Category: Stock Market

Key Points

• PlaySide Studios shares lift following another record performance
• All-time high revenue of $5.36 million, up 71% pcp
• Management experts strong pipeline of releases in FY22

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The PlaySide Studios Ltd (ASX: PLY) share price is heading north today following the company’s latest trading update for FY22.

At the time of writing, the video game developer’s shares have accelerated to 99.5 cents, up 3.65%.

What’s driving PlaySide Studios shares higher?

Investors are buying up PlaySide Studios shares after the company reported a robust performance for the second-quarter of FY22.

According to its release, PlaySide Studios advised it has achieved record quarterly unaudited commercial revenue of $5.36 million. This represents an increase of 71% over the corresponding period (pcp), and a 33% improvement quarter-on-quarter (QoQ).

Management credited the company’s original IP business which registered $3.3 million in revenue, a growth of 53% on pcp. First development revenue for Age of Darkness: Final Stand and initial revenue from the Dumb Ways to Die portfolio primarily contributed to the result.

The work for hire business continued its growth trajectory with $2.08 million in revenue, up 112% on pcp and 57% QoQ. The key achievements included signing a major strategic agreement with 2K Games and a material new contract with Shiba Inu Games.

In line with its growth plans, PlaySide Studios is continuing to invest in its game development roadmap. The investment in original IP titles across mobile, PC & console platforms is expected to provide a strong pipeline of releases in FY22.

The company declared $33.01 million in cash reserves, representing an increase by $23.67 million for the quarter. It is worth noting though that the bulk of the positive movement comes from a net $26.7 million placement and share purchase plan.

What did management say?

PlaySide Studios CEO, Gerry Sakkas commented:

PlaySide continues to deliver strong results with another record quarter of revenue, building on a strong start to FY22. Our Original IP business continued to track extremely well with development revenue generated from Age of Darkness: Final Stand and games revenue from our Dumb Ways to Die acquired portfolio being recorded for the first time.

Additionally, highly anticipated title Legally Blonde entered soft launch during the quarter and is tracking strongly towards commercial launch in Q4 FY22.

PlaySide Studios share price snapshot

Over the past 12 months, PlaySide Studios shares have gained 150%, but are down by more than 10% year-to-date.

Based on today’s price, PlaySide Studios commands a market capitalisation of roughly $138.52 million, with approximately 144.29 million shares outstanding.

The post PlaySide Studios (ASX:PLY) share price climbs on record revenue appeared first on The Motley Fool Australia.

More reading

• 2 growing small cap ASX shares to watch
• Playside Studios (ASX:PLY) share price rockets 18%. What’s going on?
• 2 exciting ASX tech shares that actually jumped last month

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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Key points

• The Ansell share price is down more than 20% on Monday
• First half earnings are expected to be significantly impacted due to COVID-19 demand dwindling
• A US customs order brings disposable glove supply to a halt
• Full year guidance has now been revised lower

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The Ansell Limited (ASX: ANN) share price is falling off a cliff following the release of a trading update.

In morning trade, shares in the protective personal equipment manufacturer are down 20.4% to $24.90. After opening, the company’s share price touched a new 52-week low of $23.85.

Ansell share price sinks on disappointing first half earnings

Investors are applying selling pressure to the Ansell share price on Monday morning after checking out the company’s latest trading update.

The details contained in the release relate to the half-year ended 31 December 2021. While the official first-half results are expected to be released on 15 February 2022, today’s announcement gives shareholders a fair idea of what those numbers will look like.

According to the release, Ansell expects to deliver FY22 first-half sales of US$1,009 million. Notably, this represents an increase of 7.6% compared to the prior corresponding period. However, as we run further through the financials we’ll see this is the full extent of positive news.

Preliminary numbers suggest Ansell will report earnings before interest and tax (EBIT) of US$111 million. In addition, earnings per share (EPS) is slated to come in at 61 US cents for the half. Disappointingly, these metrics are down 24.7% and 26.4% respectively from the previous year’s first half. Unsurprisingly, the Ansell share price is struggling on this news.

According to Ansell, margin compression is a result of COVID-19 related operational challenges and softer demand in the exam/SU division.

Additionally, the company’s outsourced finished goods experienced a lower volume of sales as customers opted to reduce inventories prior to ordering more.

