Category: Stock Market

National Australia Bank Ltd. (ASX: NAB) is the latest of the ASX banks to report its half-year earnings. NAB did just that this morning, which we covered earlier today. Although the third-largest ASX bank reported a 94.8% surge in cash earnings to $3.34 billion for the 6 months ending 31 March 2021, the market is not reacting well today. The NAB share price is, at the time of writing, down a hefty 3.14% to $26.51, well below its new 52-week high that we saw earlier in the week. That makes it by far the worst performing ASX bank today, although the other 3 have all given up some value on the markets as well. But NAB’s report also came with a dividend announcement. And since many (if not most) ASX investors hold the banks for dividend income, this will be of keen interest.

So NAB shares currently offer a trailing dividend yield of 2.26% on current pricing. That’s built off of NAB’s past two dividend payments for 2020. Unlike Westpac Banking Corp (ASX: WBC), NAB managed to fund two dividend payments last year. However, those dividends were not what investors would be used to from NAB. The bank paid an interim dividend of 30 cents per share, fully franked, in July last year. This was supplemented by a final dividend, also 30 cents fully franked, in December.

Just for some context, in 2019 NAB paid out 2 dividends of 83 cents a share. In 2018, it was 2 lots of 99 cents per share.

NAB’s got a brand new dividend

So NAB’s newly announced interim dividend for 2021 will be 60 cents per share, fully franked. It will be paid out on 2 July, with an ex-date of 14 May. 60 cents isn’t quite back up to NAB’s pre-pandemic dividend levels. But it’s also a substantial improvement on what was on offer last year.

But how much is this dividend worth to investors? Well, if we combine this new 60 cents per share payout with NAB’s previous dividend, we get an annual payment of 90 cents per share. That would equate to a trailing dividend yield of 3.4%, or 4.85% grossed-up with full franking. If we take the new payment of 60 cents per share and annualise it, NAB would offer a forward yield of 4.53% today, or 6.47% grossed-up.

That amount isn’t quite as high as what Australia and New Zealand Banking GrpLtd‘s (ASX: ANZ) newly-announced dividend is worth. But it does pip Westpac’s new payout.

On the current NAB share price, the ASX bank has a market capitalisation of $87.35 billion and a price-to-earnings (P/E) ratio of 24.4.

More reading

• ASX 200 down 0.35%; NAB half year results, Nearmap crashes on legal threat
• ANZ Bank (ASX:ANZ) share price hit by broker downgrade post results
• NAB (ASX:NAB) share price on watch after reporting $3.34bn cash profit
• 5 things to watch on the ASX 200 on Thursday
• How did the NAB (ASX:NAB) share price move today after landmark loan?

Motley Fool contributor Sebastian Bowen owns shares of National Australia Bank Limited. 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 Global Lithium Resources (ASX: GL1) share price has hit the ASX board running following the successful completion of its IPO today.

At the time of writing, the lithium developer’s shares are changing hands for 30 cents. This is 50% higher than its IPO listing price of 20 cents.

The Global Lithium Resources IPO

Global Lithium has landed on the Australian share market on Thursday after raising $10 million via a heavily oversubscribed IPO.

The Pilbara-focused lithium explorer raised the funds via the issue of 50 million shares at a price of 20 cents per share.

Combined with the remaining 81.4 million shares on issue, this gave the company a market capitalisation of $26.4 million at listing.

Following today’s strong rise in the Global Lithium share price, this has now lifted to approximately $40 million.

What is Global Lithium?

Global Lithium was established in 2018 and is aiming to become a leading Australian lithium company via the development of the Marble Bar Lithium Project (MBLP) in Western Australia’s Pilbara region.

The MBLP is an emerging lithium discovery approximately 180km southeast of Port Hedland near the town of Marble Bar.

Global Lithium has achieved significant exploration success to date through the discovery of the Archer lithium deposit. It declared a maiden JORC Inferred Mineral Resource of 10.5Mt @ 1.0% Li2O, following three successful RC drilling programs.

Its primary focus following today’s listing is to explore the MBLP and seek to grow the Archer deposit.

The release explains that management is confident that further exploration will result in an increase in the size of the Archer deposit and that the remaining MBLP project area is also highly prospective for additional discoveries.

