Category: Stock Market

The Vulcan Energy Resources Ltd (ASX: VUL) share price is pushing higher on Tuesday.

In morning trade, the lithium developer’s shares are up 3% to $9.08.

What’s going on with the Vulcan share price today?

This morning Vulcan revealed that it will become the first ASX-listed company to have a dual listing on the regulated market of the Frankfurt Stock Exchange (FSE). This follows the submission of a dual listing application last week and the receipt of approval from the German Federal Financial Supervisory Authority (BaFin) today.

As a result of this approval, Vulcan’s ordinary shares are expected to trade on the FSE under the ticker “VUL” from 15 February 2022.

Why is this a positive?

Management believes this could be a positive for the Vulcan share price as it will provide European investors with easy access to it shares. And given that its Zero Carbon Lithium Project is based in Germany, investor interest could be high.

Vulcan’s Managing Director, Dr. Francis Wedin, commented: “An ASX first, the FSE dual listing will increase the international profile of Vulcan, while providing the full range of the European investment community an opportunity to invest in the Company and the Zero Carbon Lithium Project, which has a German base and plays a role in the EU energy transition.”

“The Prime Standard has the strictest levels of governance and reporting on the FSE, including additional regulatory obligations and increased transparency requirements. The robust requirements ensure Vulcan meets the highest calibre of corporate governance,” he added.

This news is the likely to have gone down well with analysts at Germany-based Alster Research.

In a recent note, it suggested that this listing could be a positive catalyst for the Vulcan share price, which it believes is significantly undervalued.

The broker said: “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.”

The post Why is the Vulcan (ASX:VUL) share price charging higher today? appeared first on The Motley Fool Australia.

More reading

• 2 ASX lithium shares with huge upside potential in 2022
• Vulcan Energy (ASX:VUL) shares could be set for a dual listing. Here’s what you should know
• Lithium boom! Broker says the Vulcan (ASX:VUL) share price has 175% upside
• Here’s why the Vulcan Energy (ASX:VUL) share price is climbing today
• Vulcan (ASX:VUL) share price tumbles despite Italian lithium project news

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 Ansell Limited (ASX: ANN) share price is in the green on Tuesday after the company released its earnings for the first half of financial year 2022.

At the time of writing, the Ansell share price is $25.92, 0.64% higher than its previous close.

Ansell share price higher despite disappointing first half

• The company saw around US$1 billion of sales over the half year – a 7.6% increase on the prior comparable period
• Its earnings before interest and tax (EBIT) came to US$111 million – down 24.3%
• The company’s profits for the half year slipped 27% to US$77.6 million
• Ansell reported 60.6 US cents of earnings per share (EPS), representing a 26.5% drop
• Its operating cash flow came to US$22.1 million
• The company announced an interim dividend of 24.25 US cents per share – a 26% drop on its previous interim dividend

Over the 6 months ended 31 December 2021, the personal safety and protection equipment manufacturer saw its sales grow despite increased challenges.

The company’s improved EBIT margin came from sales growth and higher production volumes, as well as manufacturing efficiencies and selling, general, and administrative expenses operating leverage.

Its operating cash flow was weaker due to a drop in profitability, employee costs for financial year 2021, and an increase in working capital.

The company’s manufacturing operations in South East Asia were hit by COVID-19-induced lockdowns early in the half.

Following the lockdowns, the company found itself facing a labour shortage and logistical delays, contributing to increased backorders for some products.

Its 24.25 US cents interim dividend represents a payout ratio of around 40%, consistent with Ansell’s dividend policy.

It ended the first half with US$382.1 million in debt and US$182.9 million of cash and equivalents.

What else happened during the half?

The company’s healthcare global business unit’s sales for the first half came to US$632.1 million – 15% more than during the first half of financial year 2021. It saw organic growth in all its strategic business units.

The unit’s internally manufactured products saw volume growth.

However, its Exam/Single Use unit outsourced products’ sales volumes dropped due to increased supply and third parties apparently reducing inventory levels.  

