The Fortescue Metals Group Limited (ASX: FMG) share price is down around 20% over the last month. What do brokers make of the value that the miner offers investors?

How has the Fortescue share price been going recently?

It has been a volatile period over the last few months for the large iron ore miner. At the start of December 2020 it was priced at $18.23. A few weeks later it had climbed 42% to $25.92 on 7 January 2021.

However, it has steadily sunk 25% since then.

Why has the Fortescue share price been falling?

Like any commodity-based business, Fortescue’s prospects are heavily linked to the movement of the iron ore price.

The iron ore price has been falling recently, it can’t be expected to stay strong forever.

There have been concerns that there has been a call by Chinese authorities to reduce emissions in Tangshan which would involve a slow down of steel production.

However, the Fortescue share price is still a lot higher than recent years and so is the iron ore price. This was reported by Fortescue itself in its half-year result when it said that the realised price was up 42% year on year to US$114 per dry metric tonne.

There wasn’t much change in the amount of iron ore sold by Fortescue – it went up 3% to 90.2 million tonnes.

The increase in the iron ore price led to Fortescue growing revenue by 44% to US$9.3 billion, underlying earnings before interest, tax, depreciation and amortisation (EBITDA) growing by 57% to US$6.6 billion and net profit after tax (NPAT) rising by 66% to $4.08 billion.

A shift in focus for the company

Investors have also been taking in the news that Fortescue is going to be focusing on decarbonising its operations and pursuing green energy projects.

Fortescue has said it’s going to leverage its successful track record of identifying, assessing and developing large-scale resource and infrastructure opportunities, It’s going to bring its capabilities to adopting innovative technology to ensure Fortescue is at the forefront of this emerging industry.

Fortescue Future Industries (FFI) has been established, it’s identifying renewable energy and green hydrogen projects both in Australia and globally.

The miner has committed to investing 10% of its net profit each year into renewable energy growth through FFI.

Broker thoughts on the Fortescue share price

There are varying thoughts on Fortescue. The broker Macquarie Group Ltd (ASX: MQG) has a price target of $25.50, which suggests potential upside of around 30%.

However, there’s then Morgan Stanley which thinks the Tangshan issues will start to cause a decline for the iron ore price. As a miner with a lower grade of iron, Fortescue could be hurt more by this. Morgan Stanley’s price target is $17.45.

In FY22, Morgan Stanley thinks that Fortescue could pay a dividend of $1.58 per share, amounting to a grossed-up dividend yield for next financial year of 11.6%.

However, Macquarie has a more positive outlook for the FY22 dividend and earnings. Macquarie believes the Fortescue share price is valued at 8x FY22’s estimated earnings with a FY22 grossed-up dividend yield of 14%.

More reading

• Where to reinvest your Fortescue (ASX:FMG) dividends
• The ANZ (ASX:ANZ) share price is Macquarie’s top big four bank pick
• Macquarie sees near-term pain for the Afterpay (ASX:APT) share price
• 5 things to watch on the ASX 200 on Wednesday
• 8 ASX 200 shares rated as ‘outperform’ by brokers

Motley Fool contributor Tristan Harrison owns shares of Fortescue Metals Group Limited. The Motley Fool Australia owns shares of and has recommended Macquarie Group 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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Big brokers have run the ruler on new announcements and notable share price movements. Here are the ASX 200 shares that have been upgraded to a buy or buy equivalent rating on Thursday. 

4 bullish ASX 200 shares 

Bapcor Ltd (ASX: BAP) 

Bapcor announced its plans to expand into Asia by acquiring 25% of the issued equity of Tye Soon. Tye Soon is an independent automotive parts distributor in South East and North East Asia, distributing a wide range of parts and aftermarket parts. Bapcor will invest approximately SGD$12.5 million for the 25% stake and work together to maximise opportunities in the Asia and Australasia region. 

Citi believes the acquisition will provide Bapcor with a base to grow its Asian business and address the gaps in its specialist wholesale portfolio. The broker eyes South Korea and Malaysia (43% of Tye Soon’s revenue) as key rollout opportunities for Bapcor in Asia. 