Other factors hurting business during the half included higher freight and labour costs; as well as manufacturing shutdowns. Although, higher costs were partially dealt with through passing on price increases to customers.

What else?

Investors could be responding negatively to Ansell’s other portion of today’s update. Regarding manufacturing and supply, the company has been witnessing an increase in COVID-19 cases at its manufacturing facilities. Because of this, the Malaysia facility had to shut down completely last week.

Meanwhile, on 28 January 2022, the United States Customers and Border Protection issued a withhold release order against YTY Industry Holdings Sdn Bhd (YTY). This company is a major supplier of exam/SU gloves to Ansell.

The order means ASX-listed Ansell will be unable to import its disposable gloves into the US while the order stands. At this stage, YTY is working with the necessary parties to show that its operations are free of forced labour practices.

Lastly, Ansell provided a guidance update today to allow for disruptions to YTY supply. As a result, the company now expects FY22 EPS to be between 125 cents to 145 cents. This is compared to the previous range of 175 cents to 195 cents.

The Ansell share price is now down ~37% in the last 12 months following today’s update.

The post Ansell (ASX:ANN) share price crashes 20% as guidance slashed appeared first on The Motley Fool Australia.

More reading

• 2 ASX shares that could be buys for both growth and dividends

Motley Fool contributor Mitchell Lawler 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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Key points

• ASX dividend shares could be useful for income, particularly after the recent drop in the market
• Adairs is an expanding homewares and furniture retailer that is priced cheaply and expected to pay a big dividend
• Soul Pattinson is an investment conglomerate that has the longest-running streak of dividend growth

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The ongoing ASX share market volatility may present income-focused investors with the ability to buy ASX dividend shares at a cheaper price and with a higher dividend yield.

When share prices fall, it means that the prospective dividend yield is larger for new investors.

Whilst there’s more to consider about a business than just its yield, it could be a useful time to consider these two ASX dividend shares:

Adairs Ltd (ASX: ADH)

Adairs is one of Australia’s leading retailers of furniture, homewares and furnishing.

It’s currently rated as a buy by a few different brokers including UBS and Morgans. Their most recent thoughts came after the recent trading update which was for the period where there were lockdowns and supply chain impacts affecting the business.

However, UBS reckons that these impacts are only short-term problems and the business can come through the problems. Store trading days were reduced by around 31% in the 26 weeks ending 26 December 2021. Stock flow from Asia remains inconsistent because of factory and shipping capacity disruptions across the region. It has faced challenges with its own supply chain with its new distribution centre and workforce shortage.

However, the ASX dividend share has plans to grow profit in a number of ways with its national distribution centre which is expected to reduce, upsizing selected stores, expanding its range, adding to its omnichannel capabilities and integrating Focus into the business.

Morgans thinks the Adairs share price is valued at 8x FY23’s estimated earnings with a projected FY23 dividend yield of 12.4%.

Washington H. Soul Pattinson and Co. Ltd (ASX: SOL)

Soul Pattinson is a very old investment conglomerate which has been listed for over 100 years, though it started off as just a pharmacy business. It has paid a dividend every year since 1903.

The business has built a diversified portfolio of assets that, combined, provide the ASX dividend share with a fairly consistent and defensive source of investment income.

Some of its investments includes listed businesses like: TPG Telecom Ltd (ASX: TPG), Brickworks Limited (ASX: BKW), New Hope Corporation Limited (ASX: NHC), Pengana Capital Group Ltd (ASX: PCG), Pengana International Equities Ltd (ASX: PIA) and Bki Investment Co Ltd (ASX: BKI).

Soul Pattinson also has unlisted investments including resources, agriculture, financial services and swimming schools.

It has managed to grow its dividend every year since 2000, which is the record for consecutive years of dividend increases.

The company is steadily diversifying its portfolio away from its main, long-term investments. Soul Pattinson is looking at opportunities like the energy transition, global shares, education, health and ageing, ‘real assets’, financial services and agriculture.

Soul Pattinson has a trailing grossed-up dividend yield of 3.3%.

The post Are these 2 ASX dividend shares buys in February 2022? appeared first on The Motley Fool Australia.