The healthcare global business unit’s EBIT fell 36.6% over the half, with margins dropping 820 basis points to 10.1%.

Selling high-cost inventory from outsourced suppliers at lower margins, COVID-19 related manufacturing disruptions, higher freight costs, and the company’s share of loss from Careplus joint venture were key drivers for EBIT margins’ fall.

Meanwhile, Ansell’s industrial global business unit saw US$377.1 million of sales over the half – 2.8% lower than the prior comparable period.

The business’ Mechanical unit grew 3.2% while its Chemical unit’s growth slumped 10.9%.

What did management say?

Ansell managing director and CEO Neil Salmon commented on the half year just gone, saying:

Ansell’s [financial year 2022] first half results were delivered in a challenging external environment…

Even in this challenging and complex operating environment we have made significant progress against the most important longer-term drivers of value creation. We are seeing strong interest in new products that address important unmet safety needs, we are winning new customers for our more differentiated product lines, and we are seeing continued strong growth in emerging markets.

Sales growth was encouraging across most of our portfolio as we successfully executed on our long-term strategic plans.

Surgical and Life Sciences grew above market rates showing the benefit of some important new business wins.

Mechanical achieved respectable growth in a mixed industrial demand environment, delivering very strong results in emerging markets and success with new products.

What’s next?

As market watchers might have noticed, Ansell dropped its financial year 2022 guidance late last month to the detriment of its share price.

It now expects to provide between 125 US cents and 145 US cents of EPS for financial year 2022.

That assumes sales growth for its Industrial and Surgical and Life Sciences businesses for the second half due to higher production and a seasonal sales increase.

It also assumes that the company’s Exam/Single Use unit will see a drop in sales in the second half but that its prices will stay above pre-COVID-19 levels.

Finally, it assumes outsourced supplier costs will continue to fall.

Ansell share price snapshot

The Ansell share price has tumbled into 2022.

It has fallen 21% year to date. The drop can mostly be attributed to the 14% plunge experienced after the company downgraded its guidance.

The Ansell share price is also 32% lower than it was this time last year.

The post Ansell (ASX:ANN) share price gains despite profits tumbling 27% in ‘challenging’ half appeared first on The Motley Fool Australia.

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• These were the worst performing ASX 200 shares last week
• Down 20% in 2022, is the Ansell (ASX:ANN) share price a bargain buy?
• Why Amcor, Ansell, Block, and Credit Corp shares are sinking today
• Ansell (ASX:ANN) share price falls again amid broker upgrade
• How will ASX shares perform this earnings season? Experts explain what to look for

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. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Ansell 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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This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

What happened?

Today’s price action in the crypto world has been relatively muted, following the highly anticipated “Crypto Bowl,” which saw many cryptocurrencies take center stage at yesterday’s Super Bowl. Two of the key tokens investors were watching on the advertising slate were Dogecoin (CRYPTO: DOGE) and Crypto.com (CRYPTO: CRO) Coin. Unfortunately for investors, as of 12:20 p.m. ET, these tokens were down 3.9% and 5.8%, respectively.

Dogecoin initially ran higher heading into the Super Bowl, with fans expecting some sort of positive announcement from McDonald’s about the potential for Dogecoin to be accepted as payment. This speculation was spurred by previous tweets between the iconic fast-food franchise and Dogecoin supporter Elon Musk. However, no such announcement came.

For Crypto.com Coin, an ad featuring LeBron James piggybacked on a previous partnership initiative for Web3 development education. That said, investors appear to have wanted to see more.

Metaverse-related crypto project The Sandbox (CRYPTO: SAND) also sunk 1.3% over the past 24 hours as of 12:20 p.m. ET, as investors shrugged off a high-profile partnership announcement with Hong Kong-based entertainment resort developer Ocean Park.

So what?

This year’s Super Bowl has been often referred to as the “Crypto Bowl” in a similar fashion to the “Dot-Com Bowls” of the past. Investors looking for exciting speculative catalysts were watching eagerly yesterday, looking to trade these tokens, which happen to be open for trading 24/7.

