Stock Pick

  • What is the outlook for ASX travel shares for the rest of 2022?

    Man in suit looks through binoculars in front of a control tower at an airport.Man in suit looks through binoculars in front of a control tower at an airport.

    The ASX travel share industry has been through a lot over the last three years. After all this pain, could the clouds finally be lifting?

    Demand for travel was decimated when borders were shut, lockdowns imposed, and Zoom became the way (business) people interacted.

    But, lockdowns are no more. Borders are open.

    This seems like a timely article considering that Qantas Airways Limited (ASX: QAN) just released an update, which could also give positive implications for names like Webjet Limited (ASX: WEB), Flight Centre Travel Group Ltd (ASX: FLT), and Corporate Travel Management Ltd (ASX: CTD).

    Promising update for ASX travel shares

    The airline said it’s expecting to generate underlying profit before tax of between $1.2 billion and $1.3 billion in the first half of FY23. This is based on “forward bookings, current fuel prices and latest assumptions about the second quarter”.

    Qantas revealed that travel demand remains “strong” across all categories. This sounds good for the wider ASX travel share sector. Revenue intake for business purposes is more than 100% of pre-COVID levels and leisure revenue intake has “further strengthened” to more than 130%.

    A warning about the economic outlook

    While demand is strong, Qantas noted that the broader operating environment remains “complex” with high fuel prices and high inflation, as well as higher interest rates hitting consumer confidence.

    Even so, the airline believes that “robust demand indicates that people are prioritising spending on travel above other categories”, allowing it to recover higher fuel costs through fares.

    Fuel prices are now around 75% higher than in pre-COVID times.

    What to make of this for ASX travel shares

    Webjet, Flight Centre and Corporate Travel don’t generate all of their earnings from Australia, and don’t exclusively deal with Qantas. But, I think this is a very promising sign considering Qantas is saying that demand remains at least as strong as pre-COVID times, despite the higher fuel costs situation.

    The Qantas share price is up more than 11% today. But, I do think the others could be short-to-medium-term (and perhaps long-term) opportunities because some investors may not yet be factoring in a strong recovery of earnings for them.

    Corporate Travel Management shares are down 28% over the past six months, while the Webjet share price is down 6% in the last month.

    Webjet has done a lot of work on reducing its cost base so that its earnings before interest, tax, depreciation and amortisation (EBITDA) margin is strong when travel demand recovers to pre-COVID levels.

    Corporate Travel has worked hard to increase its market share, including with smart and well-timed acquisitions.

    Final thoughts

    Travel is not exactly a highly defensive sector. But I believe, with the worst of COVID impacts now long behind us, proof of a return to profitability will be a useful boost to investor sentiment about ASX travel shares.

    The post What is the outlook for ASX travel shares for the rest of 2022? appeared first on The Motley Fool Australia.

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    Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Zoom Video Communications. The Motley Fool Australia has recommended Corporate Travel Management Limited, Flight Centre Travel Group Limited, Webjet Ltd., and Zoom Video Communications. 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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  • BrainChip share price flat despite ‘new milestone’

    A young man stands facing the camera and scratching his head with the other hand held upwards wondering if he should buy Whitehaven Coal shares

    A young man stands facing the camera and scratching his head with the other hand held upwards wondering if he should buy Whitehaven Coal sharesThe BrainChip Holdings Ltd (ASX: BRN) share price is having a subdued day on Thursday.

    At the time of writing, the semiconductor company’s shares are flat at 87.5 cents.

    This compares unfavourably to the performance of the ASX 200 index, which is currently up 0.5%.

    And that’s despite BrainChip releasing its second announcement in as many days.

    What did BrainChip announce?

    This morning BrainChip announced that it has strengthened its patent portfolio with a “new milestone.”

    The release notes that this new milestone demonstrates the company’s intention and openness to recognise essential technologies of other parties and acquire their intellectual property (IP) to improve its long-term competitive advantage.

