S&P/ASX 200 Index (ASX: XJO) bank shares may see their future competition dwindle as the Australian Prudential Regulatory Authority (APRA) tightens its controls on new banking licences.

Under APRA’s new rules, new authorised deposit-taking institutions (banks) will have to jump through additional hoops before gaining the regulator’s favour.

This could see the ASX 200 banks with less competition on their block in the future, particularly from neobanks.  

Neobanks are banks that purely exist online. Think, Douugh Ltd (ASX: DOU) and the recently collapsed Xinja.

Let’s take a look at the new rules.

ASX 200 banks in focus on higher hurdles for new kids

ASX 200 bank shares may be in the spotlight today while their potential competitors feel the blues.

Following Xinja’s failure, APRA now requires new banks on the block to provide both deposit and income-generating products.

Of course, Xinja famously offered deposit only options to its customers, negating to launch any real income-generating products. Xinja’s banking licence barely made it past its first birthday before the former bank threw in the towel.

Not much has changed for established banks, like those on the ASX 200. However, APRA now calls on all banks to have response plans in place to navigate tough times. Banks are also required to plan for how they’d exit the banking business if they flopped.

New banks will also have to keep a generous capital conservation buffer – a certain amount tucked away in case of a rainy day. As well as a limit on how much cash they can mind for their customers.

From now on, APRA will provide 3 types of banking licences:

• The first is a 2-year restricted licence, allowing a new bank to get on its feet while planning how it would pay back its customers if it all goes wrong.

  Restricted banks have a $2 million deposit limit and must have $3 million of ongoing capital and $1 million in a resolution reserve.  

  If a new bank has a good amount of cash in its coffers and a history of running a successful banking-related business, it can skip this licence.

• The next is a new licence. Banks that hold a new licence have higher capital requirements they must meet.

• And finally, existing banks like those on the ASX 200 can pretty much continue working as normal. Though, that doesn’t mean APRA won’t be looking over their shoulder!

The post ASX 200 bank shares rejoice. Life just got tougher for new neobanks appeared first on The Motley Fool Australia.

More reading

• Why is the Douugh (ASX:DOU) share price up 5% on Monday?

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 Bruce Jackson.

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The National Australia Bank Ltd (ASX: NAB) share price could be a mover on Thursday after the company released its third-quarter trading update.

How did NAB perform in the third quarter?

The NAB share price will be in focus today after the bank reported an unaudited statutory net profit of $1.65 billion and unaudited cash earnings of $1.70 billion for the June quarter.

NAB’s revenue fell 1% as declines in Markets & Treasury (M&T) income outweighed higher volumes and margins in its lending businesses.

The M&T division experienced limited trading opportunities, impacted by current global monetary policy settings.

Excluding M&T, the group’s revenue would have increased by 1.9%.

The bank’s net interest margin (NIM) was broadly stable, reflecting lower deposit and funding costs, partly offset by the impact of low-interest rates and home lending competition.

NAB’s expenses fell 1% for the quarter with productivity benefits outweighing the bank’s technology and investment spend.

The company chose to compare today’s figures against FY21 first-half quarterly averages, which reflect a 1% increase in cash earnings and a 1% decrease in cash earnings before tax and credit impairment charges.

Management commentary

NAB Chief Executive Officer, Ross McEwan was pleased with the quarter, saying:

Our performance this quarter is encouraging. Cash earnings rose 10.3% compared with 3Q last year, supported by significantly better credit impairment outcomes.

Particularly pleasing is the strong momentum across our business. In Australia, lousing lending rose 2% and SME business lending grew 4.3%, both outpacing system in recent months. Our New Zealand business also delivered robust growth with lending up 2.7%. These outcomes are a result of the decisions and investments we are making, which are having a positive impact for customers and colleagues.

We have a clear focus on where and how we will continue to grow. The exit of MLC Wealth is now complete, and the acquisitions of 86 400 and Citigroup’s Australian consumer business will help accelerate our growth strategy.