For a number of tokens such as Dogecoin, a lack of news flow, despite various teases that suggested a crypto partnership with McDonald’s could be in the books, took this token on a volatile ride lower immediately during the game. Crypto.com Coin followed suit, while other high-risk, high-upside cryptocurrencies like The Sandbox dipped in sympathy before recovering most of these losses.

The bar was seemingly set very high for these cryptocurrencies, with any sort of previously priced-in enthusiasm being sucked out of the market in short order.

Now what?

The price action for these three tokens has been interesting to watch over the past 24 hours. Specific tokens that saw outsized hype heading into yesterday’s game have underperformed many other top cryptocurrencies, which are actually trending higher today. As a matter of fact, the entire crypto sector has moved 0.9% higher over the past 24 hours, as of 12:20 p.m. ET.

Thus, perhaps the rotation away from more speculative, catalyst-driven tokens into more stable, “established” cryptocurrencies is still underway. It’s also unclear as to whether investors believe that sustained hype can drive valuations of certain meme tokens higher on a consistent basis, as in previous rallies last year. 

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post What did ‘Crypto Bowl’ ads do for these tokens? appeared first on The Motley Fool Australia.

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• 2 reasons Shiba Inu and Dogecoin are soaring this weekend
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Chris MacDonald 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.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

Payment and digital banking company Block (NYSE: SQ) has struggled over the past several months, falling nearly 60% from its all-time highs as of Monday’s prices. Investors have soured on the stock, flocking to more defensive companies; meanwhile, tech giant Apple‘s (NASDAQ: AAPL) decision to launch iPhone payment terminals, becoming a direct competitor with the Square seller ecosystem, could be making sentiment worse.

A company’s path is not always smooth or straightforward, and understanding the difference between fundamental problems and temporary distractions is key to identifying good buying opportunities. Is Block a broken stock or a broken company? Here are three key points to consider when considering Block shares.

1. Digital banking through Cash App

When boiled down to its most simple form, Block’s business makes it simple to move money between people and merchants. For merchants, the seller ecosystem has grown from a payment terminal into an all-in-one hardware and software package that merchants can use to run their businesses.

However, Cash App has emerged on the consumer side; what started as a simple app for peer-to-peer payments, like “Hey, send me $10 for pizza last night,” has steadily involved into a feature-rich app capable of handling the majority of your financial needs. Users can now deposit checks, buy stocks and Bitcoin (CRYPTO: BTC), and order the Cash Card, a debit card that draws from your Cash App balance, like any bank card.

In its most recent quarter, Cash App generated $512 million in gross profit, a 33% year-over-year increase. The company focuses on gross profit instead of revenue because Bitcoin trade volume inflates revenue but adds almost no gross profit to the business. According to data tracking company App Annie, Cash App’s momentum appears strong; it was a top 10 smartphone app in the US in 2021.

Cash App is disrupting banking, creating digital tools for its users to manage their money. Block benefits from lower customer acquisition costs because there are no buildings to manage or staff to pay. Traditional banks still control most consumer wealth, but Block’s younger users could mean more market share for the company over time. It opened the app up to users aged 13-17 in 2021.

2. Square seller ecosystem versus Apple

Apple made headlines by announcing that merchants could soon use their iPhones as payment terminals, but how much of a threat is this to Block? Nobody will know for sure until it plays out over future quarters, but I suspect it won’t be as significant a threat as one might think.

Consider the value that the Seller ecosystem has today. The payment terminal itself is a small piece of the value that Block has built. Frankly, it’s not the payment terminal that’s the secret sauce. Instead, it’s the many tools Block offers through the Seller platform, including point-of-sale, inventory management, marketing, gift cards, loyalty programs, banking, and more.

There’s so much that the ecosystem can do that it probably doesn’t make sense for many merchants beyond the most basic to leave it in favor of Apple’s payment terminal. Apple could always prove otherwise, and perhaps its tap-to-pay gains serious traction, but I’m willing to give Block the benefit of the doubt for now.