More reading

• Why analysts are bullish on these 2 ASX dividend shares
• Broker says Adairs (ASX:ADH) share price is cheap after selloff
• Is the Brickworks (ASX:BKW) share price a smart buy in this volatility?
• Why Adairs, Bigtincan, Regis Resources, and Telix shares are sinking
• 2 cheap ASX shares that value investors could love

Motley Fool contributor Tristan Harrison owns Pengana International Equities Limited and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and has recommended ADAIRS FPO, Brickworks, and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia owns and has recommended ADAIRS FPO, Brickworks, and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia has recommended 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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A Queensland man is facing up to a decade in jail after pleading guilty to 2 charges relating to insider trading of an ASX-listed company.

Jin Xi Li of Caloundra, Queensland appeared in the Brisbane District Court to plead guilty to one charge of trading while in possession of inside information.

He also pleaded guilty to a charge of getting his wife to trade while holding inside information.

Traded just before PanAust shares popped after acquisition

The charges related to copper producer PanAust Limited (ASX: PNA).

Back in 2015, the company was wholly acquired by Guangdong Rising HK (Holding) Limited and subsequently delisted from the ASX.

But just before this became public knowledge on 30 March 2015, Li is accused of buying 390,000 PanAust contracts for difference (CFDs) over a period of 8 days.

Li also allegedly bought a further 265,000 CFDs under his wife’s name over 5 days.

The CFDs that Li and his wife bought were linked to the share price of PanAust.

After the acquisition was announced, Li and his wife’s trading brought them a windfall of about $343,000.

Long court case could end with 10 years’ jail

The maximum penalty for insider trading is currently 15 years imprisonment. However, at the time of Li’s offences, a maximum of 10 years applied.

Li will face Brisbane District Court again on 28 February for sentencing.

The Australian Securities and Investments Commission originally started its investigations after its surveillance team identified suspicious trading.

The Li case has been through the courts since 2017.

The post Man faces 10 years’ jail for making $343,000 from insider trading appeared first on The Motley Fool Australia.

More reading

• Are these 2 ASX dividend shares buys in February 2022?
• Pilbara Minerals (ASX:PLS) share price races higher after strong lithium prices offset potential guidance downgrade
• Origin (ASX:ORG) share price lifts amid APLNG’s 33% revenue boost
• Want to be a millionaire investor? Consider this Warren Buffett pick
• Here’s why the Vulcan Energy (ASX:VUL) share price is climbing today

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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Key points

• Pilbara Minerals had a disappointing quarter for production and shipments
• FY 2022 guidance likely to be downgraded with half year results
• But very strong lithium prices are offsetting this disappointment

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The Pilbara Minerals Ltd (ASX: PLS) share price is starting the week strongly following the release of its second quarter update.

At the time of writing, the lithium miner’s shares are up 4% to $3.35.

What happened during the second quarter?

For the three months ended 31 December, Pilbara Minerals reported production of 83,476 dry metric tonnes (dmt) of spodumene concentrate.

This was down 2.7% quarter on quarter and fell short of the downgraded guidance range of 85,000 to 95,000 dmt given with just 10 days of the quarter remaining on 21 December. Management advised that this was due to the extended outages at both the Ngungaju and Pilgan plants in the latter part of December.

It further explained that the key impacts being experienced relate principally to manning levels for increased contract mining, construction, and improvement projects, as well as delays in sourcing additional labour and equipment for plant shutdowns and repairs. It notes that these issues are being widely experienced across the entire Western Australian resources sector.

During the quarter, Pilbara Minerals shipped 78,679 dmt of spodumene concentrate, which was down 14% quarter on quarter.

In light of the above, management has warned that it is reviewing its FY 2022 guidance for production of 400,000 to 450,000 dmt and shipments of 380,000 to 440,000 dmt.

Finally, in respect to costs, Pilbara Minerals reported a unit operating cost of US$587 per dmt at the Pilgan operation. While this is higher quarter on quarter, it is largely due to higher royalties linked to significantly higher selling prices.

Strong lithium prices

It wasn’t all doom and gloom during the second quarter. One highlight was the sky high prices that Pilbara Minerals is commanding for its lithium. The release explains that the average prices received in the December quarter were in the range of approximately US$1,750 per dmt to US$1,800 per dmt on a CIF China SC 6.0 basis. This was at the top end of its guidance range of US$1,650 to US$1,800 per dmt.

It gets better. Management revealed that indicative pricing for the third quarter under existing offtake contracts is expected to be in the range of US$2,600 to US$3,000 per dmt on a CIF China SC6.0 basis.