    On this occasion, the company has now gained full ownership of the IP rights related to the JAST learning rule and algorithms that were acquired from French technology transfer-based company TTT in 2017.

    This has allowed the company to terminate the licence agreement that came with the original acquisition.

    Though, with a one-off fee of just 250,000 euros, it doesn’t appear as though TTT placed much value on this IP. This may be why the BrainChip share price is responding in such a manner today.

    Nevertheless, BrainChip stated that it “believes the pending patent applications, once issued, will protect a broad level of learning algorithms, providing competitive advantages to the Company.”

    It highlights that key features of the acquired IP rights are as follows:

    • The underlying invention relates to unsupervised detection of repeating patterns in a series of events.
    • Detection of repeating patterns is performed through an innovative bit-swap method enabling resource-efficient implementation in silicon.

    Combined with yesterday’s patent issue in the United States, BrainChip has a patent portfolio comprising 9 US, 1 European, and 1 Chinese issued patents. It also has 29 patent applications pending across all markets.

    The post BrainChip share price flat despite ‘new milestone’ appeared first on The Motley Fool Australia.

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    Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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  • Why is the Core Lithium share price lagging the ASX 200 on Thursday?

    An unhappy man in a suit sits at his desk with his arms crossed staring at his laptop screen as the PointsBet share price falls

    An unhappy man in a suit sits at his desk with his arms crossed staring at his laptop screen as the PointsBet share price falls

    The Core Lithium Ltd (ASX: CXO) share price has been a strong outperformer over the medium and longer term.

    But not today.

    Core Lithium shares closed yesterday trading for $1.17 and are currently trading for $1.13, down 3% in morning trade.

    The fall comes despite a positive start from the S&P/ASX 200 Index (ASX: XJO) on Thursday. The benchmark index is up 0.30% at this same time.

    But it’s not just the Core Lithium share price lagging the benchmark today.

    The S&P/ASX 200 Materials Index (ASX: XMJ) is down 0.7%. And ASX lithium shares are broadly falling.

    The Pilbara Minerals Ltd (ASX: PLS) share price, for example, is down 5.2%, while shares in rival ASX lithium stock Allkem Ltd (ASX: AKE) are down 3.8%.

    There’s no price-sensitive news out from Core Lithium today.

    And the healthy long-term outlook for Australian lithium exports remains unchanged.

    So, following a big run higher for much of the past year, today’s sell-off appears to be largely driven by some profit-taking.

    Core Lithium share price snapshot

    Shares in Core Lithium are up a whopping 136% since this time last year. An impressive return, given that the ASX 200 is down 8% over the 12 months.

    The post Why is the Core Lithium share price lagging the ASX 200 on Thursday? appeared first on The Motley Fool Australia.

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    Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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  • Why is the NAB share price having such a stellar run today?

    Two businesspeople in suits run, one chasing the other.Two businesspeople in suits run, one chasing the other.

    It’s shaping up to be a good day for the National Australia Bank Ltd (ASX: NAB) share price.

    The banking giant’s stock is lifting 3.71% at the time of writing to trade at $30.99. That sees it among the top performers on the S&P/ASX 200 Index (ASX: XJO).

    Meanwhile, the index is posting a 0.52% gain.

    So, what might be driving the NAB share price higher into the green on Thursday? Let’s take a look.

    What might be boosting the NAB share price today?

    There’s been no news to explain the gains posted by the NAB share price on Thursday. Though, the stock isn’t alone in the green.

    It’s joined by many of its S&P/ASX 200 Financials Index (ASX: XFJ) peers. The financial sector is climbing 2.34% right now, driven by the Westpac Banking Corp (ASX: WBC) share price’s 4.26% jump.

    As is the case with NAB, there’s been no word from the Westpac camp either.

    Where there have been whispers, however, is Bank of Queensland Ltd (ASX: BOQ). The smaller ASX 200 bank posted its financial year 2022 earnings yesterday, sending its stock 11% higher.

