At lunch on Tuesday, the S&P/ASX 200 Index (ASX: XJO) has bounced back strongly from its low. The benchmark index is currently down 0.2% to 7,271.1 points.

Here’s what is happening on the ASX 200 today:

BHP shares lower following update

The BHP Group Ltd (ASX: BHP) share price is trading lower today following the release of its fourth quarter and full year update. BHP reported full year iron ore production of 235.5Mt, petroleum production of 102.8MMboe, and copper production of 1,635.7kt. Iron ore and copper were in line with guidance, whereas petroleum was slightly above guidance for FY 2021. Management has guided to broadly flat production in FY 2022.

Afterpay share price higher on Money app launch

The Afterpay Ltd (ASX: APT) share price is pushing higher today after announcing the roll out of its Money by Afterpay app. According to the release, the launch will begin with an Australian staff pilot, followed by a full Australian customer launch in October. It will provide users with a 1% per annum interest rate on savings accounts and a daily account with a physical debit card, digital wallet offerings, and the ability to easily make and receive real time payments.

Oil Search rejects Santos merger proposal

The Santos Ltd (ASX: STO) share price and the Oil Search Ltd (ASX: OSH) share price are heading in very different directions on Tuesday. This follows news that Oil Search received and then rejected a merger proposal from Santos. The latter tabled an offer of $4.25 per share, which Oil Search believes did not offer appropriate value for shareholders. This news helped the Oil Search share price overcome a sharp decline in oil prices overnight. The Santos share price was not so lucky.

Best and worst ASX 200 performers

The best performer on the ASX 200 on Tuesday has been the Zip Co Ltd (ASX: Z1P) share price with a 6% gain. This is despite there being no news out of the buy now pay later provider. The worst performer on the ASX 200 has been the Santos share price with a 3.5% decline. This has been driven by oil price weakness and the rejection of its merger proposal.

The post ASX 200 midday update: Oil Search rejects Santos merger proposal, Afterpay rolls out Money app appeared first on The Motley Fool Australia.

More reading

• Afterpay (ASX:APT) share price is higher despite the sharp ASX 200 selloff
• Is this the beginning of a market crash for ASX shares? Experts say fear not
• Santos (ASX:STO) share price lower after Oil Search rejects merger proposal
• Afterpay (ASX:APT) share price higher after announcing Money by Afterpay app roll out
• What happened on the US stock market overnight and how could it impact ASX shares?

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 AFTERPAY T FPO and ZIPCOLTD FPO. The Motley Fool Australia owns shares of and has recommended AFTERPAY T FPO. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

from The Motley Fool Australia https://ift.tt/3eA6p2e

The Locality Planning Energy Holdings Ltd (ASX: LPE) share price is rocketing higher today, gaining a massive 47.22%.

Right now, the Locality Planning Energy (LPE) share price is 26.5 cents – up from its previous close of 18 cents.

Earlier today, the LPE share price reached 34 cents, which represents a 67% gain.

LPE is an energy provider focused on the New South Wales and Queensland markets. According to the company, it has used first-to-market technology to provide apartment buildings with solar energy and carbon-neutral hot water systems.

Today’s massive gain follows the company’s release of a trading update and unaudited preliminary results for the 2021 financial year.

Let’s take a look at what’s driving the Locality Planning Energy share price today.

Successful financial year

The LPE share price is soaring today after the company announced it has passed a milestone 10,000 new customers and a $1 million net profit, which is also LPE’s maiden net profit.

Over the 2021 financial year, LPE reported growth across all key financial metrics.

The company reported a 27% increase in revenue, while its operating costs only increased 8%.

LPE’s earnings before interest, tax, depreciation, and amortisation (EBITDA) grew by 217% over the 2021 financial year.

Its EBITDA went from a $3.8 million loss in the 2020 financial year, to a $3.6 million profit in the financial year just ended.

It also posted $55 million in reoccurring revenue.

Finally, it now has 41,000 customers using its services.

Commentary from management

LPE chair Justin Pettett commented on the company’s results:

The company’s maiden net profit represents just the beginning of the delivery on our vision for the company… [We] look forward to building on these results into FY22, as the company begins to deploy its unique, and exclusive shared solar product to strata communities throughout Queensland and New South Wales…

[The] company is now positioned for further growth with the uptake of our exclusive shared solar for apartment living.

