With iron ore continuing to float the economy, the question of how China truly feels about Australian coal is stealing headlines.

The Australian reports today that the nation’s total exports to China have broken a new record. This implies that China isn’t all that mad given it is still spending its money here.

Meanwhile, the Australian Financial Review poses the question of whether or not the China coal ban is permanent and what that means for the economy.

So what’s actually going on? What does China really think about Australian coal?

Iron ore exports undermine Beijing’s ban 

According to The Australian, the total value of Australia’s exports to China rose 8.2% in January and February 2021. Iron ore led the pack.

China imported $26.6 billion worth of exports from Australia in the first two months of the year. This beats the last record set by the first two months of 2020 when exports pulled in $24.5 billion.

The article notes that the “elevated price of iron ore and liquefied natural gas — Australia’s two biggest exports to China — more than compensated for crippling strikes on wine, lobster, timber, barley, beef and even coal, Australia’s third biggest export to China.”

Is it a trade war if you spend $148 billion?

In 2020, Australian exports to China reached the second-highest level in history, totalling $148 billion. 

The AFR report draws attention to the coal that China is still buying regardless of the “trade war”.

According to the AFR, China likes to buy intermediate quality coal from Australia, and companies like BHP Group Ltd (ASX: BHP) are happy to sell it to them.

Coal quality is defined by kilocalories, which determine the efficiency of the energy created as well as the emissions that are produced — 5500 kilocalorie coal and up is considered high quality.

However, Yancoal Australia Ltd (ASX: YAL) CEO David Moult comments in the AFR that being able to accommodate different grades of coal is a strategic business move. He believes Australia is lucky to be one of the only producers that can offer a spectrum of grades.

Foolish takeaway

Fools say that there are two sides to every story and then the truth. Iron ore is not going out of style in Australia any time soon.

While geopolitical sagas will continue to rattle headlines, businesses find a way to adjust to changing environments. Although we hear a lot about a trade war with China, the amounts being traded seem to tell a different story. At least for today.

More reading

• ASX 200 Weekly Wrap: ASX finishes higher, despite tech selloff
• Morgan Stanley reveals some investment trends to watch in 2021
• 5 things to watch on the ASX 200 on Thursday
• These ASX 200 shares are trading at near 52-week highs
• ASX shares on watch: Chinese investment in Australia has dropped 61%

Motley Fool contributor Gretchen Kennedy 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 does China really feel about Australian iron ore and coal? appeared first on The Motley Fool Australia.

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The Splitit Ltd (ASX: SPT) share price has dropped 3.85% at the time of writing and is currently trading at $1.00 a share.

The Splitit five-day average volume of 2.5 million has been exceeded three out of the past five days. Today’s trade volume currently sits at around 2 million shares.

Let’s take a look at some recent happenings to consider what might be moving the Splitit share price and why it’s being so heavily traded.

Why is the Splitit share price lower today?

The Wall Street Journal notes that the Nasdaq Composite Index is about to enter correction territory resulting in a slump for tech stocks.

The Splitit share price is dipping along with its big siblings Netflix Inc (NASDAQ: NFLX) and Facebook, Inc. (NASDAQ: FB) which lost 4.47% and 3.39%, respectively, in yesterday’s trade.

The WSJ points out that the Nasdaq has declined for 3 consecutive weeks losing more than 2% last week. This is likely because investors are betting that growth will slow in the tech space as the coronavirus gradually winds down.

What’s on the horizon for Splitit?

Reflecting on the achievements of 2020, Splitit CEO Brad Paterson said:

“Splitit delivered a breakout year with record financial and operational results in FY20, despite a globally challenging year due to the COVID-19 pandemic…

With financial empowerment and responsibility core to our values, 2020 was a year we refreshed our brand and visual identity that positions Splitit as the only buy-now-pay-later solution to empower shoppers to use their existing credit to pay over time…”

In the latest financial performance report Splitit advised that the company is well funded with plans to continue its “strong growth trajectory”.

As of 31 December FY20, the company held US$92.8 million in cash.

Splitit snapshot

At the current share price, Splitit has a market capitalisation of $486.4 million. There are presently 456.7 million shares outstanding.

Over the past year, the Splitit share price has jumped 123.6%.

More reading

• ASX 200 sinks 2.4%, Afterpay plunges, AMP jumps
• Splitit (ASX:SPT) share price tumbles despite quadrupling its revenue
• The IOUpay (ASX:IOU) share price is skyrocketing 30% today
• Why the QuickFee (ASX:QFE) share price is falling 8% lower today
• Why is the Splitit (ASX:SPT) share price underperforming Afterpay and Zip?

Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to its CEO, Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Gretchen Kennedy 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 Facebook and Netflix. The Motley Fool Australia has recommended Facebook and Netflix. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post Splitit (ASX:SPT) share price sinks as trade volumes bounce appeared first on The Motley Fool Australia.

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The De Grey Mining Ltd (ASX: DEG) share price had its ‘Eureka, I found gold!’ moment in 2020 after a series of positive announcements for its Mallina Gold Project in Western Australia. This led to its share price surging as high as 3,000% from 6 cents to $1.60. 

Today, the company announced new results at its Mallina Gold Project in an area called Hemi. 

De Grey share price down despite continued gold discovery

De Grey reports two new discoveries named Diucon and Eagle. The gold mineralisation shows similar alteration and sulphide development at its adjacent Hemi deposits of Aquila, Brolga, Crow and Falcon. The company has left these zones open and believes it has the potential to rapidly and cost-effectively increase Hemi’s gold endowment with continued drilling. 

De Grey Managing Director, Glenn Dardine commented on the results: 

“The discovery and growth profiles of Diucon and Eagle are good examples, along with Falcon, of the potential for the Company to continue to rapidly increase gold endowment at Hemi. Falcon was discovered in September 2020 and has also grown substantially. The Diucon and Eagle discoveries were announced in January this year after positive results in initial wide spaced RC drilling. Additional RC drilling has now rapidly expanded the mineralised footprints at both zones which both remain open.”

Dardine went on to comment that extensional drilling is continuing at Diucon and Eagle, and that drilling for new discoveries is underway in the Greater Hemi area. 

The bigger picture 

Ultimately, the company plans to complete and evaluate early-stage project de-risking studies to pursue a strategy to develop itself as a Tier 1 Gold Project. This is defined as a project producing a minimum of 300,000 ounces per year with a minimum mine life of 10 years.

To add some perspective, Ramelius Resources Limited (ASX: RMS) produced 230,426 ounces of gold in FY20 with a market capitalisation of approximately $1.1 billion. 

While De Grey is still a gold explorer with a similar market cap, the company could possess significant potential and reserve upside should things go to plan. 

Gold prices holding miners back 

Gold prices have been far from inspiring for ASX gold miners, slumping from highs of US$2075 to US$1,683 at the time of writing. The strong Australian dollar is another factor that is likely to curb the revenue gold miners receive. This has dragged ASX gold mining shares prices across the board.

The De Grey share price is currently trading 1.7% lower at 86 cents per share. 

More reading

• How does China really feel about Australian iron ore and coal?
• Splitit (ASX:SPT) share price sinks as trade volumes bounce
• Credit Suisse just rated the Afterpay (ASX:APT) share price as ‘outperform’
• Leading brokers name 3 ASX shares to sell today
• Why the Food Revolution (ASX:FOD) share price rocketed 26% today

Motley Fool contributor Kerry Sun 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 The De Grey (ASX: DEG) share price lower despite outstanding gold results appeared first on The Motley Fool Australia.

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It might be an awkward time to initiate coverage for the Afterpay Ltd (ASX: APT) share price as tech shares across the board are being sold down.

However, Credit Suisse has done just that today, initiating coverage of the Afterpay share price with an outperform rating. Perhaps this is the positivity the stock needs to stop freefalling. 

The Afterpay share price takes a dive 

The Afterpay share price is once again under relentless selling pressure today. Its shares are down 8.40% at the time of writing, dragging its year-to-date returns to a surprising -13%. 

Much of the weakness in the Afterpay share price is driven by factors outside the company’s control. Rising bond yields has been an overarching factor that has severely impacted ASX 200 tech shares in recent weeks. 

Credit Suisse rates Afterpay as an ‘outperform’ 

Credit Suisse is bullish on Afterpay shares with its analysts expecting Afterpay sales to potentially increase almost six-fold from FY20 levels over the next five years. In FY20, the company delivered underlying sales of $11.1 billion, implying a potential $66 billion sales by FY25. 

While other brokers may have pointed to risks and challenges for buy now pay later players including increasing competition, fund risks and a reduction in e-commerce sales post-COVID, Credit Suisse takes a more optimistic view for the industry. 

The broker points to structural growth for the BNPL industry as a result of higher e-commerce penetration and the shift away from credit cards. It also points to the emerging millennial and Gen Z population whose retail spending power is expected to rise strongly in the coming years. 