    They came complete with a 15% year-on-year increase in after-tax profits and an upsized 24-cent final dividend, bringing the bank’s full-year offerings to 46 cents per share.

    On top of that, Bank of Queensland has been the focus of several brokers’ notes this morning. Goldman Sachs, for one, commented:

    One of the key highlights of the [bank’s] FY22 result was the disclosure of its 4Q22 [net interest margin (NIM)], which at 1.81%, was 6 basis points higher than the 2H22 half average NIM. Furthermore, management noted that the exit NIM was well in excess of the 4Q22 NIM.

    Fundamentally, this improving NIM outlook is being driven by inertia in deposit pricing as cash rates (and therefore asset interest rates) rise. It is for this reason we continue to believe the major banks are better positioned to benefit from the current environment.

    That’s likely good news for NAB and its big four peers, and could be helping to bolster their share prices on Thursday.

    The post Why is the NAB share price having such a stellar run today? appeared first on The Motley Fool Australia.

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    Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Goldman Sachs. The Motley Fool Australia has recommended Westpac Banking Corporation. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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  • Down 25%, is it safe to invest in the S&P 500 right now?

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

    A man rests his chin in his hands, pondering what is the answer?

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

    It’s ugly out there. The S&P 500 (SNPINDEX: ^GSPC) is 25% below its January peak, and after its latest rout sits within sight of new multi-month lows. Yikes! Whether you’re a new investor or a veteran, it’s tough to feel confident about putting money into the market right now.

    If you truly believe in a long-term approach, though, this could be the time to do exactly that. Just buckle up if you’re going to take the ride.

    Not quite but close enough?

    The market could still easily move lower before moving higher again. The average bear market drags the S&P 500 to 36% below its peak, according to data from mutual fund company Hartford Funds, while brokerage firm Edward Jones calculates the average bear market lasts about 15 months. We’re not quite at either mark yet.

    Data by YCharts.

    Trying to step in at the precise end of a bear market and the very beginning of a new bull market, however, can prove costly for a couple of different (but related) reasons.

    The first reason: You’re not going to be able to identify the bottom while the bottom is being established.

    Plenty of pundits will argue with that, claiming the market gives clear hints it’s hitting bottom. And there might be something to their arguments — the stock market may be somewhat mechanical some of the time. But those hints are not consistent enough to count on when you’re making major buying and selling decisions. At best, it’s an exercise in futility; at worst, it’s a way of talking yourself out of a great opportunity at the worst possible time.

    Why? Consider the second reason you should be more inclined to invest right now despite the clear bearishness rather than hold off: Not being in the market for the entirety of any bullish reversal can cost you … a lot.

    Edward Jones had some curious findings regarding recoveries. Chief among them: The five most recent bull markets averaged a gain of 25% in just the first three months. That’s a sizable chunk of the average total bull market gain (more than 150% from beginning to end).

    Or think about it like this: While this bear market isn’t 15 months old and hasn’t reduced the S&P 500’s value by 36%, it’s closer to both of those milestones than not.

    The real danger

    Whether or not it’s safe to step into the S&P 500 now that it’s 25% below its peak mostly depends on your personal situation.

    If you’re going to need the capital in the very near future (say, for college tuition or to buy a home), then there’s danger in being exposed to stocks here. If you’re nearing retirement, that also complicates the answer.

    Impending retirement doesn’t necessarily mean you should remain on the sidelines. While you may start withdrawing some of your retirement funds right away, for most investors the bulk of any retirement savings won’t be tapped for years down the road. It would be nice to grow that piece of your nest egg in the meantime, and stocks are still the best long-term growth engine around.  

    Perhaps a better question to ask is this: Are you more afraid of losing money in the short run, or more afraid of missing out on an opportunity to make money in the long run? If your portfolio reflects an outlook of five years or longer, your bigger danger isn’t being in the market when things are a little rough — it’s not being in the market once things finally take a turn for the better.

    Most investors fear the former until they’ve had a chance to consider the consequences of the latter.  