3. Afterpay could drive growth moving forward

The negativity surrounding Block has washed away much of the positivity around its acquisition of buy now, pay later company Afterpay, which recently closed. Block’s wasted no time rolling out features, including adding buy now, pay later features to its Seller ecosystem and plans to integrate it with Cash App too.

Afterpay already had roughly 98,000 merchants on its platform, selling to more than 16 million active users. Sales on Afterpay, the value of transactions on the platform, grew 102% to $22.4 billion in 2021, generating $693 million in net revenue for the company. Afterpay also gives Block more international exposure; the company has a large footprint in Australia, North America, and a presence in the United Kingdom.

According to Allied Market Research, the buy now, pay later industry could grow more than 40% per year to reach nearly $4 trillion in transaction volume by 2030. Afterpay gives Block direct exposure to this growth, both as a stand-alone buy now, pay later business and as a tool for bringing potential new users into the Seller and Cash App ecosystems.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post 3 things the doubters could be missing about Block shares appeared first on The Motley Fool Australia.

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Justin Pope has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and has recommended Block, Inc and Bitcoin. The Motley Fool Australia has recommended Apple. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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As I type this, two blokes are trying to fix my home air conditioning.

Now, thankfully, it’s a pretty wet summer, and the temperatures at my place have been mild this year.

So there’s that.

But for the past week or so, we’ve been without cooling or heating.

Yes, definitely a first world problem, so no complaints.

And I’m less temperature-sensitive than many, perhaps most.

Still, it’s better when the aircon works, and not just because the family is happier.

I don’t yet know the full extent of the problem, but – and call me a genius if you want – I did notice that part of the problem was that one of the ducts had a gaping hole in it.

I know… Sherlock Holmes eat your heart out.

And yet, when I got the blokes out to fix it, I also asked them to check the system over closely, because I’m not convinced that it was working properly, even when the ducting was okay.

I’d offer to update you when I know more… but I’m going to guess that few of you are actually interested.

Fair enough.

In fact, I don’t much care, either… as long as it works.

But I’m going to suggest that such a hands-off approach probably isn’t great.

Waiting until your car engine seizes before getting a service is an expensive automotive habit.

Waiting for the heart attack before getting a little exercise and improving your diet is, well, suboptimal.

And if you’re one of those people who waits for the ‘low fuel’ light to come on before looking for a servo… Well, I hope that habit doesn’t get you in trouble if you’re out of the city at the time!

An ounce of prevention, as they say, is worth a pound of cure. (Or, in metric terms, a gram and a kilogram, respectively… but imperial just does it better, for some reason.)

Which reminds me – as most things tend to, eventually – of investing.

To be clear, I generally prefer the ‘set and forget’ style of investing.

Too much attention and activity will, for most people, most of the time, cause more problems than it solves.

If you can’t leave well enough alone, how do you expect compounding to help you?

Sure you ‘can’t go broke taking a profit’… but – as a budding vegetable gardener – you wouldn’t pull the tomato plant out after the first fruit ripens, either.

Which isn’t to say that you should just ignore your portfolio, though.

Or the rest of your financial life.

How long since you really reviewed your portfolio, to make sure you were happy with the companies you owned?

No, not whether the share price had gone up recently.

No, not whether other people agreed with you.

But whether your expectations for the company’s future were still intact.

How long has it been since you reviewed how much you were saving and spending?

When did you last check to see if you could #getabetterrate on your mortgage?

Your mobile phone? Internet?

When did you last compare insurance providers for your car? Home? Contents?

They are the financial equivalent of getting the car serviced.

Sure, you can get away with it, for a while.

And sure, your finances might not come to a shuddering, permanent, halt without regular attention.

But isn’t it likely that you’ll be in a better place if you give them a little care and attention?

Maybe you can save a few bucks on your internet. Perhaps you’ll get 0.1% or 0.2% off your mortgage rate. And you might find that a little attention on where you spend your money will help you save a little more, too.

Add that up, then invest it well, and you’ll be surprised what you might be able to amass over a decent amount of time. Invest it well, and that result could be multiples of what you save.

Turns out, in the time I’ve taken to write this, we have a verdict on my aircon.