Global Lithium’s Chair, Warrick Hazeldine, said: “It is a proud and exciting day as we list as a publicly traded Australian company and we look forward to creating shareholder value through the successful exploration of our Marble Bar Lithium Project located in the globally renowned Pilbara region of Western Australia.”

“After two years of successful exploration activities, this is a great time to bring this investment opportunity to the market. It’s a great time to be in the lithium industry and Global Lithium is one of only a handful of opportunities for investors to gain exposure to lithium via the ASX,” he added.

More reading

• Why is the Tyro Payments (ASX:TYR) share price dropping today?
• Austal (ASX:ASB) share price edges higher amid acquisition rumours
• Why the Emeco (ASX:EHL) share price is soaring 6% higher today
• ASX 200 down 0.35%; NAB half year results, Nearmap crashes on legal threat
• Broker sees upside for these ASX 200 mining shares

Motley Fool contributor James Mickleboro 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 Tyro Payments Ltd (ASX: TYR) share price is not having a great time of it today.

At the time of writing, Tyro shares have fallen 2% to $3.43 a share. That’s meaningfully underperforming the broader S&P/ASX 200 Index (ASX: XJO), which is down 0.4% today.

It’s been a topsy-turvy year for Tyro, whose shares are, on current pricing, up 2.3% year to date.

The payments company endured a short seller attack early in the year, which resulted in some share price turmoil at the time. Saying that, Tyro shares are also up 48.9% since 15 January, so any investor who took advantage of this turmoil could have done well for themselves.

So, what could be behind today’s share price fall?

Well, it’s likely to be a business update Tyro released to the markets this morning. Just before market open, Tyro released a copy of its presentation at the Macquarie Australia Conference.

This presentation contained some significant business updates for the company. Let’s go through them.

Latest update 

So Tyro gave investors some monthly transaction data for the past 6 months. Its payment volumes for April came in at $2.246 billion, which was a 147% increase on the same month last year, and a 53% increase on April 2019’s numbers.

Merchant churn for April was 10.8%, down from the 12% average for the first half of FY2020, but up from the 10.2% average for the first half of FY2021. Tyro has 943 new merchant applications for April 2021, down from the 1,072 we saw in the previous month of March.

Finally, Tyro also reported that its weekly loan originations continue to grow rapidly. Loan originations stood at $379,705 as of 7 March. But since then, they have grown almost every week, reaching a sum of $1,565,638 by the week ending 2 May.

About the Tyro Payments share price

Tyro is a disruptive company in the payments space. It offers payment facilities such as card terminals, in-app digital payment infrastructure, and the facilitation of recurring payments for businesses. It has the largest number of payment terminals in Australia behind the four big banks.

On the current share price, Tyro Payments has a market capitalisation of $1.74 billion. It is up just 1.48% since its December 2019 ASX IPO.

More reading

• Why Bubs, IDP Education, ResMed, & Tyro shares are dropping today
• The Tyro Payments (ASX:TYR) share price has gained 30% in 12 months
• Why Bubs, Carbon Revolution, Paradigm, & Tyro shares are sinking
• Tyro (ASX:TYR) share price drops despite April transaction values surging 155%
• Smartpay (ASX:SMP) share price lifts on fourth quarter trading update

Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Tyro Payments. 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.

The post Why is the Tyro Payments (ASX:TYR) share price dropping today? appeared first on The Motley Fool Australia.

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Austal Limited (ASX: ASB) shares are edging higher in midday trading. Having entered a trading halt prior to today’s market open, the company’s shares are now back trading and have edged 1.29% higher to $2.36. For comparison, the S&P/ASX 200 Index (ASX: XJO) is currently 0.4% lower.

Today’s developments come after an Australian diplomat said the company was on the verge of acquiring a major shipbuilding facility.

Let’s take a closer look at today’s news.

Why the Austal share price is in focus

Investors have been keeping an eye on the Austal share price after it resumed trading around an hour after the market’s open. In comments to local media, as reported by the Australian Broadcasting Corporation, the Australian ambassador to the Philippines, Steven Robinson, said Austal was on the verge of completing the takeover of the Hanjin shipyard in Subic Bay.

“I’m hopeful that there will be some progress made in the next month or two that [will] see a finalisation of all those negotiations,” Ambassador Robinson said on Monday about the takeover.

