Ask a Fund Manager

The Motley Fool chats with fund managers so that you can get an insight into how the professionals think. In part II of this edition, Katana Asset Management’s co-founder Romano Sala Tenna, reveals the ASX shares poised for outperformance in 2022.

MF: What ASX sectors are looking promising to you in the year ahead?

RST: There are a few sectors that look strong.

First, financials, on the back of inflation and the expected increase in interest rates. Provided the interest rates don’t turn up so aggressively that you start to see an increase in bad and doubtful debts. But the early stages in recovering interest rates are generally good for financials. They can extract more margin from their book. And the front and back book become more aligned.

The other big thematics are decarbonisation and electrification, which are really 2 sides of the same coin. There’s no bigger opportunity in the market at the moment. But it can be hard to play these thematics in Australia, because we don’t have world leading technologies. So we’ve had to restrict ourselves to EV metals such as nickel, copper and lithium. I think that’s the best way in Australia to play those 2 themes.

Then, on the opposite end of the spectrum from EVs, is the energy market. I think the energy market was sold down very aggressively over a short period of time. We’re now starting to see good value opportunities in the energy market, even though the headwinds are there.

We’re starting to see Woodside Petroleum Ltd (ASX: WPL) trade on a single digit PER [price-earnings ratio], with LNG at record prices. That’s giving them some very large cash flow from current spot cargoes. The oil price is around US$80 per barrel. We think the outlook for Woodside is very good. It’s been heavily sold down on the back of the ESG thematic.

We’re capable and comfortable to look at both ends. The EV thematic is clearly macro driven. Energy is very much a value driven opportunity.

MF: Which ASX shares look well positioned for the EV thematic?

RST: In the lithium space, Mineral Resources Ltd (ASX: MIN) is our largest holding. We’ve had other positions, such as Pilbara Minerals Ltd (ASX: PLS), which we’ve now taken some profit on.

Mineral Resources will be the largest lithium spodumene producer in the country once they restart Wodgina and get it up to full production. At the moment it’s on care and maintenance. They just announced they’re in the process of getting their first train back online by the third quarter of next year. They’ve built 3 lines already, which should produce about 750,000 tonnes per annum when fully operational.

They’ve also got the joint venture with Albemarle, which enables them to do downstream production as well. So we’ll see them in the hydroxide space in the future, with up to 40,000 tonnes per annum.

In terms of what the market’s attributing to that value, you’re pretty much buying the entire Mineral Resources asset, including all their iron ore production, all their mining services division, plus other cash and miscellaneous assets for about the same price you’re paying just for Pilbara, which is quite an extraordinary state of affairs.

A $7.2 billion market cap on Pilbara and a $7.7 billion market cap on Mineral Resources, and they’re the largest contract crushing company in the world. It does seem to be quite a disconnect.

MF: You also mentioned nickel and copper. Do any ASX shares stand out in that space?

RST: The nickel space is very hard to play. We have some limited exposure through IGO Ltd (ASX: IGO) and Western Areas Ltd (ASX: WSA). But not with any particular conviction.

As for copper, there are really 4 listed copper players on the ASX. We’ve chosen to play it through Oz Minerals Ltd (ASX: OZL) and Aeris Resources Ltd (ASX: AIS).

Oz Minerals is probably the tier-1, dedicated copper asset in the Australian landscape. And Aeris, on a valuation basis, is on 3.5 to 4 times earnings. Aeris also has some very good hits coming out of its Constellation deposit. We think that’s setting them up for an extension in mine life of 10 plus years.

MF: Which sectors are you likely to avoid?

RST: We’re very cautious on concept tech versus real tech.

We love some of the real technology that’s coming through with real revenue, real profitability, good rates of growth and the likes. That makes sense.

But there’s a lot of concept tech out there that I think is going to get caught out. As your bond yields turn up the discounted rate of return increases. When you start modelling some of these earnings 5 to 10 years out in today’s dollar terms, they don’t stack up. So I think a lot of the concept tech is going to come under pressure.

