Things have gone from worse to ugly for the Redbubble Ltd (ASX: RBL) share price. Its shares have tumbled more than 30% in the past month alone, with today’s session shedding another 8.9% to a 10-month low of $3.57. 

What’s driving the Redbubble share price lower? 

It seems the Redbubble share price is caught between a significant weakness today across tech, retail and e-commerce sectors. 

The S&P/ASX200 Info Tech (INDEXASX: XIJ) is one of the worst-performing sectors, falling 2.32%. This could be a follow on from the weakness in the tech-heavy  Nasdaq Composite (NASDAQ: .IXIC) overnight, which fell 2.55%. 

ASX retail shares were a standout performer towards the end of April with the likes of Accent Group Ltd (ASX: AX1), Adairs Ltd (ASX: ADH) and Premier Investments Ltd (ASX: PMV) all soaring into record territory. However, these shares have all topped out and slipped between 5% to 15% in recent weeks. 

Similarly, ASX e-commerce shares are cycling through a period of tough comparables against ‘supercharged’ FY20 earnings. Redbubble peers including Kogan.com Ltd (ASX: KGN) and Temple & Webster Group Ltd (ASX: TPW) have struggled to make headway in recent months.

Redbubble competitor flags slow growth ahead 

Etsy Inc (NASDAQ: ETSY) functions a similar business model as Redbubble, providing an online marketplace for unique items from independent sellers. 

The Etsy share price was met with a similar selloff as Redbubble following its quarterly results on 6 May. Esty CFO Rachel Glaser commented on the sector’s growth, saying: 

Q1 2021 growth will be approximately in line with Q4 2020 and that the industry will start to more rapidly decelerate starting in Q2 with the majority of incremental growth for the year realised in the first quarter.

This could spell bad news for the Redbubble share price as the company had already flagged a decrease in earnings before interest, taxes, depreciation, and amortisation (EBITDA) margins in its third quarter update.

More reading

• 2 ASX tech shares that are growing rapidly
• Brokers name 3 ASX shares to buy now
• These are the 10 most shorted shares on the ASX
• 2 highly rated ASX dividend shares with generous fully franked yields
• Got money to invest? Here are 2 ASX shares to buy

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 Kogan.com ltd and Temple & Webster Group Ltd. The Motley Fool Australia has recommended Kogan.com ltd, Temple & Webster Group Ltd and Premier Investments. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post Down 9% today, why the Redbubble (ASX:RBL) share price continues to tumble appeared first on The Motley Fool Australia.

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The Afterpay Ltd (ASX: APT) share price has slumped 7% lower to $90, driven by today’s broader weakness in tech and the Nasdaq Composite (NASDAQ: .IXIC) selling off overnight. 

Amid the weakness in local BNPL shares, US-listed Affirm Holdings Inc (NASDAQ: AFRM) delivered an upbeat quarterly result with its share price jumping 5.56%. 

With the US market as the most important growth region for the Afterpay share price, Affirm results could provide key insight as to how the region is performing. 

Affirm catches a break on solid quarterly results 

 The Affirm share price has tumbled all the way from a high of US$146.90 on 10 February to a record low of US$53.80 last Friday. 

Its results overnight delivered a much-needed push to the upside, closing the overnight Monday session 5.56% higher to $57.00. The climb came about with a significantly higher volume of 5.77 million shares traded compared to its 10-day average volume of 2.93 million shares. 

Affirm delivered an 83% increase in gross merchandise volume (GMV) in the third quarter to US$2,257 million against the prior corresponding period. From a quarter-on-quarter perspective, GMV increased 8.77%.

The company’s active customers increased 60% to 5.36 million on the pcp and an encouraging 19.4% on the previous quarter. 

How does this compare with Afterpay growth? 

Afterpay’s quarterly results have far outpaced Affirm, with a 104% increase in transaction values and 75% increase in customers. 

However, credit needs to be given where credit’s due, as Affirm only has a regional exposure to North America, while Afterpay has made a significant effort for international exposure. 

Is this good news for the Afterpay share price? 

The 5.56% move from Affirm on significant volume is encouraging. However, in the bigger picture, its shares are still hanging around record lows. Only time will tell whether Affirm’s move up is just a ‘dead cat bounce’ from lows or part of a broader recovery.

