Category: Stock Market

With the onset of the COVID-19 pandemic, investor interest in well-positioned ASX healthcare shares and Australian healthcare properties has rocketed.

There currently are no pureplay ASX-listed healthcare real estate investment trusts (REIT). But there are unlisted funds investing exclusively in Australian healthcare real estate.

With that in mind, the Motley Fool reached out to fund manager Andrew Hemming, the managing director of Centuria Healthcare.

Centuria Healthcare, a subsidiary of Centuria Capital Group (ASX: CNI), provides unlisted healthcare property investments to individual, wholesale and institutional investors.

We were particularly interested in the Centuria Healthcare Property Fund (CHPF). This is a new, open-ended, unlisted fund with a current portfolio of more than $115 million worth of healthcare assets.

With additional asset purchases in the pipeline, CHPF currently owns the Forrest Family Practice (tenanted by BGH Capital), Bloomfield Medical Centre, Vermont South Medical Centre and Hobart Day Surgery properties (all tenanted by Nexus Hospitals).

Retail investors can invest with $10,000 or more.

CHPF’s last distribution for October 2020 was 5.75 Cents Per Unit (CPU), annualised*.

Read on for the full interview with Andrew Hemming.

Can you give us an overview of the Centuria Healthcare Property Fund?

We set the Centuria Healthcare Property Fund with a different structure to what we’ve done before. What we’ve done before are single property and multi-property closed-end funds. This is a multi-property, open-ended fund, with a limited liquidity facility. And with a seed portfolio of roughly $115 million, which we intend on growing with our near-term pipeline and into the future.

All transactions were off market. Most transactions were operator led, which is an important point of difference for us. In 2013-14, we decided strategically to focus on a partner-based approach to delivering a pipeline of healthcare properties.

How does the partner-based approach work?

For example, Nexus Hospitals is one of our aligned partners. Nexus is 75% owned by Queensland Investment Corporation, and 25% owned by doctors and management. They currently operate 15 hospitals, and they’re trying to substantially grow over the next few years than they have over the past, say, seven years. We’re their partner of choice.

In today’s economic environment, people are wanting to either invest into yield-driven assets or invest into industries that are more robust or resilient. Clearly, we’ve seen over the last 6-8 months that, as a result of COVID, industrial (sheds and warehouses) and healthcare properties (hospitals and medical centres) are attractive.

We focus on properties that are going to bring us those opportunities, because in our world these opportunities do not typically exist.

There are a lot of hospitals in Australia, both public and private, where there may be an opportunity to securitise through a sale and leaseback from the operator with a long-term lease into the future, but they don’t exist today.

So, you’ve got to create the product.

How do you create that product?

The best way for us to create our product is through the lens and ability of the operator.

As in the example with Nexus, the operator is a business with a high degree of capitalisation, vast experience in terms of management prowess as well as clinical experience, like surgeons and nurses. Those are highly specialised assets.

We work very much in partnership with the operator to find the right location and to create the product type… the opportunity. In creating these healthcare real estate opportunities, we have a highly skilled team in finding, structuring and developing to own the real estate over the long term.

There are several ways we are able to structure and fund these transactions:

First, a straight forward sale-and-leaseback where the healthcare operator sells its property with a long-term lease in place.

Second, a fund-through structure where we would buy the land with leases in place, fund the construction, and own the property over the long-term.

Or third, as we’ve done more recently, we may come upstream in terms of risk and develop the property. We would ensure we have the anchor tenant with a lease in place which provides us with greater clarity in which other healthcare users can pack around that healthcare operator.

Let’s say a well-known operator has interest in a site, and the operator has the doctors as well. It will likely occupy 50% of this development. We would acquire the land with 50% leased to this operator. We would then set about leasing the remaining space with complementary healthcare businesses, and in doing so create a sustainable healthcare ecosystem.   

This strategy is very similar to neighbourhood shopping centres, if you have a core user there.