“It’s still kind of commercially in confidence so I can’t get too much into the details, but nevertheless, let’s hope that there’s a positive outcome, which will see Austal expand further here in the Philippines,” he added.

Subic Bay, on the island of Luzon, is located on the geopolitically important South China Sea. Tensions between the Philippines and China have ratcheted up in recent days, with the Philippines Foreign Minister asking Chinese ships to leave the disputed zone.

At the same time as rumours circulate around Austal’s investment in the Philippines, the company is divesting from its Chinese enterprises.

Austal responds

In response to media speculation, and in light of the ambassador’s comments, Austal released a statement to the ASX. In it, Austal said its position on the Hanjin shipyard has not changed since August 2019.

“There is no certainty that any additional expansion opportunities will be either pursued or completed,” the statement said.

In the statement, Austal also said its investors should be “well aware of the Company’s strategy to move into steel shipbuilding…”

Austal share price snapshot

Over the past 12 months, Austal shares have fallen in value by around 18%. Since the beginning of the year, they have also fallen by around 13%.

Given the current Austal share price, the company has a market capitalisation of $837.8 million.

More reading

• Here’s why the Austal (ASX:ASB) share price is in the spotlight today
• ASX 200 shares thrown in the bargain bin: Here’s 3 ideas
• The War in Afghanistan is ending. Which ASX companies supply our military?

Marc Sidarous has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Austal Limited. 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 Emeco Holdings Limited (ASX: EHL) share price is soaring higher in mid-morning trade. This follows the release of the company’s presentation at the Macquarie Group Ltd (ASX: MQG) conference along with an update from its board.

At the time of writing, the equipment rental company’s shares are fetching for 99 cents apiece, up 6.67%.

What did Emeco announce?

Investors are snapping up Emeco shares after the company reaffirmed its guidance for the H2 FY21 period.

In its announcement, Emeco highlighted that it is continuing to deliver strong revenue growth. This is primarily due to the successful execution of its strategy.

Operating earnings before interest, tax, depreciation and amortisation (EBITDA) is expected to be in the upper guidance range of $115 million to $118 million. Pleasingly, this is despite the company facing COVID-19 disruptions and coal weakness in the sector.

In addition, Emeco noted that it is achieving positive Q4 FY21 rental earnings that are set to run into FY22. Approximately half of the equipment off-hired last year has been re-deployed across the business into new projects.

Further to the company’s share price rise, the Emeco board approved a capital management policy.

This will see between 25–40% of operating net profit after tax allocated to capital management initiatives each year. The policy will come into effect after the end of FY21, on a pro rata basis for the second half.

The board stated it will decide on the relative benefits of dividend payments to maximise shareholder value. In particular, the company aims to make use of its $85 million through franking credits and share buybacks. This of course is dependent on the share price and valuation at the time of the decision being made.

Comments from the CEO

Emeco CEO and managing director, Ian Testrow commented:

This capital management policy marks the next phase of Emeco’s evolution where our strong balance sheet and cash flow supports the recommencement of returning funds to shareholders. The company is in a sound position both financially and operationally, with a positive outlook ahead. Emeco has come a long way over recent years and we are excited to continue the journey as a business which makes regular payments to shareholders, as we maximise shareholder value through the cycle.

Our aim is to provide a sustainable distribution stream to shareholders, utilising our available capital as well as our franking balance, whilst also taking into consideration our share price and valuation and ensuring that we prudently deploy our capital to support growth in a disciplined way.

About the share price

It has been a rocky 12 months for investors as the Emeco share price has gone on a rollercoaster ride. While the company’s shares are almost 10% higher from this time last year, its year-to-date performance has slumped, down 10%.

Based on today’s prices, Emeco has a market capitalisation of about $554 million, and 544 million shares outstanding.

More reading

• Why Eclipx, Emeco, SeaLink, & Starpharma shares are storming higher today

Motley Fool contributor Aaron Teboneras 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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At lunch on Thursday, the S&P/ASX 200 Index (ASX: XJO) is on course to record a disappointing decline. The benchmark index is currently down 0.35% to 7,070.4 points.

Here’s what is happening on the market today:

NAB half year results

The National Australia Bank Ltd (ASX: NAB) share price is trading lower following the release of its half year results. NAB reported cash earnings of $3,343 million for the six months ended 31 March. This was up 94.8% on the prior corresponding period. A key driver of its result was the write-back of a credit impairment charge of $128 million. This compares to a charge of $1,161 million in the prior corresponding period. The NAB board declared a fully franked interim dividend of 60 cents per share.