In the case of the Afterpay share price, it plunged almost 40% from a high of $160.05 to $100 between mid-February to late-March. This was followed by what seemed like a bullish rally back up to $130 by mid-April, but after running higher for a few sessions,  its shares are back to square one and below the iconic $100 level.

More reading

• ASX 200 down 0.9%: Boral rejects takeover offer, Afterpay & PointsBet sink
• Nasdaq slump: will ASX tech shares face selling pressure today?
• How will the Afterpay (ASX:APT) share price react when US rival delivers trading results overnight?
• 5 things to watch on the ASX 200 on Tuesday
• These are the 10 most shorted shares on the ASX

Kerry Sun has no position in any of the stocks mentioned. 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.

The post Afterpay (ASX:APT) share price dives 7% despite US-listed rival surging on results appeared first on The Motley Fool Australia.

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There are some ASX shares that are growing rapidly in the technology space.

The businesses that are generating the most revenue growth may have a stronger chance of producing better returns.

Below are two companies that have grown a lot and are still growing strongly:

Volpara Health Technologies Ltd (ASX: VHT)

Volpara’s technology provides feedback on breast density, compression, dose and quality. Its practice management software helps with productivity, compliance, reimbursement and patient tracking.

The healthcare business recently hit US$18.6 million of annual recurring revenue (ARR). That was 60% higher, including 20% of organic growth. Volpara has said it has seen important tailwinds develop around personalised breast care, particularly surrounding assessment genetics. The acquisition of CRA Health has really helped with this, bringing a range of skills that Volpara was lacking (that’s management’s words), as well as a substantial installed based in the electronic health record (EHR) world.

The company has an important market share, of around a third of 12.5 million annual breast screenings. Volpara’s gross profit margin and average revenue per user (ARPU) continue to rise and this is driving the business towards generating a net profit.

Volpara’s executive vice president of US sales and marketing, Jill Spear, pointed out that 68% of US women don’t get Volpara-level care. Ms Spear wants more of these women to get high-quality images, accurate density scoring and accurate risk assessment so that they can detect cancer early.

Temple & Webster Group Ltd (ASX: TPW)

Temple & Webster is another ASX share that’s growing rapidly. E-commerce has certainly seen strong adoption since COVID-19 came along, but growth hasn’t fizzled out as restrictions were lifted.

FY21 third quarter revenue saw growth of 112% compared to the prior corresponding period. April 2021 revenue also grew by more than 20% compared to April 2020, which was the fastest growth month last year due to the nationwide lockdowns.

As a result of strong trading over the FY21 second half to date and a belief in a permanent shift in consumer shopping behaviours, the business is doubling down on its strategy of investing to capitalise in a “once in a generation” shift from offline to online shopping in the furniture and homewares category. This will involve investing in both short and long-term growth initiatives.

In 2020, just under 10% of Australian furniture and homewares were bought online, an almost doubling of the 5% bought in 2019. The ASX share thinks that online penetration is expected to continue to climb.

During this scale-up phase, the company is just focused on revenue growth and further expanding its market leadership. This will (hopefully) result in strong double digit revenue growth, and a low single digit earnings before interest, tax, depreciation and amortisation (EBITDA) margin.

The Temple & Webster CEO and co-found Mark Coulter said:

You only need to look at the US to see how the e-commerce market is playing out, and why we remain bullish about the shift from offline to online. We are at the start of this once in a generation shift, and now is the time to put our foot down to secure market leadership and ensure we are the brand for the next generation of furniture shopper.

More reading

• These are the 10 most shorted shares on the ASX
• Are there buying opportunities among ASX COVID fallen stars?
• 2 explosive ASX growth shares rated as buys
• 2 ASX tech shares to buy in May 2021
• 2 quality SaaS ASX shares to buy in May 2021

Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Temple & Webster Group Ltd and VOLPARA FPO NZ. The Motley Fool Australia has recommended Temple & Webster Group Ltd and VOLPARA FPO NZ. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post 2 ASX tech shares that are growing rapidly appeared first on The Motley Fool Australia.

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The Fortescue Metals Group Limited (ASX: FMG) share price may be trading lower today, but that doesn’t diminish the incredible gains it has made over the last 12 months.