Citi retained a buy rating with a $9.35 target price, representing an upside of approximately 26%.

Brickworks Limited (ASX: BKW) 

The Brickworks share price is on the rise today after announcing its half-year results. At the time of writing, Brickworks shares were trading for $19.80, up 4.7%.

The building products company reported a 4% decline in revenue to $432 million. Earnings before interest and tax (EBIT) fell 6% to $127 million. 

These results were better than expected from Citi’s point of view and were boosted by revaluations and sales of property. Excluding property, the operational performance came in below expectations, driven by a weaker Australian building products segment. 

The broker retained a buy rating with the belief that its outlook is improving. Its target price of $22.70 represents an upside of approximately 20% at today’s prices. 

Graincorp Ltd (ASX: GNC) 

Graincorp upgraded its earnings on Wednesday on the back of new operating initiative and completion of its international expansion. This is expected to increase its ‘through-the-cycle’ earnings which refers to a notional year of average East Coast Australia grain production and average tonnes handled by GrainCorp.

Credit Suisse believes the market has underrated the cost reductions that Graincorp has made over the years. The broker also increased its medium-term forecasts, in-line with the company’s new earnings before taxes, depreciation, and amortisation EBITDA guidance. 

The broker upgraded Graincorp shares to outperform with a $5.59 target price. With the Graincorp share price pushing another 2.6% higher today to $5.13, the target price represents an upside just shy of 10%. 

Polynovo Ltd (ASX: PNV) 

The Polynovo share price is making a strong recovery this month after losing more than 30% in value between late December 2020 and mid January 2021. 

The company missed earnings expectations when it updated the market back in January. The update reported a 31% increase in sales vs. the commentary from Polynovo managing director that revenue would double again in FY21. 

Macquarie Group Ltd (ASX: MQG) believe Polynovo could get back on track with its entry into sizeable markets such as chronic wounds and hernia to support growth in the medium to long term. 

The broker upgraded Polynovo shares from neutral to outperform with a $3.20 target price. The Polynovo share price has surged more than 20% this month to $3.02 at the time of writing. The target price represents an upside of 5.40%. 

More reading

• The PolyNovo (ASX:PNV) share price jumps 5% with its latest news
• ASX 200 rises, Brickworks builds, Netwealth sinks
• 2 ASX 200 shares that keep growing their dividends
• Some of the ASX 200 companies that drove Australian exports to record levels
• Why Brickworks, McPherson’s, MedAdvisor, & Premier Investments are storming higher

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 POLYNOVO FPO. The Motley Fool Australia owns shares of and has recommended Bapcor and Brickworks. 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 PolyNovo Ltd’s (ASX: PNV) share price took flight this afternoon after it announced an agreement with a US group purchasing organisation (GPO), Premier Inc.

The medical device company will sell its novel range of bio-resorbable polymers to Premier’s member hospitals.

The PolyNovo share price was trading up 4.88% to close this afternoon at $3.01. 

Let’s look closer at PolyNovo’s news today.

Group purchasing agreement

PolyNovo’s purchasing agreement with Premier will see the potential for the company’s product NovoSorb BTM to be used in around 4100 health facilities and hospitals.

According to PolyNovo, its agreement with Premier will allow its products to be accessed by more than 2000 acute care hospitals, 100 designated trauma centres, and 63 children’s hospitals.

NovoScorb BTM is a dermal scaffold for the regeneration of the dermis when lost from surgery or burns. It can be produced in many forms such as film, fibre, foam and coatings.

PolyNovo will have access to Premier’s regional representatives from the beginning of next month and plans to provide them with training. The training will cover how they can best advise healthcare professionals on the use and purchase of NovoScorb BTM.

Why are GPOs important?

The company stated that GPOs were key to promoting new medical technologies in the United States. GPOs vet products on their efficiency and value before recommending them to healthcare providers.

PolyNovo said Premier was the second largest GPO in the US and held agreements with the fifth largest GPO, First Choice, and Aptitude, another GPO.

