The Pendal Group Ltd (ASX: PDL) share price is heading south today.

This follows the company’s announcement late yesterday regarding a ‘potential transaction’.

At the time of writing, the fund manager’s shares are swapping hands at $4.36, down 1.53%.

Let’s take a look at what was released to the market.

Pendal in high-level discussions about possible acquisition

In its statement, Pendal advised that it is in talks with Perpetual Limited (ASX: PPT) about a possible acquisition. 

It noted that the meetings are highly confidential and preliminary, and do not guarantee that a transaction will take place.

The Pendal board will keep shareholders informed in accordance with its continuous disclosure obligations.

Earlier in April, Perpetual made a $2.4 billion non-binding offer to take over Pendal.

The $6.23 per share offer, which represented a 35.4% premium at the time, was deemed not in the best interests of Pendal shareholders.

Eventually, the deal fell through.

As reported by The Australian, if the arrangement is on the same terms, then this would value Pendal shares at $5.58 apiece.

Last week, Pendal provided an update on its funds under management (FUM) for the quarter ending 30 June 2022.

The performance wasn’t rosy and led its shares to hit a 52-week low of $3.69 on the day.

Pendal CEO Nick Good touched on the disappointing performance, saying:

During the quarter there have been sustained market challenges. Global equity market volatility increased dramatically with rising inflation worries, ongoing concerns over geopolitical tensions, and fears of economic recession around the world due to aggressive tightening measures by major central banks.

As a result of current market conditions, we remain prudent and flexible in managing costs, focusing on building and strengthening our strategic growth areas…

Pendal share price snapshot

In the past 12 months, Pendal shares have continued to be sold off by investors to fall 44%.

When looking at year to date, its shares have lagged the S&P/ASX 200 Financials Index (ASX: XFJ) – down 20% vs. 8.5%, respectively.

Pendal has a price-to-earnings (P/E) ratio of 7.92 and commands a market capitalisation of roughly $1.69 billion.

The post Pendal share price slides amid ‘potential transaction’ 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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The Beach Energy Ltd (ASX: BPT) share price is dropping on Wednesday following the release of the company’s quarterly update.

In morning trade, the energy company’s shares are down 2% to $1.74.

Beach share price lower on Q4 update

For the three months ended 30 June, Beach delivered a 9% increase in production to 5.6 MMboe. Management advised that this was driven by higher customer gas demand from the offshore Otway Basin.

This underpinned a 10% increase in quarterly revenue to $504 million. This comprises oil revenues of $195 million and gas and gas liquids revenue of $309 million.

Full year guidance achieved

For the full year, the company achieved its guidance with production of 21.8 MMBoe.

This led to total revenue coming in at $1,749 million, which represents a 15% increase year on year and was largely in line with consensus estimates for the year.

Another positive is that its unit field operation costs are expected to come in at the low end of its guidance range of $11.50 to $12.50 per boe. So, with the company commanding an average realised price of $78.2 per boe for all its products, it looks set to report strong free cash flow and earnings next month.

In fact, at the end of the quarter, the company had a net cash position of $165 million, which was up from $7 million three months earlier.

Management commentary

Beach Energy’s chief executive officer, Morné Engelbrecht, was pleased with the final quarter and full year. He commented:

A key plank of the Beach strategy is to continue investing in new gas supply to support the east coast market. Our results this quarter against the backdrop of the current energy crisis validate this strategy. This quarter Beach supplied an additional 3.5 PJ (0.6 MMboe) of gas from the Otway Gas Plant to Australian domestic retailers, thanks in part to recent commissioning of two Geographe development wells.

Engelbrecht appears confident on the company’s prospects for the year ahead. He said:

We enter FY23 with strong momentum as we complete our major development projects and deliver more new gas to the domestic market. In the Otway Basin, we will connect four offshore Thylacine development wells and the Enterprise discovery to the Otway Gas Plant to bring production rates back to full capacity. In the Perth Basin, Waitsia Stage 2 is developing material gas volumes for both domestic and global LNG markets.

Beach remains focused on delivering our major Otway and Perth Basin development projects. We are also planning for our next phase of growth, including exploration in the Perth, Otway, and Cooper basins, and we do so with a Balance Sheet capable of supporting our growth aspirations.