Also, with interest rates turning up as our base case, the infrastructure space could come under pressure.

Infrastructure stocks are often seen as a bond proxy; you buy them instead of buying bonds. As bond yields increase, infrastructure stocks are going to become less attractive. Even more importantly, a lot of these funds are heavily geared. As interest rates turn up, it will have a material impact on their bottom line and there’s no way to hide that impact on those earnings.

Some REITs [real estate investment trusts] fall into that same space. But you can be discerning.

A share like Unibail-Rodamco-Westfield (ASX: URW), for example, is one of our larger holdings. We think that has a hard NTA [net tangible assets] backing at around $13 per share and it’s trading just over $5 per share.

As shopping centres across Europe and the US open up, we think URW will start to get some more attention. They own 18 of the top 30 shopping centres in Europe. These are tier-1 assets. They’re slowly repairing their balance sheet. As we start to see more interest coming to the reopening trade off shore, in Europe and the US, I think we’ll start to see Unibail-Rodamco gain greater interest in the market place.

MF: If the market closed tomorrow for 5 years, which ASX share would you want to hold?

RST: It’s a company I already mentioned, and that’s Mineral Resources.

We’ve been an investor in Mineral Resources for about as long as our fund has been around. We’ve scaled our weighting up and down, but we’re an ultra long-term shareholder.

Back in 2006 when the company listed, it had an EBITDA – earnings before interest, taxes, depreciation and amortisation – of about $38 million. Fast forward to 2021 and their EBITDA has grown to $1.9 billion. Now that is a peak earnings EBITDA based on a very high iron ore price. But through the cycle we think their EBITDA is somewhere north of $1billion for the business.

When you look at that, north of $1billion of sustainable levels of earnings versus $38 million in 2006, you can see the long-term trajectory that business has been on.

Over the last 3 years, it’s averaged a return on equity north of 20%. There are very few companies in the Australian landscape that can boast that. And we think they’ve set themselves up once again for the next level of growth.

They’re going to be volatile because of the cyclicality of their underlying earnings, being iron ore, lithium and mining services. But in 5 years’ time, we expect them to be generating substantially more than they are today.

**

If you missed part I of our interview with Romano Sala Tenna, you can find that here.

(To learn more about the Katana Australian Equity Fund, click here.)

The post These are the biggest opportunities on the ASX in 2022: fund manager appeared first on The Motley Fool Australia.

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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 Bruce Jackson.

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If you’re currently building an income portfolio, then you might want to look at the shares listed below.

Here’s why these ASX dividend shares could be worth considering right now:

Adairs Ltd (ASX: ADH)

The first dividend share to look at is Adairs. It is a leading homewares and furniture retailer with both a physical presence and growing online presence. The latter includes through both its core brand and its online only Mocka brand.

The team at UBS are positive on Adairs. While it acknowledges there is near term uncertainty, the broker believes the company’s outlook remains very positive thanks to its quality operations, its loyal customer base, and strong earnings potential in a post-pandemic world.

UBS currently has a buy rating and $5.40 price target on the company’s shares. As for dividends, the broker is forecasting fully franked dividends of 19.6 cents per share in FY 2022 and 29.9 cents per share in FY 2023. Based on the current Adairs share price of $3.42, this will mean yields of 5.7% and 8.7%, respectively.

DEXUS Property Group (ASX: DXS)

Another ASX dividend share to look at is Dexus. It is an Australian real estate company focused on office, industrial and retail properties. This includes the recent acquisition of $1.5 billion worth of industrial assets, including Jandakot Airport in Perth and a logistics centre leased to Australia Post.

Macquarie is positive on the company and has an outperform rating and $11.90 price target on its shares. The broker sees upside risk to consensus earnings expectations in the coming years from the sale of capital-intensive assets and a shift towards higher returning income streams.