The other tenants would be a GP primary care business, a radiology business, a pharmacy, consulting suites, maybe even radiation oncology. They’re all complementary businesses to the anchor tenant.

And the fund paid a 5.75 CPU annualised distribution in October. How did you determine that and what’s the outlook?

We arrived at the number for 2 reasons. One, because the off-market seed portfolio we delivered to this fund had a weighted market capitalisation rate of 6.06%, therefore we were able to deliver a 5.75 CPU annualised distribution in October.

As for the future? With interest rates and the overall economy being weaker, we expect there’ll be a flight to quality. We expect cap rates in healthcare properties will compress, because there’ll be more interest in them. There’ll be a weight of money moving into this space. More than we’ve seen historically.

We’ll continue to do these deals off market. We are still confident, at least in the next 6-12 months, in acquiring new properties for this fund at an accretive capitalisation rate of 5.75%, because they’ll be off market deals and we’ll be doing them efficiently. Along with existing property acquisitions, we intend on continuing  to buy land and funding construction, creating the benefit of reduced tax leakage from stamp duty.

Are the Centuria Healthcare Property Fund’s tenants different from those in other sectors?

These are highly specialised assets in which you’ve got alignment from the customer on the demand side as well as the user, who’s the tenant. The tenant is likely to be there for more than the initial lease term.

For example, there is the radiation oncology bunker that we built and own in Concord West (Sydney). The tenant spent $15 million on 1 piece of equipment. They’ve also spent an additional $5­-7 million on the other warm shell fit out of that hospital. The equipment is housed in  1.5m thick concrete bunkers which are not going anywhere.

So that business makes the economic decision on whether they want to be there or not based on the type of demand and the density of that demand. As well locationally, this is a business that’s not too far away from the public hospital that’s just had $341 million spent on it in Concord.

These are businesses that look at the type of population, the economics of that population, the ancillary services within the building and in the location. And if they think their business is going to be there for a longer period of time, 20 years, if not longer, they are prepared to spend quite a bit of money on their fit out and pieces of equipment.

And that makes them sticky.

What essential boxes does a healthcare asset need to tick before you’d consider buying it?

We really look at the layers of alignment. You want to look at the demographics. You’ve got to be able to build something that’s more specialised than you think it’s going to be used for over time if the population’s going to be there.

No matter what, it’s not transient. Not like a mining town, which is a transient population in boom or bust cycle. So, we look at the depth and type of demand.

And we evaluate the type of use and the covenant. The covenant for us is not just the financial capacity of that operator tenant over that period of time, but also its reputation.

We would look at the strength of the covenant from a financial perspective as well as its ability in terms of experience to drive that type of business model over 20-30 years.

Then we look at what we can pack around it. You’ve got a high-grade covenant – a blue chip hospital, for example – what other uses and services can you pack around that hospital to make it stronger?

People talk about ecosystems. This translates to referral networks that work between a primary care business, a hospital business, a radiology business, a pharmacy and a consultancy. They’re all relying on each other to attract that customer. And once that customer’s there, that customer is likely to stay in that building and spend more money. So from an economic viewpoint it’s quite efficient and more sustainable in nature.

Lastly, from the built form, there are builders that have got good depth of experience in terms of building a hospital or radiation oncology bunker and those who just don’t.

Has COVID-19 changed your investment criteria? And how has it impacted your tenants?

Healthcare tenants have been more robust and resilient than other sectors for obvious reasons.

Even when the Federal Government shut the doors on elective surgery, volume has since recovered (and in some cases surged past previous levels).  This is a result of the pent-up demand.  

COVID-19’s taught the healthcare sector some important lessons in terms of isolation. Aged care has been impacted quite materially from COVID-19, and the thinking has already started into how to contain the spread of infectious disease in the future. In surgical hospitals, it will be about ventilation systems and improved sterilisation units, for example.

COVID-19 has taught every industry that being nimble, having a nimble balance sheet, is vitally important.