The post Beach share price falls despite solid FY22 revenue growth 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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The Megaport Ltd (ASX: MP1) share price is soaring today after the company delivered EBITDA profit for the first time.

The technology company’s share price is currently swapping hands at $8.00, a 23.65% gain. That’s after hitting a high of $8.96 in early trade, up 38% on yesterday’s close. For perspective, the  S&P/ASX 200 Index (ASX: XJO) is 1.26% higher at the time of writing.

Let’s take a look at what Megaport reported today.

Megaport delivers profit

Highlights of the Megaport’s unaudited financial results presented in the quarterly report include:

• Monthly Recurring Revenue (MRR) grew 13% on the previous quarter to $10.7 million
• Underlying MRR jumped 10% to $10.7 million
• Total revenue jumped 10% on the previous quarter to $30.6 million
• Annualised recurring revenue of $128 million
• Normalised EBITDA of $1 million, up 126% on the previous quarter
• Profit after direct costs and partner commissions of $19.9 million, up 14% on the third quarter
• Cash position of $82.5 million

What else did the company report?

Megaport delivered EBITDA profit in the fourth quarter, a first for the company. This compared to a loss of $3.8 million on the third quarter of FY22. Canada and Japan becoming profitable earlier than scheduled contributed to this result.

Underpinning the strong monthly recurring revenue growth was strong port sales and a 7% boost in the average revenue per port to $1,120 per month. Net new port sales jumped by 6% to 9,545.

Customers also increased 4% during the quarter to 2,643. Megaport sold 1,447 new services during the quarter, up 6% on the prior quarter.

Multi-cloud connections on the Megaport platform also increased, with 9% more Megaport Cloud Routers (MCR) sold in the June quarter. In total, 14% of the company’s customers have now taken up the MCR offering.

During the quarter, Megaport also launched in Mexico, a market the company describes as the “second largest IT spending market in Latin America”.

Megaport enabled 16 new data centres during the quarter, and four of these were in Mexico.

Overall, monthly recurring revenue leapt 15% in North America, 12% in the Asia Pacific, and 9% in Europe in the fourth quarter of FY22.

Management comment

Commenting on the results, chief executive officer Vincent English said:

During the fourth quarter of fiscal year 2022 Megaport drove steady underlying revenue growth. Uptake of core products, as well as monthly recurring revenue growth, were strong in the quarter.

This is driven by customers continuing to increase the number of service providers they securely connect through our platform as they undertake global digital transformation initiatives.

The underlying Megaport network and business model has strong operating leverage to further increase profit and generate cash as revenue grows.

What’s ahead?

Megaport has a “high degree of confidence” in FY23 and highlighted its solid cash position of more than $80 million.

The company has aligned the business to reduce “cash burn”, enabling it to achieve profit. English added:

Closing fiscal year 2022 with a solid fourth quarter performance across all operating metrics provides excellent momentum going into fiscal year 2023.

Megaport share price snapshot

The Megaport share price has lost 47% in the past year, while it has fallen 55% in the year to date.

However, in the past month, Megaport shares have rocketed more than 62%.

For perspective, the benchmark ASX 200 index has lost more than 7% in the past year.

The post Megaport share price explodes 38% on June quarter profit 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 positions in and has recommended 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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The Allkem Ltd (ASX: AKE) share price is falling on Wednesday following the release of the company’s quarterly update.

In early trade, the lithium miner’s shares are down 1% to $9.72.

Allkem share price falls despite record quarter

The Allkem share price is falling today despite the company revealing that it had a strong finish to the financial year.

During the three months ended 30 June, Allkem delivered record quarterly group revenue of approximately US$337 million and a group gross operating cash margin of approximately US$292 million.

This means that group revenue for FY 2022 (including Mt Cattlin from the merger date of 25 August 2021) was US$762 million and its group gross operating cash margin was approximately US$594 million (excluding corporate and other non-operating costs).

Allkem finished the year with a hefty cash balance of US$663.2 million, which is an increase of US$213.1 million since the end of March.

What were the drivers of its record result?

The key Mt Cattlin and Olaroz operations finished the year strongly.

In respect to the former, the Mt Cattlin operation achieved production of 24,845 dry metric tonnes (dmt) and shipments of 37,837 dmt despite COVID-19 cases impacting the mine site over the quarter.

