Category: Stock Market

The BWX Ltd (ASX: BWX) share price has returned from its trading halt and is storming higher.

At the time of writing the personal care products company’s shares are up 7% to $3.91.

Why was the BWX share price in a trading halt?

On Thursday BWX requested a trading halt in order to undertake a $50 million equity raising. This comprised a $40 million fully underwritten institutional placement at $3.40 per share (a discount of 7.1% to its last close price) and a $10 million share purchase plan.

The company behind the Sukin brand advised that the funds would primarily be used for the development and construction of a game-changing, world class manufacturing facility

BWX’s Chief Operations Officer, Rory Gration, explained: “This future world-class facility is expected to significantly boost BWX’s in-house manufacturing capacity, capability and competitive advantage; provide up-skilling opportunities for our team; and enhance the ways in which we serve our retail partners, customers, and consumers all over the world.”

“We believe this is an ambitious plan but one that creates further earnings potential to deliver sustainable returns and long-term value creation to shareholders.” he added.

Placement complete.

The good news for BWX is that the manufacturing facility came a step closer to becoming a reality this morning after the company successfully completed its $40 million institutional placement.

BWX advised that it received strong interest from existing offshore and Australian institutional shareholders, as well as other institutional investors. This led to demand significantly exceeding the funds BWX was seeking to raise.

BWX’s CEO and Managing Director, Dave Fenlon, commented: “We are very pleased with the strong support from our institutional shareholders who are right behind our plans to transform BWX’s operating model with the development of a new world-class manufacturing facility.”

“Following a strong FY20 trading performance, we are committed to using the Placement proceeds to invest in the new facility which we expect can solve capacity constraints, unlock significant efficiency gains, and deliver growth over and above our Three Year Strategic Plan,” he concluded.

FY 2020 performance.

Speaking of its FY 2020 trading performance, BWX released a trading update with its equity raising announcement.

According to the release, in FY 2020 BWX delivered a 25% increase in unaudited revenue to $187.6 million and a 30% lift in EBITDA (pre-AASB 16) to $27.5 million. This was in line with its FY 2020 guidance of 20% to 25% revenue growth and 25% to 35% EBITDA growth.

On the bottom line things were even better, with BWX reporting a 48% jump in unaudited statutory net profit after tax to $14.1 million.

More reading

• Market close: ASX 200 drops 0.7% today
• BWX delivers strong growth in FY 2020 and announces $50 million equity raising
• Leading brokers name 3 ASX shares to buy today
• 3 ASX shares that could make a big turnaround
• ABS reveals which industries (and ASX shares) may rebound hard after COVID-19

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended BWX 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.

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The Integrated Research Limited (ASX: IRI) share price is on watch this morning after the technology provider announced it expects to report record revenue and profit in FY20. Revenues and profit are expected to grow between 8% and 11% and FY20. 

What does Integrated Research do? 

Integrated Research is involved in the design and implementation of technology that optimises business operations, predicts disruptions, and automates business processes. Now with over 1,000 customers in 60 countries, Integrated Research provides performance management software for critical IT infrastructure, payments, and unified communications. 

What did Integrated Research announce? 

Integrated Research announced that, based on internal management accounts, it anticipates record revenues and profit in FY20. The company expects total revenue to be in the range of $109.5 million to $111 million, which represents growth of 9% to 10% on the prior corresponding period. Total profit after tax is expected to be in the range of $23.6 million to $24.2 million, compared to $21.9 million in FY19, representing growth of 8% to 11%. 

How has Integrated Research been performing? 

The Integrated Research share price took a tumble in the March downturn but has since recovered and surpassed previous highs. From a low of $2.34 in March, the Integrated Research share price has gained 65% and is currently trading at $3.87. As a result of the rise in the share price, Integrated Research’s price-to-earnings ratio now sits around 30. 