4 pressure switches and the printed circuit board need replacing. And the drain is blocked.

Hopefully, that’ll give me a better outcome, temperature-wise, and probably save me a few bob in electricity and gas as a result.

How’s your aircon?

But, more importantly, how efficiently is your financial life running?

Why not take 15 minutes to see if you could get things running more smoothly.

After all, the improvements in my aircon will be welcome.

But they won’t get better and better, over time.

Your financial position, however – if you invest the savings – could well get better and better, over time, thanks to the wonders of compounding.

Tomorrow will be better, if I can get the aircon fixed.

But the benefits of fine-tuning my financial life will be felt for years and decades to come.

I dare say the same will be true for you. And isn’t that worth a little effort?

I think so.

Fool on!

The post Are you sure you’re on the right financial track? appeared first on The Motley Fool Australia.

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Motley Fool contributor Scott Phillips 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 possibility of a Russian invasion of Ukraine has triggered anxious shivers into share markets and bond yields.

The presence of more than 100,000 military personnel along the border has sent a signal to the US and its allies that Vladimir Putin is not mucking about. 

Financial markets are worried obviously because war itself would be damaging, but heavy economic sanctions against Russia could also cause major upheaval.

However, one expert reckons the flagship cryptocurrency, Bitcoin (CRYPTO: BTC), will flourish if fighting breaks out in eastern Europe.

Money that can’t be confiscated

According to DeVere Group chief executive Nigel Green, “serious geopolitical risks” are bringing to light the real-life usefulness of cryptocurrencies.

“Research shows that Bitcoin donations are flooding into Ukrainian non-governmental organisations and volunteer groups,” he said. 

“The crowdfunding activities are, say experts, being used to equip the Ukrainian army with military and medical supplies.”

Cryptocurrencies like Bitcoin are hosted on the blockchain, which removes centralised administration and provides anonymity.

So funds sent that way are less likely to be confiscated by unfriendly authorities.

“Meanwhile, Ukraine’s adversary, Russia, is planning to regulate cryptocurrencies, with crypto legislation, including tax standards, expected as soon as next week,” said Green.

“Both these rivals know that Bitcoin and cryptocurrencies can circumnavigate traditional financial institutions that might block transactions — as in crypto there’s no central authority that can block payments.”

An example of the advantages of decentralisation was demonstrated on the other side of the world last week.

Canada, like in Australia, saw a ‘Freedom Convoy’ protest against COVID-19 vaccination requirements.

A crowdfunding page to support the trucker protests was pulled down by the host site GoFundMe, citing lack of accountability in how the funds would be used.

“But, in response, crypto enthusiasts set up a crowdfunding campaign on the platform Tallycoin as an alternative way to raise money for the protestors.”

So why has the Bitcoin price crashed?

Despite these bullish tailwinds, the value of Bitcoin has plunged more than 10% this year, and about 35% since November.

“This was triggered by a wider risk-off sentiment that also impacted many areas of global stock markets,” said Green.

“Stock markets, like the crypto market, never move in a straight line, there are always peaks and troughs. Yet history teaches us that the long-term trajectories are predictable for both: they go up.”

Green has previously espoused Bitcoin as an excellent store of value due to its programmatically enforced limited circulation of 21 million.

He added that the tense Ukraine situation has now highlighted to mainstream investors another of crypto’s best attributes.

“Geopolitical issues this week have tested its other core values of being a viable decentralised, tamper-proof, ‘unconfiscatable’ monetary system,” said Green.

“These real life use cases will further increase Bitcoin’s mass adoption and lead to higher prices this year.”

The post How a war in Ukraine could send the Bitcoin price skyrocketing appeared first on The Motley Fool Australia.

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Motley Fool contributor Tony Yoo owns Bitcoin. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and has recommended Bitcoin. The Motley Fool Australia owns and has recommended Bitcoin. 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 BHP Group Ltd (ASX: BHP) share price will be one to watch this morning.

This follows the release of the mining giant’s eagerly anticipated half year results.