This led to the company delivering record quarterly Mt Cattlin revenue of US$188.9 million with a gross cash margin of 84% based on average pricing of US$4,992 per dmt.

In light of this strong quarter, Mt Cattlin reported record full-year production of 193,563 dmt.

It was a similar story over in Argentina at the company’s Olaroz Lithium Facility. During the quarter, Allkem reported production and sales of lithium carbonate of 3,445 tonnes and 3,440 tonnes, respectively.

This led to the Olaroz Lithium Facility generating record quarterly revenue of ~US$141 million with a gross cash margin of 90% based on average pricing of US$41,033 per tonne.

Once again, this meant record full year production at Olaroz Lithium Facility of 12,863 tonnes of lithium carbonate. Approximately 47% of this was battery grade material, which was in line with targets.

Outlook

It could be the company’s outlook that is underwhelming investors and weighing on the Allkem share price today.

Allkem revealed that it is targeting Mt Cattlin spodumene production of approximately 160ktpa to 170ktpa. This will be down from 193.5ktpa in FY 2022.

Management also warned that costs will be higher in FY 2023. This is due to ongoing developments, lower production volumes, and labour shortages in Western Australia.

However, with customer demand in the spodumene market remaining robust, the company is expecting spodumene concentrate pricing in the September quarter to be higher than the June quarter.

No real guidance was given for Olaroz other than management expecting the lithium carbonate sales price for the September quarter to remain similar to the June quarter.

The post Allkem share price falls despite record quarter appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro has positions in Allkem Limited. 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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ASX investors don’t need to be told twice that the market is going through turmoil in 2022.

The S&P/ASX 200 Index (ASX: XJO) has sunk more than 12% year-to-date, but many portfolios are in the red far worse than that because the mining and energy sectors have been dragging the index up.

The capitulation is best seen in the initial public offer pipeline. 

According to the HLB Mann Judd IPO Watch Australia mid-year report released this week, there are currently only 15 companies preparing to list on the ASX for a total of $121 million.

That compares to 43 at the end of June last year, seeking to raise $1.25 billion.

This shows it’s not just investors that are frightened. Businesses seeking investment have also gone into their shells.

So far this year, IPOs have raised just $790 million — a minuscule amount against the $2.9 billion harvested in the first half of 2021.

HLB Mann Judd partner and report author Marcus Ohm acknowledged that turbulent market conditions have depressed the IPO market.

“We expect that macroeconomic and capital market conditions will continue to impact the IPO market in the second half of 2022.”

The one shining light, much like the ASX 200, has been the resources sector.

It has dominated IPOs this year, with 44 out of 59 listings representing mining companies.

Even in chaos, these companies have a bright future

So it is no wonder that Ohm reckons the only current reliable thematic is lithium.

“On lithium, there’s just a massive gap between demand and supply at the moment,” he said.

“A few years ago, there was more supply on tap — so that was suppressing growth in the lithium price. But that’s gone now and the sources just can’t meet the demand.”

According to Ohm, just the global transition to electric vehicles (EVs) would see any surge in lithium supply be immediately used up by rising demand.

“Just the EV usage is predicted to go up by 50% over the next two years,” he said.

“All those battery manufacturers and Tesla Inc (NASDAQ: TSLA) have got to pay those prices to lock in the supply. If you don’t have the supply, you have no business, effectively.”

He said this is why it’s important to invest in ASX lithium shares that seek new sources, not just the existing producers.

“If you don’t have a healthy exploration industry, you don’t have a future,” he said.

“I think, lithium, you can confidently predict that’s going to do well.”

Historically, plenty of resources IPOs are for explorers just starting out their journey.

And despite the depressed equities market, those listed this year have done pretty well out of the blocks.

“In terms of share price performance across the materials sector, companies generally outperformed the broader market, recording on average a first-day gain of 19%.”

The post The only certainty in uncertain times: expert appeared first on The Motley Fool Australia.

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Motley Fool contributor Tony Yoo 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 Tesla. 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 Bubs Australia Ltd (ASX: BUB) share price is on the move on Wednesday.

In morning trade, the infant formula company’s shares are up almost 4% to 55.5 cents following the release of its quarterly and full year update.

Bubs share price higher amid strong Q4 sales growth

For the three months ended 30 June, Bubs delivered a 278% increase in gross revenue over the prior corresponding period to $48.1 million.