In the first half, Integrated Research reported its fifth consecutive year of interim profit growth. Total revenue increased 6% to $53.2 million and profit after tax increased 1% to $11.8 million. A fully franked interim dividend of 3.5 cents per share was paid. Significant sales during the half year came from AT&T, BT, Capgemini, ANZ, and HCL Technologies. with over 95% of the company’s revenue derived outside Australia. 

In the company’s first half announcement, chair Paul Brandling stated, “the company is well positioned to deliver on its hybrid cloud strategy as a result of the new SaaS platform going live and ready for first beta customers to trial its new Payment Assurance products over the coming months.”

What is the outlook for Integrated Research? 

Integrated Research has been steadily increasing its earnings per share over recent years. With share prices frequently following earnings per share, an appreciation in the Integrated Research share price could be expected if it can continue to grow earnings. 

More reading

• Rio Tinto share price on watch after Q2 production update
• Westpac share price on watch after being hit with flex commissions class action
• Why this fundie sees an ASX bank share recovery
• Are Transurban shares a hot buy today?
• Why I would buy NAB and this ASX dividend share

Kate O’Brien has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Integrated Research Limited. 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.

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The Rio Tinto Limited (ASX: RIO) share price will be one to watch this morning after the release of its second quarter production update.

How did Rio Tinto perform?

During the second quarter Rio Tinto reported 86.7Mt of Pilbara iron ore shipments, which brought its first half shipments to a total of 159.6Mt. This was a 1% and 3% increase, respectively, on the prior corresponding periods.

Pleasingly, the mining giant achieved higher production in the second quarter despite the impact of COVID-19 related operational controls.

Another positive was the price Rio Tinto commanded for its iron ore. It revealed a Pilbara iron ore FOB average realised price of US$86.5 per dmt in the second quarter and US$85.4 per dmt for the half.

Also performing well were its Bauxite and Iron Ore pellets operations. Bauxite production came in 9% higher for the quarter at 14.6Mt (+8% for the half) and iron ore pellets production was up 9% for the quarter to 2.8Mt (+6% for the half).

This offset weaker Aluminium, Copper, and Titanium dioxide production during the quarter and half. For the first half, aluminium production was down 2%, copper production fell 5%, and titanium dioxide production reduced by 7%.

Iron ore guidance on track.

Rio Tinto’s Chief Executive, J-S Jacques, was pleased with the company’s performance and notes that it is on track to achieve its iron ore guidance in FY 2020.

He said “We delivered a strong performance, particularly in iron ore and bauxite, demonstrating the underlying resilience of our business and ability to adapt in difficult conditions. Our iron ore assets are performing well in a strong pricing environment and we are on track to meet our 2020 iron ore guidance.”

The chief executive also spoke about the pandemic and the heavily criticised events at Juukan Gorge during the quarter.

“Our focus is to maintain a business as usual approach with many safeguards at a very unusual time. Our operational teams are continuing to run our assets safely so we can continue to contribute to local and national economies and serve our customers. We remain even more committed to our relationship with communities, following the Juukan Gorge events in the Pilbara, and we are engaging extensively with Traditional Owners around our operations and across Australia,” Mr Jacques added.

He concluded: “We are executing our value over volume strategy to drive performance, productivity and free cash flow per share. We will remain agile and ready to adapt to the changing operating and macro environment.”

Guidance.

Rio Tinto’s capital expenditure is expected to be around US$6 billion in FY 2020, compared to previous guidance of US$5 billion to US$6 billion. This is due to an appreciation in its major operating currencies against the US dollar since the first quarter and a reduced impact of COVID-19 on both sustaining and development expenditure.

After which, capital expenditure for FY 2021 and FY 2022 is expected to be around US$7 billion per year, up from US$6.5 billion. This guidance includes spend from 2020 that has been re-phased as a result of COVID-19 restrictions. 

Elsewhere, Rio Tinto’s production guidance remains unchanged across all commodities and it continues to target iron ore shipments of 324Mt to 334Mt this year.