That goes to operating their business more effectively.

One thing is to get cash for a sale and leaseback. That’s great, but what do you do with it?

You want to invest it into things that are going to make your business better. To make the experience of the customer, the patient, better. Both from a financial efficiency perspective and a health outcome perspective.

There hasn’t been a listed healthcare REIT on the ASX since 2017. What are your views on this?

Certainly, there’s a gap in the listed environment for pureplay healthcare property. I think there’s plenty of demand, and it’s a matter of when not if. I think there’s an opportunity for more than 1 manager to have a listed healthcare fund.

(* Investors should note that past performance is not a reliable indicator of future performance.)

More reading

• Broker tips Fisher & Paykel Healthcare (ASX:FPH) share price to go even higher
• 2 exciting mid cap ASX shares to buy
• 2 ASX dividend shares with 6%+ yields to buy
• 5 things to watch on the ASX 200 on Thursday
• Strike Energy (ASX:STX) share price rises on business update

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post Ask a fund manager: Centuria Healthcare’s Andrew Hemming on unlocking value in Australia’s healthcare properties appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/33fx8v4

The Fisher & Paykel Healthcare Corp Ltd (ASX: FPH) share price has been a very strong performer in 2020.

Since the start of the year, the medical device company’s shares have risen a remarkable 50%.

Why is the Fisher & Paykel Healthcare share price up 50% this year?

Investors have been scrambling to buy Fisher & Paykel Healthcare’s shares this year after the COVID-19 pandemic led to a surge in its sales and profits.

Yesterday, the company released its half year results and revealed a 59% increase in operating revenue to NZ$910.2 million and an 86% jump in net profit after tax to NZ$225.5 million.

This was driven by strong demand for its hospital hardware, particularly its Optiflow and Airvo systems. Traditionally, this nasal high flow therapy is used in clinical practices but has shifted as a front-line treatment for COVID-19 patients in hospitals.

Management appears optimistic that the second half will be strong and has lifted its expectations for FY 2021.

Based on current assumptions, it estimates that full year revenue could come in at NZ$1.72 billion and net profit after tax would be between NZ$400 million to NZ$415 million. The latter is up from its previous expectation for profit after tax of NZ$365 million to NZ$385 million. 

Is it too late to buy Fisher & Paykel Healthcare shares?

According to one leading broker, it’s not too late to make an investment in Fisher & Paykel Healthcare’s shares.

This morning analysts at Goldman Sachs retained their buy rating and bumped their price target higher to $37.60.

The broker notes that high-flow therapy continues to build momentum and it sees an attractive penetration runway ahead.

Goldman commented: “High-flow penetration of conventional oxygen therapy probably sits between 10-20%, and we see limited reasons why 50%+ is not possible over the mid/long-term. Clinical and regulatory feedback have been increasingly supportive, and we expect the forward penetration trajectory to have steepened through recent periods.”

“FPH reiterated today that Optiflow and Airvo are ‘nowhere near’ market saturation. FPH upgraded FY21 guidance for the second time today (after four upgrades in FY20). With near-term momentum accelerating rather than slowing, we expect at least one further upgrade in the remainder of the year and upgrade our FY21 earnings estimate by 11% to $426m (+5% above mid-point of range),” it added.

More reading

• ASX 200 up 0.8%: Fisher & Paykel Healthcare impresses, Harvey Norman’s profits surge
• Fisher & Paykel (ASX:FPH) share price on watch following half-year results
• 5 things to watch on the ASX 200 on Wednesday
• ASX 200 Weekly Wrap: ASX continues to climb, despite outage
• 5 things to watch on the ASX 200 next week

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. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post Broker tips Fisher & Paykel Healthcare (ASX:FPH) share price to go even higher appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/3q1vKGb

Earlier this week I looked at a couple of small cap ASX shares that have been rated as ones to buy.