This led to Bubs’ second half gross revenue growing 168% to $65.7 million and its full year gross revenue increasing 123% to $104.2 million for FY 2022.

Management advised that this was driven by gross across all key product segments and all key markets.

A key driver was the company’s US business which was given an almighty boost from the U.S. Government’s Operation Fly Formula.

In order to help with supply issues, Bubs’ infant formula products are now sold in over 5,400 stores across 34 US states. This includes the four largest retailers of infant formula: Walmart, Kroger, Albertsons/Safeway and Target.

In China, the company’s interesting decision to reward a key daigou seller with shares in exchange for sales appears to be working with corporate daigou sales up 1,201% during the fourth quarter.

However, taking some of the shine off the strong top line result was the company’s cash flow. Despite its sales growth, Bubs recorded an operating cash outflow of $6.7 million for the quarter and $10.2 million for the year.

Management commentary

Bubs’s CEO Kristy Carr was very pleased with the final quarter. She commented:

The last quarter has seen the business reach critical mass following exceptional growth across Australia, China, and rapid expansion in the USA with our involvement in the Biden-Harris Administrations’ Operation Fly Formula initiative aimed at helping to mitigate the ongoing infant formula shortage crisis. This business diversification and increased scale of our most profitable products and channels has flowed through to our operating margins, delivering profitability for the full year (excluding non-cash equity compensation expenses).

Carr also appears confident that the company’s US operations aren’t just benefiting from a one-time sugar hit due to supply issues.

We are confident of the long-term growth prospects for the USA now that the Food and Drug Administration has committed to a framework for suppliers like Bubs, who have already been approved to import infant formula products, to remain on shelf beyond November 2022. As a result, we envisage the USA will become a lead export market opportunity on par with China in the future.

Outlook

Bubs continues to expect to report underlying EBITDA of greater than $2.4 million. Though, this excludes non-cash equity compensation expenses such as share based payments and equity linked transactions.

Looking further ahead, Bubs’ executive chair, Dennis Lin, was optimistic on the company’s growth outlook. He said:

Now that we have achieved scale with over $100 million in gross revenue, we expect margin accretive growth to continue, and anticipate FY23 revenue and margin contribution will be largely attributed to growth in China and the USA, and across our portfolio segments, with infant formula forming a significantly higher proportion of revenue than the current 60 per cent.

The USA represents the most dynamic opportunity and long-term growth prospect for the business. The team will be singularly focused on delivering earnings accretive growth in FY23 and beyond for our existing and new shareholders.

The post Bubs share price higher after more than tripling Q4 sales 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 BUBS AUST 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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The Atlas Arteria Group (ASX: ALX) share price is in the green on Wednesday after the company released an update on its performance in the June quarter.

At the time of writing, the Altas Arteria share price is $8.14, 0.37% higher than its previous close.

Atlas Arteria share price gains alongside quarterly revenue

Here are the key takeaways from the S&P/ASX 200 Index (ASX: XJO) toll road operator’s quarterly update:

• Weighted average toll revenue increased 18.9% on that of the prior comparable period
• That marks a 2.4% increase on that of the same quarter of 2019
• Weighted average traffic on the toll road operator’s assets increased 21.2%
• That was around 1.7% lower than the same quarter of 2019

All four of the company’s toll road assets ­– located in France, the United States, and Germany – recorded higher revenue in the second quarter of 2022 than they did in the same quarter of 2021.

The increases were bolstered by greater tourism and employment in France and Germany and a gradual return to office-based work in the United States.

What else happened in the June quarter?

Of course, the quarter was also a brilliant one for the Atlas Arteria share price. It leapt 23% over the three months ended June.

Most of its gains came on the back of apparent takeover interest.

The IFM Global Infrastructure Fund snapped up 15% of the ASX 200 company’s stock and noted it was considering putting in an acquisition bid last month.

However, Atlas Arteria declined to provide non-public information to help the fund build a bid.  

What’s next?

Atlas Arteria didn’t provide the market with new guidance today. Though, it did provide an insight into how its toll assets have been performing year to date.

