The online sales surge reported by Shaver Shop Group Ltd (ASX: SSG) last week is an ominous sign for the $50 billion shopping mall industry.

The $70 million market cap retailer reported last Thursday a near 400% surge in online sales for the six weeks to May 10 as Aussies rediscovered the love of self-grooming during this COVID-19 lockdown.

This has the potential to re-write the lopsided relationship between small retailers and all-powerful shopping centre landlords sooner than many think.

Six years in six weeks

Shaver Shop isn’t the only retailer to see a big online surge. Others like Myer Holdings Ltd (ASX: MYR), Premier Investments Limited (ASX: PMV) and JB Hi-Fi Limited (ASX: JBH) have reported strong growth in internet sales.

While the online trend isn’t new, the surge in adoption rates due to the coronavirus pandemic over the six-week shutdown is probably equal to what is forecast for the next six years!

Power rebalances

This changes the power balance between ASX retailers and property groups in two ways. The first is the realisation by retailers that they don’t need as many shops as they thought previously.

The second is the devaluation of foot traffic. In the past, mall operators would incentivise large anchor tenants, such as Woolworths Group Ltd (ASX: WOW), to move in as they draw large number of shoppers.

This allows landlords to charge a premium to smaller retailers who regard high traffic areas as a key sales driver. Smaller retailers are usually charged a base rent plus a variable component on sales turnover.

Mega malls have peaked

But the business model for landlords may have to change and it’s the mega malls that are likely to feel more of the impact of this structural shift.

The losers include Vicinity Centres (ASX: VCX) with its flagship Chadstone Shopping Centre, and Scentre Group (ASX: SCG) with its Westfield branded shopping destinations.

If physical stores become pick-up points for online orders or a showcase for products to aid web purchases, then retailers will baulk at paying a premium to be in mega malls.

Foolish takeaway

Don’t get me wrong, I am not saying mega malls will turn into ghost cities in the post COVID-19 apocalypse. But their strategic value has probably peaked and these landlords have a lot of shops to fill.

What this means for investors in ASX-listed Australian real estate investment trusts (A-REITs) is that they may need to question traditional valuation models when making their investment decision.

On the flipside, the online evolution is likely to lift the operating margins for ASX retailers. This means that profitability can improve even if online sales don’t fully offset lost sales from a physical store.

The David and Goliath battle is only just beginning.

More reading

• These are the 10 most shorted ASX shares
• ASX shares that could benefit from the Internet of Food
• Broker tips 10 ASX 200 shares for a post-coronavirus recovery
• 4 top ASX 200 shares for blue chip investors
• Why I think Premier Investments is the best retail share on the ASX

Motley Fool contributor Brendon Lau has no position in any of the stocks mentioned. Connect with him on Twitter @brenlau.

The Motley Fool Australia owns shares of and has recommended Premier Investments Limited. The Motley Fool Australia owns shares of Woolworths Limited. The Motley Fool Australia has recommended Scentre Group. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post How this $70m ASX small cap is cutting down a $50bn industry appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/2AxA3nm

Many ASX mid-cap shares have been on a tear over the past week. There were a couple of stand out performers in the aviation space, as well as the iron ore mining space. However, last week belonged predominantly to the ASX gold miners.

This is a reinforcement of just how uncertain the market is as Australia moves from lockdown. Fears over global trade and tensions, concerns over economic forecasts, and uncertainty about potential second wave infections are driving safe-haven investing. 

ASX mid-cap movers

The Regional Express Holdings Ltd (ASX: REX) share price rose an impressive 21.5% last week. On Wednesday, the company’s shares jumped by 38.3%. This was after deputy chairman John Sharp on Tuesday told ABC radio the airline was planning a domestic service similar to one that Virgin Australia had operated. Normally, such claims would be laughed off. However, REX runs a very tight ship and is talking about an achievable $200 million investment. 

The Champion Iron Ltd (ASX: CIA) share price popped to 15.26% up from Monday’s open. This was a recognition of the value of its 66.5% iron ore concentrate from its Bloom Lake operations in Canada. Iron ore has been remarkably resilient during the COVID-19 pandemic. Iron ore contract prices were up by 7% last week.