Its analysts are also forecasting dividends per share of 53.7 cents in FY 2022 and 58.1 cents in FY 2023. Based on the current Dexus share price of $11.13, this will mean yields of 4.8% and 5.2%, respectively.

The post Analysts rate these 2 ASX dividend shares as buys 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. owns shares of and has recommended ADAIRS FPO. The Motley Fool Australia owns shares of and has recommended ADAIRS FPO. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Pinnacle Investment Management Group Ltd (ASX:PNI) share price has declined by 10% in just one week.

After a pretty heavy drop, could that make the affiliate funds management business good value?

A decline may not necessarily change the attractiveness of a business. An ASX share could rise and be cheap, or perhaps drop and be expensive.

Whilst the decline didn’t start this week, the Pinnacle share price dropped another 5.6% after announcing an acquisition and telling investors about its funds under management (FUM) progress.

Acquisition and global affiliate

The business is acquiring a 25% stake in Australian based private equity business Five V Capital. The investment is $65 million, plus an additional $10 million contingent on a successful fund raising for Five V’s Venture Capital strategy.

Pinnacle said that Five V has a high-quality investment team with a proven track record of delivering “investment excellence”. The funds management business believes that this investment can deliver attractive returns. There is no sell down by Five V principals Adrian MacKenzie and Srdjan and Dangubic.

The investment provides Five V with a source of capital to support co-investments and growth as well as business development initiatives. Five V has/had $1.1 billion of FUM.

Over time, members of the broader investment management team will be invited to acquire equity in Five V from the principals to support long-term succession, enhance internal alignment and promote longevity and consistency of performance.

The investment and equity raising is expected to be broadly neutral to earnings per share (EPS) before performance fees.

Turning to the global affiliate, it announced the establishment of its first North American based affiliate – a global and Canadian small cap equities fund manager based in Toronto, Canada. This was established in partnership with Greg Dean, who was the former principal manager at Cambridge Global Asset Management. It will own 32.5% of this new affiliate.

Pinnacle has successfully completed a $105 institutional placement, at a Pinnacle share price of $16.70, to fund the investment and replenish balance sheet capacity. Regular shareholders will now be able to buy up to $30,000 in new shares.

FUM and outlook

The company said its momentum has continued through the start of FY22.

Aggregate affiliate FUM was $90.9 billion at 31 October 2021. That’s up 1.7% from 30 June 2021. It was up 6.3% when excluding the $3.9 billion outflow of the Omega passive mandate which had “very modest” fees, which was previously disclosed.

Within the total FUM growth, aggregate retail FUM was up 13.3% over the four months to $23 billion.

The company is expecting to deliver growth in FY22, with current aggregate affiliate FUM more than 30% higher than average FUM in FY21.

Pinnacle said it is committed to taking advantage of the significant offshore opportunity by evolving into a global multi-affiliate platform.

Is the Pinnacle share price good value?

The broker Morgans is expecting good ongoing growth from affiliates and international acquisitions which can add to its global growth potential.

However, Morgans thinks the positives for the business are priced into the current valuation, which is why it currently rates the business as a hold.

Based on the broker’s numbers, Pinnacle shares are valued at 40x FY22’s estimated earnings and 33x FY23’s estimated earnings.

The post Down 10% in a week, is the Pinnacle share price an obvious buy? 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. owns shares of and has recommended PINNACLE FPO. The Motley Fool Australia owns shares of and has recommended PINNACLE FPO. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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On Wednesday the S&P/ASX 200 Index (ASX: XJO) was out of form again and dropped into the red. The benchmark index fell 0.15% to 7,399.4 points.

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

ASX 200 expected to fall

The Australian share market looks set to drop again on Thursday. According to the latest SPI futures, the ASX 200 is expected to open the day 13 points or 0.2% lower this morning. This follows a poor night on Wall Street, which in late trade sees the Dow Jones down 0.25%, the S&P 500 down 0.1%, and the Nasdaq down a few points.