Here’s how much revenue its four major assets brought in over the six months ended June compared to the same period of 2021:

• France’s APRR brought in 1,289.6 million euros ­– a 20% increase
• France’s ADELAC brought in 29.55 million euros – a 52% increase
• The US’s Dules Greenway brought in US$32.06 million – a 20% increase
• Germany’s Warnow Tunnel brought in 6.08 million euros – an 11% increase

Atlas Arteria share price snapshot

The Atlas Arteria share price has outperformed the ASX 200 this year so far.

The company’s stock has gained 17% year to date while the ASX 200 has tumbled around 12%.

Additionally, Atlas Arteria’s stock is trading for 28% more than it was this time last year. Comparatively, the index has fallen 8% over the last 12 months.

The post Atlas Arteria share price lifts as revenue spikes 19% appeared first on The Motley Fool Australia.

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• How to beat the market with ‘boring’ ASX shares: fundie
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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 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.

In just a few months, Netflix (NASDAQ: NFLX) has gone from a market darling to market disaster.

The stock price is down more than 70% from its peak last fall, and it’s not just because tech stocks, in general, have pulled back. The streaming leader posted a surprise decline in subscribers in the first quarter and guided to a loss of 2 million in Q2.

A combination of pandemic hangover and rising competition seemed to zap the company’s growth, and its formerly reliable formula of plowing billions into original content is no longer paying off.

In the aftermath of the first-quarter report, Netflix announced two rounds of layoffs and signaled that it would scale back its content spending to focus on the bottom line. The company is also planning to launch an ad-based tier, a reversal from its earlier strategy, as co-CEO Reed Hastings had long dismissed ads as overcomplicated. 

There hasn’t been much good news for Netflix this year, but there may be one area that investors can take heart in. With macroeconomic conditions deteriorating, Netflix seems better positioned to weather a recession than its peers. 

Is Netflix recession-proof?

Entertainment stocks generally fit in the consumer discretionary category, which by definition sees declines in consumer spending during tough economic times. But Netflix has bucked that trend in the past. 

During the 2008-2009 recession, most companies, including its tech peers, experienced significant headwinds from the financial crisis. However, Netflix’s growth continued virtually unabated. In 2008, Netflix’s subscriber growth increased 26% to 9.3 million, accelerating from the year before, and jumped even faster in 2009, up 31% to 12.3 million.  

Netflix was a very different company back then. It was exclusively a DVD-by-mail service, only operated in the U.S., and was much smaller than it is today. During that era, the company’s primary competition was video stores like Blockbuster and kiosks like Redbox. Today, it’s other streaming services like Walt Disney‘s Disney+ and Warner Bros. Discovery‘s HBO Max. 

The same principles that helped Netflix grow through the last recession still apply today. The company offers considerable value compared to other forms of entertainment. It has raised its prices several times in recent years, and the standard package now costs $15.49 per month in the U.S. and the basic plan is just $9.99 per month. Netflix is more expensive than its peers like Disney+, but it also has a bigger library than other streamers. Importantly, the standard monthly package is still much cheaper than a traditional cable plan, and similar to a single movie ticket, or one night of entertainment. If you’re looking for value for your entertainment dollar, it’s still hard to beat a Netflix subscription, which is an advantage in a downturn.

In a recession, consumer spending tends to gravitate toward options that are cheap and convenient, which perfectly describes Netflix’s value proposition. 

Netflix vs. streaming competition

Unlike the last recession, Netflix isn’t alone in the industry. It now faces direct competition in streaming from virtually every major Hollywood studio, and many of those have undercut it on price.

Netflix doesn’t have a price advantage in streaming, but it does have an edge on its rivals in other ways. The company is still a pure-play streamer, so unlike Disney, HBO Max, or Paramount Global‘s Paramount+, it doesn’t rely on box office sales or cable subscriptions to drive revenue. That’s a clear benefit, as the transition away from cable is likely to accelerate in a recession, and tighter consumer spending could weigh on film studios’ recovery.

Netflix also doesn’t have exposure to theme parks, like Disney and Comcast, which are highly sensitive to macroeconomic conditions. Finally, Netflix derives a majority of its revenue from outside of the U.S., meaning its streaming business is much more diversified geographically, so its exposure to a U.S. recession is more limited.

Is Netflix a buy?

A recession alone isn’t a good reason to buy the streaming stock, but its ability to withstand a recession is a reminder that the risks facing the company may not be as great as the market fears.

The company is still highly profitable, it remains the leader in streaming, and it’s penetrating a huge market in Asia.

