the quality and diversification of tenants.

Overall, the REIT’s property portfolio increased by approximately $1.42 billion to $6.98 billion for the half, boosted by its new acquisitions and “$532 million in property revaluation uplift”.

As a result, the company’s weighted average lease expiry (WALE) is now at 12.2 years, thereby providing long-term income security, according to the company.

Charter Hall’s property portfolio now stands at around $7 billion, up from $5.6 billion on 30 June 2021.

As well, 46% of its leases are now inflation-linked – resulting in a 3.3% weighted increase in 1H FY22 as CPI soared to multi-year highs last year.

The company also announced distributions of 15.24 cents per share, up 5.1% on the previous payment – and, importantly, well ahead of the inflation figure.

Subsequent to its progress this half, Charter Hall’s capitalisation rate has trimmed from 4.77% at 30 June 2021 to now rest at 4.38%.

Management commentary

Speaking on the announcement, Charter Hall Long WALE REIT Fund Manager Avi Anger said:

During 1H FY22 we successfully completed the acquisition of the ALE Property Group in partnership with Hostplus. This has seen us further improve the quality and diversity of CLW’s real estate portfolio and the resilience of CLW’s income through increasing our exposure to Australia’s leading hospitality operator, Endeavour Group. In addition, we further increased our exposure to the Industrial and Logistics sector with three high quality acquisitions, two of which were secured off-market. These acquisitions were a direct result of the depth of expertise and ability of the Charter Hall management platform which the REIT benefits from.

What’s next for Charter Hall?

Today Charter Hall’s board reaffirmed FY22 operating earnings per share (EPS) guidance of “no less than” 30.5 cents.

This, it says, reflects growth of no less than 4.5% over FY21’s operating EPS of 29.2 cents.

Aside from that, there was no other specific guidance provided by the REIT in its earnings release today.

Charter Hall share price snapshot

In the last 12 months, the Charter Hall share price has gained almost 5%. This year to date, it is down almost 3%.

The company has a market capitalisation of around $3.5 billion.

The post Charter Hall Long WALE REIT (ASX:CLW) just boosted its dividend. Here’s what you need to know appeared first on The Motley Fool Australia.

More reading

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Motley Fool contributor Zach Bristow 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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We are in some strange times here at the dawn of 2022. The pandemic is not over after two long years and counting. But the generous government stimulus that has walked hand in hand with the pandemic looks to be winding up. That makes investing in ASX shares all the more difficult in these strange times.

The past two years have been an interesting time to invest. We’ve seen travel shares fall and rise, and tech shares rise and fall. So how does one position an investment portfolio in 2022? Is it finally time to let go of some COVID losers (or winners)? Let’s see what some investing experts reckon.

Elston Asset Management’s Bruce Williams and Investors Mutual Limited’s Simon Conn recently joined LiveWire for a ‘Buy Hold Sell’ interview. Let’s see how these investing experts are gauging the year ahead for ASX shares.

So both experts agree that we might continue to see some heightened volatility throughout the year as stimulus ends and central banks around the world look to start raising interest rates. Mr Williams says that we are looking at a “pretty volatile period” which will “change the expectations for not only companies but what we pay for them as well”.

Mr Conn agrees, stating that we might see a “big valuation adjustment” as interest and bond rates rise, particularly among high-growth ASX shares with stretched valuations.

ASX experts: Out with ASX retail shares, in with energy and consumer staples

Williams is also avoiding consumer discretionary shares, particularly those in the retail sector:

They’ve had a period of unbelievable demand because we’d had no other choice… In our view, it meant these companies are actually over-earning… And it’s really difficult to work out what underlying demand will be going forward.

Mr Conn agrees, saying that retail shares’ margins are “looking a bit inflated” and that the “valuations don’t reflect more normal underlying running conditions for a lot of the companies in that sector.”

Instead, both Mr Williams and Mr Conn are looking to other parts of the market in 2022, especially the consumer staple and communications sectors. Mr Conn names these ASX shares as having resilient demand, pricing power and current valuation. He likes Bega Cheese Ltd (ASX: BGA) right now, as well as TPG Telecom Ltd (ASX: TPG) and Telstra Corporation Ltd (ASX: TLS).

Meanwhile, Mr Williams is eyeing off energy and healthcare shares. He names Santos Ltd (ASX: STO) as a potential winner going forward, noting its “discipline” and strong balance sheet. For healthcare shares, Williams likes Ramsay Health Care Limited (ASX: RHC) for its long-term growth prospects.