More reading

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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.

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The Westpac Banking Corp (ASX: WBC) share price will be on watch on Friday after confirming that it has been hit with another class action.

What has Westpac announced?

This morning Westpac confirmed that it has been named in a class action brought by law firm Maurice Blackburn in relation to allowing automotive dealerships to charge customers flex commissions on car finance.

Flex commissions allowed automotive dealerships to set the interest rate on car loans above a base rate set by the bank and take a cut of the difference.

The practice was banned by ASIC in 2018 on the belief that they could encourage car dealers and finance brokers to arrange car loans at the highest possible interest rate. The regulator noted that the higher the interest rate, the larger the commission earned by the dealer or broker.

Who is impacted?

This class action has been filed by Maurice Blackburn on behalf of certain plaintiffs and group members in relation to the payment of flex commissions to auto dealers pursuant to automobile finance agreements signed during the period 1 March 2013 to 31 October 2018 inclusive.

According to the AFR, Maurice Blackburn’s national head of class actions, Andrew Watson, believes there could be as many as 400,000 unsuspecting car buyers that have been negatively impacted by the practice.

He said: “This case will seek to prove that Westpac and St George failed to comply with their obligations under consumer credit protection laws and that this failure caused substantial losses for many consumers.”

At this stage it is unclear what the financial damage of a successful claim would be. At present, the claim seeks to recover “damages of an unspecified amount.”

Westpac has advised that it intends to defend the claim and notes that other similar claims may be filed by other law firms.

More reading

• Why this fundie sees an ASX bank share recovery
• Why Goldman Sachs’ revenue surge bodes well for the Macquarie Group share price
• ASX 200 jumps 1.3%: Big four banks drop lower, Afterpay up after U.S. update
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Motley Fool contributor James Mickleboro owns shares of Westpac Banking. 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.

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The major ASX bank shares dominate the S&P/ASX 200 Index (ASX: XJO), not to mention many conversations about the Aussie share market.

However, 2020 hasn’t been the best year for the Aussie banks. But one leading fundie thinks that might be about to change…

Why ASX bank shares could be set for a rebound

The latest fundie to step up the plate is Ausbil’s Paul Xiradis. The Aussie fund manager provided his thoughts on the current market and macro outlook for 2020 in a recent client memo.

In the memo, Mr Xiradis said if you believe in a strong Australian and New Zealand economic recovery, “you have to be comfortable with the banks”. He commented that ASX bank shares have become “a pretty attractive proposition” after the coronavirus-induced selldown.

That’s largely due to the nature of the banks’ operations and role in the economy. The banks are “leveraged to an improving economy” and a faster than expected recovery could be a huge factor. That means now could be a “fantastic opportunity” for investors to re-weight to the banks, according to Xiradis.

Ausbil increased its exposure during the recent bear market and is now “the most overweight” it’s been in the banks for years.

How have the banks performed this year?

In short, not well. Commonwealth Bank of Australia (ASX: CBA) and Westpac Banking Corporation (ASX: WBC) shares fell 40.4% and 45.1%, respectively, from 14 February to 23 March.

However, the recovery since that point has been strong. CommBank is down 9.0% for the year, while the benchmark ASX 200 index has fallen 10.2% in 2020.

If a leading fundie like Mr Xiradis is bullish on the banks, maybe it’s time to give them another look in 2020.

What other shares is Ausbil looking at right now?

It wasn’t just ASX bank shares that Mr Xiradis has his eye on right now. Ausbil has increased its exposure to Qantas Airways Ltd (ASX: QAN) and Transurban Group (ASX: TCL) ahead of an anticipated recovery.

In the retail sector, Ausbil is also looking at particular companies within the healthcare, retail and real estate sectors. That includes high-yield options like Goodman Group (ASX: GMG) and JB Hi-Fi Limited (ASX: JBH).

More reading

• Are Transurban shares a hot buy today?
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Motley Fool contributor Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of Transurban Group. 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.

