Over the last couple of weeks the BHP Group Ltd (ASX: BHP) share price has been falling and it has continued that downward trend further today. The resources stock is down 2% at the time of writing.

Since 10 May 2021, BHP shares have fallen by almost 10%. Considering the ASX market capitalisation of BHP is currently approximately $140 billion, a 10% drop is a hefty drop in dollar terms.

What is the latest news?

In the shorter-term, investors pay attention to BHP’s quarterly production numbers and the changing commodity prices.

Iron ore is the biggest profit generator right now. Whilst the iron ore price is a bit lower than the last week or two, it’s still above US$200 per metric tonne which is almost the highest it has been over the last five years.

A few weeks ago the business revealed how it performed in the performed in the three-month period to 31 March 2021.

Petroleum production was up 7% to 25.4 million barrels of oil equivalent (MMboe). Higher volumes reflect the increased Shenzi working interest (after completion in November 2020) and the impacts of Hurricanes Delta and Zeta in the Gulf of Mexico in the prior quarter.

Copper production was down 9%. Lower volumes were primarily a result of decreased throughput at Escondida, reflecting the impact of a reduced operational workforce due to the continuation of COVID-19 restrictions and lower concentrator feed grade.

Iron ore production was down 4% to 59.9 Mt. Lower volumes at Western Australia iron ore (WAIO) reflects weather impacts and planned ore handling plant and stacker maintenance at Newman, partially offset by improved car dumper performance.

Metallurgical coal saw production rise 1%. Queensland coal volumes were in line with the prior quarter as operations continue to be impacted by wet weather events.

Energy coal saw a large 34% increase in production thanks to higher volumes at Cerrejon as a result of a strike in the prior period, partially offset by lower volumes at New South Wales energy coal (NSWEC) with significant wet weather impacts and increased washed coal in response to reduced port capacity following damage to a shiploader at the Newcastle port.

Nickel saw production volumes fall 15% as a result of planned maintenance undertaken at the Kwinana refinery.

Is the lower BHP share price an opportunity?

BHP itself is looking to growth opportunities to help continue the strong performance it is experiencing.

The CEO of BHP, Mike Henry, said:

We are reliably executing our major projects, bringing on new supply in copper, petroleum and iron ore. The Spence Growth Option and Samarco are ramping up and West Barracouta, in petroleum, started production this morning. First production from petroleum’s ruby project is expected in the coming weeks and South Flank, with its higher grade and lump proportion, is on track to begin production in the middle of the year.

The brokers at Macquarie Group Ltd (ASX: MQG) are still confident about BHP shares. It noted that BHP said last week that the ASX miner will soon announce first production at the 80 million per annum South Flank iron ore project. Macquarie is expecting very strong profit in the FY21 second half. The broker has a price target on the BHP share price of $57 over the next 12 months. That suggests a possible upside of around 20%.

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ASX shares in the aged care sector have emerged as top performers this year after several years of decline.

Aged care operators including Estia Health Ltd (ASX: EHE) and Japara Healthcare Ltd (ASX: JHC) have surged an impressive 48% and 75%, respectively, year-to-date.

Why ASX aged care shares dipped to multi-year lows

The aged care industry has faced a number of regulatory and funding headwinds, raising concerns over weaker earnings and rising debt levels.

Aged cares shares first plunged in late 2016 after the government announced new service fee guidelines for residential aged care customers. This meant that several revenue sources would not be permissible under the new legislation. Between 26 August and 5 September 2016, the Estia share price plunged from $4.72 to as low as $2.08.

Two years later, the royal commission investigation into the aged care sector took another jab at these beaten up ASX shares.

The March COVID-19 sell-off last year added further insult to injury, which saw the Estia share price briefly trade for less than $1.

On 2 March this year, the final results of the royal commission were released — you can find a summary of recommendations and responses here.

What’s ahead for ASX aged care shares?

The Federal 2021/22 budget will see $17.7 billion of funding flow into the aged care sector over the next five years. The funding will address a number of royal commission recommendations including a $650 million investment to grow and upskill the aged care workforce and requirements that staff spend at least 3 hours and 20 minutes a day with each aged care resident from 2023 onwards.