Nearmap share price crashes on legal threat

The Nearmap Ltd (ASX: NEA) share price is crashing lower today after being hit with legal proceedings. Nearmap advised that rival Eagle View alleges patent infringement in relation to its roof estimation technology. Nearmap believes that the allegations do not affect its core proprietary technology and do not affect the survey of imagery or the delivery of premium content.

Appen sinks

The Appen Ltd (ASX: APX) share price is sinking following the release of a presentation ahead of its appearance at the Macquarie Group Ltd (ASX: MQG) conference. During the presentation, CEO Mark Brayan said: “Our competitors outside of relevance are maturing. This is unsurprising. Their presence and funding demonstrate that ours is an attractive market. We maintain our leadership position and our customers rely on us for quality, scale, security and reliability but it means that we have to maintain our flow of new product features and fight harder to stay ahead.”

Best and worst ASX 200 performers

The best performer on the ASX 200 on Thursday has been the Chalice Mining Ltd (ASX: CHN) share price with a 4.5% gain. This morning Macquarie retained its outperform rating and lofty $9.20 price target on the fold explorer’s shares. The worst performer has been the Nearmap share price with a decline of 17.5% following its legal update.

More reading

• Don’t underestimate the upside for these ASX 200 mining shares
• ANZ Bank (ASX:ANZ) share price hit by broker downgrade post results
• Nearmap (ASX:NEA) share price dives 16% on legal proceedings
• Why the Appen (ASX:APX) share price is down 6% to a multi-year low
• NAB (ASX:NAB) share price on watch after reporting $3.34bn cash profit

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Appen Ltd and Nearmap Ltd. The Motley Fool Australia owns shares of and has recommended Macquarie Group Limited. The Motley Fool Australia has recommended Nearmap 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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From sky-high iron ore prices to the long term prospects of lithium, Macquarie sees both short and long term upside for these ASX 200 mining shares. 

ASX 200 mining shares to buy 

Chalice Mining Ltd (ASX: CHN)

The Chalice share price has surged some 65% year-to-date as the company continues to deliver on its exploration success. The company’s overall strategy is to target tier-1 scale mineral projects (net present value greater than US$1 billion) and undertake high impact activity to bring them closer to production. 

Chalice Mining currently has two new and significant discoveries. Firstly, the Julimar project in Western Australia and secondly the Pyramid Hill gold project in Central Victoria. In addition, Chalice Mining has a number of minor exploration projects and royalty interests. 

Macquarie observes the Julimar project has grown significantly over the past 12-months and expects a maiden resource around September. The broker believes the latest round of drilling provides more clarity on the size of the deposit with the likelihood of more upside.

An outperform rating was retained with a $9.20 target price. Chalice shares have pushed another 3% higher at the time of writing to $7.37. 

IGO Ltd (ASX: IGO) 

Macquarie believes IGO has undergone a significant transformation after the sale of its 30% interest in Tropicana and acquisition of 50% of the global lithium joint venture. The broker says that the company’s nickel project, Nova, will continue to drive earnings in the short term. However, its diversification into lithium will drive long-term value for shareholders.

The broker retained an outperform rating with an $8.50 target price. IGO shares are currently fetching $7.78.

Mineral Resources Ltd (ASX: MIN)

Mineral Resources’ presentation at the Macquarie Conference Australia 2021 highlighted the company’s plans to increase iron ore production from 20Mtpa to 90Mtpa over the next five years. This was well above Macquarie’s 50Mtpa base case estimates. 

In a similar narrative to IGO, the broker believes that iron ore operations will continue to generate strong cash flows while its emerging lithium operations will possess significant growth potential in the medium to long term. 

An outperform rating was retained with a $61 target price. Mineral Resources shares continue to hover around record territory of $48, its shares are up 25% year-to-date. 

Oz Minerals Ltd (ASX: OZL) 

The Oz Minerals share price has bounced back after its first-quarter update on 22 April. Macquarie has pointed to its Prominent Hill and Carrapateena as key growth prospects that will increase production in the near term. 