Oil prices edge lower

Energy shares including Oil Search Ltd (ASX: OSH) and Woodside Petroleum Limited (ASX: WPL) could have a soft day after oil prices edged lower overnight. According to Bloomberg, the WTI crude oil price is down 0.2% to US$78.36 a barrel and the Brent crude oil price has fallen 0.2% to US$82.16 a barrel. Oil reserve releases are weighing on prices.

Rio Tinto shares named as a buy

The Rio Tinto Limited (ASX: RIO) share price could be great value according to the team at Goldman Sachs. This morning the broker has retained its buy rating and $121.00 price target on them mining giant’s shares. This is due to its attractive valuation, strong free cash flow, production growth potential, and its exposure to low emission aluminium.

Gold price falls

Gold miners Evolution Mining Ltd (ASX: EVN) and Regis Resources Limited (ASX: RRL) could have a subdued day after the gold price edged lower. According to CNBC, the spot gold price is down 0.05% to US$1,783.1 an ounce. The gold price slipped amid the release of strong US economic data.

Annual general meetings

There are a number of ASX 200 shares holding their annual general meetings on Thursday. These companies could also provide investors with trading updates at their respective events. Among the shares holding meetings are gold miner Evolution Mining, financial services company IOOF Holdings Limited (ASX: IFL), and struggling ecommerce company Kogan.com Ltd (ASX: KGN).

The post 5 things to watch on the ASX 200 on Thursday 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. owns shares of and has recommended Kogan.com ltd. The Motley Fool Australia owns shares of and has recommended Kogan.com ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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If you’re planning to make some investments in the near future, then you may want to look at the shares listed below.

These three shares have been tipped as buys by leading brokers. Here’s what they are saying about them:

Adore Beauty Group Limited (ASX: ABY)

Adore Beauty is a leading online retailer in the $11.2 billion Australian beauty and personal care (BPC) market. It has been growing strongly over the last few years thanks to its highly successful business model. The company’s integrated model combines online retail with education and entertainment, making its website a destination for consumers even when they’re not purchasing items. Though, plenty of consumers still visit its website to buy items! During the first quarter of FY 2022, Adore Beauty reported revenue of $63.8 million, up 25% on the prior corresponding period. This is still only a small slice of its addressable market.

UBS is positive on Adore Beauty. It currently has a buy rating and $6.00 price target.

Aristocrat Leisure Limited (ASX: ALL)

Aristocrat Leisure is a global gaming technology company with a growing portfolio of poker machines and digital games. The latter includes the hugely popular RAID franchise. In addition, Aristocrat Leisure is in the process of acquiring London-listed leading global online gambling software and content supplier, Playtech, for $5 billion. If this deal goes through, it is expected to be a major boost to its earnings.

Morgans is a fan of Aristocrat Leisure. It currently has an add rating and $52.50 price target on its shares.

Bapcor Ltd (ASX: BAP)

Bapcor is the Asia Pacific region’s leading provider of vehicle parts, accessories, equipment, service and solutions. Thanks to its strong market position, acquisitions, and the expansion of its store footprint, it has been growing at a solid rate in recent years. Positively, these trends continue, particularly for its expansion plans, with management highlighting a significant opportunity in Asia. And while the announcement of the retirement of its long-serving CEO has created some uncertainty, the selloff that ensued afterwards could be a buying opportunity for investors.

Citi is positive on Bapcor. It has a buy rating and $8.75 price target on its shares.

The post 3 top ASX shares named as buys 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 recommended Adore Beauty Group Limited. The Motley Fool Australia has recommended Adore Beauty Group Limited and Bapcor. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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There are a good number of shares for investors to choose from on the Australian share market.