But due to the risk that small caps carry, not everyone is comfortable investing at that side of the market.

With that in mind, today I am moving a little further down the risk scale to mid cap shares.

Two mid cap ASX shares that are highly rated are listed below. Here’s what you need to know about them:

Megaport Ltd (ASX: MP1)

Megaport is a provider of elastic interconnection services across data centres globally. Its clever service allows its users to increase and decrease their available bandwidth in response to their own demand requirements. This is proving to be an increasingly popular alternative to being tied to fixed service levels on long-term and expensive contracts. So much so, in FY 2020 Megaport reported a 57% increase in monthly recurring revenue (MRR) to $5.7 million.

Analysts at UBS have been encouraged by its new ports growth in FY 2021. They believe this is a sign that its growth is back on track and continue to expect Megaport to benefit from a structural shift to the cloud. In light of this, last month they upgraded its shares to a buy rating with a $16.45 price target.

Nearmap Ltd (ASX: NEA)

Nearmap is a $1.1 billion aerial imagery technology and location data company. Its leading products give businesses instant access to high resolution aerial imagery, city-scale 3D datasets, and integrated geospatial tools. This means users can undertake virtual site visits from across the country, which enables informed decisions, streamlined operations, and meaningful cost savings. Nearmap has recently bolstered its offering with the launch of new products. This includes an artificial intelligence product which could be a game-changer in the industry.

While FY 2020 was a mixed year for Nearmap, analysts at Morgan Stanley expect better in FY 2021. As a result, earlier this month the broker put an overweight rating and $3.10 price target on Nearmap’s shares.

More reading

• Nearmap (ASX:NEA) targets return of 20-40% year-on-year growth
• Is the Nearmap (ASX:NEA) share price great value?
• Why Fortescue, Nearmap, Saracen, & Westpac shares are dropping lower
• The Nearmap (ASX:NEA) share price is up and down today. Here’s why.
• 5 things to watch on the ASX 200 on Thursday

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 and recommends MEGAPORT FPO. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Nearmap Ltd. The Motley Fool Australia has recommended MEGAPORT FPO and Nearmap Ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post 2 exciting mid cap ASX shares to buy appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/363in0m

Luckily for income investors in this low interest rate environment, there are a large number of dividend shares to choose from on the Australian share market.

But with all the quality options, it can be hard to decide which ones to buy.

Two ASX dividend shares with 6%+ yields that come highly rated are listed below:

Aventus Group (ASX: AVN)

Although the retail sector has been a difficult place to be this year because of the pandemic, particularly in respect to property, Aventus has been largely unaffected. This is thanks to the popularity of its retail parks with consumers and their high weighting towards everyday needs. Among its tenants you’ll find retailers such as ALDI, Bunnings, Officeworks, and The Good Guys.

One broker that has been impressed with its performance and expects more of the same in the future is Goldman Sachs. It recently reiterated its buy rating and $2.76 price target on its shares. It notes that Aventus has a quality portfolio and opportunities with its land bank. And based on the latest Aventus share price, the broker estimates that it offers a forward 6.2% dividend yield.

Fortescue Metals Group Limited (ASX: FMG)

This iron ore producer could offer one of the most generous dividend yields on the Australian share market right now. This is thanks to the high levels of free cash flow the company is generating due to sky high iron ore prices and its ultra low costs. At the time of writing, the benchmark iron ore price is up slightly to US$123.180 a tonne. This compares to Fortescue’s current C1 costs of just US$12.74 per wet metric tonne.

Last week analysts at Macquarie reaffirmed their outperform rating and $20.00 price target due to the high iron ore prices. They estimate that its free cash flow generation will allow the Fortescue board to declare a dividend of approximately $1.64 per share in FY 2021. Based on the latest Fortescue share price, this equates to a fully franked 8.8% dividend yield.