Since this time a year ago, the iron ore producer’s shares have doubled in value from $12.11 to $24.23.

Why has the Fortescue share price doubled in value?

The strong gains made by the Fortescue share price over the last 12 months have been driven by the rapid rise of the iron ore price.

This has led to Fortescue reporting significant increases in its margins and delivering bumper free cash flows.

And with the majority of this free cash flow being returned to shareholders, it has been raining dividends.

More dividends to come

The good news for shareholders is that there could be more big dividend payments to come.

According to a note out of Bell Potter, this morning the broker increased its dividend estimate for FY 2021 to a total of $4.04 per share.

Based on the latest Fortescue share price, this represents a massive fully franked 16.7% dividend yield.

However, it is worth noting that its price target stands at $23.96. As a result, Bell Potter has a hold rating on its shares.

What did Bell Potter say?

The broker commented: “The extraordinary iron ore price action we have continued to see through the June quarter has prompted us to further refine our financial performance forecasts for FMG as we head towards the end of FY21.”

“Marking-to-market the iron ore price for the June 2021 quarter to date shows the average price now sits at ~US$184/dmt. This compares with our previous forecast of US$160/dmt and the current spot price of US$212.90/dmt. This lifts our 2HFY21 forecast to US$179/t, up 9% from US$164/dmt previously.”

“Our higher forecast iron ore price flows through to modest earnings and dividend increases. It is partially offset by a higher AUD:USD forecast and the slightly higher costs reported in the March 2021 quarterly. Our FY21 dividend increases 4% to A404cps, inclusive of a fully franked final dividend payment of A257cps (from A241cps), a 10.4% yield on its own,” it concluded.

More reading

• Why Crown, Fortescue, Nearmap, & Tyro shares are charging higher
• ASX 200 Weekly Wrap: Bank shares push ASX 200 towards all-time high
• Iron ore price hits another record high as tensions with China increase
• Why ASX miners are cheering record high shipping costs
• The ASX 200 is within an arms reach of all-time record highs

Motley Fool contributor James Mickleboro 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 How big will the Fortescue (ASX:FMG) dividend be in FY 2021? appeared first on The Motley Fool Australia.

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Ask A Fund Manager

The Motley Fool chats with fund managers so that you can get an insight into how the professionals think. In part 1 of our interview, Eley Griffiths portfolio manager Nick Guidera tells why Aussie Broadband is his biggest ASX holding, although it’s competing against massive rivals.

Investment style

The Motley Fool: What’s your fund’s philosophy?

Nick Guidera: I work for a company by the name of Eley Griffiths Group, and we have two strategies — the Eley Griffiths Group Small Companies Fund and the Eley Griffiths Group Emerging Companies Fund. 

We’re a specialist in that area of the market, so we focus only on small and emerging companies. We’re style agnostic, so we can own growth and value companies to construct portfolios, which we believe will outperform. 

The Emerging Companies Fund, [which is the subject of this interview], offers investors exposure to a diversified portfolio of Australian-listed emerging companies that reside outside the S&P/ASX 200 Index (ASX: XJO). We can also invest directly into the New Zealand Exchange. 

The fund is benchmarked against the ASX Small Ordinaries Accumulation Index, and is about 4 years old. What we do is combine fundamental bottom-up research in companies with an in-depth qualitative assessment of their management and also the industry structure that they belong to.

MF: To give our readers an idea, what are your two biggest holdings?

NG: So the two biggest holdings in the Emerging Companies Fund are Mainfreight Limited (NZE: MFT) and Aussie Broadband Ltd (ASX: ABB). 

Mainfreight is a global freight business based in New Zealand. Aussie Broadband is an Australian-listed company that IPOed at the back end of last year, and is obviously in the telco space and the consumer broadband space — as well as more recently, the enterprise broadband space.

It’s a very simple story in that they are providing a very genuine alternative to the major telco providers. So much so that you are seeing this particular business take a significant proportion of new subscribers to NBN, or churn subscribers versus their market share. I think the most recent stat, they took close to 9% of new subscribers to NBN, [although] their market share was closer to 3%.

So they’re really winning share from the majors by having a really solid customer service offering, as well as a quality of service that is superior to a number of the other resellers and other telcos out there. You’ve got consistency of broadband through the day and the night.