The company is in discussions with other GPOs to distribute NovoScorb BTM.  

Commentary from management

PolyNovo managing director Paul Brennan commented on the agreement:

This signing with Premier, the second largest GPO in the US, is a major milestone. We have recently signed with Aptitude and First Choice. These GPO agreements put our disruptive BTM on a much larger list of hospitals than our sales team can get around in the short term.

We will continue expanding our sales team into new markets to support hospitals and surgeons but now also to match the geographical footprint of the GPOs. We look forward to demonstrating improved health economic benefits for Premier hospital members and their patients.

PolyNovo share price snapshot 

The PolyNovo share price is up by 109% over the last 12 months but down 24.03% year to date.

The company has a market capitalisation of $1.9 billion, with approximately 661 million shares outstanding.

More reading

• Brokers are bullish on these 4 ASX 200 shares
• ASX medical shares report promising half-year results
• What’s happening with the PolyNovo (ASX:PNV) share price?

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 POLYNOVO FPO. 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 S&P/ASX 200 Index (ASX: XJO) went up by 0.2% today to 6,791 points.

These are some of the highlights from the ASX today:

Netwealth Group Ltd (ASX: NWL)

The Netwealth share price fell around 13% today after announcing a significant change for its business.

Describing the events leading up to the change, Netwealth said that as a result of COVID-19 and current global economic conditions the Reserve Bank of Australia (RBA) has reduced and maintained official interest rates at 10 basis points and provided substantial liquidity to the Australian banking sector at historically low rates and credit spreads.

Due to the current environment, and reduced cost of funding for banks, Netwealth said that the agreement with Australia and New Zealand Banking Group Ltd (ASX: ANZ) in relation to the interest payable on the total pooled cash transaction account is to be terminated in 12 months on 24 March 2022, pursuant to the terms of the agreement.

This agreement that’s being terminated provides a margin of 95 basis points above the overnight cash rate and will continue for 12 months.

Netwealth said that it’s in negotiations with ANZ and other banks to establish an alternate facility and deposit rate.

Washington H. Soul Pattinson and Co. Ltd (ASX: SOL)

Investment conglomerate Soul Patts reported in its half-year result that it saw a 27.7% decrease in regular profit after tax, whilst statutory profit increased by 35.2% to $68.9 million.

Soul Patts said that the decrease in regular profit was attributable to two areas. TPG Telecom Ltd (ASX: TPG) did not make a contribution to regular profit due to the derecognition of TPG as an equity accounted associate of Soul Patts following the merger with Vodafone.

The second area was that New Hope Corporation Limited’s (ASX: NHC) contribution to regular profit decreased 99% due to lower average coal prices and lower volumes as a result of planned maintenance at Bengalla and end of mine life at stage 2 of New Acland.

These negatives were partially offset by Round Oak’s contribution to regular profit increasing $50 million as a result of increased production levels at all operations and strengthening commodity prices together with lower ore treatment charges.

The ASX 200 share’s net asset value (pre-tax) was up 1.3% to $5.2 billion. However, net cashflows from investments fell 8% to $85.3 million.

Soul Patts grew its dividend by 4% to 26 cents.

The managing director of Soul Patts, Todd Barlow, said:

The operating environment for most of our investments continues to improve from the disruptions of COVID-19. In particular, we are seeing a strong recovery in certain commodities such as thermal coal and copper (up 42% and 73% respectively in the last 12 months in US dollar terms).

Brickworks Limited (ASX: BKW)

Brickworks also reported its FY21 half-year result to the market.

It said that group revenue fell 4% to $432 million, underlying earnings before interest, tax, depreciation and amortisation (EBITDA) dropped 4% to $163 million, underlying earnings before interest and tax (EBIT) fell 6% to 127 million and underlying net profit dropped 10% to $90 million.

The Australian building products division saw EBIT jump 60% to $16 million, but the North American division suffered a 33% decrease in EBIT to $4 million. It’s starting to see a recovery of demand in the US, whilst Australian demand remains robust.