Despite the near-term uncertainty and challenges for the Australian economy in the wake of recent lockdowns, McEwan remains confident in the long term:

However, we remain optimistic about the long-term outlook for Australia and New Zealand. The strong economic momentum leading into this period, ongoing government support and customers’ relatively healthy starting positions give us confidence that once restrictions are eased, the economy will again bounce back.

NAB share price snapshot

The NAB share price has rallied 18.75% year to date and is up 48.9% in the last 12-months.

However, NAB shares have struggled to make a meaningful move above their pre-COVID highs of about $27.40.

The post NAB (ASX:NAB) share price on watch following June quarter update appeared first on The Motley Fool Australia.

More reading

• Why the NAB (ASX:NAB) share price is closing in on a 52-week high
• Westpac (ASX:WBC) share price lags the big banks’ after NZ ‘formal warning’
• Is now a good time to buy Bendigo and Adelaide Bank (ASX:BEN) shares?
• Is the NAB (ASX:NAB) share price in the buy zone after its Citi acquisition?
• 5 things to watch on the ASX 200 on Tuesday

Motley Fool contributor Kerry Sun 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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The Wesfarmers Ltd (ASX: WES) share price has been on the move, soaring 9% over the past month alone. This comes despite no price sensitive news being released by the retail conglomerate since late July.

After Wednesday’s market close, Wesfarmers shares finished the day slightly down 0.31% to $63.56. It’s worth noting that its shares reached an all-time high of $64.10 on Monday.

What’s driving Wesfarmers shares into uncharted territory?

The Wesfarmers share price has been attracting a number of investors to its registry since March 2020.

When COVID-19 arrived within our shores, Australians began to panic-buy in supermarkets, hardware stores and other retail outlets. The surge in spending led to bumper profits for Wesfarmers, which recorded strong sales and earnings growth across its businesses.

Fast-forward to today, half of Australia is again in lockdown, particularly with no end in sight for New South Wales. This has led consumers to again splurge on DIY projects from Bunnings, as well as business supplies from Officeworks.

Recently, Wesfarmers put forward a $687 million offer to acquire 100% of Australian Pharmaceutical Industries Ltd (ASX: API). The retail conglomerate is seeking to further diversify its growing portfolio with entry into the pharmaceutical market. However, this offer has since been rejected by the API board, indicating that the proposal undervalued the business.

Only time will tell if Wesfarmers will increase its offer to API shareholders. If successful in its takeover, this would expand the company’s presence into new markets.

Wesfarmers is scheduled to report its FY21 full-year results on Friday 27 August 2021.

Wesfarmers share price snapshot

No doubt, investors will be happy with how the Wesfarmers share price has tracked over the last 12 months, up 35%. The company has a price-to-earnings (P/E) ratio of 38.46, and a trailing dividend yield of 2.58%.

Wesfarmers commands a market capitalisation of roughly $72 billion, making it the 7th largest company on the ASX.

The post Here’s why the Wesfarmers (ASX:WES) share price is up 9% in a month appeared first on The Motley Fool Australia.

More reading

• 2 ASX 200 shares that could offer good dividend income
• Wesfarmers (ASX:WES) share price rises amid latest digital push
• These 10 ASX 200 shares hit new 52-week highs this Monday
• Pricing-power shares like Wesfarmers (ASX:WES) help fight inflation: expert
• Wesfarmers (ASX:WES) share price slips amid green hydrogen agreement

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 owns shares of and has recommended Wesfarmers Limited. 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 A2 Milk Company Ltd (ASX: A2M) share price now looks as though it’s taken a page out of AGL Energy Limited (ASX: AGL) or Myer Holdings Ltd (ASX: MYR)’s books.

Shares in the ex-market darling have been trending lower since late July last year, losing more than 70% in value during this time.