Despite the Estia and Japara share price surging a respective 48% and 75% year-to-date, the recovery story is still in its early days. Both companies continued to deliver net losses during February half-year results, driven by factors including lower occupancy rates and shareholder class action settlements.

Looking forward, Japara’s half-year results flagged ongoing COVID-19 uncertainties and that the “funding environment is unclear and occupancy, although stabilising, remains weakened”.

While the road ahead could continue to be challenging for ASX aged care shares, we’re seeing the share prices of some of the sector’s companies emerge as top performers, bouncing strongly off multi-year lows.

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The A2 Milk Company Ltd (ASX: A2M) share price is under pressure again on Monday.

At one stage today, the fresh milk and infant formula company’s shares were down 3.5% to $5.36.

When the a2 Milk share price hit that level, it was down a very disappointing 73% from its 52-week high.

Where next for the a2 Milk share price?

Given the sharp decline in the a2 Milk share price from its high, investors will no doubt be wondering where it is heading next.

However, unfortunately, opinion remains incredibly divided even after this sizeable decline.

The bears over at Credit Suisse believes the company’s shares could still fall further and have slapped a sell rating and $5.00 price target on them.

Citi and Macquarie also have sell ratings on its shares with price targets of $5.85 and $5.60, respectively.

Sitting on the fence is Morgan Stanley. Its analysts have an equal-weight rating and $7.10 price target. Though, with this price target implying potential upside of 32%, an upgrade to a buy rating may not be far away if its performance doesn’t deteriorate further.

The bulls

Despite its abject performance, which has led to four earnings guidance downgrades in FY 2021, there are a few brokers that have bullish views on the a2 Milk share price.

Morgans currently has an add rating and $6.65 price target and, last week, UBS put a buy rating and NZ$13.50 (A$12.50) price target on its shares. The latter rather optimistically implies that the a2 Milk share price could double over the next 12 months.

And finally, analysts at Bell Potter have a buy rating and $8.50 price target on the company’s shares.

What now?

Which broker’s recommendation ultimately proves accurate will entirely depend on the success of a2 Milk’s inventory rebalance and the review of its growth strategy and executional plans to respond to changes in the lucrative China market.

But given the company’s failure to turn around its performance numerous times in FY 2021, the near term remains very uncertain. This helps to explain why brokers have such mixed views on the company right now.

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Real estate investment trusts (REITs) can be overlooked in the face of popular dividend and growth sectors including materials, financials and tech.

However, sectors such as materials and tech have come under fire in recent weeks, driven by factors such as rising inflation expectations and China taking aim at commodity prices.

REITs with portfolios focused on highly sought after assets such as healthcare accommodation, industrial parks and childcare have been a stable movers amidst a volatile market. Many large and mid cap names not only pay stable and reliable dividends, but eyeing 52-weeks highs.

Arena REIT (ASX: ARF)

Arena REIT’s investment strategy is to invest in long duration properties in sectors such as childcare, healthcare, education and government to generate consistent yield for investors with earnings growth prospects over the medium- to long-term.

The Arena REIT share price managed to top its pre-COVID high of $3.39 this month, hitting a record high of $3.52 on Monday. The company declared an FY21 distribution guidance of 14.8 cents per share or a dividend yield of approximately 4.2%.

Charter Hall Social Infrastructure REIT (ASX: CQE)

Charter Hall Social Infrastructure is another stable moving REIT with a focus on childcare properties. Its shares have nudged 2% higher year-to-date, with most of its gains achieved during the COVID-19 rebound last year.

In the company’s half-year results, it announced an upgrade to its FY21 distribution from 15 cents per share to 15.7 cents. At today’s prices, this represents a yield of approximately 4.75%.

Centuria Industrial REIT (ASX: CIP)

Centuria is one of Australia’s largest domestic pure play industrial REITs with quality tenants including Woolworths Group Ltd (ASX: WOW), Telstra Ltd (ASX: TLS) and Australia Post.