BHP share price on watch after beating expectations

• Revenue from continuing operations up 27% to US$30,527 million
• Total revenue up 32% to US$33,784 million
• Underlying EBITDA up 46% to US$21,381 million
• Underlying EBITDA from continuing operations up 33% to US$18,463 million
• Underlying profit from continuing operations up 57% to US$9,715 million
• Free cash flow from continuing operations of US$8.5 billion
• Record fully franked interim dividend of US$1.50 per share

What happened during the first half?

BHP was on form during the first half and delivered a 27% increase in revenue US$30,527 million and a 57% jump in underlying profit to US$9,715 million. Management advised that this reflects higher sales prices across its major commodities, near record production at WAIO and higher concentrate sales at Spence, and favourable exchange rate movements.

This was partially offset by the impacts from planned maintenance across a number of assets, the expected copper grade decline at Escondida, significant wet weather at Queensland Coal, and inflationary pressures. The latter includes higher fuel, energy and consumable prices.

BHP’s performance was impacted by COVID-19 once again. In fact, management estimates that it took a US$223 million pre-tax hit from COVID. This comprises US$69 million associated with lower volumes and US$154 million from direct costs.

This couldn’t stop BHP from generating significant free cash flow during the first half, which has allowed the board to declare a record fully franked US$1.50 per share interim dividend. At current exchange rates and the latest BHP share price, this dividend alone equates to a 4.4% yield. This also represents total dividends of US$7.6 billion and a 78% payout ratio.

How does this compare to expectations?

Management commentary

BHP’s Chief Executive Officer, Mike Henry, was pleased with the half.

He commented: “BHP had a strong first half. We achieved our third consecutive fatality free calendar year. We mitigated the impacts of COVID-19 and significant adverse weather events to turn in a solid operational performance, particularly from our flagship Western Australian Iron Ore business.”

“We have announced an interim dividend of US$1.50 per share, bringing total shareholder returns to more than US$22 billion over the past 18 months. Our record interim dividend was supported by our reliable operating performance and continued strong markets for a number of our products.”

“We have made strong progress on the execution of our strategy. We unified the BHP corporate structure with strong support from shareholders, we announced and advanced the proposed merger of our petroleum business with Woodside, we progressed our divestments of certain coal assets and we announced the final investment decision for our Jansen Stage 1 potash project. We have also secured further growth options in future facing commodities. BHP is well positioned for the future. We are building on our strong foundations and capital discipline to reshape our business and grow long-term value for shareholders and other stakeholders,” he concluded.

Outlook

BHP has warned about industry wide inflationary pressures that are steepening operating cost curves.

Management explained: “Many commodity-linked uncontrollable costs have moved noticeably higher, in some cases to record highs. Labour costs have increased materially due to localised shortages of both general and skilled workers. This partly reflects regulatory constraints on movement across international and state borders.”

“We expect cost headwinds due to supply bottlenecks to remain challenging in the 2022 calendar year, with only tentative signs of easing by the end of the period. As the actual recognition of costs tends to lag developments in prompt pricing, these pressures are expected to continue to impact on our cost base in the following calendar year.”

Nevertheless, full year unit cost guidance for WAIO and Escondida remains unchanged. Whereas unit cost guidance for Queensland Coal has been increased, reflecting lower expected volumes for the full year as previously announced.

The post BHP (ASX:BHP) share price on watch after earnings beating and record dividend 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. 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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Could the APA Group (ASX: APA) share price offer investors defensive earnings and reliability?

With a market capitalisation of $11.7 billion, APA is one of the larger businesses in the S&P/ASX 200 Index (ASX: XJO).

What does APA do?

It is the operator of 15,000km of natural gas pipelines that connect sources of supply and markets across mainland Australia. APA operates and maintains networks connecting 1.4 million Australian homes and businesses. It supplies half of Australia’s natural gas usage.

But it owns more than just gas pipelines. It owns, or has interests in, gas storage facilities, gas-fired power stations and renewable energy generation. Those renewable energy sources are wind and solar farms.

Does it generate reliable cash flow?