The property division saw 3% growth of EBIT to $92 million, with the net trust income growing 7% to $16 million.

Total assets within the property trust now stands at almost $2.2 billion. After including debt, Brickworks’ share of net assets was $777 million at the end of the half, up another $50 million over the six-month period.

The Brickworks board decided to grow the dividend by interim dividend by 5% to 21 cents.

More reading

• Why is the Woolworths (ASX:WOW) share price up 5% in a week?
• 2 ASX 200 shares that keep growing their dividends
• Some of the ASX 200 companies that drove Australian exports to record levels
• Here’s why the Oceania Healthcare (ASX:OCA) share price is falling today
• Why Airtasker, Netwealth, Piedmont Lithium, & Resolute Mining are tumbling lower

Motley Fool contributor Tristan Harrison owns shares of Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia owns shares of and has recommended Brickworks and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia owns shares of Netwealth. 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 Singular Health Group Ltd (ASX: SHG) share price was flying today. The medical software company reached an intraday high of 64.5 cents per share – up 9.32% on the previous day’s close.

The price rocketed after the company announced the completion of a project developed with the Australian Government.

At the time of writing, the Singular Health share price had retreated slightly, trading for 60 cents each, still up 1.7%. By comparison, the S&P/ASX All Ordinaries Index (ASX: XAO) is down 0.04%.

Let’s take a closer look at Singular Health’s announcement.

Singular Health and CSIRO develop AI medical technology

Today’s announcement shook the Singular Health share price. In a statement to the ASX, Singular Health declared it and the Commonwealth Scientific and Industrial Research Organisation (CSIRO) had developed “an artificial intelligence [AI] model capable of automatically segmenting spinal vertebrae from CT scans.”

According to Singular Health, the automatic segmentation of the spine will enable surgeons and radiologists to closely examine the spines of patients through 3D models. Doctors will be able to manipulate models down to individual vertebrate. This will enable medical professionals to “better plan their surgeries and even design custom surgical implants and guides.”

Consequently, Singular Health believes the product will drastically cut diagnostic times for practitioners. Overall this should reduce times from a few hours to only a couple of minutes.

The project was made possible due to the CSIRO’s Kick-Start program. The agency provides funding and research assistance to small-and-medium Australian technology companies. The program matches company investment in research and development between the sums of $10,000 – $50,000. Additionally, this program allows companies to use CSIRO staff, equipment, and related expenditures.

Management Commentary

Dr. Guan Tay, executive director of Innovation at Singular Health, said the following about today’s announcement:

Singular Health has had the unique opportunity to access the deep-domain knowledge of CSIRO’s data scientists to develop this semi-automated instance segmentation and labelling of the spinal vertebrae. We are conducting further testing and validation of the spine segmentation function before commercial release.

The use of artificial intelligence in medical imaging, and more specifically radiology, has the ability to profoundly change the workflow for radiologists.

With around 45,000 Australian’s undergoing spinal surgery every year, the rapid segmentation will save thousands of hours for radiologists and surgeons who will only have to make small mark-ups and/or validate the segmentation as opposed to manual segmentation slice-by-slice.

We would like to thank the team at CSIRO and the efforts of our internal developers for their dedication to the collaborative research project and for delivering a successful outcome.

Singular Health share price snapshot

Since its IPO in early February, the Singular Health share price has increased by 57.89%. A healthy return for a company not even 2 months old.

At its current valuation, Singular Health has a market capitalisation of $61.3 million.

More reading

• Why Fortescue, Freedom Foods, QBE, & Singular Health are sinking
• Why the Singular Health (ASX:SHG) share price is sinking 13% today
• Why is the Singular Health (ASX:SHG) share price frozen?

Motley Fool contributor Marc Sidarous 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.

The post Why the Singular Health (ASX:SHG) share price opened nearly 10% higher today appeared first on The Motley Fool Australia.

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Even though the S&P/ASX 200 Index (ASX: XJO) is the most followed ASX index covering the Australian sharemarket, the All Ordinaries Index (ASX: XAO) is actually the oldest one. Established in 1980, the All Ords covers 500 of the ASX’s largest companies, as opposed to the more concentrated ASX 200.