More reading

• Why Ampol, Cann, Fortescue, & Mesoblast shares are surging higher
• Why the Fortescue (ASX:FMG) share price is shooting up more than 5% today
• ASX 200 up 0.7%; Zip trading update, Ampol buyback, IAG sinks
• 2 top ASX dividend shares with yields greater than 4%
• Brokers name 3 ASX shares to buy right now

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has recommended AVENTUS RE UNIT. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post 2 ASX dividend shares with 6%+ yields to buy appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/33h7O88

On Wednesday the S&P/ASX 200 Index (ASX: XJO) continued its remarkable run and charged higher once again. The benchmark index rose 0.6% to 6,683.3 points.

Will the market be able to build on this on Thursday? Here are five things to watch:

ASX 200 expected to edge higher.

The Australian share market is expected to edge higher this morning. According to the latest SPI futures, the ASX 200 is poised to rise 10 points or 0.15% at the open. This is despite it being a mixed night of trade on Wall Street. Late in the session the Dow Jones is down 0.45%, the S&P 500 is down 0.2%, and the Nasdaq is up 0.4%.

Virgin Money UK results.

The Virgin Money UK CDI (ASX: VUK) share price will be on watch following the release of its full year results. The UK-based bank reported a 77% drop in full year underlying pre-tax profit. This was driven by a 501 million pound impairment charge against an expected surge in bad loans in coronavirus-driven economic downturn. Virgin Money UK now has a total of 735 million pounds in provisions on its balance sheet.

Oil prices push higher again.

Energy producers including Beach Energy Ltd (ASX: BPT) and Oil Search Ltd (ASX: OSH) could be on the rise today after oil prices continued their recovery. According to Bloomberg, the WTI crude oil price is up 2.5% to US$46.04 a barrel and the Brent crude oil price has risen 2.1% to US$48.87 a barrel. A combination of COVID vaccine hopes and a drop in U.S. inventories have lifted oil prices.

Gold price flat.

Gold miners such as Evolution Mining Ltd (ASX: EVN) and Newcrest Mining Ltd (ASX: NCM) will be on watch today after the gold price found some support. According to CNBC, the spot gold price is flat at US$1,804.20 an ounce. Weak economic data helped the gold price during overnight trade.

WiseTech Global AGM.

The WiseTech Global Ltd (ASX: WTC) share price could be on the move today when it holds its annual general meeting. The logistics solutions company is likely to provide investors with an update on current trading and its expectations for FY 2021. In August, WiseTech provided full year guidance for revenue growth in the range of 9% to 19% (representing revenue of $470 million to $510 million) and EBITDA growth of 22% to 42% (representing EBITDA of $155 million to $180 million).

More reading

• ASX stock of the day: Platinum (ASX:PTM) shares up 6%
• US markets hit record high, is the ASX 200 next?
• Why the Regis (ASX:RRL) share price is up today despite sliding gold price
• 2 quality ASX cyclical shares to buy today
• ASX 200 up 0.8%: Fisher & Paykel Healthcare impresses, Harvey Norman’s profits surge

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of WiseTech Global. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post 5 things to watch on the ASX 200 on Thursday appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/378m2t1

The Strike Energy Ltd (ASX: STX) share price was trading higher today following news of a new pipeline for the Western Australia gas market.

At close of trade today, the Strike Energy share price is up 1.92% to 26 cents. In comparison, the All Ordinaries Index (ASX: XAO) is 0.5% higher at 6,888 points.

What’s driving the Strike Energy share price?

The oil and gas explorer provided a business update following APA Group‘s (ASX: APA) pipeline announcement earlier today.

The APA Group advised it plans to invest $460 million to build a 580km gas pipeline. The 12″ pipeline will connect gas fields from the Perth Basin to the Goldfields region, forming an interconnected Western Australia gas grid. The project is due to become operational mid-2022, and will provide additional capacity to the whole network while increasing gas supply options.

Strike said APA’s move to build a new pipeline connection validated how large-scale and low-cost gas resources could benefit the wider state economy.