LPE share price snapshot

For a moment, the LPE share price was in the green today on a year to date basis. However, it’s dipped slightly from its intraday high.

Right now, LPE shares have fallen 5% in 2021. They’ve also dropped 24% since this time last year.

The company has a market capitalisation of around $16 million, with approximately 62 million shares outstanding.

The post Why the Locality Planning Energy (ASX:LPE) share price is up 47% today appeared first on The Motley Fool Australia.

More reading

• Do ASX 200 banks share same BNPL ambitions as Westpac (ASX: WBC)?
• COVID-19 lockdowns and the Sydney Airport (ASX:SYD) share price
• Afterpay (ASX:APT) share price is higher despite the sharp ASX 200 selloff
• JB Hi-Fi (ASX: JBH) share price higher after beating expectations in FY 2021
• Is this the beginning of a market crash for ASX shares? Experts say fear not

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.

from The Motley Fool Australia https://ift.tt/2Uk8kkz

According to Humm Group Ltd (ASX: HUM), global banks are seeking out deals with buy now, pay later (BNPL) providers. They’re said to be looking for agreements similar to Humm’s new deal with Westpac Banking Corp (ASX: WBC).

Last week, Humm announced it has partnered with Westpac’s subsidiary, Red Bird Ventures Limited. The pair will work together to launch Humm’s Bundll product in New Zealand.

Today, the BNPL provider’s CEO Rebecca James told the Australian Financial Review global banks are approaching Humm to provide similar services.

She also pointed to Commonwealth Bank of Australia‘s (ASX: CBA) StepPay as proof BNPL might shake up the banking industry.

Quick refresher

Humm’s Bundll uses the MasterCard (NYSE: MA) network to let customers tap and pay for BNPL purchases.

Westpac’s New Zealand customers will get “preferential” benefits when using Bundll.

Bundll doesn’t charge interest but it does charge late fees if its customers miss a payment.

James commented on the deal, saying:

[We] are actively in discussions with a number of banks, loyalty programs and financial institutions about similar potential partnerships around the globe.

BNPL the future for ASX big banks?

According to James, Westpac is ahead of the unavoidable bend the banking industry must take to provide BNPL services.

CBA is also one of the first of the ASX’s big banks to jump onto the BNPL bandwagon.

Its StepPay is set to launch in the near future. It will allow customers to pay for purchases worth between $100 and $1000 in 4 instalments.

It’s a step up from zero-interest credit cards that charge a monthly fee. Both CBA and National Australia Bank Ltd (ASX: NAB) launched zero-interest credit cards in September last year.

CBA’s CommBank Neo and NAB’s StraightUp Card were both seen as a step towards a BNPL offering from the ASX 200 banking giants.

James was quoted by the AFR:

We are seeing a global trend where consumers want to pay with things in fixed-term instalments and the key consideration is how quickly [banks] can respond to that need before their traditional card businesses suffer from a revenue perspective.

The post Do ASX 200 banks share same BNPL ambitions as Westpac (ASX: WBC)? appeared first on The Motley Fool Australia.

More reading

• What happened on the US stock market overnight and how could it impact ASX shares?
• 2 high yield fully franked ASX dividend shares rated as buys
• Leading brokers name 3 ASX shares to buy today
• Why CSL, Humm, IntelliHR, & Vulcan shares are pushing higher
• The CBA (ASX:CBA) share price slips as COVID loan support announced

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 Mastercard. The Motley Fool Australia has recommended Humm Group Limited and Mastercard. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

from The Motley Fool Australia https://ift.tt/3zeBNef

The Sydney Airport (ASX: SYD) share price is falling in late morning trade, down 0.51%.

Of course, it’s not just Sydney Airport shares sliding today.

Overnight Aussie time, all the major European and US exchanges fell heavily on renewed investor angst over the delta COVID-19 variant slowing global economic reopening. At time of writing the S&P/ASX 200 Index (ASX: XJO) is down 0.38% as well.

But ASX travel shares, like Sydney Airport, are particularly vulnerable to domestic and international border closures. And this is what the company revealed in its June traffic performance results, released this morning.

What passenger numbers did the airport report?

The Sydney Airport share price is sliding amid wider investor concerns about delays in reopening free travel.

In its monthly June traffic figures, the airport compared the performance to June 2019 – pre-pandemic – rather than June 2020 when much of its operations were already shuttered.