This in itself is not uncommon by global standards. Over in the United States, the most tracked index is the S&P 500 Index (INDEXSP: .INX). And there are indexes that cover as many as 5,000 different US companies. You can even get an exchange-traded fund (ETF) on the ASX – the Vanguard U.S. Total Market Share Index ETF (ASX: VTS) – that covers 3,669 of these companies.

There is a plethora of ASX ETFs that cover the ASX 200. One of the most popular is the iShares Core S&P/ASX 200 ETF (ASX: IOZ). There’s even one ETF in the Vanguard Australian Shares Index ETF (ASX: VAS) that covers the ASX 300. But, to this writer’s knowledge, there is no ASX ETF that tracks the All Ordinaries. None. Zilch. That is rather uncommon, and unusual, one would think.

So why is our oldest index not ‘investable’?

The All Ords and liquidity

Well, there’s one strong possibility: liquidity. ETFs that track indexes are more effective when the index holds large companies with liquid shares. The smaller a company’s market capitalisation becomes, the fewer buyers and sellers it will inevitably have, and thus, the more illiquid its pool of shares will be. The ASX 200 functions quite well in terms of liquidity. But when you throw in another 300 smaller companies, it throws a few spanners into the works.

To illustrate, let’s look at one company that is near the bottom of the All Ords pile – Zoono Group Ltd (ASX: ZNO). Zoono has a market cap of $104.3 million. According to ASX data, 220,000 shares traded hands on 23 March. In comparison, 30.9 million Telstra Corporation Ltd (ASX: TLS) shares swapped hands on the same day.

It’s probably just not efficient for an index fund to track dozens or hundreds of companies that small. Especially in what is already a relatively small capital market here in Australia. And it can also cause liquidity issues (like dramatic share price moves) if an index fund enters such a small market.

It’s most likely a combination of these reasons why we don’t see an All Ordinaries ETF. Who knows what the future will hold. But for now, investors will have to either buy their favourite All Ords companies themselves or just stick with the ASX 200 or the ASX 300.

More reading

• Why is the Woolworths (ASX:WOW) share price up 5% in a week?
• How is Australia’s jobs rebound affecting ASX shares?
• Could a restructure spell a new era for the Telstra (ASX:TLS) share price?
• 8 ASX 200 shares rated as ‘outperform’ by brokers
• What experts are saying about Telstra’s (ASX:TLS) big restructuring plans

Motley Fool contributor Sebastian Bowen owns shares of Telstra Limited. The Motley Fool Australia owns shares of and has recommended Telstra 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 Renascor Resources Ltd (ASX: RNU) share price broke a new high today after announcing a memorandum of understanding (MOU) with a leading Japanese trading company.

Renascor shares reached as high as 18.5 cents at the market open before losing ground throughout the day. By the close of trading, the Renascor share price was up 6.67% at 16.2 cents.

What’s pushing the Renascor share price higher?

In today’s release, Renascor advised it had signed a non-binding MOU with Hanwa CoLtd (Hanwa) to supply purified spherical graphite (PSG).

Founded in 1947, Hanwa is one of the largest traders of battery chemicals in the Asian region. The Japanese company operates a dedicated battery team that supplies graphite across the global battery chain.

Hanwa also deals with the wholesale, import, and export of steel products, non-ferrous metals, industrial machines, and food products. Last year, the company reported more than $21 billion in sales, reflecting its size and scale of operations.

Details of the agreement

Under the framework, Renascor will provide up to 10,000 tonnes per annum of PSG over 10 years. This will be manufactured and delivered from the company’s planned Battery Anode Material operation in South Australia.

Renascor highlighted that the potential purchase covered more than one-third of its projected initial PSG production capacity at the plant.

Additional product validation tests will be carried out before any formal binding agreement being signed. Once successful, both the final annual delivery amount and the contract duration will be finalised. This includes price, product quality, and other parameters.