With Strike’s onshore gas assets located close to the Goldfields region, it can provide supply to the pipeline. This will reduce energy transportation costs for customers purchasing Perth Basin gas. The company estimates that with the new project, Strike’s geographical advantage will increase to 80% of the existing gas market in Western Australia.

Furthermore, the company noted that as gas became more readily available and affordable, it would take over its more expensive counterpart, electricity.

What did the managing director say?

Commenting on the new pipeline, Strike Energy managing director Stuart Nicholls said:

APA’s pipeline announcement is a significant endorsement in the potential of the Perth Basin to be a long term, competitive source of energy for the Goldfields.

Gas is the fuel of choice to replace diesel fired electricity in the Goldfields. It is reliable and affordable, has significantly lower emissions, and facilitates high penetration of complimentary renewable energy.

Strike Energy’s market access continues to grow. We look forward to engaging further in discussions with potential end users of Perth Basin gas.

About the Strike Energy share price 

The Strike Energy share price has lifted more than 26% in the last 6 months, and is closing in on its 52-week high of 29 cents. The company has a market capitalisation $455.9 million, and trades at an average volume of 1.8 million shares daily.

More reading

• Here’s why the Clean TeQ (ASX:CLQ) share price tumbled 10% today
• APA Group (ASX:APA) share price flat despite major project news
• Why the Tower (ASX:TWR) share price is up 4% today
• Why the Next Science (ASX:NXS) share price dropped 9% today
• Recce (ASX:RCE) share price shoots up 5% on new patent approval

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. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post Strike Energy (ASX:STX) share price rises on business update appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/3nSCZhR

The Northern Star Resources Ltd (ASX: NST) share price and the Saracen Mineral Holdings Limited (ASX: SAR) share price will be on watch on Thursday after the release of an update on their merger plans this afternoon.

What did they announce?

This afternoon the two gold miners jointly announced that all Northern Star financier consents and material Saracen facilities and relevant agreements consents required under their merger implementation deed have been obtained and are now satisfied.

This brings the completion of the mega merger a step closer, though it is far from being complete.

The scheme of arrangement, which will see Northern Star acquire 100% of Saracen, remains subject to a number of other remaining conditions. These include approval being obtained from Saracen shareholders and court approval.

Saracen is intending to circulate a scheme booklet to shareholders next month. This booklet contains information about the scheme, the independent expert’s report, and the basis for its board’s unanimous recommendation.

If all goes to plan and Saracen shareholders vote to approve the merger, the scheme is expected to be implemented in February 2021.

The scheme continues to be unanimously endorsed and supported by the Northern Star board, subject to no superior proposal for Northern Star emerging.

Why are the two gold miners merging?

When the merger was announced back in October, Northern Star’s Executive Chair, Bill Beament, stated his belief that the merger will create a lot of value for both sets of shareholders.

He explained: “Northern Star has only ever pursued growth when it will create value for shareholders, and this merger-of-equals will create an abundance of value for both Northern Star and Saracen shareholders.”

“This is significant value-creating M&A. Our position as joint venture partners at KCGM, the close proximity of the majority of the combined company’s assets and a host of other synergies makes this a unique opportunity exclusive to Saracen and Northern Star shareholders,” he concluded.

More reading

• 5 things to watch on the ASX 200 on Wednesday
• ASX 200 rises more than 1% on Tuesday
• Why ASX, Kogan, Myer, & Northern Star shares are dropping lower
• Why ASX gold shares are the worst performers so far today
• ASX 200 jumps 1.2%: Technology One results, Brickworks update, gold miners sink

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. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post Northern Star (ASX:NST) and Saracen (ASX:SAR) shares on watch after merger update appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/2UYXXz9

Australians are going so mad for Tesla Inc (NASDAQ: TSLA) shares that there are now more shareholders than customers in this country.