Right in the middle of the decline marked the worst ever day for the A2 Milk share price, which plummeted 23.7% on 18 December from $13.26 to $10.12.

Why did the A2 Milk share price fall off a cliff?

Things went from bad to ugly for the infant formula business following the release of updated half-year and full-year FY21 guidance.

This is when A2 Milk flagged a far greater and protracted disruption to its all-important daigou channel.

The continued underperformance was driven by the flow-on effect of pantry destocking following a strong sales uplift in the 2020 third quarter and a weak retail daigou performance in Australia as a result of reduced tourism and international students.

A2 Milk would issue grim FY21 guidance which included:

• Group revenue for FY21 of NZ$1.40 billion to NZ$1.55 billion.
• Group earnings before interest, tax, depreciation, and amortisation (EBITDA) margin for FY21 of between 26% and 29%.

The new figures would imply a year-on-year revenue decline between 11.9% and 20.5%.

It only got worse from there

The A2 Milk share price would continue to fall sharply on two separate occasions.

The release of the company’s half-year FY21 results on 25 February would witness a 16% tumble from $10.45 to $8.76.

This was heavily influenced by yet another guidance downgrade which expected:

• FY21 revenue of NZ$1.4 billion.
• EBITDA margin between 24% and 26%.

Just three months later, on 11 May, the A2 Milk share price would stage another double-digit decline, sliding 18.6% from $7.02 to $5.71.

Why you might ask?

Another guidance downgrade. This time, forecasting:

• FY21 revenue between NZ$1.2 billion and NZ$1.25 billion.
• EBITDA margin between 11% and 12%.

After multiple downgrades, A2 now expects FY21 revenue to decline 29% to 31% against FY20 figures. Meanwhile, EBITDA margins have tumbled all the way from 26.4% to a forecast 11% to 12%.

What to expect this earnings season

A2 Milk is expected to report its full-year FY21 results on Thursday 26 August.

With results right around the corner, here’s a preview of what investors might be able to expect.

The post When was the worst ever day for the A2 Milk (ASX:A2M) share price? appeared first on The Motley Fool Australia.

More reading

• a2 Milk (ASX:A2M) share price rises on bullish broker note
• Here’s why the A2 Milk (ASX:A2M) share price is down 18% in a month
• These are the 10 most shorted ASX shares
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• Is it a good time to buy A2 Milk (ASX:A2M) shares in August 2021?

Motley Fool contributor Kerry Sun 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 A2 Milk. 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 QBE Insurance Group Ltd (ASX: QBE) share price could be on the move today.

This follows the release of the insurance giant’s half year results this morning.

QBE share price on watch after reporting strong first half growth

• Gross written premium (GWP) increased 26.9% to US$10,203 million
• Net earned premium rose 8.9% to US$6,571 million
• Combined operating ratio improved to 93.3%
• Underwriting result of US$642 million, compared to loss of US$189 million
• Adjusted cash profit after tax of US$463 million, compared to US$66 million loss.
• Interim dividend of 11 Australian cents per share, up from 4 Australian cents per share in the prior period

What happened for QBE in the first half?

Positively for the QBE share price, for the six months ended 30 June, a material turnaround in both underwriting and investment returns underpinned strong profit growth for the company.

The release notes that QBE’s GWP grew strongly over the prior corresponding period thanks to the strong premium rate environment, improved customer retention, and new business growth across all regions.

One of the highlights was its Crop business. It grew 48% due to the significant increase in corn and soybean prices and targeted organic growth. For example, overall GWP increased by 14% on a constant currency basis excluding Crop and 20% including Crop.

In respect to premium increases, the company revealed that it achieved group-wide average rate increases of 9.7% during the half. Though, it does note that rate momentum is showing signs of moderating in some geographies and products. This is particularly the case in International Markets.

Another positive that may give the QBE share price a boost today was its improving combined operating ratio. It came in at 93.3% during the half, compared to 103.4% in the prior period. A reading below 100% represents profitable underwriting.