So that’s how these two investing experts are positioning their ASX share portfolios in 2022. It’s certainly a plan for a different world to the one we’ve been living in over the past 2 years.

The post Is now the time to rid your ASX share portfolio of COVID losers? appeared first on The Motley Fool Australia.

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Motley Fool contributor Sebastian Bowen owns Ramsay Health Care Limited and Telstra Corporation 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 owns and has recommended Telstra Corporation Limited. The Motley Fool Australia has recommended Ramsay Health Care Limited and TPG Telecom 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 Vulcan Energy Resources Ltd (ASX: VUL) share price has been a positive performer on Tuesday.

In morning trade, the lithium developer’s shares are up 1% to $9.11.

Where next for the Vulcan share price?

Although the Vulcan share price has rocketed materially higher over the last 18 months, one broker doesn’t believe it is too late to invest.

In fact, this broker appears to believe that Vulcan could be the best value lithium share on the Australian share market.

According to a note out of Germany-based Alster Research, its analysts have put a buy rating and $25.00 price target on the company’s shares.

Based on the current Vulcan share price, this implies potential upside of ~175% over the next 12 months.

What did the broker say?

Alster Research highlights that Vulcan has finalised its agreement with LG Energy Solution (LGES), the world’s second-largest battery maker. This will see LGES purchase between 41,000 to 50,000 tonnes of battery grade lithium chemicals over an initial term of five years from 2025.

In addition, the broker notes that Vulcan shares will be trading on the Frankfurt Stock Exchange (FSE) later this month. It expects this to be a positive catalyst.

The broker explained: “By finalizing the deal with LGES, Vulcan has now five definitive agreements with high-profile customers. We consider this as a clear sign for the high demand for battery metals from the phasing out of the combustion engine.”

“At this point, Vulcan has marketed its initial production volumes for the first 5-6 years. We expect the upcoming definitive feasibility study (DFS) to create some leeway. In the near term, we expect the admission to FSE as a catalyst for the stock, as future capital increases will be accessible to a broader audience. Thus, liquidity and interest will most likely increase. We confirm our PT of AUD 25.00, equivalent to EUR 15.81, and reiterate our BUY recommendation,” it concluded.

The post Lithium boom! Broker says the Vulcan (ASX:VUL) share price has 175% upside appeared first on The Motley Fool Australia.

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• Why Vulcan (ASX:VUL) could be a lithium share with 120% upside
• Here’s why the Vulcan Energy (ASX:VUL) share price is climbing 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 Bruce Jackson.

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The Qantas Airways Limited (ASX: QAN) share price is rising again today. This comes after its CEO Alan Joyce welcomed Australia’s border reopening, declaring the country is “finally back open for business”.

At the time of writing, the airline’s shares are up 1.66% to $5.52. This follows a 4.6% jump on Monday when it was announced Australia would be opening up to fully vaccinated international tourists from 21 February.

Let’s take a look at this week’s news.

Restarting flights

Joyce has revealed the company is looking to restart flights from more overseas countries in the near future on the back of the border announcement.

In a report in the Australian Financial Review, Joyce was quoted as saying Australia is “finally back open for business”.

We know there are lots of international tourists who want to come to Australia.

There are also a lot of business travellers who will finally be able to be in the same room as their customers or local teams after almost two years apart. This means they can now book to come here with confidence.

We will be looking at our schedules to see if we can restart flights from more international destinations sooner or add capacity to those routes we are already flying. We have the flexibility to ramp up flights in response to demand.

As Motley Fool Australia reported Monday, the Qantas share price lifted at yesterday’s open amid news the reopening could be imminent.

Prime Minister Scott Morrison confirmed international visitors would be able to return after a cabinet national security meeting on Monday.

In a statement, the Government said:

Today’s announcement will give certainty to our vital tourism industry, and allow them to start planning, hiring and preparing for our reopening. 

In 2018-19, tourism generated more than $60 billion for the Australian economy, with more than 660,000 jobs dependent on the industry.

In other news, Qantas will soon fly to Broken Hill from Sydney for the first time. The airline will fly between the destinations with a 50 seat Q300 aircraft twice a week from April.

The company has also recently announced changes to its frequent flyer program. Fewer frequent flyer points will be required to book hotels or holiday packages. Qantas’ share price gained more than 4% after this news was announced on Friday.

Qantas share price snapshot

The Qantas share price is up almost 15% in the past year and around 9% year to date. In the past week, the company’s shares have soared 14%.