Its share price has climbed to 52-week highs around $3.50, within reach of its pre-COVID highs of $3.75. The company has announced a number of recent positive updates including a Woolworths lease extension, $88.8 million Dandenong South industrial estate development and $27 million Arndell Park distribution centre acquisition.

While targeting a number of growth opportunities, the company announced an FY21 distribution guidance of 17 cents per share, which equates to a yield of approximately 4.8% at today’s prices.

Goodman Group (ASX: GMG)

Goodman Group is one of the largest ASX-listed REITs with a focus on high quality, in-demand properties including warehouses, large scale logistics facilities and business parks.

In the company’s third quarter update, it reaffirmed its forecast FY21 operating profit of $1.2 billion, representing an earnings per share growth of 12% on FY20. It also reaffirmed its full year distribution of 30 cents per share, representing a yield of 1.50% at today’s prices.

After a brief sell-off between late December 2020 and March 2021, Goodman shares are back on track and eyeing previous highs of $20. Goodman shares are currently fetching $19.23.

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The Kogan.com Ltd (ASX: KGN) share price has more than halved in 2021. Shares in the company opened the year at around $19.42. At the time of writing, Kogan shares are trading at just over 50% of this level at $9.85.  

Last year, Kogan was a market darling as the COVID-19 pandemic forced consumers to flock online. As a result, shares in the online retailer surged to all-time highs of around $25 per share by October 2020.

So why has the Kogan share price fallen from grace?

Kogan cites growing pains in recent update

In its most recent market update, Kogan highlighted how the company has struggled to keep up with demand.

In a trading update released to the market last Friday, Kogan informed shareholders it had revised its earnings predictions for the current financial year. The company cited a number of operational and logistical challenges as reasons for the revised guidance.

As a result, Kogan warned investors that earnings before interest, tax, depreciation and amortisation (EBITDA) is likely to come in at between $58 million and $63 million for the financial year.

The revised guidance was between $7 million and $12 million below consensus forecasts of around $70 million in EBITDA. In response, investors dumped their holdings, sending the Kogan share price plummeting to a 52-week low.

What else has caused the Kogan share price to plunge?

In 2021, the initial catalyst that sent Kogan shares nosediving can be traced back to late January. Following the release of a business update for the first half of FY21, Kogan reported a slower rate of growth than expected. Even then, Kogan cited warehouse capacity and logistical issues for the result.

The second catalyst prompting investors to sell their Kogan shares was the company’s first-half report. For the six months ended 31 December, Kogan reported a 97.4% increase in gross sales to $638.2 million and an 88.6% jump in revenue to $414 million. Despite the seemingly strong results, investors remained largely unimpressed.

Outlook

Arguably, Kogan’s inventory issues are being exacerbated by its aggressive expansion strategy. Company management noted in its Friday update that the business practically doubled in size during the first half of FY21 following a surge in consumer demand. As a result, Kogan has had to rapidly expand its inventory resulting in excess stock and increasing warehouse costs. However, the company also noted that it has learnt valuable lessons on how to better scale operations.

But investors may not be as convinced. According to the most recent data from ASIC, Kogan shares are among the most shorted on the ASX with a 10.1% short interest.

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The Keytone Dairy Corporation Ltd (ASX: KTD) share price has broken its downward trend to lift in early-afternoon trade.

This follows the dairy manufacturer’s update on sales and purchase orders received from Walmart (China) Investment Co.

At the time of writing, the Keytone share price is swapping hands for 13.5 cents a pop, up 3.8%.

Sales accelerate

Investors are buying up positions in Keytone shares after the company recorded strong sales for 2021.

In its release, Keytone advised sales and forward orders have topped NZ$3.3 million from Walmart China. This represents a three-fold increase for the first five months of 2021 when compared to this time last year.

The company attributed the robust performance to its whole and skim milk powder for Sam’s Club China. The popular product has been a hit with Chinese consumers due to the company’s strategic partnerships and accredited facilities.

In addition, the company has booked NZ$1.4 million of further orders to be delivered in the third quarter of 2021.