On one trading platform alone, Stake, more than 17,000 Australians have bought a stake in Tesla. Stake’s research suggests about 10,000 Australians actually own a Tesla car.

Stake chief executive Matt Leibowitz told The Motley Fool the electric vehicle sector is hot with Australian investors now.

“Tesla is undeniably the market leader with approximately 3 times larger market share than 2nd placed Volkswagen.”

More than $442 million has been transacted for Tesla shares through Stake this year. That’s 1840% up on last year’s $22.8 million.

Tesla’s cultural cache

The Tesla brand has built up a “cultural cache”, according to Leibowitz, and this stirs up passions that raw financial figures can never replicate.

“Whether it be selling Tequila or short-shorts for $69.420, it’s become the sort of brand that recruits loyal followers not just transactional customers — Apple-esque.”

Tesla shares started the year at US$86.05. It is now at $555.38 — multiplying 6.5 times in just 11 months, notwithstanding a COVID-19 market crash.

The incredible rise has made its boss Elon Musk the second wealthiest person in the world this week.

The Motley Fool asked Leibowitz how much higher the share price can go when the inflation is all based on potential future earnings.

“While the market prices in future potential, no one actually has a crystal ball,” he said.

“Tesla’s been driving itself for many years but now the category is taking on a life of its own. Modern players like Nio Inc (NYSE: NIO) and Electrameccanica Vehicles Corp (NASDAQ: SOLO) are creating excitement — these are also amongst Stake most traded — and this lifts the whole category.”

Electric vehicles finally take centre stage

Leibowitz said the public is only just starting to understand the potential market for electric vehicles.

“For example, cars aside, Business Wire have estimated the charging infrastructure market alone to be a US$112 billion business by 2027,” he said.

“This is one of those industries that is really poised to completely disrupt and overhaul its predecessors and when you’re at the beginning of that inflection point, potential growth is enormous.”

Taking advantage of the cult status of the brand, Stake has partnered with the official Tesla Owner’s Club in Australia to put on an electric vehicle time trial event on Monday.

The event is claiming to be a world first, and has ambitions to insert itself as an annual fixture in the Australian motorsport calendar.

“It’s these category-and-culture leading brands that can really stir the popularity of investors the world over.”

More reading

• Here are the US shares that CommSec customers are buying
• Tesla stock could surge 104% to $1,000, according to this analyst
• Elon Musk is now the world’s second richest person
• It’s official: Like it or not, millions will own Tesla stock soon
• Tesla (NASDAQ:TSLA) share price zooms 8% on S&P 500 news

Tony Yoo owns shares of NIO Inc. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Tesla. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post More Aussies now own Tesla shares than Tesla cars appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/3m5fTE7

The Crown Resorts Ltd (ASX: CWN) share price is trading higher today despite receiving a downgrade by ratings agency Fitch Ratings. Fitch has placed Crown Resorts’ BBB rating on ‘rating watch negative’, after the NSW gaming authority delayed the December opening of Crown’s Sydney casino until February 2021.

However, the Crown Resorts share price was up 5.93% at $10.19 in closing trade. Could shares in the company be buoyed by the opening of its Melbourne casino today?

Why Crown Resorts has been downgraded

Fitch Ratings said the downgrade reflected its opinion that the Sydney opening ban highlighted an “increased risk” of severe regulatory action being taken by the Independent Liquor and Gaming Authority (ILGA). The ratings agency said this risk could potentially include a loss of licence.

According to Fitch, the ban in NSW has also heightened the potential for further regulatory action by the Victorian and Western Australian regulators. That possibility would have a “significant” impact on Crown’s business, the company says. 

Fitch’s downgrade follows the steps of Moody’s Investors Services on 20 November, when it downgraded the issuer rating of Crown Resorts from Baa2 to Baa3. Moody’s also said that ILGA’s decision to delay the Sydney opening was instrumental in its decision to downgrade. 