At the same time, it’s founder-led, built from the ground up, is Australian-owned and the management is very well aligned with the strategy. In addition to that, we can see a path to improved earnings over time, as they’re spending a significant amount of capital on their network to improve the gross margin. 

The costs that they have to pay to provide these services over time, rather than paying those [to another company], they’ll have their own network. [This] will ensure that there is… a gross margin uplift over time, which will ultimately drive earnings. At the same time, they’re seeing very solid subscriber growth, and that’s largely because of their no-nonsense approach to broadband and their very successful marketing campaigns.

MF: It’s not an easy field to be in though, because they’re competing against bigger companies with very, very deep pockets?

NG: That’s correct. But I think they have been clever around how they’ve targeted customers through very much a non-conforming way of advertising — a lot of direct mail… People are also looking for alternatives when they’re not happy with their NBN service providers. 

I think it’s fair to say that a number of the majors have struggled with providing appropriate customer service and resolving consumer issues. As a result of public ratings et cetera for particular products… there’s a really good groundswell and positive attitude towards this brand.

MF: Did you buy in during the IPO or after it floated?

NG: We did both. We participated in the IPO and we also bought on market in the days post-IPO to build on that position.

Buying and selling 

MF: What do you look at closely when considering buying a stock?

NG: We’ve got a proprietary investment process. It’s known as SCOPE — stands for Small Company Optimal Portfolio Evaluation. It’s a process we’ve had in place for about 18 years, since the history of the business.

What it does, in a nutshell, it’s a relative stock-scoring tool that ranks stocks from highest to lowest based on the score. We consider a number of factors — probably most of interest to your readers is management track record and alignment of key staff. 

Has the management suggested that they were going to take a particular path for the company and delivered on it? Are they invested alongside external investors, so they own shares in the company? Do they have equity-incentive plans? Not just the CEO and CFO — are the key people within the business aligned?

The second thing we focus on is capital management and how well this particular management team would deploy capital. Are the investors getting an appropriate return on equity? [Is] management getting an appropriate return on capital for what they’re deploying?

The third factor we look at is the strategic plan. Is the company just plodding along without a whole lot of great ambition? Generating plenty of cash, but doesn’t have a great plan to actually grow or optimise the business over time? The outlook to the industries, I think, is really important. It’s certainly a lot easier to invest in a stock with solid industry tailwinds than one that’s fighting the tide [in] an industry going backwards.

Probably the most important factor, which I think is pretty overlooked by a number of investors, is liquidity. Especially at [the emerging] end of the market, a lot of these stocks can move on news flow or on not much, particularly if there’s not a lot of stock supply. So we spend a fair amount of time understanding the liquidity parameters — so that we can be comfortable that when we’re investing our investors’ money into these stocks, that we’re sure that we’ve got an appropriate liquidity hurdle… Should our investment thesis change, we can exit the stock, or we can add to the stock comfortably enough that we don’t end up owning something above our risk controls.

MF: What triggers you to sell a share?

NG: Typically for us, a change in investment thesis [is] the key reason for selling a stock. 

When we invest in a stock, it’s very clear — we’re backing a management team with a really strong strategic plan in an industry that we think has great prospects, and ultimately, we expect the earnings to grow, or there’s a valuation differential that attracts us to the stock in the first place.

So [for example] if for some reason a key CEO departs, [or] you see a deviation from the strategic plan. A company’s always said they’re going to grow organically their revenue 10% per annum, and all of a sudden they look like they’re going to grow 3%, but they do an acquisition to supplement the growth — is that because the organic story is petering out?

The third thing is, often stocks can go above their valuation bands, and as such in this end of the market, you can see stocks move very quickly through growth hurdles. And sometimes retail investors can not have the same-eyed evaluation that others do, and hysteria can creep in. 

As such, you need to have a disciplined approach to harvest some of your winners rather than just holding on. Because even though the investment thesis hasn’t changed, the valuation… looks incredibly stretched.

MF: Do you also have an investment horizon in mind when you enter a position?

NG: In the Emerging Companies Fund, we’re always looking to invest beyond the 12-, 18-month period. Ideally, it’s a 3-year period… If anything, COVID taught you a lot of things, that what was a defensive [stock] in one month was not a defensive the next, and what was a COVID beneficiary was all of a sudden the COVID loser. 