What did management say?

QBE’s Interim CEO, Richard Pryce, was pleased with the improved performance during the half.

He said: “Notwithstanding the heightened level of catastrophes during the half which remain a major issue for the industry, I am very pleased with the improvement in the underwriting result and the strong but targeted premium growth.”

“While we continue to benefit from meaningful compound premium rate increases in all our geographies, there are signs that pricing momentum is moderating, particularly in International Markets. Regardless, we will remain vigilant in balancing premium growth and pricing adequacy for an appropriate risk adjusted return on capital, with claims inflation and catastrophe costs key areas of ongoing focus,” he added.

What’s next for QBE?

No guidance has been provided for the second half of FY 2021, which could potentially weigh on the QBE share price a little today.

Though, the company advised that it continue to push on with its efficiency program focused on IT modernisation and digitisation. It notes that it has challenged itself around historic operating structures and work practices to develop a more modern and high performing business.

As part of this, QBE is targeting an expense ratio of 13% by 2023 compared with 13.7% today. It expects to incur a restructuring charge of $150 million to be expensed over three years, of which $29 million was recognised in the half.

The QBE share price is up 35% in 2021.

The post QBE (ASX:QBE) share price in focus after delivering strong first half growth appeared first on The Motley Fool Australia.

More reading

• How did the QBE (ASX:QBE) share price respond last earnings season?
• Here are the 10 top moving ASX shares on Monday
• Here’s why the QBE (ASX:QBE) share price is up 27% so far in 2021

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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Quality exchange-traded funds (ETFs) could be good considerations to think about for the long-term.

ETFs allow investors to get exposure to a number of investments in a single trade. Some are focused on a particular industry, such as Betashares Global Cybersecurity ETF (ASX: HACK) whereas others give exposure to a wider array of businesses such as an index of shares like iShares S&P 500 ETF (ASX: IVV).

These two ETFs could be ones to think about:

Vanguard Msci Index International Shares ETF (ASX: VGS)

This is a broad ETF which has over 1,500 holdings spread across the world. That represents a lot of diversification. It’s a globally-focused ETF that looks to track the MSCI World ex-Australia Index. In other words, it’s giving investors exposure to many of the world’s largest companies listed in major developed countries.

Whilst the US gets almost 70% of the portfolio’s allocation, there are a number of places that get an allocation of at least 1%: Japan, the UK, Canada, France, Switzerland, Germany, the Netherlands, Germany, Sweden and Hong Kong.

The top holdings represent around 18% of the portfolio, so it’s not quite as concentrated as some other ETF portfolios that give exposure to the growth-focused FAANG names (Facebook, Apple, Amazon and so on).

Vanguard Msci Index International Shares ETF’s biggest 10 holdings are: Apple, Microsoft, Alphabet, Amazon.com, Facebook, Tesla, Nvidia, JPMorgan Chase, Johnson & Johnson and Visa.

It has a pretty low annual management fee of just 0.18%, which is a lot cheaper than most active fund managers.

The long-term returns of this ETF have been in the double digits, though past performance is not an indicator of future performance. Over the last five years it has produced an average return per annum of 14.7%.

VanEck Vectors Morningstar Wide Moat ETF (ASX: MOAT)

This ETF operates fairly differently to the Vanguard one.

VanEck says the ETF: “Gives investors exposure to a diversified portfolio of attractively priced US companies with sustainable competitive advantages according to Morningstar’s equity research team.”

The businesses are only sourced from US stock exchanges, but the underlying businesses can (and do) generate earnings from overseas.

Companies only make it into the portfolio if they are trading at good value prices compared to the estimate of fair value by Morningstar.

As of 10 August 2021, the biggest 10 weightings in the portfolio (with each allocation between 2.5% and 3% of the portfolio) were: Pfizer, Alphabet, Servicenow, Microsoft, Facebook, Wells Fargo, Tyler Technologies, Cheniere Energy, Salesforce.com and General Dynamics.