The broker believes a key driver of the Oz Minerals share price will be buoyant copper prices. Its analysts estimate that spot prices could increase Oz Minerals earnings by 25% in 2021 and 75% in 2022. An outperform rating was retained with a $29.50 target price.

Oz Minerals shares have had a relatively flat month following share price weakness after its first-quarter update. However, sky-high copper prices have pushed its shares up some 30% year-to-date to $25.06. 

More reading

• ASX 200 down 0.35%; NAB half year results, Nearmap crashes on legal threat
• ANZ Bank (ASX:ANZ) share price hit by broker downgrade post results
• Why the Regis Resources (ASX:RRL) share price is in focus
• Afterpay (ASX:APT) share price tumbles despite investor presentation
• Brokers point to these ASX 200 shares to beat the market in May

Motley Fool contributor Kerry Sun has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended 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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Lithium Australia NL (ASX: LIT) has declared it is ready to join the Battery Stewardship Council’s battery recycling scheme. As a result of the news, the Lithium Australia share price opened 4.17% higher at 12.5 cents. At the time of writing, however, the Lithium Australia share price has retreated back to 12 cents, flat for the day so far.   

Let’s take a look at the announcement released by the battery metal supplier this morning.

Battery recycling

Lithium Australia has announced its 90%-owned subsidiary, Envirostream Australia Pty Ltd, has received Dangerous Goods approval for its packages that will transport batteries for recycling. This means the company is able to participate in the Battery Stewardship Council’s battery recycling scheme.

The Battery Stewardship Council has secured funding from the federal government and industry for its battery recycling scheme, which is planned to launch in January next year.

The council states the scheme will provide drop off points for customers to take used batteries to be recycled.

According to the Battery Stewardship Council, spent batteries are currently sent to landfill. There, their casing eventually corrodes which allows battery chemicals to leach into soil and waterways.

According to Lithium Australia, the World Bank’s Minerals for Climate Action report predicts demand for battery minerals will increase by 500% by 2050. Thus, the recycling of batteries could be a significant, sustainable source of battery critical materials.

In anticipation of the battery recycling scheme’s launch, Envirostream has created 6-kilogram and 12-kilogram storage and transportation boxes that are approved to hold both lithium-ion and alkaline batteries.

Commentary from management

Envirostream managing director Andrew Mackenzie commented on today’s news released by Lithium Australia, saying:

The Scheme is vital to improving Australia’s battery recycling rates, which currently sit at around 10% – a very low figure in comparison to other countries. At Envirostream, we’re developing mixed-battery collection systems designed for convenience and approved for safety and the mitigation of environmental risk.

Lithium Australia share price snapshot

Lithium Australia shares are having a roaring time on the ASX of late.

Currently, the Lithium Australia share price is up by around 100% year to date. It’s also up 144% over the last 12 months.

The company has a market capitalisation of around $108 million, with approximately 901 million shares outstanding.

More reading

• The Lithium Australia (ASX:LIT) share price is on watch today. Here’s why
• Why has the Lithium Australia (ASX:LIT) share price plunged 7% today?
• Why the Lithium Australia (ASX:LIT) share price is surging 7%

Motley Fool contributor Brooke Cooper 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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In late morning trade, the S&P/ASX 200 Index (ASX: XJO) is out of form and tumbling lower. At the time of writing, the benchmark index is down 0.4% to 7,067.1 points.

Four ASX shares that are not letting that hold them back are listed below. Here’s why they are storming higher:

Eclipx Group Ltd (ASX: ECX)

The Eclipx share price is up 8.5% to $2.15 following the release of its half year results. For the six months ended 31 March, the fleet management and salary packaging company reported net operating income of $105.9 million and net profit of $39.3 million. This was a 22% and 77% increase, respectively, over the prior corresponding period.

Emeco Holdings Limited (ASX: EHL)

The Emeco share price has jumped 7% to 99.5 cents. The catalyst for this was the release of a capital management update by the mining equipment company. According to the release, Emeco’s new capital management policy will see the company allocate 25% to 40% of operating net profit after tax to capital management initiatives each year. The policy will take effect following the end of FY 2021.

SeaLink Travel Group Ltd (ASX: SLK)

The SeaLink share price is up 2.5% to $10.08 after announcing a new acquisition. According to the release, the travel and transport company has entered into a binding agreement to acquire Western Australia-based Go West Tours for an enterprise value of $84.7 million. The deal also includes an earnout component of up to $25 million. Go West is one of the largest specialist bus operators serving the resources sector in Western Australia.