Netflix has also bounced from past growth setbacks, and the stock looks cheap at a price-to-earnings ratio of less than 20. While streaming pioneer seems unlikely to make a sudden recovery, investors are making a mistake if they forget it still has plenty of competitive advantages, including its upside potential in a down economy. 

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

The post Why a recession could be good for Netflix appeared first on The Motley Fool Australia.

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Jeremy Bowman has positions in Netflix and Walt Disney. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Netflix and Walt Disney. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended the following options: long January 2024 $145 calls on Walt Disney and short January 2024 $155 calls on Walt Disney. The Motley Fool recommends Warner Bros. Discovery, Inc. The Motley Fool Australia has recommended Netflix and Walt Disney. 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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The AMP Ltd (ASX: AMP) share price has been through a painful decline over recent years.

AMP shares are down around 80% over the past five years. That’s already a heavy decline. But they are down even further when looking at the pre-GFC share price.

After a bad showing in the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry, AMP has been trying to turn things around.

Part of the strategy has been to sell parts of its business. For example, the latest is an agreement to sell Collimate Capital’s international infrastructure equity business to DigitalBridge Investment. AMP sold Collimate for an upfront consideration of AU$462 million, representing a total value of up to A$699 million.

Combined with the AU$430 million from the sale of the domestic infrastructure equity and real estate business announced on 27 April 2022 and the AU$578 million from the sale of the infrastructure debt platform completed in February 2022, this values the total Collimate Capital business at up to $2.04 billion, including the value of retained assets, and up to AU$2.5 billion when including the maximum earn-outs.

AMP intends to return the majority of net cash proceeds to shareholders. This is “likely to be via a mix of capital return and on-market share buyback.” The company will use some of that money to pay down corporate debt.

So, AMP is unlocking value for shareholders through pieces of its business. But what about what remains inside AMP?

AMP’s continuing businesses

Talking on an Allan Gray webinar, AMP CEO Alexis George spoke about how AMP has been working on its businesses:

We really had to reposition the businesses we had, which is the bank and wealth management. They weren’t competitive. They couldn’t really compete against the players in the market. I think we’ve done that now on most of those businesses, in fact, all of the businesses in wealth management and they’re ready to compete. I think we really need to explore some new revenue opportunities into new ancillary revenue and I think we’ve really committed to the retirement space.

George also says that the company has been working on its digital offering, with its direct-to-consumer ability being a key focus.

However, George went on to say that the business will be considered and focused with what it spends its money on:

I think we have just got to be careful that we don’t go chasing every bell and whistle; that we stick to our knitting – innovate where it’s necessary – but not get caught up in things that don’t really add value, either to the customers or to the advisors.

Looking at the 2022 first quarter, the company said that AMP Bank grew at two times the overall system growth. This growth came with the total loan book increasing $0.5 billion to $22.6 billion despite a highly competitive market. The total deposits increased by $1.7 billion to $19.5 billion during that first quarter.

The Australian wealth management assets under management decreased $5.8 billion to $136.5 billion, with net cash outflows of $1.3 billion. This was better than the $2 billion net cash outflows in the prior corresponding period.

North inflows from external financial advisers increased 53% to $342 million.

AMP Capital assets under management on a ‘normalised’ basis declined by 0.6% to $52.5 billion. This primarily reflects redemptions from China Life AMP Asset Management money market funds.

George says that AMP has been set up for a “strong and sustainable future, with a clear strategy to grow AMP Bank” and the wealth management businesses. As noted above, it’s seeing some areas of growth in the business.

Share price snapshot

Since the beginning of 2022, the AMP share price is virtually flat. However, it’s down 16% since 5 May 2022.

The post ‘Ready to compete’: Will AMP seek out new opportunities or stick to its knitting? 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 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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Motley Fool Australia Chief Investment Officer Scott Phillips joined Sky News First Edition on Tuesday morning to discuss Australia and New Zealand Banking Group Ltd‘s (ASX: ANZ) planned purchase of Suncorp Group Ltd‘s (ASX: SUN) banking business, plus the Treasurer’s admission that real wages will keep going backwards.

The post ANZ to buy Suncorp’s banking business, and real wages going backwards. Scott Phillips on Sky News First Edition appeared first on The Motley Fool Australia.

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Motley Fool contributor Scott Phillips 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 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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