Three that could be top options right now are listed below. Here’s why analysts think they are in the buy zone:

Elders Ltd (ASX: ELD)

Elders is one of Australia’s largest agribusiness companies. After going through a very tough time during the 2010s, things are now looking increasingly positive for the company. This has been driven largely by the success of Elders’ transformation plan and acquisitions. Pleasingly, Goldman Sachs is confident this positive form will continue. So much so, its analysts have a conviction buy rating and $15.65 price target on its shares. The broker likes Elders due to the rationalisation of the rural services industry, margin expansion through backward integration, its strong balance sheet and cash flow, and the benefits of its large scale systems modernisation project.

Healius Ltd (ASX: HLS)

Healius is one of Australia’s leading pathology and diagnostic imaging providers. Its healthcare network has been performing particularly positively over the last 18 months thanks to a robust performance from its core business and elevated demand for COVID-19 testing. The good news is that this has continued in FY 2022. For example, during the first quarter, Healius reported a 43.7% increase in group quarterly revenue to $689.9 million. And while its growth rate will inevitably slow once testing demand eases, the team at Macquarie still see a lot of value in its shares at the current level. The broker currently has an outperform rating and $5.65 price target on its shares.

ResMed Inc. (ASX: RMD)

ResMed is a medical device company with a focus on the sleep treatment market. Its masks and software help sufferers of afflictions such as sleep apnoea and COPD. These are huge markets, which provide ResMed with a long runway for growth over the next decade. Particularly given its industry leadership position and high level of investment in research and development. The latter is keeping its portfolio filled with world class products. Morgans is a fan of ResMed and has an add rating and $40.80 price target on its shares.

The post Analysts name 3 ASX shares to buy now 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 Elders Limited and ResMed Inc. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The S&P/ASX 200 Index (ASX: XJO) is home to a large number of high quality companies. This can make it hard to decide which ones to buy ahead of others.

To help narrow things down, I have picked out two ASX 200 shares that brokers rate very highly. Here’s what they are saying about them:

Goodman Group (ASX: GMG)

The first ASX 200 share to look at is Goodman Group. It is a leading integrated commercial and industrial property company with operations across the world.

Goodman currently has $62 billion of total assets under management and over 1,600 customers globally. Among its portfolio are warehouses, data centres, large scale logistics facilities, and business and office parks. These properties are greatly in demand with end users due to being located in key gateway cities around the world. This has led to a sky high occupancy rate and robust earnings growth in recent years.

Morgan Stanley is a fan of Goodman. It was pleased with its strong start to FY 2022 and appears confident its positive form can continue. It has an overweight rating and $26.50 price target on Goodman’s shares.

South32 Ltd (ASX: S32)

Another ASX 200 share to consider is South32. This mining giant produces a wide range of commodities including alumina, aluminium, bauxite, energy and metallurgical coal, manganese, nickel, silver, lead, and zinc. It will also soon add copper to this with the acquisition of an interest in the Sierra Gorda copper mine in Chile.

Thanks to this diversity, and particularly its exposure to aluminium, South32 has been tipped to generate significant free cash flow in the coming years.

It is largely for this reason that Goldman Sachs currently has a conviction buy rating and a $4.40 price target on its shares. But it doesn’t stop there. The broker is also forecasting double-digit dividend yields through to at least FY 2026.

The post Why these ASX 200 shares could be strong buys 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 Bruce Jackson.

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There are some leading ASX growth shares that analysts currently rate as a buy.

These ideas are companies that are seeing their operations grow at an impressive double (or even triple) digit rate.

Not every company that’s growing is a worthwhile investment at today’s price, but these companies could be too good to ignore:

Airtasker Ltd (ASX: ART)

Airtasker is an online marketplace business that connects people that want to work with people who need work doing.

The business is currently rated as a buy by Morgans, with a price target of $1.27. That’s almost 30% higher than where it is today.