Starpharma Holdings Limited (ASX: SPL)

The Starpharma share price has stormed 4% higher to $1.85. This follows the release of an update on its Viraleze antiviral nasal spray. According to the release, the Viraleze antiviral nasal spray is now available for purchase by consumers in Europe via the company’s webstore. Viraleze is a broad spectrum antiviral nasal spray that irreversibly inactivates >99.9% of coronavirus/SARS-CoV-2 within one minute.

More reading

• Starpharma (ASX:SPL) share price surges higher on COVID product update
• Why the Eclipx (ASX:ECX) share price is rocketing 10% higher today
• Here’s why the SeaLink (ASX:SLK) share price is charging higher today
• Why Dubber, PointsBet, Starpharma, & Westpac shares are storming higher
• Starpharma (ASX:SPL) share price edges higher on update

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Starpharma Holdings Limited. The Motley Fool Australia has recommended Starpharma Holdings 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 Australia and New Zealand Banking GrpLtd (ASX: ANZ) share price fell for the second day as a broker downgrade is adding to the pressure.

The ANZ Bank share price slipped 0.4% to $27.79 in morning trade after it lost over 3% yesterday on the back of its profit results.

But the bank is in good company. The National Australia Bank Ltd. (ASX: NAB) share price fell 2.2% to $26.77 at the time of writing as the market also took a dim view of its earnings update.

The other major banks aren’t faring better either. The Westpac Banking Corp (ASX: WBC) share price lost 0.5% to $25.83 while Commonwealth Bank of Australia (ASX: CBA) also slipped 0.5% to $92.26.

ANZ Bank downgraded as upgrade cycle runs out of puff

What may also be weighing on sentiment towards the ANZ Bank share price is a note by Morgan Stanley.

The broker lowered its recommendation on the ASX bank to “equal weight” from “overweight” as it believes ANZ Bank’s upgrade cycle has reached an end.

“We think ANZ’s TSR has been the best of the majors over the past year due to the execution of its simplification strategy, superior capital management and leverage to recovery,” said the broker.

“However, we now expect a pause in the upgrade cycle to limit further share price upside.”

Top-line growth hard to come by

While the bank’s 6-basis point increase in net interest margins over the half was pleasing, the bigger issue is the lack of revenue growth.

Morgan Stanley isn’t holding out much hope of any improvement to ANZ Bank’s top-line. This is because of the loss of Australian mortgage momentum, lower institutional lending, NZ macro[1]prudential measures and a normalisation of Markets income.

Dividend growth to take backseat

The other issue it that the broker does not believe ANZ Bank can increase its dividend at the next reporting season.

“ANZ lifted the dividend to 70c, which is ‘more in line with the targeted long term payout ratio of 60-65%’,” added the broker.

“However, based on our forecasts, the dividend is unlikely to grow again until FY23.”

Morgan Stanley also lowered its 12-month price target on the ANZ Bank share price to $28 from $28.50 a share.

ANZ Bank share price may represent longer-term value

However, not all brokers have taken a dim view of the ASX bank. Macquarie Group Ltd (ASX: MQG) reiterated its “outperform” rating on ANZ Bank as it described the results as “respectable”.

On the other hand, the broker did acknowledge that the bank’s 2HFY21 guidance appears less optimistic.

“In this context, relative underperformance following the result was not surprising, particularly when coupled with the solid share price performance in the lead-up,” said Macquarie.

“However, in the medium term, we believe ANZ continues to offer better relative value than peers.”

Macquarie’s 12-month price target on the ANZ Bank share price is $30.50 a share.

More reading

• Is the ANZ (ASX:ANZ) share price a buy following its half year results?
• NAB (ASX:NAB) share price on watch after reporting $3.34bn cash profit
• 5 things to watch on the ASX 200 on Thursday
• ASX 200 rises, ANZ drops, Nearmap jumps
• Afterpay (ASX:APT) share price tumbles despite investor presentation

Motley Fool contributor Brendon Lau owns shares of Australia & New Zealand Banking Group Limited, Commonwealth Bank of Australia, Macquarie Group Limited, National Australia Bank Limited, and Westpac Banking. The Motley Fool Australia owns shares of and has recommended 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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