At the end of July 2021, just over 20% of the portfolio was invested in healthcare, with 16.6% invested in IT and 15.4% invested in industrials. Financials (13.3%) and consumer staples (11.1%) were the other two sectors with double digit weightings.

VanEck Vectors Morningstar Wide Moat ETF comes with an annual cost of 0.49%.

Past performance is not a reliable indictor of future performance. Over the last five years, the ETF has produced an average return per annum of 19.4%.

The post Why these 2 top ETFs could be buys appeared first on The Motley Fool Australia.

More reading

• ASX investors can’t get enough! ETF inflows hit new record high
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• 3 high quality ETFs for ASX investors

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 recommended VanEck Vectors Morningstar Wide Moat ETF and Vanguard MSCI Index International Shares ETF. 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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All eyes will be on the Telstra Corporation Ltd (ASX: TLS) share price today.

This follows the release of the telco giant’s highly anticipated full year results for FY 2021.

Telstra share price on watch after achieving guidance

• Total income fell 11.6% to $23.1 billion
• Reported earnings before interest, tax, depreciation and amortisation (EBITDA) fell 14.2% to $7.6 billion
• Underlying EBITDA was down 9.7% to $6.7 billion (versus guidance of $6.6 billion to $6.9 billion)
• Net profit after tax increased 3.4% to $1.9 billion
• Free cash flow up 11.6% to $3.8 billion
• Fully franked final dividend of 8 cents per share, bringing full year dividend to 16 cents per share
• FY 2022 guidance: Underlying EBITDA growth of 4.5% to 9%
• $1.35 billion on-market share buyback

What happened in FY 2021 for Telstra?

For the 12 months ended 30 June, Telstra reported an 11.6% reduction in total income and a 9.7% decline in underlying EBITDA. Given the latter was in line with its guidance, this could bode well for the Telstra share price today.

Telstra’s EBITDA result reflects an in-year NBN headwind of $650 million and an estimated $380 million financial impact from COVID-19. If you exclude the NBN headwind, Telstra’s underlying EBITDA would have fallen only $70 million year on year.

A key driver of its improving performance was its mobile business. In the second half, mobile service revenue grew 3.7% over the prior corresponding period. Pleasingly, further growth is expected in FY 2022 from the key segment.

Also supporting its performance was an underlying fixed cost reduction of $490 million. But management doesn’t expect it to stop there and is guiding to a further ~$430 million of cost outs in FY 2022. It also sees opportunities beyond this.

Another positive which could boost the Telstra share price today is its expectation for the NBN headwind to ease. Management expects this to be just $350 million in FY 2022, down from $650 million in FY 2021.

What did management say?

Telstra’s CEO, Andy Penn, was pleased with the company’s performance. Particularly the successful investments it has made in innovation, digitisation and networks, its commitment to improving customer experiences, and its disciplined approach to capital management and productivity.

He believes this leaves Telstra well-positioned going into FY 2022.

Mr Penn said: “2021 was a really significant year for Telstra. We delivered results in line with guidance and we are seeing the focus and discipline on T22 pay off. It represents a turning point in our financial trajectory. Our second half underlying EBITDA was up on the first half, and our guidance for FY22 underlying EBITDA is $7.0-7.3 billion, which represents mid to high single digit growth.”

“We are clearly building financial momentum and I am very pleased to be able to say that our underlying business will return to full-year growth in FY22. We have confidence because we see strong performance in our mobile business, continued discipline on our cost reduction target, green shoots in some of our growth businesses and a diminishing impact from the nbn.”

Share buyback

Another positive from today’s result that could support the Telstra share price was the announcement of a $1.35 billion on-market share buyback. This follows the recent InfraCo Towers transaction.