In response to the Moody’s downgrade, Crown advised the ASX on Friday that interest costs associated with its Euro Medium Term Notes would subsequently lift by about US$1 million per annum.

What issues has Crown been facing

Crown Resorts has been on the regulator’s radar after it was revealed that the casino paid illegal junket operators to attract high rollers from mainland China. These accusations have been investigated by AUSTRAC, the Australian government intelligence agency set up to monitor money laundering, organised crime, and fraud. 

It is alleged that junket operators based in Macau and Hong Kong are suspected to have links with Chinese organised crime groups. Known as triads, they in turn are said to provide the junkets with capital, protection, drugs, prostitutes and debt collection services.

In response to allegations, Crown has suspended all junket relationships until mid 2021. The ongoing inquiry into Crown’s dealings will decide whether Crown is fit to hold a license in NSW. 

How did the Crown share price perform in 2020

The Crown Resorts share price has dropped by 15% in 2020. The share price began the year at $12.04 before dropping to $6 as the Government put COVID-19 lockdown restrictions in place. It has since risen to $10.19 today. The company commands a market cap of $6.5 billion.

More reading

• ASX 200 rises again on Monday
• Why the Crown (ASX:CWN) share price is dropping lower again today
• Why a2 Milk, Crown, Immutep, & Suncorp shares are dropping lower
• ASX 200 down 0.3%: Altium FY 2021 guidance, Crown drops, insurance shares sink
• 5 things to watch on the ASX 200 on Thursday

Motley Fool contributor Eddy Sunarto has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Crown Resorts Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post Crown Resorts (ASX:CWN) share price is up 6% despite Fitch downgrade appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/2VcKjZz

The Bravura Solutions Ltd (ASX: BVS) share price was out of form on Wednesday and dropped lower.

The financial technology company’s shares fell 2.5% to $3.35.

Why did the Bravura share price drop lower?

Today’s decline appears to have been driven by concerns over the company’s ability to deliver on its guidance for FY 2021.

Yesterday at its annual general meeting, management revealed that it was facing sizeable headwinds due to the COVID-19 pandemic and Brexit and thus was forecasting a flat full year profit.

However, it was the significant weighting to the second half which is likely to have spooked investors.

Bravura’s chief executive officer, Tony Klim, explained: “In October 2020, we also flagged that the second wave UK lockdowns and stalling Brexit negotiations have increased uncertainty and are slowing the progress of pipeline opportunities in the UK. As a result, Bravura expects FY21 NPAT to be weighted approximately 80% to the second half of FY21.”

Is this share price weakness a buying opportunity?

One broker that sees the weakness in the Bravura share price as a buying opportunity is Goldman Sachs.

This morning the broker retained its buy rating and $4.50 price target on the company’s shares, even though it expects it to fall short of its guidance.

It commented: “In conjunction with its 2020 AGM, BVS further specified that it expects FY21 NPAT to be c.80% weighted to 2H21. We forecast FY21E NPAT of A$38.2mn, down 5% from A$40.1mn in FY20E, comprised of A$10.9mn in 1H21E and A$27.2mn in 2H21E (71% weighted to 2H). Note, our forecasts exclude the impact of the Delta acquisition, which we previously published could be EPS accretive.”

Why does Goldman like Bravura?

The broker’s buy rating is based on four key reasons.

They are its strong market position in existing product offerings (with a high degree of recurring revenue), the emerging microservices ecosystem strategy, a net cash position that provides its with a buffer in uncertain times and flexibility to invest and pursue further acquisitions, and its undemanding valuation.

More reading

• Top brokers name 3 ASX shares to buy today
• Why Coles and this ASX dividend share are buys for income investors
• Here’s why the Bravura Solutions (ASX:BVS) share price raced higher today
• 2 cheap ASX shares to buy right now
• Fund managers have been buying Kogan (ASX:KGN) and this ASX share

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Bravura Solutions Ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post Is the Bravura Solutions (ASX:BVS) share price a buy? appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/39eblI8