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

    The post Down 25%, is it safe to invest in the S&P 500 right now? appeared first on The Motley Fool Australia.

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    James Brumley has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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

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  • Why this heavily shorted ASX 200 share could be a buy: expert

    Smiling man sits in front of a graph on computer while using his mobile phone.Smiling man sits in front of a graph on computer while using his mobile phone.

    It’s been a rough year for the share price of S&P/ASX 200 Index (ASX: XJO) tech stock Megaport Ltd (ASX: MP1).

    Not only has it dumped 60% year to date to trade at $7.67, but the company’s short position has been on the up and up.

    Megaport’s short position had leapt to 10% as of The Motley Fool Australia’s latest weekly short-selling breakdown. As my colleague James noted, short-sellers’ eyes might have been caught by valuation concerns and weakness in the tech sector.

    But not all are bearish on the ASX 200 tech share. Indeed, some experts are tipping the stock as a buy, while others are suggesting it could offer more than 80% upside.

    Let’s take a closer look at what might be going right for the embattled short target.

    Is ASX 200 tech share Megaport a buy right now?

    The future could be bright for the Megaport share price, with some experts flagging it as a buy.

    The company uses software-defined networking to provide cloud connectivity and on-demand data networking globally.

    The tech share has been sold off alongside the S&P/ASX 200 Information Technology Index (ASX: XIJ) this year. The sector has dumped 37% year to date amid rising interest rates.

    Its tumble might have brought about a buying opportunity, however.

    Market Matters author and Shaw and Partners portfolio manager James Gerrish thinks the stock is a buy, saying growth challenges facing the company are likely already priced into its share price. He continued, telling Livewire:

    Obviously, they’ve had to refocus on how they sell their product. They had some issues with the level of growth they were achieving. I think they’ve addressed that. They’re providing a little bit more clarity and information to the market and I think that’s a positive. 

    The company’s average revenue per customer grew 24% last financial year. Its major focus will be growing towards profitability this fiscal year.

    But not all are bullish on its stock. Investors Mutual portfolio manager Lucas Goode said, via Livewire:

    I think with Megaport they’ve got a really interesting product, but it’s one that, while it should have really high incremental margins, they’ve really struggled to generate the returns that you would expect because it’s actually a very difficult sales cycle.

    Fortunately, top brokers seem more inclined to agree with Gerrish over Goode.

    Goldman Sachs has a buy rating and a $10.30 price target on Megaport shares, implying the ASX 200 tech stock has a 37% upside.

    And Citi is even more hopeful, tipping the stock as a buy and slapping it with a $13.90 price target, The Motley Fool Australia recently reported. That marks a potential 81% upside.

    The post Why this heavily shorted ASX 200 share could be a buy: expert appeared first on The Motley Fool Australia.

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    Citigroup is an advertising partner of The Ascent, a Motley Fool company. Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Goldman Sachs and MEGAPORT FPO. The Motley Fool Australia has recommended MEGAPORT FPO. 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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  • Is Google now joining the crypto party following its latest move?

    group of asx 200 investors celebrating increasing share pricegroup of asx 200 investors celebrating increasing share price

    Alphabet Inc (NASDAQ: GOOG), or Google to you and me, looks to be joining the crypto party.

    Google has been gradually increasing its footprint in the crypto space for some time now.

    And this week, the tech giant announced a partnership with Coinbase Global Inc (NASDAQ: COIN) to improve the Web3 ecosystem.

    Google Cloud to accept crypto payments

    According to news provided by Google Cloud, that partnership will see certain customers be able to pay for their cloud services via select digital tokens.

    Coinbase supports numerous cryptos, including Bitcoin (CRYPTO: BTC), Ethereum (CRYPTO: ETH), and Dogecoin (CRYPTO: DOGE).

    Following the initial rollout in early 2023, Google will likely expand that offering to more customers.

    Atop enabling payments in select tokens, CNBC reports that Google is also looking into the possibility of employing Coinbase Prime. Coinbase Prime stores companies’ cryptos alongside enabling trades.