Having the agility to be nimble and to question your investment thesis can shorten your investment horizon, but fundamentally, the stocks that we’re backing and the management teams that we want to be on board with, we see these stocks likely to enter the ASX 100 in time. 

Tomorrow in part 2 of our interview, Guidera tells us 2 ASX shares that are ripe for the picking now.

More reading

• ASX 200 down 0.9%: Boral rejects takeover offer, Afterpay & PointsBet sink
• Boral (ASX:BLD) share price in focus as it rejects Seven Group (ASX:SVW) takeover bid
• 5 things to watch on the ASX 200 on Tuesday
• ASX 200 jumps, A2 Milk sinks, Crown rises
• 2 ASX 200 COVID-19 shares to buy

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. owns shares of Aussie Broadband Limited. The Motley Fool Australia has recommended Aussie Broadband Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post This little ASX telco’s picking customers off the big boys: fundie appeared first on The Motley Fool Australia.

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At lunch on Tuesday, the S&P/ASX 200 Index (ASX: XJO) is following the lead of Wall Street and tumbling lower. The benchmark index is currently down 0.9% to 7,106.2 points.

Here’s what is happening on the market today:

Boral rejects Seven’s takeover offer

The Boral Limited (ASX: BLD) share price is trading slightly higher today after rejecting a takeover approach by Seven Group Holdings Ltd (ASX: SVH). Seven, which currently owns 23.18% of Boral, has made a $6.501 cash per share off-market for all of the shares it does not own. The building materials company believes the offer is opportunistic, undervalues it and unanimously recommends that shareholders reject the offer.

Tech shares tumble

It has been a disappointing day of trade for many Australian tech shares such as Afterpay Ltd (ASX: APT) and TechnologyOne Ltd (ASX: TNE). They have taken a tumble on Tuesday after their US counterparts were sold off on the Nasdaq index during overnight trade. The Nasdaq index ended the session with a 2.55% decline. At the time of writing, the S&P/ASX All Technology Index (ASX: XTX) is down 2.35%.

A2 Milk shares continue to sink

Investors have continued to sell A2 Milk Company Ltd (ASX: A2M) shares on Tuesday following its fourth guidance downgrade yesterday. A number of brokers have responded very negatively to the downgrade. One of those is Credit Suisse, which has retained its underperform rating and cut its price target to $5.00. Macquarie Group Ltd (ASX: MQG) is also bearish on a2 Milk. It downgraded its shares to an underperform rating and cut the price target on them to $5.60.

Best and worst ASX 200 performers

The best performer on the ASX 200 on Tuesday has been the Boral share price with a modest 1.5% gain. This follows its takeover approach this morning. The worst performer has been the PointsBet Holdings Ltd (ASX: PBH) share price with a 7% decline. This may be due to a combination of profit taking and weakness in the tech sector today.

More reading

• Nasdaq slump: will ASX tech shares face selling pressure today?
• Is the A2 Milk (ASX:A2M) share price cheap? Here’s what brokers think
• Boral (ASX:BLD) share price in focus as it rejects Seven Group (ASX:SVW) takeover bid
• 2 impressive ASX shares to buy in May 2021
• How will the Afterpay (ASX:APT) share price react when US rival delivers trading results overnight?

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 recommends Pointsbet Holdings Ltd. The Motley Fool Australia owns shares of AFTERPAY T FPO, owns and has recommended A2 Milk, and has recommended PointsBet. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post ASX 200 down 0.9%: Boral rejects takeover offer, Afterpay & PointsBet sink appeared first on The Motley Fool Australia.

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Today is Budget Day.

I know…

I have a confession to make though – I kinda like it.

Actually, that’s a slight understatement. I really like it.

Back in the day, living in Melbourne, I might, possibly, have paid for a taxi to get home from a late finish at the office, because the tram would have got me home too late to see the beginning of the Treasurer’s speech.

I know.

I’ll give my wife your condolences.

But indulge me just for a minute.

See, to me, the Budget is an annual example of what we otherwise see only every few years: Australian democracy in action.

Now, our democracy isn’t perfect (don’t get me started on the need for a Federal ICAC and the lack of long term thinking in the halls of Parliament House!), but for all its faults, it’s pretty bloody good.