Resolute Mining Limited (ASX: RSG) saw its share price rise by 14.2%. Resolute is a well-performing gold mining company. In part, it has benefited by investor sentiment over gold. However, it also announced the success of the second tranche of its ~$195 million equity raising launched in January 2020. It also maintained FY20 guidance despite COVID-19 constraints.

Other gold miners that saw their shares rise last week include Silver Lake Resources Limited (ASX: SLR), which rose by 9.14% over the week, and Perseus Mining Limited (ASX: PRU), which saw its share price rise by 5.1%. Also, the Gold Road Resources Ltd (ASX: GOR) share price rose by 7.1%.

In the industrial sector, shipbuilder Austal Limited (ASX: ASB) saw its share price jump by 4.4% over the week. This is recognition of the solid management, consistent contract wins, and the defensive nature of the share. 

Foolish takeaway

The mid-cap shares on the ASX are very volatile. When things go well, they can jump several times more than their large-cap stablemates. However, when things go badly, they tend to fall by greater percentages as well.

Last week’s share price movements underscore the uncertainty in the market, yet there are still opportunities for discerning investors. For instance, Champion Iron should provoke interest in mid-cap iron ore miners.

More reading

• These were the best performing ASX 200 shares last week
• ASX 200 finishes up 1.4%, gold miner share prices surge
• 6 ASX shares driving the Australian gold boom
• Why the best performing ASX stock might have more room to run higher
• Losers of Virgin Australia’s potential nationalisation

Daryl Mather owns shares of Austal Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Austal Limited. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post 7 roaring ASX mid-cap shares last week appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/2ZdL3kj

I think it’s time to buy the diversified property S&P/ASX 200 Index (ASX: XJO) share Brickworks Limited (ASX: BKW).

The ASX 200 has plenty of quality shares that would make good long-term investments for most portfolios. An added bonus from owning Australian shares is that franking credits are attached to the dividends that are paid.

I think it’s time to buy Brickworks for these reasons:

Low share price

One of the most important parts of investing is buying that asset at a good price. Due to the coronavirus the Brickworks share price has fallen 34% since 20 February 2020. Having the option to buy this great long-term focused ASX 200 share is very attractive right now.

There are some shares that are priced a lot cheaper at the moment because of potential wipeout risk. Think how bad it could get for the banks if bad debts get significantly worse. But I don’t think the Brickworks share price decline is warranted considering its long-term prospects.

Good dividend for an ASX 200 share

One of the main things that ASX 200 share investors look for is a decent dividend. I don’t think banks like Westpac Banking Corp (ASX: WBC) can be relied upon for income. But Brickworks has a great record. It hasn’t cut its dividend for over 40 years. I think that’s a fantastic record.

It’s not just the reliability that I like though. The grossed-up dividend yield is really attractive at 6.6%. The falling share price has boosted the starting yield for investors.

Diversification

One of the main reasons I’m confident about Brickworks for the future as an ASX 200 share pick is the diversification of its business.

Most people will think of Brickworks for its Australian building products divisions that supplies the country with bricks, paving, roofing, precast and so on.

But there are other parts to the business that should be regarded just as well. Its American building products business is just getting started after a few acquisitions. The US is a huge market with plenty of growth potential.

It also has two defensive assets – its ‘investments’ divisions and the 50% stake of its industrial property trust that it owns along with Goodman Group (ASX: GMG). Both of these provide defensive earnings and good cashflow.

Foolish takeaway

I think Brickworks is one of the best ASX 200 shares to choose right now. Its shorter-term construction income looks uncertain and bleak – which is precisely why the share price is down so much. When things start improving the share price will probably go up too, much sooner than we see a recovery in the earnings.

More reading

• These ASX 200 shares are up over 40% in 2020
• 5 things to watch on the ASX 200 on Monday
• ASX 200 up 0.25% this week, CBA reveals Q3
• Top brokers name 3 ASX 200 shares to sell next week
• Why BHP is an ASX 200 dividend share to buy today

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Brickworks. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post Why I think it’s time to buy this ASX 200 share appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/2X7X08i