Management commentary

Renascor managing director David Christensen commented:

Our MOU with Hanwa is a further significant step toward Renascor constructing, in Australia, the first integrated, in-country mine and Purified Spherical Graphite operation outside of China.

We are particularly pleased to be working with Hanwa, a leading Japanese-based global trading company, providing access to the Japanese anode market, which is the largest market for PSG outside of China.

Mr Christensen said the Hanwa MOU, together with MOUs with Minguang New Material and Zeto, potentially accounted for 100% of the company’s planned Stage 1 PSG production.

As a result of an increase in inbound enquiries from globally recognised anode and battery companies for Siviour PSG, we are now considering an expanded Stage 1 production capacity and/or an additional Stage 2 PSG production capacity.

The Renascor share price has gained an astonishing 3,100% over the past 12 months and is up more than 1,200% year-to-date.

More reading

• Why is there no ASX All Ordinaries ETF?
• 2 stellar ASX shares to buy and hold
• Genex Power (ASX:GNX) can count Atlassian founders as major backers
• Afterpay (ASX:APT) share price hits 3-month low: Time to buy?
• Why is the Woolworths (ASX:WOW) share price up 5% in a week?

Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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If you are looking to emulate Warren Buffett’s strategy of buy and hold investing, then you may want to take a look at the two shares listed below.

Both have significant potential and have been rated as buys recently. Here’s what you need to know about these top ASX shares:

Adore Beauty Group Limited (ASX: ABY)

Adore Beauty is a growing online beauty retailer that has almost 800,000 active customers in an Australian beauty and personal market currently worth ~$11 billion a year.

Last month the company released its half year results and revealed an 85% increase in first half revenue to $96.2 million. This was well ahead of its prospectus forecast of $89 million. It is also only a very small slice of its overall market opportunity, even when annualised.

This means it has a significant runway for growth over the next decade, particularly given the low penetration of online beauty and personal care sales in Australia.

According to its prospectus, Frost & Sullivan estimate the online penetration rate of the beauty and personal care market in Australia is just 7.3%. This lags international markets such as the United States and the United Kingdom, with estimated online penetration levels of 15.4% and 12.7%, respectively.

Morgan Stanley is a fan of the company. Last month its analysts reiterated their overweight rating and lifted their price target on its shares to $8.75.

Xero Limited (ASX: XRO)

Another ASX share to consider buying and holding is Xero. It is a leading cloud-based business and accounting software provider which provides a full service solution to small businesses.

Thanks to the quality and stickiness of its platform, Xero has been growing its customer numbers and subscription revenues at a rapid rate over the last few years.

This has even continued in FY 2021 despite the impact that COVID-19 has had on many small businesses. During the first half of FY 2021, Xero’s subscriber numbers grew to 2.45 million, underpinning a 21% increase in operating revenue to NZ$409.8 million.

This is still scratching at the surface of its enormous global market opportunity. In fact, Goldman Sachs believes Xero is well-placed to grow its subscribers to 7.4 million by 2030. This is triple its current numbers.

In light of this, Goldman believes Xero is a growth share to own and has recently reaffirmed its buy rating and $157.00 price target on its shares.

More reading

• Adore Beauty (ASX:ABY) calls for a more inclusive beauty industry
• 5 things to watch on the ASX 200 on Thursday
• How are New Zealand-based ASX shares performing ahead of a likely recession?
• ASX 200 up 0.45%: Premier Investments results, Xero acquisition, Computershare halted
• Why Alcidion, GrainCorp, Premier Investments, & Xero are storming higher

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends Adore Beauty Group Limited. The Motley Fool Australia owns shares of Xero. 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 Genex Power Ltd (ASX: GNX) share price is still motionless today as the renewable energy developer finalises its capital raising, which was launched yesterday.

This leaves the attention on who is pouring money into the company to make the hydro project possible. It appears Australian rich listers and Atlassian Corporation PLC (NASDAQ: TEAM) founders Mike Cannon-Brookes and Scott Farquhar are in the mix.

At the time of writing, the Genex share price is frozen in a trading halt at 27.5 cents per share on the ASX.