Judging by the Pilbara Minerals share price performance today, this news appears to have offset the disappointment of a potential production and shipments downgrade next month.

Further details, including its FY 2022 guidance, will be provided with its half year results next month.

The post Pilbara Minerals (ASX:PLS) share price races higher after strong lithium prices offset potential guidance downgrade appeared first on The Motley Fool Australia.

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• 5 things to watch on the ASX 200 on Monday
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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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Key points

• The Origin share price opened 0.18% higher this morning at $5.53
• The rise is gaining momentum after the release of the company’s report for the December quarter
• Over the quarter, the company’s integrated gas business was boosted alongside energy commodity prices while its gas sales dropped 17%

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The Origin Energy Ltd (ASX: ORG) share price is trading in the green this morning amid the release of the company’s results for the December quarter.

At the time of writing, the Origin share price is $5.60, 1.27% higher than its previous close.

Let’s look at the highlights of the company’s latest results:

Origin share price rises on $555m of APLNG revenue

• APLNG’s production increased 2% and its revenue boosted 33% quarter-on-quarter
• As of 31 December, Origin has received $555 million from the venture this financial year
• Origin’s electricity sales increased 2% quarter-on-quarter
• Its gas sales volumes dropped 17% on the prior comparable quarter’s

The company’s integrated gas business was boosted last quarter. Australia Pacific LNG (APLNG) – an incorporated joint venture between Origin, ConocoPhillips, and Sinopec – saw its production increase 2% on that of the September quarter.

The venture’s commodity revenue also increased 33% quarter-on-quarter, driven by 3 spot cargos capturing record spot LNG prices and higher realised oil prices. Though, a drop in short-term contract volumes saw its domestic revenue fall last quarter.

APLNG’s year-to-date revenue is also 91% higher than it was at the end of 2020’s December quarter.

Origin received $555 million of cash from APLNG over the 6 months to December.

Origin’s realised gas price last quarter was $13.29 a gigajoule, comprising an average LNG price of US$11.80 per million British thermal units and an average domestic price of $6.33 a gigajoule.

In energy markets news, the company’s electricity sales volume increased 2% on that of the previous comparable quarter.

A 10% increase in business volumes – partly offset by COVID-19 impacts – was weighed down by a 6% drop in retail volumes due to cooler weather and, again, COVID-19.

The average National Energy Market spot electricity price for the quarter was $57.50 per megawatt hour.

That was down from $66.10 per megawatt hour in the prior quarter, but up from $43.80 per megawatt hour in the prior comparable quarter.

Meanwhile, Origin’s gas sales volumes fell 17% on that of the December 2020 quarter. Gas sales to generation also fell 39% quarter-on-quarter.

What else happened in the December quarter?

Last quarter also saw plenty of asset movement from the company.

The Origin share price fell when it announced it’s acquiring WINconnect for $42.2 million post-tax. Purchasing WINconnect is expected to see Origin with another 87,000 customers.

Additionally, APLNG joint venture partner ConocoPhillips purchased a 10% stake in the venture from Origin for $2.21 billion. Origin will continue to be APLNG’s upstream manager.

In exploration news, drilling of the Velkerri 76 S2-1 well – located in the Beetaloo Basin in the Northern Territory – was completed last quarter. Its preliminary results indicate the Velkerri shales are within the wet gas maturity window.

Meanwhile, in the Canning Basin in Western Australia, drilling at the Rafael 1 well indicated liquids-rich gas potential in a conventional reservoir.

What did management say?

Origin CEO Frank Calabria commented on the company’s quarterly results, saying:

Australia Pacific LNG has continued its strong performance and was able to benefit from the substantial increase in oil and spot LNG prices and favourable currency movements, helping to drive a large increase in revenue compared to the prior year.

In Energy Markets, a cooler start to summer and reduced economic activity owing to continued lockdowns in the two most populous states meant the December quarter was subdued. Prices across the National Energy Market were lower in this period, as a consequence of fewer unplanned baseload outages and increased renewable generation.

What’s next?

Those keeping an eye on the Origin share price have plenty to look forward to.

Origin’s acquisition of WINconnect is set to be finalised in the first half of 2022 and the company is expected to drop its results for the first half of financial year 2022 on 17 February.