It said that domestic traffic was down 56.8%, to 906,000 passengers, in June compared to the corresponding period in 2019.

International travel, as you’d expect, was down even more. The airport reported a total of 83,000 international travellers in June. That’s 93.6% less than in 2019, when June saw 1.31 million international travellers.

All told, total passenger traffic last month fell 70.9% from the June 2019 figures, to 989,000 passengers.

The company pointed to renewed lockdown measures issued by the New South Wales Government as negatively impacting the final week’s domestic travel figures:

These restrictions have resulted in border closures to NSW limiting interstate travel and a suspension in quarantine-free trans-Tasman travel from 23 June 2021. Prior to this suspension, trans-Tasman passenger traffic had returned to more than 40% of the corresponding period in 2019.

Sydney Airport share price snapshot

Despite edging lower today, the Sydney Airport share price remains up by around 33% over the past month, smashing the 0.1% gains posted by the ASX 200 over that same time.

Shareholders largely have the takeover offer, reported on 5 July, to thank for that big lift. The consortium of investors (including QSuper, IFM Investors and Global Infrastructure Management) offering to acquire all the airport’s shares valued the company at $22.6 billion, or $8.25 per share.

That’s 4.7% above the current Sydney Airport share price of $7.88.

The post COVID-19 lockdowns and the Sydney Airport (ASX:SYD) share price appeared first on The Motley Fool Australia.

More reading

• Broker: Sydney Airport (ASX:SYD) share price won’t hit $8.25 for awhile
• ASX 200 Weekly Wrap: ASX shakes off lockdowns to rise higher
• It’s been a great month for the Sydney Airport (ASX:SYD) share price
• ASX 200 drops, Woodside down, Sezzle rises
• Fresh blow to ASX 200 travel shares as Victoria lockdown looms large

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.

from The Motley Fool Australia https://ift.tt/2UpXHMQ

The Afterpay Ltd (ASX: APT) share price has staged a slow-and-stay comeback in wake of intensifying pressure from Apple and PayPal.

The negative news saw a sharp 13.45% selloff in Afterpay shares last week to $103.79.

But Afterpay managed to withstand the broad selloff yesterday, where the S&P/ASX 200 Index (ASX: XJO) tumbled 0.85%.

Similarly, the Afterpay share price has added another 1.55% on Tuesday to $106.53, despite the ASX 200 sliding another 0.37% at the time of writing.

Afterpay rallies despite sharp selloff overnight

The US market tumbled in an aggressive fashion overnight with the Dow Jones Industrial Average Index (DJX: .DJI) tumbling 2.09%, the S&P 500 Index (SP: .INX) falling1.59% and the Nasdaq Composite (NASDAQ: .IXIC) down 1.06%.

According to CNBC, the sharp selloff was driven by increasing concerns that the resurgence in COVID-19 cases could slow down global economic growth.

COVID-19 cases in the United States have slowly crept up to a seven-day average of 31,745 as of 18 July compared to 11,623 a month ago.

Morgan Stanley chief US equity strategist Mike Wilson told CNBC, “The market appears ready to take on a more defensive character as we experience a meaningful deceleration in earnings and economic growth.”

The Afterpay share price is making a turnaround despite a weak overnight performance from its US-listed rival, Affirm.

Affirm shares were off to a grim start on Monday night, sliding as much as 6.34% to US$54.06.

Encouragingly, the Affirm share price managed to bounce off lows, finishing the session 2.85% lower to US$55.86.

Affirm has struggled in light of a potential Apple BNPL service, with its shares tumbling 14.17% last week.

What else might be driving the Afterpay share price?

This morning, Afterpay revealed that it will begin rolling out its new money and lifestyle app, Money by Afterpay.

The new service will begin with a staff pilot at the end of July and plans to launch to market in October.

The new service will offer classic banking features including multiple savings accounts with an interest rate of 1% per annum, a physical debit card and instant payments.

The post Afterpay (ASX:APT) share price is higher despite the sharp ASX 200 selloff appeared first on The Motley Fool Australia.