For perspective, the S&P/ASX 200 Index (ASX: XJO) has returned nearly 4% over the past year.

Qantas has a market capitalisation of about $10 billion based on today’s share price.

The post ‘Open for business’: Qantas (ASX:QAN) share price lifts amid CEO’s renewed optimism appeared first on The Motley Fool Australia.

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• Why are ASX travel shares Flight Centre (ASX:FLT), Qantas and Webjet lifting off today?
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• Why is the Qantas (ASX:QAN) share price taking off this week?
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Motley Fool contributor Monica O’Shea 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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ASX shares, with only the rarest of exceptions, were hammered during the early days of the COVID-19 pandemic.

Few ASX investors will forget the 33% fall in the All Ordinaries Index (ASX: XAO) from late February through to late March 2020.

Since then, many ASX shares have rocketed back, propelling the All Ords back above pre-COVID levels.

But with international borders having remained all but shuttered, ASX tourism shares have broadly lagged behind that recovery.

But that all may be changing.

Yesterday the government reported that Australia’s international borders will reopen to all fully vaccinated travellers commencing on 21 February.

Well positioned to finally benefit

Commenting on the lifting of border restrictions and the impact on ASX shares in the tourism sectors, Alex Shevelev, senior analyst at Forager Funds Management, said:

This move continues the reopening of Australian borders to the world. Tourism operators, large and small, will now have more confidence to begin preparing for international arrivals. While the recovery will be gradual, the industry will be hoping that the initial trickle of tourists will be followed by a torrent of arrivals.

Shevelev pointed to cost cutting measures undertaken by many of the companies in the sector as potentially boosting their profit margins.

“Importantly, many operators have lowered their cost bases and will be more profitable when arrivals approach pre-COVID levels,” he said.

So which ASX shares are looking set to benefit?

According to Shevelev:

Companies like skydive and Great Barrier Reef tour operator Experience Co Ltd (ASX: EXP) … and Apollo Tourism & Leisure Ltd (ASX: ATL) have struggled through the COVID travel decimation for 2 years while working to improve their businesses. When tourists return, they will be well positioned to finally benefit.

How have these 2 ASX shares been performing?

The Apollo Tourism share price is up 47% over the past 12 months, but has fallen 17% so far in the new year.

Experience shares have gained 89% over the last 12 months and are flat so far in 2022.

As international tourists return to Australia, both ASX shares, as Shevelev says, look well positioned.

The post 2 ASX shares primed for Australia’s reopening: fund manager appeared first on The Motley Fool Australia.

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The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and has recommended EXPERNCECO FPO. The Motley Fool Australia owns and has recommended EXPERNCECO FPO. 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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Many eyes will be on the Megaport Ltd (ASX: MP1) share price tomorrow as the company releases its earnings for the first half of financial year 2022.

It will be the first chance the market has had to see, in detail, how the company’s ‘Scale Up, Scale Out’ growth strategy is advancing.

At the time of writing, the Megaport share price is $13.27, 30% lower than it was at the start of 2022. That makes it the worst performing S&P/ASX 200 Index (ASX: XJO) tech share of the year so far.

So, what might the market expect to hear from the company tomorrow? Let’s take a look.

Here’s what to look out for when Megaport reports

Owners of Megaport shares are likely anticipating the company’s earnings for the first half of this financial year, set to drop tomorrow.

They’ll follow from its financial year 2021 results. The last financial year saw Megaport deliver major boosts to its performance.

Its revenue increased 35% to $78 million, it recorded a 33% increase to its ports, and its monthly reoccurring revenue (MRR) grew 32% to $7.5 million.

However, the company recorded a net loss of $55 million for financial year 2021.

At the time, CEO Vincent English looked to the future, saying:

The Megaport mission for the coming year is to ‘Scale Up, Scale Out’. This is a commitment by everyone at Megaport to accelerate our growth and our innovation cycle to increase our lead in the network-as-a-service (NaaS) space … We will invest in revenue growth by making investments in further market expansion, product, and service innovation, and most critically, the people responsible for making Megaport the transformational technology company that is changing the way IT services are built today and tomorrow.

Unfortunately, that’s the closest thing to guidance for financial year 2022 the market got from Megaport.

Still, the strategy might be one point Megaport shareholders look for in the company’s half-year earnings tomorrow.

Since the end of financial year 2021, 2 quarterly updates have been released by the company, each showing notable growth.

It recorded 8% revenue growth for both the September and December quarters – reaching $24.6 million and $26.6 million respectively.