Commenting on the buyback, Mr Penn said: “When we launched T22, we committed to establishing a standalone infrastructure business unit for three reasons: to give transparency of those assets, to bring a harder commercial edge to how we operationalise them, and to create optionality with a view to maximising shareholder value. This share buy-back is a clear demonstration of how we are creating additional long-term value for our shareholders.”

What’s next for Telstra in FY 2022?

Telstra has provided guidance for FY 2022 and is expecting the underlying business to return to full year growth.

It expects:

• Total Income of $21.6 billion to $23.6 billion
• Underlying EBITDA of $7 billion to $7.3 billion
• Capex of $2.8 billion to $3.0 billion
• Free cashflow after lease payments (FCFal) of $3.5 billion to $3.9 billion

Telstra share price outperforms in 2021

The Telstra share price has been outperforming in 2021 and is up 27% year to date. Shareholders will no doubt be hoping this result, its guidance, and the buyback will be enough to extend these gains today.

The post Telstra (ASX:TLS) share price on watch after hitting guidance & $1.35bn buyback appeared first on The Motley Fool Australia.

More reading

• 5 things to watch on the ASX 200 on Thursday
• Telstra (ASX:TLS) FY 2021 results preview
• Why the Aussie Broadband (ASX:ABB) share price rose 8% to a new high
• How did the Telstra (ASX:TLS) share price respond last earnings season?
• Telstra (ASX:TLS) and this ASX dividend share are rated as buys

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 owns shares of and has recommended Telstra Corporation Limited. 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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It’s been a disappointing 2021 so far for the Woodside Petroleum Limited (ASX: WPL) share price. Shares in Australia’s oil and gas production giant have fallen 5.0% lower to $21.91 as at Wednesday’s close.

We’re now well in the swing of the August reporting season. Woodside investors will be waiting in anticipation for the company’s half-year results release on Wednesday 18 August.

As it stands, the Woodside share price is trading at a 2.3% forward dividend yield. Let’s explore a little bit more about what that means and how it compares to Woodside’s ASX peers.

Woodside share price dividend yield

There are a couple of ways to calculate a dividend yield – a commonly cited valuation metric for shares. It can either be done on a trailing (i.e. actual, historical payments) or forward (forecast or blended) basis.

According to The Motley Fool calculations, the Woodside share price is currently priced with a 2.3% dividend yield.

At the current $21.91 share price, that means the forecast full-year dividend for the Aussie energy share is roughly 51.5 cents per share. That is almost exactly the same as the FY2021 combined distributions of 51.6 cents (15.3 cents paid in March 2021 and 36.25 cents paid in September 2020).

The Woodside share price is trading on a higher dividend yield relative to its ASX peers. Santos Ltd (ASX: STO) shares are trading on a 1.43% dividend yield with Oil Search Ltd (ASX: OSH) shares at 0.16%.

Foolish takeaway

It’s useful to analyse multiple metrics when considering investments. A company’s dividend yield is simply a dividend estimate (or past dividend) divided by the current share price.

The Woodside share price has struggled to climb higher in 2021. That means the denominator in the dividend yield calculation is lower, making its yield higher.

Keen-eyed investors will be watching the 18 August results for further commentary and earnings outlooks to help guide dividend expectations going forward.

The post The Woodside (ASX:WPL) share price is now trading on a forecast 2.3% fully franked dividend yield appeared first on The Motley Fool Australia.

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• 5 things to watch on the ASX 200 on Tuesday

Motley Fool contributor Ken Hall 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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The last 30 days have been good to the CSL Limited (ASX: CSL) share price.

Its gained 4.97% over the month to today, despite releasing no news to the market. In fact, the last time the ASX heard price-sensitive news from CSL was back in early May.

Right now, the CSL share price is $292.73.

Let’s take a look at what’s been driving it lately.

What’s up with the CSL share price?

It’s been a quiet, yet productive month on the ASX for CSL.

While it has been in and out of the news due to its contract to produce AstraZeneca‘s COVID-19 vaccine, the company itself hasn’t announced anything.