More reading

• Afterpay (ASX:APT) share price higher after announcing Money by Afterpay app roll out
• Why Apple stock was falling Monday
• Finally, some good news for the Afterpay (ASX:APT) share price
• Here’s why Apple stock has room to run higher
• ASX 200 Weekly Wrap: ASX shakes off lockdowns to rise higher

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. owns shares of and has recommended AFTERPAY T FPO, Affirm Holdings, Inc., Apple, and PayPal Holdings. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended the following options: long January 2022 $75 calls on PayPal Holdings, long March 2023 $120 calls on Apple, and short March 2023 $130 calls on Apple. The Motley Fool Australia owns shares of and has recommended AFTERPAY T FPO. The Motley Fool Australia has recommended Apple and PayPal Holdings. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

from The Motley Fool Australia https://ift.tt/3rjyHCY

The JB Hi-Fi Limited (ASX: JBH) share price is defying the market weakness and charging higher on Tuesday.

In late morning trade, the retail giant’s shares are up almost 3% to $49.02.

Why is the JB Hi-Fi share price charging higher?

Investors have been bidding the JB Hi-Fi share price higher this morning following the release of a sales and earnings update for FY 2021.

According to the release, JB Hi-Fi experienced increased demand for consumer electronics and home appliance products in FY 2021. This underpinned a 12.6% increase in total sales to $8.9 billion for the 12 months.

A key driver of this growth was its online business. JB Hi-Fi reported a 78.1% year-on-year increase in online sales to $1.1 billion. This means that online sales now account for 11.9% of total sales.

In respect to earnings, JB Hi-Fi revealed that improvements in gross margins and cost control led to significant operating leverage.

As a result, the company expects to report earnings before interest and taxes (EBIT) of $743.2 million and net profit after tax of $506.1 million. This represents an increase of 53.8% and 67.4%, respectively, year on year.

How does this compare to expectations?

According to a note out of Goldman Sachs, JB Hi-Fi has outperformed expectations in FY 2021. This goes some way to explaining the solid gains being made by the JB Hi-Fi share price today.

It commented: “JBH pre-announced FY21 results reporting sales at A$8916.1mn, +0.3% vs. GSe and +0.1% vs. Visible Alpha consensus and EBIT at A$743.2mn, +2% vs. GSe and +4.7% vs. Visible Alpha Consensus.”

“FY21 results was broadly in line with our expectations with strong margins driven by ongoing sales momentum. While we continue to expect this to normalize at some stage, the ongoing lockdowns could potentially prolong the strong momentum longer than our current expectations,” the broker added.

Goldman Sachs currently has a neutral rating and $48.00 price target on the JB Hi-Fi share price.

The post JB Hi-Fi (ASX: JBH) share price higher after beating expectations in FY 2021 appeared first on The Motley Fool Australia.

More reading

• Why the JB Hi-Fi (ASX:JBH) share price is on watch today
• Expert reveals 2 ASX shares to buy during lockdown
• Why the JB Hi-Fi (ASX:JBH) share price is down 7% this month
• 2 ASX 200 shares that keep growing their dividends
• Why the Telstra (ASX:TLS) share price outlook suddenly improved last week

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.

from The Motley Fool Australia https://ift.tt/2W0KISr

ASX shares have been riding a wave of optimism since rebounding from the COVID-19 market crash of 2020. Fortunately, the world is experiencing a global rollout of vaccines, and unemployment rates falling below 5%. This has been met with rising share prices.

However, the recent concerns stemming from the delta strain have brought concerns of another market crash to the front of investors’ minds.

Although volatility has increased in the stock market recently, some experts remain unfazed. Instead, these market participants are finding reasons to buy.

Recent market activity

One of the main worries for investors now is the rebound in coronavirus cases. Locally, New South Wales is enduring a prolonged lockdown with the latest strain proving difficult to manage.

The latest modelling by Melbourne University suggests a further 5.8 weeks of lockdowns will be required to reach a ‘safe level’ of a two-week average of five cases per day.

Economists and investors alike are fearing the impact the delta strain might have on global economic growth. This fear is evident from the 2.1% fall in the Dow Jones Industrial Average overnight, and the 1% drop in the S&P/ASX 200 Index (ASX: XJO) this morning. At the time of writing, however, the index has partially recovered to currently trade 0.41% lower for the day so far.

Experts who don’t see a market crash in the works

While the recent ASX 200 moves are negative, some well-respected analysts do not see it as a market crash in the making. Rather, they believe short-term pain presents buying opportunities.

When both US markets and ASX shares suffered short-term weakness in March, the CEO of Ark Invest, Cathie Wood, suggested the market was broadening out. This broadening of the market meant selling in some tech names to facilitate buying of more ‘value’ orientated companies.