The Australian Electoral Commission is perhaps our most underappreciated national treasure (followed closely, in the politics category, by the ABC’s Antony Green).

We have elections free of tampering, intimidation, and violence.

Our governments are about as transparent as any (if still not enough). 

And so Budget Day — and the Treasurer’s Budget speech (no matter what party) is just a really great, prominent, example of our democracy in action.

Plus, because I’ve always been a politics and economics nerd, it’s really important.

Budgets set out the taxes we’ll pay, and how we’ll pay them, as well as on what they’ll be levied.

They set out how the government is spending those taxes (and what the national balance sheet looks like, as a result).

These policies — known as fiscal policies — shape our government, now and in the future, and they tell us a lot about our national priorities.

And that, in a mid- and post-COVID world, is important.

The recovery has been unexpectedly swift. Economic forecasts keep getting better.

The government should — and has, from me — get a lot of credit. The actions were imperfect, but the results have been very, very good.

Tonight, the Treasurer will set out what the ongoing recovery will look like, in terms of not only the level of taxes and spending, but who will be taxed, and how much, as well as the areas in which spending will be increased and decreased.

It’s nowhere near as important as the COVID recovery policies of last year, but they were extraordinary times. Still, it’s possible that tonight’s budget will be the most important non-COVID budget in more than a decade.

It’ll set a path for what the budget deficits will look like in the next few years.

It’ll tell us how much debt the country will be likely shouldering at the end of that period.

It’ll determine how structurally sound the government’s finances are.

And it’ll tell us how much action (or otherwise) will be taken in important non-financial areas like early childhood education, health, welfare, the environment and plenty more.

Now, as writer Andrew P. Street tweeted this morning, “Budgets are theatre”.

I agree, but not entirely — there are very real impacts, as I mentioned above.

Still in these days of the 24/7 news cycle, and a need to ‘control the narrative’, there’ll be plenty of theatre: mentions of what the Treasurer wants you to know about the recovery (hint: they’ll take credit), the announcements (hint: they want you to like what’s announced and vote them back in), and the future (hint: they want you to think the other guys are terrible and would do a worse job).

This is a pre-election budget, after all.

And yes, both parties do the same thing, as we’ll see with the Opposition Leader’s Budget Reply speech on Thursday night.

(STOP PRESS: as I was editing this, I saw a tweet from The Guardian‘s Amy Remekis, with a photo of a pallet of fake money in the Mural Hall at Parliament House. So, maybe Andrew is even more correct than I thought.)

Anyway… to the extent they’re theatre, you should ignore it. Or, at the very least, look through them.

Please.

Indeed, speaking of theatre, some policies have already been selectively ‘leaked’ (I think we can dispense with the word ‘leaks’ and just call them pre-announcements, these days) for maximum coverage and electoral impact.

(We’re already seeing it being called the government’s ‘plan to secure Australia’s economic recovery’, so whatever you do, don’t use that phrase if you’re having mates around for a Budget Speech drinking game… it could get ugly!)

But don’t dismiss the budget out of hand.

It will — to a larger degree than usual, given it’s being delivered in the shadow of COVID — shape the next 5 years. 

I don’t blame you for not choosing to watch it, if you’re not as into it as I am.

But I hope you’ll at least recognise the value of the process and the institution, and pay it — the real policies, not the PR spin — some attention.

As a citizen, and as an investor who believes strongly that my returns will be best if the government thinks long term, here’s what I want:

I hope the government supports those workers and industries that haven’t bounced back from COVID-induced slumps.

I hope the government supports not just childcare, but early childhood education (there’s a very real difference between the two, for the kids in question.)

I hope the government charts a course of out deficit and into real and meaningful surplus (to help pay down the debt), as soon as the economy can absorb it.

I hope the government commits to real action on climate change.

I hope the government makes it easy for people to transition back into work.

I hope the government spends wisely on infrastructure projects, given we are already likely to have unemployment around 4.5% by year’s end.

I hope the budget has real substance, and isn’t too distorted by electoral considerations.

I don’t know how many of my wishes will come true, tonight.

What about for investors? While lots of attention will be paid to this spending, that tax or those programs, I think that’ll be missing the forest for the trees.