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You wouldn’t think a toll road operator could outperform in the middle of a pandemic. However, that’s exactly what Transurban Group (ASX: TCL) shares could do in 2020.

Why could Transurban shares outperform this year?

It’s not just me whose bullish on Transurban right now. Leading Ausbil fund manager, Paul Xiradis, is also keen on the Aussie toll road operator.

In fact, in a recent memo to Ausbil clients, Mr Xiradis said the fund has increased its exposure to Transurban with an eye to the coronavirus recovery.

Essentially, Ausbil’s base case is for a quicker than expected recovery. If the economy bounces back, that could mean a faster return to normal traffic numbers. That means more toll road income for Transurban both in Australia and North America.

Given the share market is forward-looking, this could mean Transurban shares have been oversold by investors fearing the worst.

What do the numbers say?

The Transurban share price has fallen 9.0% this year but is still outperforming the S&P/ASX 200 Index (ASX: XJO).

All in all, that doesn’t leave it in a bad spot. But if we do see a quick recovery, I agree that Transurban could be a bargain.

The Aussie toll road operator reported a 50% drop in traffic numbers in mid-April. That spooked investors and saw many selldown Transurban shares. However, things are starting to turnaround for the better. In the group’s 22 June trading update, Transurban reported its Australian traffic numbers were down 20% from early March and commented that the impact had peaked in mid-April, with a progressive recovery evident since. 

Changing attitudes towards commuting could also help Transurban’s earnings. More Aussies are working from home, which could be a drawback on overall traffic numbers. However, those that are commuting could be increasingly likely to drive to work rather than use public transport due to heightened hygiene concerns.

Transurban also recently opened the M8 toll road and commenced tolling on the M5 East on 5 July. That’s good news for long-term growth and could be a cornerstone for future revenue.

Is now the time to buy? 

The Transurban share price is still down on where it started the year. Despite some challenges, now could be a good time to pick up Transurban shares for a bargain if you’re bullish on a quick recovery.

More reading

• Why this fundie sees an ASX bank share recovery
• 5 things to watch on the ASX 200 on Friday
• Market close: ASX 200 drops 0.7% today
• The ASX tech ETF you can buy and hold forever
• Why brokers think you should buy the slumping Woodside Petroleum share price today

Motley Fool contributor Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of Transurban Group. 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.

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If you have space in your portfolio for some ASX dividend shares, then you might want to consider the two listed below.

Both of these ASX dividend shares offer generous yields which smash the interest rates offered on savings accounts and term deposits. Here’s why I like them:

Dicker Data Ltd (ASX: DDR)

The first ASX dividend share to look at is Dicker Data. It is a wholesale distributor of computer hardware and software in the ANZ region. I’ve been very impressed with the way the company has consistently delivered solid earnings and dividend growth over the last few years. This has been driven by a combination of new vendor agreements, industry tailwinds, and solid demand.

Pleasingly, its growth has accelerated in FY 2020, thanks partly to the pandemic. This has put Dicker Data in a position to deliver a bumper profit result this year. In light of this, the board intends to increase its dividend by 31% to 35.5 cents per share. Which based on the latest Dicker Data share price, represents a 5.1% fully franked dividend yield.

National Australia Bank Ltd (ASX: NAB)

If you don’t have exposure to the banking sector, then you might want to consider buying NAB shares. Although times are hard for the bank right now and a rise in bad debts seems inevitable, I’m optimistic that this is more than priced into its shares following its provisions update. As a result, I think the worst could now be behind the bank and it could be an opportune time to pick up its shares.

This is especially the case if you’re looking for dividends in this low interest rate environment. Based on the latest NAB share price, I estimate that NAB’s shares currently offer investors a generous fully franked 5.1% FY 2021 dividend yield.

More reading

• ASX 200 flat: Big four banks and travel shares push higher, Breville tumbles lower
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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Dicker Data 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.

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