More recently and locally, Burman Invest chief investment officer Julia Lee named 3 ASX shares that she considers buys ahead of earnings.

A couple of the thematics mentioned by Lee included the increased takeover activity and shares benefitting from higher lab testing.

The post Is this the beginning of a market crash for ASX shares? Experts say fear not appeared first on The Motley Fool Australia.

More reading

• What happened on the US stock market overnight and how could it impact ASX shares?
• 5 things to watch on the ASX 200 on Tuesday
• ASX 200 drops, Telstra falls, Altium declines
• Here are the 3 most heavily traded ASX 200 shares this Monday
• 2 defensive ASX 200 shares that brokers rate as ‘buys’ this Monday

Motley Fool contributor Mitchell Lawler 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.

from The Motley Fool Australia https://ift.tt/3eyr9ag

There is an economic slowdown coming, and there are only certain ASX shares that will serve you right in those conditions.

That’s the opinion of T Rowe Price Group Inc (NASDAQ: TROW) head of Australian equities Randal Jenneke, who said the country has “likely passed the peak” of the post-COVID economic recovery.

“We believe GDP growth and inflation expectations will cool over the year,” he said this week.

“The latest lockdowns in NSW and Victoria are poised to further curb some of the market’s enthusiasm for ongoing strong economic growth.”

Types of ASX shares that are good in slowing economies

According to Jenneke, slowing economic conditions favour what he called “quality” stocks.

“Historically, the highest ranked companies in the category have outperformed the lowest ranked by 1.8% each month on average during decelerating growth periods,” he said.

“Conversely, they have underperformed by -2.2% per month during recovery periods… With the strong rebound in growth during the second half of last year, the bucket experienced its worst return in close to a decade.”

Jenneke also showed the same pattern happening during the global financial crisis, dot-com bust and the 1997 Asian financial crisis.

“While we may not be entering another downturn of such magnitude, we are moving towards an impending slowdown,” he said.

“As we do so, we have already seen quality start to return to favour. It was the best performing factor in June and year-to-date it is now second only to the much-hyped value rally.”

So what is ‘quality’?

Jenneke explained that, to his team, “quality” meant strong return on capital and resilient earnings growth.

He put up 3 examples of quality ASX shares that T Rowe Price recently increased its exposure to — Resmed CDI (ASX: RMD), Goodman Group (ASX: GMG) and CarSales.com Ltd (ASX: CAR).

“Over more than two decades of data for the Australian market, high quality had outperformed low quality by 6.7% per annum,” he said.

“With many of these factors in mind, we believe the school of quality is back in session and is poised to outperform over the coming year.”

Only on Monday, Resmed displayed the resilient qualities Jenneke was espousing.

The healthcare stock shot up more than 2% on a day when the ASX generally was having a shocker. In fact, it is now trading at a 52-week high.

Goodman also held firm, holding its value in a sea of red on Monday. Carsales lost a little on Monday but has added more than 8% in the past month.

The post 3 ASX shares to buy before looming economic slowdown: expert appeared first on The Motley Fool Australia.

More reading

• Polynovo (ASX:PNV) share price bounces off 10-month lows, up 3% today
• These ASX 200 healthcare shares are holding up in today’s sea of red
• How to turn $20,000 into $250,000 in 10 years with ASX shares
• 2 outstanding ASX 50 shares named as buys
• WAM Leaders thinks these ASX shares might be buys

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 recommended ResMed. The Motley Fool Australia has recommended ResMed Inc. and carsales.com Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

from The Motley Fool Australia https://ift.tt/3hNM0sn

The Hub24 Ltd (ASX: HUB) share price is falling despite the company releasing a “record” Q4 update for FY21.

At the time of writing, shares in the fintech company are trading for $25.71 – down by 1.19%. The S&P/ASX 200 Index (ASX: XJO) is also lower, by 0.56%.

Let’s take a closer look at the latest update.

What did Hub24 report?

In a statement to the ASX, Hub24 says quarterly inflows hit a record $3.9 billion for the period. The total includes $2.2 billion from its original and namesake platform, $1.4 billion from ClearView Wealth, and $300 million from Xplore Wealth. In the March quarter, net inflow for the Hub24 platform was $1.9 billion.

Average monthly inflows are up 52% on FY20 to around $627 million.