As I said above, I hope the government does things that makes Future Australia a much better place in which to live, work, run a business and invest.

(That’s far more important than a single year’s tax rates or infrastructure plans, by the way, because they impact our compound returns over decades, not just the share price in 2021!)

I hope that’s what you want, too.

But, whatever my view on the details, I’ll be watching with a smile on my face, especially as Treasurer Frydenberg finishes his Budget speech with the words spoken by (I assume) a dozen or so Treasurers since I started watching them: “I commend the Budget to the House”.

(And if you’re as much of a politics and economics nerd as I am, I’ll almost certainly be tweeting during the speech @TMFScottP, and I’m joining Nine’s Late News with Peter Overton this evening to share my views. So, if you’re still up — or, hey, why not stay up especially! — don’t forget to tune in.)

More reading

• ASX 200 down 0.9%: Boral rejects takeover offer, Afterpay & PointsBet sink
• Iluka (ASX:ILU) share price falls despite government letter
• APN Property (ASX:APD) share price rockets 48% on Dexus takeover
• NAB (ASX:NAB) share price lower despite 86 400 acquisition update
• Brokers name 3 ASX shares to buy now

Motley Fool contributor Scott Phillips 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 Here’s Why I (Seriously!) Love The Budget appeared first on The Motley Fool Australia.

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Iluka Resources Limited (ASX: ILU) shares are falling today despite news Australian Government ministers have contacted the company to reconfirm their support of the Eneabba Rare Earths Refinery. At the time of writing, the Iluka share price is trading at $8.67, 2.36% lower than yesterday’s closing price.

According to Iluka, yesterday it received a letter from Minister for Trade, Tourism and Investment Dan Tehan and Minister for Resources, Water and Northern Australia Keith Pitt. The letter reconfirmed that Eneabba aligns with the government’s critical minerals policy objectives and encouraged the company to continue working on the project’s feasibility study. 

Let’s take a closer look at the news released by Iluka this morning.

Eneabba aligns with government objectives

The two ministers reaffirmed the government is interested in building Australia’s rare earth oxide production through projects such as Eneabba. They said doing so could move Australia further along the rare earths value chain.

The letter follows previous meetings between the ministers and the Iluka board in March.

Iluka is currently undertaking a feasibility study into the development and potential of the Eneabba Refinery.

The letter from Ministers Tehan and Pitt commented on the government’s recognition of the project’s possible value, saying:

The Morrison Government is focused on growing Australia’s critical minerals sectors, capturing more value from our resources by moving into downstream processing, and diversifying global supply chains.

It also stated the ministers believe Eneabba will generate jobs in regional Australia and build security in the supply of critical minerals.

If executed, Eneabba may be able to process some third-party rare earth concentrates, in addition to Iluka’s own monazite. Minister’s Tehan and Pitt stated:

This could help develop new Australian mines by reducing capital expenditure and risk for those projects.

Iluka is currently seeking financial support for the project from Export Finance Australia, which would include a non-recourse loan facility. Export Finance Australia is a government-run body offering financial support to companies engaged in export-related businesses.

Minister’s Tehan and Pitt encouraged Iluka to continue its discussions with Export Finance Australia, as well as the Clean Energy Finance Corporation. 

Commentary from management

Iluka managing director Tom O’Leary commented on the opportunity Eneabba affords the company, saying:

[Eneabba] is not an opportunity without risk, nor one we will pursue at any cost, particularly given the projected returns from our Phase 2 monazite business. This is the focus of our discussions with the Australian Government, along with the potential for alignment between commercial objectives and policy objectives. I have been impressed with the quality of engagement Iluka is receiving on these matters and the letter from Ministers Pitt and Tehan is a further, important and confidence building step in this regard.

Iluka Resources share price snapshot 

Despite today’s falls, the Iluka share price has been performing well on the ASX lately. Currently, Iluka shares are up by around 34% year to date. They have also rallied by around 121% over the last 12 months.

The company has a market capitalisation of $3.75 billion, with around 422 million shares outstanding.

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

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The APN Property Group Ltd (ASX: APD) share price is climbing higher than a skyscraper today. At the time of writing, shares in the real estate investment manager are selling at 90 cents – a 47.5% increase on the previous day’s close.