Funding a renewable future

The ASX-listed Genex Power share price remains halted as the company finalises the financing for stage 2 of its Kidston hub. As part of funding the $777 million hydro development, Genex Power tapped the market yesterday to source $115 million. Reportedly, Atlassian founders Mike Cannon-Brookes and Scott Farquhar substantially contributed.

Mike’s wife Annie and her firm Grok Ventures, as well as Scott’s wife Kim Jackson and her firm Skip Capital, were backers of the Genex Power capital raising. The funds will go towards constructing and bringing online a 250MW pumped storage hydro energy development.

Genex is one of the many companies investing in a renewable energy future. The Kidston clean energy hub already has established a 50MW solar firm that powers 26,000 homes and offsets 120,000 tonnes of CO2 per year. Following the completion of stage 2, Genex plans to develop a further 150MW wind project and solar farm expansion.

The addition of Genex Power to the Grok Ventures portfolio fits alongside the numerous other renewable investments the private fund has made. Such investments include the world’s largest solar energy infrastructure in the making, Sun Cable; and interest-free solar payment provider, Brighte.

When will Genex Power resume trading on the ASX?

Based on the capital-raising presentation, the institutional offer was conducted yesterday. The retail portion of the offer is expected to open on Tuesday 30 March and close on Friday 16 April. The trading halt should be lifted tomorrow, allowing the market to once again trade in the ASX-listed company.

However, a reminder for those hoping to squeeze into the capital raise, you’ll need to already own shares. This is due to the ASX T+2 settlement, meaning it takes 2 business days for purchases to settle. Unfortunately, you need to be on the share registry prior to 7 pm Friday to participant in the capital raising. 

More reading

• Genex (ASX:GNX) share price frozen on hydro project fund raising
• Why are the Nasdaq’s highest-growth stocks panicking about a strong economy?
• Could Australia be the next tech hub? Afterpay (ASX:APT) CEO thinks it should be

Mitchell Lawler has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Atlassian. 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 Afterpay Ltd (ASX: APT) share price has continued its poor run and dropped lower again on Thursday.

In fact, at one stage today the payments company’s shares were down as much as 4% to a three-month low of $103.20.

When the Afterpay share price hit that level, it was down more than 35% from its record high of $160.50.

Why is the Afterpay share price at a three-month low?

Investors have been selling Afterpay and other tech shares in 2021 due to concerns over rising bond yields.

Last week the yields on U.S. Treasuries surged to their highest level in more than a year after investors began betting that economic growth and inflation will pick up.

And while bond yields are still relatively low in the grand scheme of things, even small rises can have big impacts on valuations. This is particularly the case for richly valued stocks like Afterpay and rival Zip Co Ltd (ASX: Z1P).

This is because as the risk-free rate rises, the premium that investors are willing to pay to put their money into risk assets decreases.

Is this a buying opportunity?

One broker that that sees the weakness in the Afterpay share price as a buying opportunity is Morgan Stanley.

Earlier this month the broker put an overweight rating and $159.00 price target on its shares. Based on the current Afterpay share price, this implies potential upside of approximately 52% over the next 12 months.

According to the note, Morgan Stanley believes that Afterpay has developed a moat thanks to its merchant marketplace, its strong global brand, and its integrated shopping experience.

In light of this, the broker isn’t concerned by increasing competition in the industry from the likes of Commonwealth Bank of Australia (ASX: CBA).

Ord Minnett appears to agree with this view. At the start of the month the broker reiterated its buy rating and lifted its price target to $150.00.

Its analysts have been pleased with the company’s performance in the UK and United States and believe the Afterpay Money app has a lot of potential.

More reading

• Why is the Woolworths (ASX:WOW) share price up 5% in a week?
• Is the Affirm share price dragging ASX BNPL shares lower?
• Macquarie sees near-term pain for the Afterpay (ASX:APT) share price
• Why the Xero (ASX:XRO) share price is outperforming today
• Afterpay and Zip were among the most traded ASX shares last week

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

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