If a business’ cash flow is consistent then it may be able to offer lower volatility with the APA share price and also reliable distributions.

Not only can APA claim to have stable cash flow, but it can also point to growing cash flow. In a recent presentation, APA said that it has “stable business operations, solid cashflow with positive leverage to increasing inflation.”

APA’s policy when it comes to the distribution is to have a payout ratio of between 60% to 70% of free cash flow, whilst fully funding maintenance capital expenditure. This also supports the appropriate level of funding for organic growth capital expenditure.

But APA isn’t just waiting on its existing assets to deliver growth. It’s regularly investing in new projects, which can help grow the cash flow and distribution.

Growth projects

APA says that it has a growing organic pipeline of $1.3 billion over the next three years, which could be a boost for the APA share price.

For example, on the gas side of things, it’s investing up to $270 million on the East Coast grid expansion, increasing the winter peak capacity by up to 25% through a two-staged expansion. Another investment is the Northern Goldfields Interconnect, costing up to $460 million, which is a new 580km pipeline that increases capacity to the Goldfields region.

But it’s also investing in the energy transition. For example, it’s working on the Mica Creek Solar Farm in Mount Isa. The investment is around $150 million. Stage two of the project comprises 44MW of additional solar power generation, for a cost of around $70 million.

APA also recently acquired an interest in the Basslink debt. Basslink is the business that operates the 370km high voltage electricity connector between Victoria and Tasmania. It’s the only one connecting Tasmania and mainland Australia. It provides two-way access to 500MW of electricity. It’s “critical” for the export of Tasmania renewable energy to the Australian mainland.

The business is looking across Australia and the US for opportunities to invest in electricity generation and transmission opportunities.

Another thing that could impact the APA share price in the coming years is if APA is able to convert some of its pipelines to carrying hydrogen. The Parmelia hydrogen project is exploring the viability of the pipeline to transport hydrogen.

APA distribution

APA is planning to pay a distribution of $0.53 per unit in FY22, translating into a yield of 5.3% at the current APA share price.

The post Is the APA (ASX:APA) share price an attractive buy for reliability? appeared first on The Motley Fool Australia.

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Motley Fool contributor Tristan Harrison 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 APA Group. 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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Ask A Fund Manager

The Motley Fool chats with fund managers so that you can get an insight into how the professionals think. In this edition, Capital H Management founder and chief executive Harley Grosser reveals a pair of small-cap ASX shares his funds are loving at the moment.

Investment style

The Motley Fool: How would you describe your fund to a potential client?

Harley Grosser: Capital H is a small- and micro-cap specialist. We have two funds at Capital H, both of which are small-cap focused. 

Inception Fund is our flagship fund. The focus is on investing in undervalued quality growing companies with good quality management teams. And we take high-conviction positions in that fund and generated comfortably north of 30% per annum after fees now for the almost 4 years it’s been running.

The active fund is our second fund. We started that in March of last year and the strategy there is to focus on finding companies that we can add value to i.e. being active in. So there’s various ways we can do that, but generally, it’s in a friendly activist style. That’s our fund that we allocate any investment positions that we think we can be active in the company to add value for shareholders.

Biggest convictions

MF: What are your two biggest holdings?

HG: I thought I’d give you one of each — largest holding in each fund.

So Inception Fund’s largest holding is Environmental Group Ltd (ASX: EGL). It’s actually been listed on the ASX since the 1970s, so it’s been around for a long time. 

We just think that its time has come. A bit of a cliche, but we think that’s true.

So EGL’s portfolio businesses are involved in, basically, protection of the environment — things like improving air quality, reducing carbon emissions and removing waste. So of those core businesses, we think they’ll do around $4 million of EBIT this year, which we think is positive. 

It is a growing cash flow positive business, but what’s most exciting for EGL is their PFAS removal technology. 

We actually got out to visit their plant in Melbourne earlier this year. They released their first order of trial results late last year in December, which the market viewed as very positive. And on the site visit, I think we were most impressed just by the simplicity of the technology, which we think improves their odds of successful commercialisation.