    What did management say?

    Commenting on the partnership that will see Google Cloud accept crypto payments, Coinbase CEO Brian Armstrong said: “We are excited Google Cloud has selected Coinbase to help bring Web3 to a new set of users and provide powerful solutions to developers.”

    Armstrong continued:

    With more than 100 million verified users and 14,500 institutional clients, Coinbase has spent more than a decade building industry-leading products on top of blockchain technology. We could not ask for a better partner to help execute our vision of building a trusted bridge into the Web3 ecosystem.

    Google Cloud CEO Thomas Kurian also touted the advantages for Web3 developers:

    We want to make building in Web3 faster and easier, and this partnership with Coinbase helps developers get one step closer to that goal… Our focus is making it frictionless for all customers to take advantage of our scalability, reliability, security, and data services, so they can focus on innovation in the Web3 space.

    It’s unclear if Google intends to hold the Bitcoin, Ethereum or other cryptos it receives as payment for its cloud services or swap them for fiat currency.

    The post Is Google now joining the crypto party following its latest move? appeared first on The Motley Fool Australia.

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    Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Alphabet (A shares), Alphabet (C shares), Bitcoin, and Ethereum. The Motley Fool Australia has positions in and has recommended Alphabet (A shares), Alphabet (C shares), Bitcoin, and Ethereum. 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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  • Brokers give their verdict on the Bank of Queensland share price

    A trio of ASX shares analysts huddle together in an office with computer screens all around them showing share price movements

    A trio of ASX shares analysts huddle together in an office with computer screens all around them showing share price movements

    The Bank of Queensland Ltd (ASX: BOQ) share price is pushing higher again on Thursday.

    In morning trade, the regional bank’s shares are up 1% to $7.65.

    This means the Bank of Queensland share price is now up 11% this week.

    Why is the Bank of Queensland share price storming higher?

    Investors have been buying the bank’s shares this week following the release of its full year results.

    Although Bank of Queensland’s results fell a touch short of expectations, its exiting net interest margin (NIM) got investors excited and appears to show that rising interest rates are boosting profitability in the banking sector.

    It was for this reason that the big four banks all charged higher along with the Bank of Queensland share price on Wednesday.

    Can its shares keep rising?

    According to a note out of Goldman Sachs, its analysts have retained their neutral rating on the company’s shares this morning.

    However, it is worth noting that the broker’s price target of $8.51 still implies potential upside of 11% for investors. And that’s before dividends!

    Goldman was pleased with Bank of Queensland’s exiting NIM, but fears that rising costs could hold it back in FY 2023. It explained:

    We reiterate our Neutral call on BOQ. Despite valuation support, we believe its NIM leverage will ultimately underperform peers and its expenses will remain under pressure given the current inflationary environment and headwinds from running legacy systems along with building its new digital bank, which are expected to offset ME Bank synergies and restructuring benefits.

    Citi remains bullish

    One broker that is more bullish on the Bank of Queensland share price is Citi.

    This morning the broker has retained its buy rating and $8.75 price target on the bank’s shares.

    This implies potential upside of 14% for investors over the next 12 months.

    The post Brokers give their verdict on the Bank of Queensland share price appeared first on The Motley Fool Australia.

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    Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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  • Can ASX 200 lithium shares bank on the price of lithium to keep soaring?

    Young boy with glasses in a suit sits at a chair and reads a newspaper.Young boy with glasses in a suit sits at a chair and reads a newspaper.

    ASX 200 lithium shares have soared ahead in 2022, but how will lithium prices impact their fortunes in the future?

    Lithium shares on the S&P/ASX 200 Index (ASX: XJO) include Pilbara Minerals Ltd (ASX: PLS), Allkem Ltd (ASX: AKE) and Core Lithium Ltd (ASX: CXO). Sayona Mining Ltd (ASX: SYA) is a recent addition to the ASX 200.