Credit Suisse believes Afterpay is poised to gain a higher share of total payments given its position as a leading BNPL player. It also points to Afterpay’s value proposition as being something more than just a payment provider. 

The coverage provided a target price of $124.00, which would represent an upside of ~20% compared to today’s prices. However, it is important to keep in mind that factors such as rising yields could continue to drag the tech sector and the Afterpay share price along with it. 

Afterpay being more than just credit 

Afterpay has a number of exciting plans for FY21. Besides its planned expansion into Europe and continued growth in the US, the company has announced a new app that could branch out existing revenues and products. 

Afterpay Money is a new stand-alone app built to help Australians manage their money. This app comes with classic banking features including a savings account and linked debit account. Users can have a salary paid into the account and add savings goals to better manage their money. While this is an app powered by Afterpay, the deposits will show up in the Westpac Banking Corp (ASX: WBC) balance sheet as part of its partnership. 

More reading

• Why Adairs, Afterpay, IAG, & Livetiles shares are sinking
• ASX 200 up 0.7%: Vocus jumps on takeover update, Afterpay crashes 9%
• The tech-heavy Nasdaq is now in a correction!
• Why the Afterpay (ASX:APT) and Zip (ASX:Z1P) share prices are under pressure again
• Why ASX 200 tech shares could be in for another wild session

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 AFTERPAY T 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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On Monday I looked at three ASX shares that brokers have given buy ratings to this week.

Unfortunately, not all shares are in favour with them right now. Three that have just been given sell ratings are listed below. Here’s why these brokers are bearish on these ASX shares:

Cochlear Limited (ASX: COH)

According to a note out of UBS, its analysts have retained their sell rating and $185.00 price target on this hearing solutions company’s shares. The broker acknowledges that clinics have adapted to the pandemic and expects the loss of deferred surgeries to be minimal. Furthermore, thanks to a recall from a key competitor, it believes Cochlear is winning market share. However, it still feels its shares are expensive and thus sees no reason to change its rating any time soon. The Cochlear share price is fetching $203.81 this afternoon.

Oil Search Ltd (ASX: OSH)

A note out of Macquarie reveals that its analysts have retained their underperform rating but lifted the price target on this energy producer’s shares to $4.10. According to the note, the broker has lifted its estimates to reflect higher oil prices thanks to OPEC holding firm with its production cuts. But it isn’t enough for the broker to become positive on Oil Search. It still doesn’t see value in its shares at the current level. The Oil Search share price is trading at $4.51 on Tuesday.

Virtus Health Ltd (ASX: VRT)

Analysts at Morgan Stanley have retained their underweight rating and lifted the price target on this fertility treatment company’s shares to $5.05. According to the note, the broker has been pleased with the strength of the IVF market, noting that Virtus Health reported strong fresh cycle growth during the first half. However, it appears concerned that government stimulus is propping this up and is waiting to see what happens when it stops. The Virtus Health share price is trading at $5.89 this afternoon.

More reading

• ASX energy shares are booming as OPEC cuts production
• 5 things to watch on the ASX 200 on Friday
• What’s up with the oil price right now?
• 2 strong ASX healthcare shares to buy this month
• Oil back to $100 per barrel? ASX energy shares could rocket

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 Cochlear Ltd. The Motley Fool Australia has recommended Cochlear Ltd. and Virtus Health 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 Food Revolution Group Ltd (ASX: FOD) share price surged as much as 26% earlier today to a high of 4.8 cents. This uplift came after the company announced it would begin selling product in Coles Group Ltd (ASX: COL) and Metcash Limited (ASX: MTS) stores.

At time of writing, the Food Revolution share price has retreated to sit at 4.2 cents – up 10.5% on yesterday’s close. In comparison, the S&P/ASX All Ordinaries Index is up 0.73%.

Let’s take a closer look at what Food Revolution announced and how it is affecting its share price.

What did Food Revolution announce today?

In a statement to the ASX, Food Revolution Group announced the launch of its ‘Juice Lab Super Shots’ in supermarkets around the country. While 9 variants of the product exist, only 3 are being launched at this time — the “Focus”, “Immunity”, and “Digest” varieties.

The products are already on sale at Coles and soon to be on sale at IGA and other Metcash stores. Coles is selling one 60ml drink for $3.50.

Initially, the product is being sold in 160 stores, but the company expects this to expand to over 1800 stores. Additionally, