The Washington H. Soul Pattinson and Co. Ltd (ASX: SOL) share price is surging in early afternoon trading amid the company posting its results for FY22.

Shares of the diversified investment house currently trade for $27.17 apiece, 5.23% higher than yesterday’s close.

Let’s cover the report’s highlights.

What did Soul Patts report?

• Group regular profit after tax up 154.4% year over year (yoy) to $834.6 million
• Group loss after tax up 104.7% yoy to $12.9 million
• Net asset value up 71.6% yoy to $9.96 billion
• Net cash flows from investments up 93% yoy to $347.9 million
• Final ordinary dividend of 43 cents per share plus a 15 cents per share special dividend, both fully franked
• 20-year total shareholder return of 12.2% per annum, beating the market by 3.4%

Sol Patts reported a statutory net loss of $12.9 million after tax. It said its group loss reflects a nonrecurring goodwill impairment charge of $984.56 million for the acquisition and merger of listed investment company (LIC) Milton, completed in October last year.

The company’s investments did much better than the overall market in the last year. Its net asset value per share increased by 34.9%, while the market fell by 6.4%.

In a rapidly changing economy, the company said its portfolio adjusted for the significant shift in interest rates, inflation expectations, and equity market conditions. In one year, the total value of the portfolio’s purchase and sale of assets exceeded $7 billion.

Both the special and final ordinary dividends have a record date of 21 November and an expiry date of 18 November. The payment date for the dividends is 12 December.

What else happened in FY22?

The company’s Net Cash Flows From Investments for the year was $347.9 million, an increase of 93% from the previous year. On a per share basis, this increase was 28% to 96 cents per share. The main reason for this was higher dividend income from the company’s portfolio, specifically from coal prices and the Milton merger.

Commenting on the growth of the company’s dividend, Soul Patts chairman Robert Millner said:

WHSP has an excellent track record of growing dividends year after year. Over the last 20 years, the dividend has increased every year and grown at a compound average growth rate of 8.5%. There is no other company in the All Ordinaries Index with this track record of growing dividends. The Board is also pleased to be able to pay a Special Dividend as a result of the very strong cash generation by New Hope in the current environment.

What did management say?

WHSP managing director Todd Barlow gave the following commentary:

WHSP’s strategy of creating an actively managed portfolio of diverse businesses continues to perform well. The Milton merger increased our diversification and flexibility to invest across a range of asset classes and industries. Over the last 20 years, WHSP’s annualised TSR has grown by 3.4% more than the market. Over that period, shareholders in WHSP have enjoyed total returns of nearly nine times their original investment which is more than double an investment in the All Ordinaries Accumulation Index.

What’s next?

Barlow said the market is still changing significantly and prices for different types of investments are going up and down. But there are still good opportunities to invest money, especially in private companies and in loans.

Overall, the company believes that its portfolio can withstand rising interest rates, inflation, and headwinds from a contracting economy. It also said its portfolio focuses on investing in businesses that have good prospects for the future, that are managed well, and have low costs.

Soul Patts share price snapshot

Even with today’s gains, the Soul Patts share price is down 12% in 2022 so far.

That compares with the 11.6% loss in the S&P/ASX 200 Index (ASX: XJO) over the same period.

The company’s current market capitalisation is $9.63 billion.

The post Soul Patts share price jumps 5% on FY22 results appeared first on The Motley Fool Australia.

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Motley Fool contributor Matthew Farley 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 Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia has positions in and has recommended Washington H. Soul Pattinson and Company 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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The Core Lithium Ltd (ASX: CXO) share price has been in the dirt over the past week.

Currently, shares in the ASX lithium producer are down 2.26% to $1.408. This means since last Wednesday, the share has fallen 15.47% despite no company announcements.

Let’s take a look at what’s putting selling pressure on the company’s shares.

What’s going on with the Core Lithium share price?

After rocketing to a record high of $1.688 on 13 September, the Core Lithium share price has continued to fall.

This comes as the S&P/ASX 200 Materials Index (ASX: XMJ) is one of the worst performers on the ASX today, down 2.41%.

When looking at the past week, the sector has tumbled 5.22%

Shares in Lake Resources NL (ASX: LKE) and Liontown Resources Ltd (ASX: LTR) are also down 19% and 7% in a week, respectively.

Investor sentiment in the market is considerably weaker as all eyes are focused on the United States Federal Reserve’s meeting tomorrow.

Any aggressive moves by the central bank will induce investors to flee the US markets, with global markets following suit.

Economists are expecting the Fed to raise the interest rate by 75 basis points, but could go up to 100 basis points to cool off inflation.

Earlier this month, the CPI data came out showing that inflation rose 0.1% on a monthly basis, and 8.3% annually.

Whatever happens this week, Core Lithium is playing the long game.

The company wholly owns the Finniss Lithium Project, which is targeting first production of spodumene concentrate by the end of 2022.

Electric vehicles are becoming more mainstream in Australia. Core Lithium is well placed to respond to demand.

The company recently announced it significantly increased the mineral resource estimate and ore reserves estimate for Finniss.

Despite tanking this week, the Core Lithium share price has rocketed by 250% over the past year, and is up 138% year to date.

Based on today’s price, Core Lithium commands a market capitalisation of approximately $2 billion.

The post Why has the Core Lithium share price cratered 15% in a week? appeared first on The Motley Fool Australia.

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

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

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

What happened

Most investors are cool on tech stocks these days, but enough of them warmed to Apple Inc. (NASDAQ: AAPL) Tuesday to give an encouraging little rise to its share price. Thanks to some news about its global operations and positive comments from an analyst, the company’s stock closed nearly 2% higher on the day, in contrast to the over 1% decline of the S&P 500 index.

So what

In an official company blog post, Apple revealed that will soon start raising prices in its App Store for certain regions and countries. These include all countries that use the euro as a currency, plus a clutch of other large and small markets in Europe, Asia, and South America. Non-eurozone countries that will see increases include Egypt, Chile, Japan, and South Korea.

The hikes will start to take effect on Wednesday, Oct. 5, Apple said.

The move comes as the U.S. dollar continues to be a strong currency when matched against peers like the euro or the Japanese yen. A strong dollar reduces the take for U.S.-based Apple from such currencies, hence the need to make adjustments.

It should be noted that this isn’t a unique, one-off move by the company. It periodically makes pricing adjustments based on factors like this.

Meanwhile, noted Apple tracker Daniel Ives from Wedbush reiterated his outperform (read: buy) recommendation on Apple stock, at a $220 per share price target. In a new analyst note, Ives cited the “brisk sales” and lengthening customer wait times for the new iPhone 14 as a key reason for his continued optimism.

Now what

Apple’s services business — which includes the App Store and its massive inventory of titles — has become increasingly important to the company. Compared to Apple’s other revenue stream (products), it’s growing more robustly, to the point where it comprised nearly $20 billion in revenue in the tech giant’s most recently reported quarter.

Meanwhile, Apple device owners tend to be relatively affluent and fond of their apps, so there shouldn’t be too much resistance to the price hikes.

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

The post Why investors found Apple stock tempting today appeared first on The Motley Fool Australia.

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Eric Volkman has positions in Apple. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Apple. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended the following options: long March 2023 $120 calls on Apple and short March 2023 $130 calls on Apple. The Motley Fool Australia has recommended Apple. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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

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Do you own Suncorp Group Ltd (ASX: SUN) shares? Well, there’s some good news awaiting you today.

Not that we would know it from the Suncorp share price. Shares of this ASX 200 financial company have been hit hard today. As it presently stands, Suncorp has lost a nasty 1.91% so far this session, putting the company’s share price at $10.28.

But at least shareholders have some other returns to look forward to this Wednesday. That’s because, for Suncorp shareholders, today is dividend payday.

Suncorp announced its full-year earnings for FY22 early last month. As we covered at the time, Suncorp’s FY22 earnings saw the company report a 14% increase in revenues to $14.17 billion. But that was not enough to stop Suncorp from posting a 24% slide in net profits after tax (NPAT) to $681 million.

Investors haven’t reacted well, with the Suncorp share price now down almost 8% since the results were made public.

At today’s pricing, the Suncorp share price remains down 10.87% in 2022 thus far, and down 17.55% over the past 12 months.

It’s dividend payday for Suncorp shares

A final dividend of 17 cents per share, fully franked, was also declared last month. That was a significant drop from the final dividend of 40 cents per share announced last year. It’s also lower than the interim dividend of 23 cents per share that investors received back in April.

Nonetheless, I’m sure many investors are looking forward to receiving this dividend today. Yes, today is payday, following Suncorp trading ex-dividend on 12 August last month.

So investors will either receive a cash payment today or additional Suncorp shares if the optional dividend reinvestment plan (DRP) is preferred.

At the current Suncorp share price, this dividend, combined with the previous interim dividend of 23 cents per share (also fully franked), gives the company a dividend yield of 3.89%. That grosses up to 5.56% with the full franking credits.

The post Own Suncorp shares? Here’s some good news about your dividends appeared first on The Motley Fool Australia.

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Motley Fool contributor Sebastian Bowen 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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At a time of rising inflation, there is one key metric that investors should research before buying a new ASX share, says Prasad Patkar, head of qualitative investments at Platypus Asset Management.

In an article published by the Australian Financial Review (AFR) today, Patkar says it’s pricing power.

Patkar said:

If you are only allowed to look for one metric to assess the quality of a business, it would be sustainable pricing power. It is an attribute of particular import today when rising input costs are eroding margins for those who don’t possess pricing power.

Analysts grill ASX companies on their pricing power

JP Morgan strategist Jason Steed said price increases were a hot topic during reporting season.

There was a marked increase in the number of questions on price increases in conference call transcripts. Analysts wanted to understand the capacity each company had to raise prices to offset rising costs. Steed said: “Through the season, focus on the topic of price increases hit an all-time high.”

A company’s ability to raise its prices is important for ongoing profitability.

Rising inflation means many companies are paying more for the inputs into their products and services. So, they need to be able to raise customer prices to help offset or overcome those cost increases.

The ability to raise prices also means companies can take advantage of inflation to an extent, with both business-to-business customers and consumers aware and somewhat accepting that ‘everything is going up’.

Which ASX shares have pricing power?

Patkar said businesses with pricing power include REA Group Limited (ASX: REA), Pro Medicus Limited (ASX: PME), ARB Corporation Limited (ASX: ARB), and IDP Education Ltd (ASX: IEL).

Patkar elaborated:

It is not a discretionary purchase for the customer. The product or service offered is superior to that of competition and is backed by reputation or brand. The cost to switch between competitors is usually high and not worth the hassle or risk.

Companies like REA, Seek Limited (ASX: SEK), and Carsales.com Ltd (ASX: CAR) have consistently increased their prices almost every year over the past decade.

REA put its prices up nationally by an average of 8%, according to the article.

The CEO of Ansell Limited (ASX: ANN), Neil Salmon, said they had upped prices without much fuss:

We’ve seen good receptivity to those price increases and that’s why I remain confident that we should be able to fully pass through the inflation effects we see in the rest of our business.

The challenge is getting the balance right. Some companies will lose demand if they raise their prices too much. So it depends on how popular their products and services are and how necessary each customer deems them to be.

Wilsons Advisory told its clients that Cleanaway Waste Management Ltd (ASX: CWY), Telstra Corporation Ltd (ASX: TLS), Lottery Corporation Ltd (ASX: TLC), CSL Limited (ASX: CSL), Resmed Inc (ASX: RMD), and James Hardie Industries plc (ASX: JHX) have significant pricing power to help them offset rising costs.

Some companies protect themselves from rising inflation through contract arrangements with built-in CPI-linked price increases. According to the AFR, 68% of the revenue of Transurban Group (ASX: TCL) is protected this way.

Sustainable and temporary pricing power

In assessing a company’s pricing power, Patkar says investors need to differentiate between sustainable and temporary pricing power.

Patkar said: “When demand went through the roof post COVID and supply couldn’t keep up, everyone seemed to have pricing power. In a shortage, you can take price almost at will.”

Businesses with sustainable pricing power “can take price steadily and regularly because the value they
add to customers is so much larger than the price they charge for it”.

Right now, some companies are taking advantage of unprecedented demand in their sectors to raise prices. However, this demand might be temporary.

In Australia, the cost of building a residential house has risen substantially due to supply chain issues, extra demand from tens of thousands of HomeBuilder projects, inflation, and a lack of skilled labourers.

According to the quarterly CoreLogic Cordell Construction Cost Index, the cost of building a house has risen by 10% over the 12 months to June 2022 — the highest increase since the GST was introduced in 2000.

Such demand pressure has allowed building materials manufacturer Boral Limited (ASX: BLD) to bring forward its annual price increase to August. This is on top of extra price rises earlier in 2022 for products like cement and concrete.

Boral CEO Zlatko Todorcevski said:

These are some of the largest pricing increases by geography and by product line that we’ve put in the market over the past five years. And I think that’s appropriate. I think it’s reflective of the inflationary environment we’re facing.

Big price rises or little price rises?

Some companies with pricing power raise prices in large chunks, while others prefer a steadier approach.

According to the AFR, examples of companies undertaking double-digit price increases include Brambles Limited (ASX: BXB). The cost of hiring CHEP pallets in the United States in 2H FY22 rose by 17%.

ARB says it prefers to do small but frequent price increases given rising inflation is expected to continue into 2023.

ARB says monthly demand for its products has been four times pre-COVID levels. This puts them in a good position to raise prices.

The post Looking to buy ASX shares? Expert reveals ‘one metric to assess the quality of a business’ appeared first on The Motley Fool Australia.

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JPMorgan Chase is an advertising partner of The Ascent, a Motley Fool company. Motley Fool contributor Bronwyn Allen has positions in Ansell Ltd., CSL Ltd., James Hardie Industries plc, Pro Medicus Ltd., REA Group Limited, and SEEK Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended CSL Ltd., Idp Education Pty Ltd, Pro Medicus Ltd., and ResMed Inc. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended ResMed. The Motley Fool Australia has positions in and has recommended Pro Medicus Ltd., ResMed Inc., and Telstra Corporation Limited. The Motley Fool Australia has recommended ARB Corporation Limited, Ansell Ltd., REA Group Limited, SEEK Limited, and carsales.com 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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The Domino’s Pizza Enterprises Ltd (ASX: DMP) share price has continued its slide on Wednesday.

In morning trade, the pizza chain operator’s shares were down 3% to a new two-year low of $57.24.

This latest decline means the Domino’s share price is now down a massive 65% from its 52-week high of $163.65.

Why is the Domino’s share price at a 52-week low?

The Domino’s share price has come under pressure this year amid concerns over its softening performance.

For example, although the pizza chain reported a 4.6% increase in global sales to $3.92 billion in FY 2022, its profits fell 12.5% to $165 million.

This was driven by significant margin pressures caused by inflationary headwinds. And with inflation not going away in a hurry, investors appear concerned that these margin pressures will continue for a little while to come.

Furthermore, while the company has been raising prices to combat inflation, there are only so many price rises you can give to customers before they start pushing back.

Is this a buying opportunity?

A recent note out of Citi reveals that its analysts are suggesting that investors take advantage of the weakness in the Domino’s share price.

Although Citi acknowledges that trading conditions remain challenging, it thinks investors should focus on the company’s very positive medium and longer term outlook. It explained:

Our analysis of high frequency data suggests sales growth is accelerating in Japan despite cycling tough comps in the pcp. However, website traffic in other key markets (Europe and Australia) remain weak likely due to cost of living pressures, labour challenges, competition and somewhat questionable execution in France. However, we remain positive on the medium term outlook given same store sales appear on track to turn positive and some inflationary headwinds are moderating. The longer term store rollout opportunity has grown supported by the recent Asian acquisition. We also see further upside potential from additional acquisitions. Maintain Buy.

Citi has a a buy rating and $84.40 price target. This implies potential upside of almost 50% for investors over the next 12 months.

The post Why did the Domino’s share price just slump to a two-year low? 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 Dominos Pizza Enterprises 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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The Brickworks Limited (ASX: BKW) share price isn’t doing much after the business released its FY22 result. But, the business’ dividend could capture some investor attention because of how reliable it has been over the long term.

The building products business reported a statutory net profit after tax (NPAT) of $854 million (up 257%). It also declared a record underlying net profit from continuing operations of $746 million (up 159%).

Brickworks’ board decided on a final dividend per share of 41 cents per share, which was an increase of 3%. Its total full-year dividend went up by 3% as well, to 63 cents per share.

Brickworks’ enviable dividend record

The business told investors that with these latest dividends, its normal dividend has been maintained or increased every year since 1976.

Brickworks boasted about its “long history of dividend growth”. The company said it has been 46 years since the normal dividend was last decreased.

Referencing the company’s dividends and capital management, Brickworks chair Robert Millner said:

We are proud of our long history of increasing dividends, which we have maintained or increased for 46 years. This is a testament to our strong financial position, prudent capital management and our diversified business model.

Despite our significant investment program over the past few years, our borrowing level remains conservative. Net debt declined by $25 million during FY2022 to finish the year at $493 million, with gearing of 15%.

How does Brickworks pay for its dividend?

Brickworks pays for its dividend with the cash flow from its investments division and property trust.

In FY22, the business paid $94 million of dividends and it generated total operating cash flow of $130 million.

Within that total, Brickworks received net trust income from the property trust of $36 million (up 17%). And the dividends received from its investments division rose by 5% to $61 million. Those two elements combine to a total of $97 million, covering the dividends paid entirely.

Further growth of the rental profit from its property trusts and the rising dividends from its investment division could help grow the Brickworks dividend, particularly as the company completes more properties within the industrial property trust.

What is the dividend yield?

Based on the annual payout of 63 cents per share, the current Brickworks share price offers a grossed-up dividend yield of 4.2%.

How has the result been received?

While investors haven’t pushed up the Brickworks share price, analysts thought the result is a good one.

According to reporting by The Australian, analyst Suraj Nebhani from the broker Citi thought the result was a “massive consensus beat” thanks to the property division.

The analyst noted that uncertainty is rising, though Brickworks is confident about growth within the property business in FY23. However, the rising interest rates could impact future property profits.

The post Brickworks has maintained or grown its dividend every year for 46 years. Here’s the latest appeared first on The Motley Fool Australia.

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More reading

• Brickworks share price edges higher on $746 million profit result
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• Why Brickworks, IDP Education, IGO, and New Hope shares are racing higher
• Why is the Brickworks share price racing 6% higher today?
• One ‘safe’ and one ‘exciting’ ASX share to own for years like Warren Buffett: fund manager

Citigroup is an advertising partner of The Ascent, a Motley Fool company. Motley Fool contributor Tristan Harrison has positions in Brickworks. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Brickworks. The Motley Fool Australia has positions in and has recommended Brickworks. 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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Could the stock market really crash 40%?

Whether you’ve invested in ASX shares or international shares, it’s a frightening figure.

And with the US Federal Reserve likely to hike interest rates in the world’s top economy by another 0.75%, or perhaps even 1%, tonight, it’s a question that’s on many investors’ minds.

The Fed’s series of 2022 rate hikes have already pushed the NASDAQ-100 (NASDAQ: NDX) down 28% this calendar year. Coupled with the rate rises from the RBA, that’s also sent the S&P/ASX 200 Index (ASX: XJO) down 11% year-to-date.

So, is a stock market crash still looming?

Dr Doom warns of 40% stock market crash

Nouriel Roubini, CEO of Roubini Macro Associates, has long been dubbed Dr Doom for his penchant for bearish forecasts.

While he hasn’t gotten all those forecasts correct, he did nail the 2008 GFC well before it fully unfolded.

Now, as Bloomberg reports, Roubini sees a “long and ugly” global recession taking hold by the end of this year and lasting through 2023.

He also believes this will lead to a full-blown stock market crash, with “a real hard landing” leading to a potential 40% fall in the S&P 500 Index (SP: .INX). A stock market crash that would likely be mirrored on the ASX.

“Even in a plain vanilla recession, the S&P 500 can fall by 30%,” Roubini said.

Of particular concern are the mountains of debt held by governments and corporations. Debts that will get far more costly to service as interest rates shoot higher from their recent historic lows.

According to Roubini (quoted by Bloomberg):

Many zombie institutions, zombie households, corporates, banks, shadow banks and zombie countries are going to die. So, we’ll see who’s swimming naked.

Roubini also cites numerous supply side issues that are likely to continue putting upward pressure on prices. These include Russia’s invasion of Ukraine, alongside China’s COVID-zero lockdown policies crimping output in the world’s most populous nation.

With these factors in mind, Dr Doom believes the Fed will “probably have no choice” but to eventually raise rates to around 5% next year.

And investors hoping for some helpful stimulus to avoid a stock market crash will be left wanting. “If you do fiscal stimulus, you’re overheating the aggregate demand,” he said.

“It’s not going to be a short and shallow recession, it’s going to be severe, long and ugly,” he said. Adding that, “You have to be light on equities and have more cash.”

Of course, not everyone agrees.

Take the long-term investing view and sleep well

Rather than pen my own takeaway here, I’ll defer to The Motley Fool’s chief investment officer, Scott Phillips.

Writing in a Take Stock yesterday, Phillips said that “worrying about volatility or ‘watching’ the markets” are not things he does.

“The truth is that I can’t remember ever being kept awake by the stock market,” he said. “And I invested during the dot.com boom and bust. I invested during the GFC. And I invested during the COVID [stock market] crash.”

Phillips admits these weren’t easy times, with ASX and international share portfolios often deeply in the red.

However, his restful nights when others were tossing and turning worried about a stock market crash were a result of the historical truth of investing.

“The lesson of history on the stock market is that compound gains of around 9% per annum have been the norm,” he said. “That includes all three crashes – dot.com, GFC and COVID.”

Philips said investors should certainly expect market volatility, just as in the past. But he noted, “Patiently investing – saving, adding, and waiting – has been an extraordinary way to build seriously impressive long-term wealth.”

Taking a multi-decade investment horizon helps put some perspective on any potential pending stock market crash.

Doing so, Phillips said, “means that whatever happens today, tomorrow, this year or next year is all but irrelevant”.

“I expect that in 2052, we’ll look back at 2022 and wish we’d all invested more money, today,” he added.

The post Could the stock market really crash 40%? 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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The Viva Energy Group Ltd (ASX: VEA) share price is rocketing this morning after the company announced a $300 million acquisition.

It will be taking on Coles Group Ltd (ASX: COL)’s namesake fuel and convenience retailing business, Coles Express.

The acquisition will see the S&P/ASX 200 Index (ASX: XJO) energy favourite running Australia’s single largest fuel and convenience network under a single operator.

The Viva Energy share price is taking off on the back of the news, rising 5.51% to trade at $2.775.

Let’s take a closer look at the latest move from the fuel refiner and supplier.

Viva Energy share price rockets on $300m acquisition

The Viva Energy share price is surging on Wednesday after the company announced it will be snapping up Coles Express, bolstering its Australian fuel and convenience network by 710 sites.

Coles and Viva Energy previously operated Coles Express in partnership, with Coles operating the stores and Viva taking control of retail fuel pricing and marketing.

Their previous agreement was to expire in 2029 when Viva Energy would take control of both businesses. The company has today said that bringing them together now, rather than at the end of the partnership, will allow it to better optimise and grow the network.

Viva Energy will be snapping up the Coles Express retail business for $300 million.

The acquisition will have a $143 million net impact and will be funded entirely from cash reserves and debt facilities.

Integration costs are expected to come in at between $120 million and $140 million over the next three years.

The acquisition is also expected to bring earnings per share (EPS) accretion of 11% to 18% on a pro-forma, post-integration, financial year 2021 basis. That’s assuming the network’s weekly fuel volumes increase to between 65 megalitres and 70 megalitres.

Most of the Coles Express sites dotted around the nation will be rebranded over the coming two years. The network will continue to carry the Shell brand under a long-term licence agreement through to 2029.

The companies have also entered a transition services agreement. That will see Coles support Viva Energy in areas like IT, accounting, and human resources.

The acquisition is set to be finalised in the first half of next year. Coles Express will then be operated as an independent business.

What did management say?

Viva Energy CEO and managing director Scott Wyatt commented on the news driving the company’s share price today, saying:

We have enjoyed a strong partnership with Coles over the last 20 years and this is an exciting next step for our business and our relationship.

Coles Express is a leading convenience retailer with considerable retail capability and experience. The acquisition of this business, and the establishment of an integrated fuel and convenience business unit, will put the Company in a strong competitive position to leverage our high-quality networks and pursue long term growth opportunities in the fuel and convenience sector.

Viva Energy share price snapshot

The Viva Energy share price has been powering up lately.

Today’s surge included, it has gained 19% since the start of 2022. It’s also currently 21% higher than it was this time last year.

For comparison, the ASX 200 has fallen 11% year to date and 7% over the last 12 months.

The post Viva Energy share price leaps 5% on Coles acquisition 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 no position in any of the stocks mentioned. The Motley Fool Australia has positions in and has recommended COLESGROUP DEF SET. 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 Nickel Industries Ltd (ASX: NIC) share price is falling wayside during trade on Wednesday morning.

This comes after the company announced a long-term strategic cooperation agreement with PT QMB New Energy Materials (QMB).

At the time of writing, the nickel producer’s shares are down 1.4% to 88.3 cents.

Nickel Industries secures long-term contract

The dip in the Nickel Industries share price appears to be coming from a broader sell-down across the ASX today. Wall Street recorded losses overnight as the United States Federal Reserve looks all but certain to lift interest rates by 75 basis points tomorrow.

In today’s release, Nickel Industries advised that it will supply 5 to 7 million wet metric tonnes per annum of limonite ore to QMB’s upcoming concentrator plant.

Subject to necessary approvals, QMB will build the concentrator plant within the Hengjaya Mine area. This will allow ore to flow through a pipeline to its newly commissioned high pressure acid leach (HPAL) plant.

The agreement between the parties will run for 20 years.

In addition, the agreement allows for the exploration of an option for Nickel Industries to take equity participation in the QMB HPAL plant.

If executed, this could see the company produce nickel and cobalt for the growing electric vehicle battery supply chain.

However, discussion on the finer details regarding the long-term agreement must take place. This will include the sale price for limonite ore.

Nickel Industries’ managing director, Justin Werner commented:

We are pleased to announce the signing of a long-term strategic cooperation agreement with QMB, a leading global new energy material company. The long-term supply agreement to the QMB HPAL plant highlights the tremendous strategic value of the world-class Hengjaya Mine resources, both limonite and saprolite. It follows our recently updated JORC resource of 3.7 million tonnes of contained nickel metal, which places the Hengjaya Mine among the top 10 nickel resources globally.

Nickel Industries share price snapshot

After reaching an all-time high of US$43,000 per tonne in mid-March, nickel is now fetching US$24,000 per tonne.

Subsequently, this impacted the Nickel Industries share price. It fell to a 52-week low of 84.5 cents on 7 September.

Year to date, the company’s shares are down 38.3%.

Nickel Industries has a price-to-earnings (P/E) ratio of 8.97 and commands a market capitalisation of approximately $2.44 billion.

The post Why is the Nickel Industries share price dipping on Wednesday? appeared first on The Motley Fool Australia.

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

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