    The Office of the Chief Economist has recently revealed its lithium price predictions. So what is the outlook?

    Lithium prices tipped to rise, then ease

    Pilbara Minerals shares have risen 62% in the year to date, while Allkem shares have soared 37%. Core Lithium shares have surged 95% this year so far, while Sayona shares have rocketed 73%.

    The price of lithium impacts the earnings of ASX lithium shares, particularly those that are producing or planning production soon.

    Lithium prices will rise in 2022 and 2023 before easing in 2024, a Resources and Energy September quarterly report predicts.

    The report predicts spodumene prices will jump from an average of US$598 a tonne in 2021 to US$2,730 a tonne in 2022. In 2023, spodumene prices are tipped to soar to US$3,280 a tonne before easing to US$2,490 a tonne in 2024.

    Meanwhile, lithium hydroxide prices are forecast to increase from US$17,370 a tonne in 2021 to US$38,575 a tonne in 2022. In 2023, lithium hydroxide prices are tipped to soar to US$51,510 before pulling back to US$37,650 in 2024.

    The report stated:

    World demand for lithium is estimated to increase from 583,000 tonnes of lithium carbonate equivalent (LCE) in 2021 to 724,000 tonnes in 2022.

    Asia remains the major source of demand for lithium, despite the spread of new battery manufacturing capacity into Europe and the US.

    Global electric vehicle sales soared 26% in the 2022 financial year, the report noted. Chinese sales surged 110%, European sales rose 6% and North American sales lifted 27%.

    UBS rates the Allkem share price as a buy but has recently recommended investors sell Pilbara Minerals shares.

    ASX 200 lithium share price snapshot

    In the past year, Allkem shares have lifted 69%, while Pilbara shares have exploded 153%.

    Sayona Mining shares have risen 50% in a year, while Core Lithium shares have charged 140% higher.

    The post Can ASX 200 lithium shares bank on the price of lithium to keep soaring? appeared first on The Motley Fool Australia.

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    Motley Fool contributor Monica O’Shea has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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  • Why is the NIB share price crashing 8% today?

    A businesswoman pulls her glasses down in shock to look at the bad news on her computer.

    A businesswoman pulls her glasses down in shock to look at the bad news on her computer.

    The NIB Holdings Limited (ASX: NHF) share price has returned from its trading halt and sunk deep into the red.

    In morning trade, the private health insurer’s shares are down over 8% to $6.88.

    Why is the NIB share price crashing?

    The weakness in the NIB share price on Thursday has been driven by the completion of the company’s $135 million institutional placement.

    According to the release, following a bookbuild process, NIB was able to raise the funds at $6.90 per new share. This represents a discount of 8.1% to the NIB share price prior to the halt.

    This was also the floor price for the underwritten placement, which may be an indication that demand wasn’t overly strong for the offering.

    NIB will now push ahead with its non-underwritten share purchase plan with the aim of raising a further $15 million. These funds will be raised at the lower of the institutional placement price or a 2% discount to the five-day volume weighted average price on 7 November.

    Why is NIB raising funds?

    The proceeds from the equity raising will be used to fund its entry into Australia’s National Disability Insurance Scheme (NDIS) sector as a Plan Manager. NIB has identified a number of potential acquisitions and signed an agreement for one.

    It will start with the acquisition of Maple Plan, which is the seventh largest Plan Manager with ~7,000 participants and revenue of approximately $10.4 million in FY 2022.

    NIB’s managing director, Mark Fitzgibbon, commented:

    The NDIS has become a vitally important part of Australia’s social capital and a significant economic sector. Already it supports 530,000 participants with more than 800,000 expected by 2030. NDIS funding is expected to double from around $29 billion in 2022, to $59 billion by 2030.

    We believe we can contribute to the success of the NDIS and improve outcomes for participants. There is an alignment between supporting NDIS participants and our 70-year history as a private health insurer.

    The post Why is the NIB share price crashing 8% today? appeared first on The Motley Fool Australia.

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