Then most importantly, the management team is A grade. They’ve done it before at Tox Free — a lot of the institutional fund managers know of [chief executive] Jason [Dixon] and his team, and the stock looks good value to us. So we’d expect it to do well this year.

MF: It was listed in the 1970s?

HG: It actually listed in 1977. It was founded, I think, in the 1920s.

It’s funny how often that happens in micro caps though. Companies list a long time ago, then they reinvent themselves. They go nowhere then it’s sort of their time. 

For a company that focuses on improving the quality of the environment in a number of different ways, it’s pretty easy to see that now is kind of their time.

MF: And the biggest holding in the active fund?

HG: So the biggest position in the active fund is a company called ARC Funds Ltd (ASX: ARC). For this one, I do need to disclose I’m the managing director. We sit on the board.

So ARC Funds are a listed multi-affiliate boutique funds management group. So think like Pinnacle Investment Management Group Ltd (ASX: PNI), but a smaller version. 

We take equity stakes in emerging funds management talent, and then we provide them with the infrastructure, the services and the distribution that they need to succeed to build these successful growing profitable funds management businesses. 

We actually released on the ASX this morning an update that Magnum Funds, which our fixed income manager had secured $35 million of commitments for, it’s soon to be launched [as an] active ETF. 

And our other manager, Merewether, launched their fund in November last year. [It] has raised about $5 million of funds and has performed very strongly over the last few months, which was a pretty rough few months for equity investors. 

We’ve got an exciting pipeline there of new managers and products — and we think it should be, if we do our job right, it should be a good year.

The post 2 ASX shares loved by expert who averages 30% return per year appeared first on The Motley Fool Australia.

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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. owns and has recommended PINNACLE FPO. The Motley Fool Australia owns and has recommended PINNACLE 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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Although the outlook for interest rates is becoming increasingly positive, it is still likely to be some time until rates are at a sufficient level for income investors.

In light of this, ASX dividend shares could be the best option for them for a little while to come. But which dividend shares could be top options?

Two to consider are listed below. Here’s what you need to know about them:

Adairs Ltd (ASX: ADH)

The first ASX dividend share to look at is this furniture and homewares retailer. Its shares are trading far closer to their 52-week low than high right now after a disappointing first half trading update.

However, it is worth noting that this was driven by COVID lockdowns, which led to Adairs losing almost a third of its trading days during the half. On a like for like basis and adjusted for closures, its sales were up 2.7% year on year.

The team at Morgans don’t believe now is the time to throw in the towel. The broker believes the sell down of Adairs shares was overdone and has created a buying opportunity. So much so, it has put an add rating and $3.70 price target on its shares.

As for dividends, it is forecasting fully franked dividends of 19 cents per share in FY 2022 and 26 cents per share in FY 2023. Based on the current Adairs share price of $3.11, this will mean yields of 6.1% and 8.4%, respectively.

South32 Ltd (ASX: S32)

Another ASX dividend share to look at is this mining giant. It has been tipped to generate strong free cash flow and reward shareholders handsomely in the coming years.

This is being underpinned by its exposure to a number of in-demand commodities such as aluminium and the recent acquisition of a stake in the Sierra Gorda copper mine in Chile.

Analysts at Goldman Sachs expect this to allow South32 to pay fully franked dividends that equate to yields of greater than 10% over the next five years.

The broker also sees decent upside for the South32 share price. It has a conviction buy rating and $5.00 price target on the miner’s shares. This compares to the current South32 share price of $4.53.

The post Analysts tip these ASX shares to offer huge fully franked dividend yields appeared first on The Motley Fool Australia.

More reading

• 2 quality ASX dividend shares to buy next week
• Here are the 3 most heavily traded ASX 200 shares this Friday
• Why Motley Fool analyst Drew Flowers thinks now is a great time to furnish your portfolio with Adairs (ASX:ADH) shares
• These 3 ASX energy shares just hit 52-week highs
• Why is the South32 (ASX:S32) share price surging to all-time highs 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. owns and has recommended ADAIRS FPO. The Motley Fool Australia owns and has recommended ADAIRS 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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