This ASX growth has a combination of a very high gross profit margin (more than 93% in FY21), rapid growth – revenue increased 38% in FY21 and positive operating cashflow ($5.5 million in FY21). Those three attributes means the business is scaling quickly, very profitably and it’s adding to the company’s cashflow positively.

Airtasker is aiming to scale new Airtasker marketplaces across the world and replicate the growth it has already achieved in Australia. The UK and USA are the next two target markets it’s expanding in.

The company also recently told investors at its AGM that it’s seeing “positive momentum” in its average task value and management expect this to continue into the medium-term and longer-term. Airtasker is also becoming more trusted by Australians – more people are turning to Airtasker for increasingly complex and therefore higher value tasks.

The ASX growth share is investing in marketing, creating new service categories and developing its re-booking model. The re-booking model is showing some “exciting results”.

Internationally, it’s targeting an annualised run rate of gross marketplace volume (GMV) of between $8 million to $10 million.

Temple & Webster Group Ltd (ASX: TPW)

The furniture and homewares ASX growth share is another business that is liked by analysts. Morgan Stanley rates it as a buy, with a price target of $16 – that’s around 50% higher than it is today.

In FY21, Temple & Webster achieved revenue growth of 85% to $326.3 million. The broker thinks that the business may be able to achieve $1 billion of revenue in four to five years thanks to its good and growing market share, as well as the tailwind of the shift to e-commerce by customers.

The ASX growth share is still seeing its revenue increase at a fast rate. For the period from 1 July 2021 to 27 August 2021, revenue had increased by another 49%.

Management said that the business is experiencing several strong tailwinds, including the ongoing adoption of online shopping due to structural and demographic shifts (and an acceleration of this due to COVID-19).

Temple & Webster is planning to drive down its profit margins for the medium-term by investing into growth areas of the business to grow its online market position so that the ASX growth share can become the largest retailer in Australia for furniture and homewares in Australia.

Not only is Temple & Webster growing its headline revenue and customer numbers, but its revenue per active customer is increasing – showing that customers are buying more often and spending more when they do. The revenue per active customer in FY21 rose 12% year on year.

The post 2 ASX growth shares to buy this month: analysts 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. owns shares of and has recommended Temple & Webster Group Ltd. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Airtasker Limited. The Motley Fool Australia has recommended Temple & Webster Group Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Metal Hawk Ltd (ASX: MHK) share price finished Wednesday higher following the company’s assay results at the Kanowna East project. The site is located about eight kilometres northeast of Northern Star Resources Ltd‘s (ASX: NST) Kanowna Belle gold mine in the West Australian goldfields.

At the closing bell, the mineral exploration company’s shares leapt 6.56% to 32.5 cents. It’s worth noting that despite today’s rise, its shares are still down around 40% in a month.

Gold assays returned from maiden RC program

Investors were buying up the Metal Hawk share price after the company provided a positive release to the ASX today.

According to the update, Metals Hawk advised that its reverse circulation (RC) drilling program has achieved gold assays results.

A number of holes were drilled to test a number of broad gold anomalies discovered at the Little Lake and Western Tiger prospects. The company undertook a recent aircore (AC) drilling program at the sites.

At Little Lake, six RC holes were completed resulting in significant new gold intercepts. This included:

• 4 metres at 17.8 grams per tonne (g/t) of gold (Au) from 75 metres (drill hole KERC012); and
• 1 metre at 2.9 g/t Au from 66 metres (drill hole KERC010).

Furthermore, five RC holes were drilled at the Western Tiger prospect, highlighting the following results:

• 2 metres at 1.45 g/t Au from 73 metres (drill hole KERC003);
• 1 metre at 1.42 g/t Au from 80 metres (drill hole KERC004);
• 5 metres at 1.95 g/t Au from 70 metres (drill hole KERC005); and
• 5 metres at 1.09 g/t Au from 69 metres (drill hole KERC006);

Metal Hawk managing director, Will Belbin commented:

Our first RC drilling program at Kanowna East has further highlighted the potential of this gold project. Following the Company’s nickel sulphide discovery at Berehaven and the successful capital raising in October, the Company is very well positioned to continue delivering exploration success across its highly prospective gold and nickel projects.