Keytone CEO, Danny Rotman touched on the company’s progress, saying:

Our international track record, strategic partnerships and growth in powdered dairy continues, underpinned by our fully licensed and accredited facilities in New Zealand. The strong growth is testament to the efficiency and quality of our facilities and team in New Zealand.

We are continually seeking new business opportunities with our existing clients, forging new relationships with others and will update the market with new material contract wins and forward orders as they come to hand.

About the Keytone share price

Today’s gain will be a relief to shareholders, as the Keytone share price has halved in value over the past 12 months. Shares in the company have also fared poorly in year-to-date performance, down more than 40%.

Based on valuation grounds, Keytone presides a market capitalisation of roughly $38 million, with approximately 273 million shares on issue.

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The Domino’s Pizza Enterprises Ltd (ASX: DMP) share price has been a positive performer on Monday.

In afternoon trade, the pizza chain operator’s shares are up over 4% to $108.44.

Why is the Domino’s share price charging higher?

Today’s gain appears to have been driven by a broker note out of Citi this morning.

According to the note, the broker has taken its sell rating off the company’s shares and upgraded them to a neutral rating.

Citi also increased its price target by approximately 44% to $104.20.

What did the broker say?

Citi has been looking at the company’s options in Europe and sees scope for Domino’s to expand into a number of new markets such as Italy and Spain.

At present, the company is the largest franchisee outside of the USA. It holds the master franchise rights to the Domino’s brand and network in Australia, New Zealand, Belgium, France, The Netherlands, Japan, Germany, Luxembourg, and Denmark.

From these markets, Domino’s is aiming to grow its network from ~2,800 stores today to 5,550 stores by 2031.

However, Citi believes that Domino’s could add a further ~2,500 stores to this total by expanding into other European markets. It notes that this would boost its profits materially.

Can the Domino’s share price go higher?

As you might have noticed, despite lifting its price target by 44%, the Domino’s share price is still trading beyond it. This would imply that the upside from here is not only extremely limited, but the risk could even be to the downside.

The good news is that another leading broker still believes the Domino’s share price can go even higher. That broker is Morgans, which currently has an add rating and $119.00 price target on the company’s shares.

Based on the latest Domino’s share price, this implies potential upside of 10% over the next 12 months.

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The Cimic Group Ltd (ASX: CIM) share price has been stuck in the red today, despite the company announcing another contract award.

The global engineering company’s shares are fetching $21.10 at the time of writing, down 1.8%.

Below, we take a closer look at what’s driving the Cimic share price today.

M6 Motorway project

In its announcement, Cimic advised that its subsidiaries CPB Contractors and UGL have been selected to build the M6 Motorway in Sydney. The design and construct contract will see both companies, along with joint venture partner Ghella, deliver the first stage of the multi-billion-dollar motorway.

The New South Wales government awarded the deal, which is expected to generate roughly $1.95 billion in revenue for Cimic. The total value of the M6 stage 1 project is around $2.5 billion.

Once completed, the M6 will connect the roads in Sydney’s south to the city’s wider motorway network. It’s envisaged this will improve journey times for motorists, as well as reduce congestion, and remove trucks from local streets.

The joint venture will include building an underground motorway connection, mainline tunnels, exit/entry ramps, shared cycle and pedestrian pathways and tunnel stubs.

The project will start in 2022 and is scheduled for completion in 2025.

What did management say?

Cimic group executive chair and CEO Juan Santamaria touted the company’s achievements, saying:

Cimic Group companies are delivering major transport projects across Australia. Having successfully completed several WestConnex projects, our companies have specific expertise in delivering motorways in urban areas.

This experience will be applied to safely and successfully deliver the M6 Stage 1 for the NSW Government.

CPB Contractors managing director Jason Spears added:

This is an important addition to the portfolio of road, rail and airport projects that CPB Contractors’ experienced teams are delivering across NSW. We are very pleased to have been selected to work closely with Transport for NSW to safely deliver this key piece of transport infrastructure for the people of Sydney.

UGL managing director Doug Moss said UGL also looked forward to bringing its expertise to the M6 project, adding that the company was helping to “improve transport infrastructure right across Australia”.