The sharp price rise comes after APN announced it has agreed to the DEXUS Property Group (ASX: DXS) offer to buy 100% of the company for 91.5 cents a share. The Dexus share price is currently $10.28 – up 0.29%.

Let’s take a closer look at today’s announcement.

APN share price surges on takeover

In a statement to the ASX, APN Property Group reported it has received, and is recommending shareholders accept, the offer from Dexus for control of the company. According to the statement, all directors are unanimous on this assessment and intend to vote as such. The directors control 33% of the company.

The offer of 91.5 cents represents a:

• 50.0% premium on the previous day’s APN share price.
• 64.3% premium over the 1-month volume-weighted average price.
• 65.8% premium over the 3-month volume-weighted average price.

The takeover bid will be subject to the standard caveats before it can be implemented, namely shareholder approval, no material changes to either company, and court and regulator permission.

Dexus will pay for the shares using its existing cash reserves. Given there are roughly 329.6 million shares outstanding in APN, the total cost of the transaction will be approximately $302 million.

Any break in the deal will incur a $3 million fee from one side to the other.

Management commentary

APN chair Chris Alyward said:

Dexus’ all cash proposal represents compelling value to APN securityholders including a material premium to APN’s trading price. We believe the combination of the two businesses will provide incremental growth opportunities for the APN business as well as its underlying funds, investors and our team members. The APD Directors consider this to be a very attractive offer and unanimously recommend that securityholders vote in favour of the schemes, subject to no superior proposal being made and the independent expert concluding the schemes are in the best interests of APN securityholders.

In a separate statement explaining Dexus’ rationale to its shareholders, Dexus CEO Darren Steinberg said:

This transaction supports our strategic initiative of expanding and diversifying our funds management business, increasing our suite of funds on offer outside of wholesale funds into listed REITs, real estate securities funds and unlisted direct property funds. The transaction also expands our investor network to include retail and high net worth capital.

We believe APN is a high-quality real estate funds management business that complements our existing platform, and we look forward to APN’s executives joining and strengthening the Dexus team while continuing to deliver strong results for investors.

Dexus and APN share price snapshots

Before today’s announcement, the APN share price had appreciated 27.1% over the past year. After today, it’s now 87.5% higher than this time last year. The Dexus share price is 11% higher when compared to 12 months ago.

In the first two months of 2020, just before the COVID-induced market crash, Dexus shares were trading as high as $13.42. It has a market capitalisation of $11.1 billion.

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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.

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The National Australia Bank Ltd (ASX: NAB) share price is trading lower today despite the release of a positive update.

At the time of writing, the banking giant’s shares are down 0.3% to $27.01.

What did NAB announce?

This morning NAB provided the market with an update on its proposed acquisition of Australian neobank, 86 400.

According to the release, the Federal Court of Australia has made orders approving the scheme of arrangement under which NAB will acquire the remaining share capital in 86 400.

This was the final approval the bank needed for the acquisition, following the prior receipt of approvals from the Treasurer, the Australian Prudential Regulation Authority (APRA), and the Australian Competition and Consumer Commission (ACCC).

In light of this, the scheme is expected to become effective on Wednesday 12 May 2021 and implementation is expected to occur on 19 May 2021.

Why is it acquiring 86 400?

In January, NAB announced its intention to acquire 86 400 to accelerate the growth of its own digital bank, UBank. It believes it can achieve this by combining UBank’s established customer base and name with 86 400’s technology and innovation capability.

UBank’s CEO, Philippa Watson, explained: “Bringing together UBank and 86 400 will help deliver on NAB’s long-term strategy to enhance the customer experience and meet their changing needs. This will create a stronger and more competitive banking alternative for Australian customers.”

“Together we will develop a leading digital bank that attracts and retains customers at scale and pace and creates the next generation of simple, fast and mobile banking solutions,” she added.

This sentiment was echoed by 86 400’s CEO, Robert Bell. He said: “Since day one, our mission has been to help Australians take control of their money. With all of the necessary approvals now received, we’ll soon have the resources to reach many more people with our innovative, easy-to-use and award-winning products and features.”

Despite today’s weakness, the NAB share price is still up 18% year to date.

More reading

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Motley Fool contributor James Mickleboro 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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