Metal Hawk noted that the next stage of RC drilling will follow up the new gold intercepts at the Little Lake and Western Tiger prospects.

Metal Hawk share price summary

Over the past 12 months, the Metal Hawk share price has jumped almost 40%, with year-to-date registering the same gains.

Metal Hawk commands a market capitalisation of about $15.14 million, with approximately 47.32 million shares on its books.

The post Metal Hawk (ASX:MHK) share price rises 6% on high-grade gold results appeared first on The Motley Fool Australia.

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Motley Fool contributor Aaron Teboneras owns shares of Northern Star Resources 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 Bruce Jackson.

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Shares in Advanced Human Imaging Ltd (ASX: AHI) fell directly from the open and have ended the day 18% lower at 98 cents apiece.

Investors sold Advanced Human Imaging following the completion of its US initial public offering (IPO), where it raised capital from the public to fund its expansion plans.

Here are the details.

What did Advanced Human Imaging announce?

Advanced Human Imaging has “patented a proprietary dimensioning technology that enables its users to check, track, and assess their dimensions using only a smartphone both privately and accurately”.

It has recently grown operations, securing contracts in the US earlier this year, amongst other progress. However, don’t forget that companies must put up capital to finance each move up the growth chain.

As such, companies are often faced with a capital budgeting decision in their expansion plans. It is a 3-pronged decision that weighs up using cash from the balance sheet, issuing company bonds/debt, or raising more capital from investors.

Often, public companies will issue new shares on international exchanges to raise more capital from investors. With its success to date, Advanced Human Imaging looked to the US capital markets to do just that.

Today the company announced the closing of its US IPO, where it sold 1,000,000 “units” at a price of US$10.50 per “unit” to fund its growth engine.

Each unit consists of two American Depositary Shares (ADS), plus a single warrant to purchase one ADS. Each ADS represents 7 ordinary shares in Advanced Human Imaging.

The company’s warrants are exercisable immediately, expire three years from the date of issuance and have an exercise price of US$5.52 per ADS.

The ADSs and warrants were issued separately and represented a price of $5.24 per ADS and $0.02 per warrant.

For reference, a warrant is a type of derivative that gives investors the right – but not the obligation – to purchase a company’s shares, at a specific price, on a specific date.

Equity warrants are very similar to option contracts, but they differ in a few ways. For example, when a warrant is exercised, one receives shares from the company itself – not from another investor, unlike with a stock option.

Each of Advanced Human Imaging’s ADSs began trading on the Nasdaq from 19 November under the symbol “AHI”.

Advanced Human Imaging plans to use the net proceeds primarily for research and product development and business development. The leftover funds will be used for general corporate purposes.

What else was announced?

Further to the IPO announcement, the company followed up with a separate announcement on agreements it has with Asia Cornerstone Asset Management (ACAM) and iConcept Global Growth Fund (iCGGF).

The release notes that convertible note subscription agreements with ACAM and iCGGF have been settled by mutual agreement.

The Company has agreed to issue 2,271,834 fully paid ordinary shares in ADSs to ACAM and 738,576 ADS’s to iCGGF as final settlement of all claims under or in connection with the agreements.

Advanced Human Imaging share price snapshot

The Advanced Human Imaging share price has fallen almost 18% into the red from January 1 this year. Yet, despite this, it has climbed around 12% in the past 12 months.

Zooming in and we see that Advanced Human Imaging shares are down 14% in the past month and have slipped over 16% in the past 12 months.

The post What sent the Advanced Human Imaging (ASX:AHI) share price down 18% today? appeared first on The Motley Fool Australia.

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The author Zach Bristow has no positions 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 Bruce Jackson.

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