It’s also analysing core samples from the the Velkerri 76 S2-1 well and is planning to begin a production test at the Rafael 1 well in the current quarter.

Origin share price snapshot

So far, the Origin share price has been gaining in 2022.

The company’s stock is currently trading for 5.33% more than it was at the end of 2021. It has also gained 16.67% since this time last year.

The post Origin (ASX:ORG) share price lifts amid APLNG’s 33% revenue boost appeared first on The Motley Fool Australia.

More reading

• Why are ASX 200 energy shares tumbling on Tuesday?
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• The Origin (ASX:ORG) share price has hit 6 52-week highs in 2022. Here’s why
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• Why is the Origin (ASX:ORG) share price hitting new highs today?

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 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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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.

Investing can make you rich if you do it right. Perhaps the best example of this is Warren Buffett who has become a billionaire largely through a series of sound investments.

The good news is, anyone can follow Buffett’s advice and have a very good chance of building substantial wealth for themselves over time. In particular, there’s one solid investment that carries very low risk that Buffett recommends and that’s all but certain to leave you with a seven-figure nest egg if you invest enough money in it.

Here’s what it is. 

This Warren Buffett recommendation can pay off for you

Although Buffett has made his fortune by selecting individual stocks (and companies) to invest in, his recommendation for most investors is not to follow in his footsteps. Instead, he suggests the majority of people are better off putting most of their money into one single investment: an S&P 500 index fund. 

The S&P 500 is a stock index commonly used as a measure of how the market as a whole is doing. The index consists of 500 of the country’s largest companies and is weighted by market capitalization. Market capitalization is calculated by multiplying the total number of shares times the price per share, so this means that companies with higher valuations have an outsized impact on the performance of the index as whole.  

Because the S&P 500 is intended to track the performance of these 500 large companies, with larger companies making a bigger impact, its performance is determined by how well America’s biggest businesses do over time. And that’s one big reason why Buffett recommends this index for most investors. He’s made clear he’d never bet against the American economy, and these companies are the driver’s of it.

Why bet big on the S&P 500?

An S&P index fund has a number of huge advantages for investors. Those who put their money into an S&P 500 index fund don’t have to individually analyze dozens or hundreds of companies to decide which ones to buy stock shares in. Instead, their purchase of the index fund gives them a small ownership stake in a huge number of companies that are household names.

The companies that make up the S&P 500 are also diverse, ranging from Apple (NASDAQ: AAPL) to Harley-Davidson (NYSE: HOG) to Caesars Entertainment (NASDAQ: CZR) to Kohl’s (NYSE: KSS). So not only are you investing in established businesses, but you’re also benefiting from instant diversification with the purchase of one simple investment. This instant diversification reduces investing risk and is another reason why Buffett’s recommendation is a solid one for most people. 

Investors who follow Buffett’s advice will also benefit from low investing fees. Fees are low because no one has to manually select the stocks included in an S&P 500 index fund, as the fund’s composition is simply determined by each company’s inclusion in the S&P 500 and its valuation.

Low fees mean investors get to keep more of their returns and their portfolio balance isn’t reduced by paying a professional fund manager to individually select investments.

Is this investment really likely to make you a millionaire?

While it’s clear there’s plenty of benefits to investing in an S&P 500 index fund, the big question is, can you really build a seven-figure nest egg with a single investment that isn’t going to outperform the market? 

The answer is an unequivocal yes. The S&P 500 has consistently produced average 10% annual returns over the long term. So if you invest just $506 per month over 30 years in an S&P index fund, you’ll almost certainly hit your $1 million goal. And the more you invest, the faster you can reach that milestone. 

If you want a safe, simple, hands-off investment that requires no effort on your part to make you a millionaire, buying into this Buffett pick is a no-brainer. 

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

The post Want to be a millionaire investor? Consider this Warren Buffett pick appeared first on The Motley Fool Australia.

More reading

• Origin (ASX:ORG) share price lifts amid APLNG’s 33% revenue boost
• Here’s why the Vulcan Energy (ASX:VUL) share price is climbing today
• Broker upgrade sends ResMed (ASX:RMD) share price charging higher
• Here’s what higher interest rates could mean for ASX bank shares
• Sezzle (ASX:SZL) share price higher after reporting 75% Q4 sales jump

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 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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Key Points

• Vulcan Energy shares lift on back of new lithium supply deal
• Up to 50,000 metric tonnes of lithium chemical to be provided to LG Energy Solution
• Vulcan Energy has sold out its entire planned lithium production for the first five years of operation

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The Vulcan Energy Resources Ltd (ASX: VUL) share price is edging into positive territory today. This follows the company announcement that it has teamed up with a future eco-friendly energy powerhouse.