Its MRR also grew 14% over the September quarter and 7% over the December quarter.

However, the latter quarter’s performance disappointed some brokers.

As The Motley Fool Australia’s James Mickleboro reported, numerous brokers expected the company to post a higher investment spend and dropped their price targets for the stock when such expectations didn’t eventuate.

Such investment spend could be another metric worth seeking out in tomorrow’s announcement.

Megaport share price snapshot

Unfortunately, the Megaport share price has a long way to climb to reach its previous level.

It’s now officially lost all its 2021 gains and is trading 1.2% lower than it was this time last year.

Though, long term investors are still well and truly in the green. The Megaport share price is currently 488% higher than it was 5 years ago.

The post Own Megaport (ASX: MP1) shares? Here’s what to watch when the company reports tomorrow appeared first on The Motley Fool Australia.

More reading

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• Why has ASX tech share Megaport (ASX:MP1) tumbled 31% in a month?
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• 3 buy-rated ASX growth shares

Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and has recommended MEGAPORT FPO. The Motley Fool Australia has recommended MEGAPORT FPO. 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 Altium Limited (ASX: ALU) share price has been a positive performer on Tuesday.

In morning trade, the electronic design software company’s shares are up over 2% to $35.26.

Why is the Altium share price rising today?

The catalyst for the rise in the Altium share price on Tuesday appears to be a broker note out of Bell Potter.

According to the note, the broker has upgraded the company’s shares to a buy rating with a trimmed price target of $40.00.

Based on the current Altium share price, this implies potential upside of over 13% for investors over the next 12 months.

What did the broker say?

Bell Potter is expecting a strong result from Altium in FY 2022. In fact, it believes the company could outperform its full year guidance.

The broker explained: “There is no change in our forecasts for Altium which we last updated in early November. We continue to forecast FY22 revenue and EBITDA of US$218m and US$80m which is at the top end or slightly higher than the guidance ranges of US$209-217m and US$72-80m.”

As for the first half, Bell Potter expects Altium to report revenue and EBITDA growth of 24% and 29%, respectively, later this month.

An attractive tech share

While tech shares have fallen out of favour with investors this year, Bell Potter believes Altium remains a quality pick.

It commented: “We are obviously aware of the recent sell-off in tech but in Altium’s favour is positive earnings, no capitalising of R&D, a strong growth outlook and an expected satisfying of the Rule of 50 over the short to medium term.”

All in all, this could make the Altium share price good value at the current level according to Bell Potter.

The post Why this broker just upgraded Altium (ASX:ALU) shares to a buy rating appeared first on The Motley Fool Australia.

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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. owns and has recommended Altium. 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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Shares in Suncorp Group Ltd (ASX: SUN) have started the new year well and are up more than 8% this year to date.

That’s a substantial gain over the benchmark S&P/ASX 200 Index (ASX: XJO), itself faltering over 4% in the red during that time.

Today Suncorp released its half yearly results for the six months ended 31 December 2021. Let’s take a closer look.

Suncorp earnings slump amid higher claims costs

The bank outlined several highlights for investors during the half, including:

• Group net profit after tax was down 20.8% year on year and reached just $388 million
• Cash earnings of $361 million decreased by 29.1% over the prior corresponding period
• Responded to 19 separate weather events and more than 50,000 natural hazard claims during the half
• Natural hazard claims costs of $695 million – $205 million more than expected for the first half
• Profit in the Bank increased to $200 million and accounted for 55% of Group cash earnings
• 1H 23 cents per share dividend fully franked interim dividend

What else happened this quarter for Suncorp?

During the half, bank home lending grew by 2.7%, reflecting “credit assessment efficiency, consistent competitive offerings and improved customer and broker experiences” according to the bank.

Customer deposits also grew by 7.8% to over $44 billion during the half, underscored by at-call transaction accounts. In line with broad market expectations, net interest margin (NIM) decreased 12 basis points from 2H FY21 to 1.97%.

Furthermore, the net impact of investment markets on the result was $61 million, and was down significantly with “volatility across yields, breakeven inflation, credit spreads and equity markets across the year”.

However, the group’s profits were down substantially for the half, falling 21% behind the result recorded at this time last year.

Not only that, but cash earnings were almost 30% lower than the year prior. Both of these results stemmed from Suncorp responding to 19 separate weather events and over 50,000 separate natural hazard claims during the half.

Naturally, hazard claims costs ballooned more than $200 million over original forecasts for the half at $695 million as a result of this.