Cimic share price review

The Cimic share price had been relatively stable prior to its results for the full-year results released in February when its shares plummeted more than 20% as investors ran for the hills. Since the beginning of May, the company’s shares have started to rebound.

Based on today’s price, Cimic commands a market capitalisation of $6.5 billion, with approximately 311 million shares on issue.

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Cryptocurrencies continued to sell off over the weekend following a clampdown on Bitcoin (CRYPTO: BTC) mining and trading activities in China.

This news comes just days after China’s finance, banking and clearing regulators banned their financial and payment institutions from cryptocurrency-related activities.

China pulls the plug on cryptocurrencies

Last week, China’s new policies were focused on ensuring that relevant institutions were banned from conducting business related to cryptocurrencies. This included bans against trading, clearing, settling or accepting virtual currency as well as the prohibition of virtual currency exchange services and the use of virtual currency as investments.

Over the weekend, China took another jab against cryptocurrency markets, this time, with a focus on Bitcoin mining and trading activities. According to Reuters, this is “the first time the state council has explicitly targeted crypto mining activities”.

China’s crackdown on Bitcoin mining could have significant implications for cryptocurrency markets. It is estimated that Chinese miners drive more than 60% of the computational power used to mine and process transactions, otherwise known as hash power or hashrate.

In late April, a blackout in China’s Xinjiang region caused almost half its Bitcoin network to go offline. This saw a significant slump in the global hashrate, according to Blockchain.com. There has typically been a positive correlation between Bitcoin hashrate and prices. The hashrate has taken a significant hit over the last week, which could be another reason why the Bitcoin price is struggling.

China’s crackdown sees cryptocurrency sell-off continue

Cryptocurrency markets have wound up in a sea of red following China’s clamp down.

The Bitcoin price managed to bounce back strongly last Thursday, regaining its US$40,000 level. But as China’s news broke out over the weekend, prices slipped to around US$37,500 by Saturday and lows of US$31,000 on Sunday. The Bitcoin price has managed to bounce off these lows and is currently sitting at US$35,578 at the time of writing.

The narrative was the same for other popular cryptocurrencies including Dogecoin (CRYPTO: DOGE) and Ethereum (CRYPTO: ETH). Both tokens experienced sharp rebounds on Thursday, followed by three sharp negative sessions.

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The AVZ Minerals Ltd (ASX: AVZ) share price is storming higher on Monday.

In morning trade, the lithium explorer’s shares were up as much as 10% to 16.5 cents.

The AVZ share price has since eased back a touch but remains up almost 7% to 16 cents.

Why is the AVZ share price storming higher?

Investors have been buying the company’s shares today after it released an update on the Mineral Resource of the Manono Lithium and Tin Project in the Democratic Republic of Congo (DRC).

According to the release, geological modelling of the pit floor has confirmed the presence of high grade, fresh pegmatite in all nine resource holes drilled on sections 7100mN to 7300mN at the Roche Dure.

This has led to its Indicated Resources increasing by 12 million tonnes, leading to its combined Measured and Indicated Resources lifting to 274 million tonnes.

In addition to this, the depth of the Roche Dure pit was shallower than the company was anticipating.

As a result, this is expected to lead to lower strip ratio and increased ore mined over the optimised Life of Mine (LoM) plan, which is forecast to have a positive financial impact on the optimised definitive feasibility study (DFS). This bodes well for upcoming discussions with its financiers and explains much of the rise in the AVZ share price today.

AVZ Managing Director, Nigel Ferguson, commented: “This additional information has resulted in the upgrade of some 12 million tonnes of Inferred Resources to Indicated Resources. These additional tonnes, located at shallow depth in the existing pit, are expected to result in fundamental improvements to the mine design and mining schedule as the optimised mine model will treat the wedge material as ore, rather than waste.”

“The lower strip ratio resulting from the increase in ore mined over the optimised mine plan, coupled with lower LOM cost assumptions, is expected to have a positive impact on the optimised DFS to be completed next month which will greatly assist our discussions with prospective financiers,” he added.

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