At the time of writing, the clean lithium developer’s shares are fetching for $9.01 apiece, up 2.04%. Despite today’s slight gain, its shares have fallen 11% in the past month.

Vulcan Energy secures another partner for its Zero Carbon Lithium Project

In today’s statement, Vulcan Energy advised it has signed a binding lithium hydroxide offtake agreement with LG Energy Solution (LGES).

Founded in 2020, LGES is the second largest battery maker in the world, holding over 20% market share. The storage battery manufacturing company supplies its products to leading Original Equipment Manufacturers (OEM) worldwide.

Currently, LGES manufactures lithium-ion batteries in Poland, the US, China, and South Korea, and is seeking to expand production capacity.

Under the deal, LGES will purchase between 41,000 to 50,000 metric tonnes of battery grade lithium chemicals from Vulcan Energy.

The agreement will last for an initial period of five years and can be extended by a further five years. Commercial delivery of the battery-making ingredient is expected to begin in 2025.

In terms of pricing, this will be based on the ongoing market price for lithium hydroxide.

Vulcan is aiming to become the world’s first lithium producer with net zero greenhouse gas emissions. Its Zero Carbon Lithium Project is seeking to produce a lithium-hydroxide chemical product for the European electric vehicle battery market.

Vulcan managing director, Dr Francis Wedin commented:

Our initial partnership with LG Energy Solution, the second largest battery producer in the world, was a significant first step in our strategy to engage with tier one battery, cathode and automakers in the European market.

The completion of the binding lithium offtake agreement with LG, in addition to our binding lithium offtake agreements with Volkswagen Group, Stellantis, Renault Group and Umicore, represents a globally unique achievement by the Vulcan Zero Carbon Lithium team. It means that we are fully sold out for the first five years of planned lithium production, which is an important foundation toward securing project finance.

Vulcan Energy hare price snapshot

Over the last 12 months, the Vulcan Energy share price has risen by more than 10% for shareholders. The company’s shares reached an all-time high of $16.65 in September, before moving on a downward channel.

Based on today’s price, Vulcan commands a market capitalisation of around $1.16 billion with approximately 131.61 million shares on issue.

The post Here’s why the Vulcan Energy (ASX:VUL) share price is climbing today appeared first on The Motley Fool Australia.

More reading

• Vulcan (ASX:VUL) share price tumbles despite Italian lithium project news
• Here’s why the Vulcan Energy (ASX:VUL) share price is powering ahead today
• 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
• How the Vulcan (ASX:VUL) share price almost quadrupled in 2021

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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Key points

• ResMed shares have been upgraded by Goldman Sachs
• Broker wasn’t blown away by its second quarter update
• Analysts see enough long term potential to make it a buy

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The ResMed Inc (ASX: RMD) share price is charging higher on Monday.

In morning trade, the sleep treatment focused medical device company’s shares are up 3% to $32.17.

Why is the ResMed share price charging higher?

Investors have been bidding the ResMed share price higher today following the release of a bullish broker note.

According to a note out of Goldman Sachs, its analysts have upgraded the company’s shares to a buy rating with a slightly trimmed price target of $35.80.

Based on the current ResMed share price, this implies potential upside of 11% for investors over the next 12 months.

Why is Goldman bullish on ResMed?

Goldman notes that ResMed’s second quarter update was a bit of a disappointment. Not only did its revenue and earnings fall a touch short of the broker’s estimates, Goldman’s concerns about the impact of supply shortages on the company’s ability to capitalise on a competitor recall were only heightened.

Goldman said: “The 2Q22 update did little to ease our concerns that supply shortages will materially restrict the near-term upside from competitor challenges. The recall tailwind of $45-55m in 2Q represented a sharp sequential slowdown from $80-90m in 1Q, and we now forecast the FY22 benefit at $285m, below the guided range of $300-350m.”

Nevertheless, the broker notes that the ResMed share price has pulled back recently to a more attractive level. This, combined with its bullish view on the company’s long term prospects, warranted an upgrade to buy.