So, it’s a mystery as to why the CSL share price is gaining. Or is it? Here are two happenings that might explain why the healthcare giant’s stock is surging.

Australian dollar

CSL is an Australian company, but most of its profit comes from overseas.

In financial year 2020, only 1.5% of CSL’s external operating revenue came from Australia.

Most of its income came from the United States. And right now, $1 Australian is only getting US$0.73.

That means when CSL earns income in US dollars, it gets more Aussie bucks back in its pocket. Although, the company does report in US dollars, so we likely won’t see the impact of the currency fluctuation in its upcoming full year report.

mRNA possibility

It’s also less than a month since the federal government’s approach to the market, calling for companies to submit their interest in creating mRNA vaccines, closed to new applicants.

According to reporting by ABC News, Industry Minister Christian Porter confirmed CSL has put itself forward to be considered as an mRNA vaccine manufacturer.

The anticipation of finding out who has won the federal government’s favour might also be boosting the CSL share price.

Of course, CSL already makes the AstraZeneca vaccine in its Melbourne facility.

CSL share price snapshot

The month that’s been has added to CSL’s strong performance on the ASX.

The CSL share price is currently 2% higher than it was at the start of 2021. It has also gained 3% since this time last year.

The post Here’s why the CSL (ASX:CSL) share price is up 5% in a month appeared first on The Motley Fool Australia.

More reading

• How does the CSL (ASX:CSL) share price perform during lockdowns?
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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. owns shares of and has recommended CSL Ltd. 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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The NEXTDC Ltd (ASX: NXT) share price will be one to watch this morning.

This follows the release of an announcement by the data centre operator after the market close on Wednesday.

What did NEXTDC announce?

The NEXTDC share price could be given a boost today by a positive update on the development of its Melbourne (M3) data centre.

According to the release, the company has been successful in obtaining planning consent for the new centre and has proceeded with construction. Furthermore, the company has acquired an additional 40,000sqm of adjoining land for $24 million, lifting the overall size of the M3 site to approximately 100,000sqm.

The release notes that, subject to planning consent, the site will be developed into a hyperscale campus which is expected to accommodate a data centre capable of approximately 150MW of capacity. This is in addition to housing its customers’ mission critical operation centres, administrative offices, and collaboration spaces.

Management advised that M3 will provide data centre services to Enterprise and Government customers, as well as hyperscale cloud providers in a new Availability Zone within the Melbourne market.

The ground works and base building construction of the initial 13.5MW of capacity is progressing, with practical completion planned for the first half of FY 2023.

NEXTDC’s Chief Executive Officer and Managing Director, Craig Scroggie, commented: “The upgraded development of this new hyperscale technology campus in Melbourne is driven by ongoing customer demand for premium quality data centre infrastructure. NEXTDC looks forward to being able to offer our customers multiple availability zone solutions across our existing M1 Port Melbourne, M2 Tullamarine, as well as this new M3 hyperscale campus in West Footscray.”

Is the NEXTDC share price in the buy zone?

The team at Goldman Sachs have looked over the announcement and remain very positive on the NEXTDC share price.

This morning the broker retained its conviction buy rating and $14.80 price target. Based on the current NEXTDC share price, this implies potential upside of over 13%.

Goldman said: “Overall we are pleased with this update, given the marginally faster completion of the M3 facility, along with the increased overall size. We also believe this facility is now much more comparable and complementary to the recently announced S4 hyperscale campus (300MW), so is a more logical and appealing inclusion within any Joint Venture structure (which we expect).”

“We continue to believe that these Hyperscale campuses are a relatively low risk way for NXT to accelerate its growth profile, given they are delivering incremental growth (i.e. new availability zone), but within existing markets. The use of a JV structure will also allow NXT to maintain its attractive return profile, along with significant funding flexibility,” it added.

The post Is the NEXTDC (ASX:NXT) share price in the buy zone after its update? appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro owns shares of NEXTDC 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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