Annual net inflow for the previous financial year was $8.9 billion – an 80% increase on the prior corresponding period. Total funds under administration (FUA) are $58.6 billion – up by $7.2 billion on the March quarter. Xplore alone makes up $41.4 billion of FUA.

The company also advised it has signed 26 new licence agreements in the quarter. Total market share is now 3.9%.

Despite these figures investors are in a selling mood today, judging by the Hub24 share price.

Finally, because of its “significant growth” – as the company states – Hub24 is investing to further grow the business.

“The company will be expanding the executive team, hiring additional distribution team members and investing in technology infrastructure to support scale and ongoing innovation. Further detail will be provided in the FY21 results update in August,” it said in its statement.

Hub24 share price snapshot

Over the past 12 months, the Hub24 share price has increased by 102%.

Since hitting its all-time high of $29.05 in the last month, Hub24 shares have been on a downward trend. On current market price, shares in the company are down 11.5%.

The Hub24 share price, however, was one of the best performers in the last financial year.

Hub24 has a market capitalisation of around $1.75 billion.

The post Hub24 (ASX:HUB) share price drops despite ‘record’ Q4 update appeared first on The Motley Fool Australia.

More reading

• Here are the 5 best ASX fintech shares of the 2021 financial year
• 2 top ASX tech shares rated as buys by brokers
• The Hub24 (ASX:HUB) share price took a hit today
• Meet the best performing ASX 200 shares of FY21. Are yours on the list?
• This ASX share is the perfect inflation fighter, experts say

The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended Hub24 Ltd. The Motley Fool Australia has recommended Hub24 Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

from The Motley Fool Australia https://ift.tt/3kB4Ch6

The Reliance Worldwide Corporation Ltd (ASX: RWC) share price has started this morning’s session in the green.

Reliance confirmed in an announcement this morning that it will acquire the business assets of LCL Pty Ltd.

Let’s take a closer look at what was released this morning.

Quick recap on Reliance

Reliance is in the business of manufacturing and selling plumbing products.

Its key markets are North America, Europe and Australasia, where it has a meaningful footprint.

At the time of writing, Reliance has a market capitalisation of $4.1 billion.

The LCL asset acquisition

LCL is a Melbourne based producer that “processes both new and recycled non-ferrous materials to produce a range of brass copper alloys”.

Reliance announced it would acquire LCL’s business assets for $37 million.

The company states “adjusted average earnings before interest, tax, depreciation and amortisation (EBITDA) for LCL over FY 2019 and FY 2021 is $7.1 million”.

According to Reliance, it accounts for more than 90% of LCL’s revenue.

The transaction will close on 31 August and adjustments for working capital may be embedded into the final sale price.

It is expected that most of LCL’s employees will transition over to Reliance’s books after the sale is finalised.

Reliance Worldwide chief executive Heath Sharp stated:

With this acquisition, RWC will secure a favourable long‐term cost position for its brass rod requirements in Australia. The co‐location of our brass forging operations with LCL’s brass production facility at Moorabbin will enable us to optimise materials handling and manufacturing efficiencies. This acquisition will secure control of a critical piece of our manufacturing supply chain.

Reliance stated it will fund the acquisition using existing debt and credit facilities.

Investors seem to welcome the announcement, as Reliance shares are now trading at $5.25, up almost 1% on yesterday’s closing price.

Reliance share price snapshot

The Reliance share price has posted a year to date return of 29%, extending the previous 12 month’s return of 84%.

Both of these returns have outpaced the S&P/ASX 200 Index (ASX: XJO)’s return of ~21% over the previous year.

Reliance shares are trading around 3.8% below their 52-week high of $5.46.

The post The Reliance Worldwide (ASX:RWC) share price up after asset purchase appeared first on The Motley Fool Australia.

More reading

• Santos (ASX:STO) share price lower after Oil Search rejects merger proposal
• PointsBet (ASX:PBH) share price up 3% after announcing plans to enter Arizona
• Costa (ASX:CGC) share price edges higher on acquisition update
• Here’s why Incannex (ASX:IHL) shares are in a trading halt
• Ramsay (ASX:RHC) share price rises despite UK acquisition collapse

The author Zach Bristow has no positions in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended Reliance Worldwide Corporation Limited. The Motley Fool Australia has recommended Reliance Worldwide Corporation Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

from The Motley Fool Australia https://ift.tt/2VQyhs8