Finally, Suncorp’s operating expenses were up $42 million on the prior corresponding period to $1.4 billion. The Group attributed this to “temporary increase in spending on strategic initiatives, and higher growth-related costs with increased commissions and marketing” and hence believes the jump is a one-off.

Management commentary

Speaking on the announcement, Suncorp Group CEO, Steve Johnston said:

While we have been challenged by the La Niña climate pattern and the operational impacts of COVID-19, we continue to deliver against our strategic priorities and have good momentum as we move into the second half of
FY22. I am particularly proud of how we have supported our customers and communities during this time. Despite the many challenges of COVID-19 our teams have mobilised quickly to get our customers back on their feet”.

What’s next for Suncorp?

The company aims to deliver a growing business with a sustainable return on equity (ROE) above its cost of equity over the coming 12 months.

For instance, Suncorp notes its General Insurance business is targeting an underlying insurance trading ratio (ITR) in FY23 of between 10–12%, and a Bank cost-to-income ratio of around 50%.

The bank also gave its hazard cost guidance an upward revision. It now expects the full year outlook for natural hazard costs to sit around $1.075 billion, up from $980 million on previous allowance.

“This year will be critical for the Group as we continue to deliver on our FY23 plan and strategic initiatives” Johnston added.

“Inefficient taxes and charges built into insurance premiums are in some cases adding more than 40% to the cost of home insurance. This unfairly impacts those in higher-risk locations, and it needs to be addressed as part of a wider reform of the tax system” he concluded.

Suncorp share price snapshot

In the last 12 months, the Suncorp share price has climbed more than 14% and is now up over 8% since January 1.

This past week, it has climbed 8% and has jumped well into the green for the month as well.

The post Suncorp (ASX:SUN) share price spikes after ‘strong underlying momentum’ in 2021 appeared first on The Motley Fool Australia.

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Motley Fool contributor Zach Bristow 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 Santos Ltd (ASX: STO) share price is even in early trading on Tuesday amid the energy giant hitting near 52-week highs after gathering strength over the past 6 weeks.

At the time of writing, the Santos share price is flat at $7.55, the same as yesterday’s close.

The S&P/ASX 200 Energy Index (XEJ) is up more than 13% this year to date whereas the benchmark S&P/ASX 200 Index (ASX: XJO) is down 4.5% over the same time.

Today investors are digesting a company announcement from Santos regarding a new CO2 storage capacity deal, which could be the first of its kind. Here are the details.

What did Santos announce?

The company advised it had secured a booking of 100 million tonnes of CO2 storage resource in the Cooper Basin in South Australia.

According to Santos, this number signifies “a subset of the total prospective storage resource in the Cooper Basin” and follows a final investment decision on the Moomba carbon capture and storage (CCS) project back in November.

Santos also understands this booking is the first in the world “in accordance with the CO2 Storage Resource Management System (SRMS) sponsored by the Society of Petroleum Engineers”.

Speaking on the announcement, Santos Managing Director and Chief Executive Officer Kevin Gallagher said:

CCS is a critical technology to achieve the world’s emission reduction goals and we only have to look at current carbon prices to see how valuable 100 million tonnes of storage is.

Santos sees CO2 storage capacity as a strategic competitive advantage in evolving cleaner energy, clean fuels and carbon markets. This globally significant carbon storage capacity booking is another tangible example of Santos leading the way in establishing the foundations to support the energy transition.

Today’s announcement also forms part of Santos’ Annual Reserves Statement. At the end of 2021, proved plus probable (2P) reserves increased by 80% to 1.16 billion barrels of oil equivalent (mmboe).

Santos attributes this gain to the final investment decision on the Barossa project and the Oil Search merger.

In fact, the merger with Oil Search added 416 mmboe of 2P reserves, 819 mmboe of 2C in Papua New Guinea, and 401 mmboe in Alaska. As well, the final investment decision on Barossa added a further 373 mmboe, according to the company.

The company also advised its binding Sale and Purchase Agreement to sell a 12.5% stake in Barossa to JERA is expected to complete in 1H 2022.

Santos share price snapshot

Over the last 12 months, the Santos share price has gained more than 7%. However, this year to date, shares have powered ahead almost 20%.

Each of these returns is far ahead of the performance of the benchmark index.

Santos has a market capitalisation of more than $25 billion.

The post ‘100 million tonnes’: Santos (ASX:STO) share price steady on world-first carbon storage deal appeared first on The Motley Fool Australia.

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Motley Fool contributor Zach Bristow 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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