The broker explained: “RMD is the clear leader in an attractive market with long-term, realizable penetration upside (underpinning a high-single digit organic profile). Competitive positioning has consistently strengthened over the last decade and looks set to continue to do so. The pricing profile is the most supportive in years, and whilst the ongoing supply/distribution headwinds add cost and complexity to near-term performance, these pressures should progressively ease through the coming quarters, and so have created an attractive entry point in the shares, in our view.”

The post Broker upgrade sends ResMed (ASX:RMD) share price charging higher appeared first on The Motley Fool Australia.

More reading

• 5 things to watch on the ASX 200 on Monday
• Why AnteoTech, Newcrest, Nitro, and ResMed shares are falling
• ASX 200 (ASX:XJO) midday update: ResMed and PointsBet disappoint
• ResMed (ASX:RMD) share price on watch after Q2 update disappoints
• 5 things to watch on the ASX 200 on Friday

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended ResMed Inc. 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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Key points

• ASX bank shares are in the spotlight amid rising rate expectations
• Higher rates help banks’ lending margins
• Higher rates could also depress mortgage lending markets

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ASX banks shares are in the spotlight as investors are increasingly convinced that the Reserve Bank of Australia (RBA) will follow the US Fed and begin ratcheting up the official cash rate.

Atop the cash rate likely rising from the current historic low of 0.10%, analysts also are flagging an unwinding of the RBA’s bond buying – or quantitative easing (QE) – program.

If you own ASX bank shares, or are thinking of investing, here’s what the prospect of higher rates could mean for the likes of Commonwealth Bank of Australia (ASX: CBA), Australia and New Zealand Banking Group Ltd (ASX: ANZ), National Australia Bank Ltd (ASX: NAB), and Westpac Banking Corp (ASX: WBC).

What these experts are saying on rate rises

On the plus side for ASX bank share prices, higher interest rates tend to increase banks’ lending margins. But that benefit could be impacted by higher rates dragging on new lending in mortgage markets. And then there’s the looming end to government pandemic funding benefits.

Commenting on the potential impact on ASX banks shares, Citigroup analyst Brendan Sproules said (quoted by the Australian Financial Review):

Despite a better short-term rate outlook over the next two years, revenue challenges will remain as the unwinding of COVID-related funding benefits (11 basis points), as well as continued mortgage competition (19 basis points), will consume much of the deposit margin benefit…

Higher rates will invariably lower borrowing capacity and pressure the housing market.

While housing market lending could take a hit, Sproules was bullish on the outlook for business lending. “System credit growth will also benefit from accelerating business credit, which we estimate will print 7.5 per cent in financial year 2022 as under-leveraged businesses gear up,” he said.

Jarden analyst Carlos Cacho also thinks ASX bank shares could be battling some headwinds in the year ahead.

According to Cacho (quoted by the AFR):

While 2022 is likely to be a solid year for the Australian economy, we expect it to be a tougher one for the banks – margin pressure, while fading, is set to remain, while credit growth is likely near its peak and mortgage competition remains intense…

Looking ahead, we still expect margin compression but see scope for moderating pressure given support from the repricing of fixed-rate mortgages, higher swap rates and moderating funding cost tailwinds.

Cacho added that he sees “the business-oriented banks” – ANZ and NAB – as “better placed in managing margin contractions in financial year 2022”.

How have these ASX bank shares been performing in 2022?

The S&P/ASX 200 Index (ASX: XJO) is down 6.77% so far in 2022.

By comparison, the NAB share price has fallen 4.13%; the CBA share price is down 5.28%; ANZ shares have lost 0.15%; and Westpac is down 3.37%.

Not exactly shooting the lights out, but all the ASX bank shares are beating the benchmark…so far.

The post Here’s what higher interest rates could mean for ASX bank shares appeared first on The Motley Fool Australia.

More reading

• What to expect from the NAB (ASX:NAB) Q1 update next month
• NAB (ASX:NAB) is the only Aussie bank on this international list of 7,000 companies. Here’s why
• Top broker sees 43% upside for the Westpac (ASX:WBC) share price
• Own CBA (ASX:CBA) shares? Here’s what the big bank reported this week
• Are these beaten down ASX 200 shares now too cheap to ignore?

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

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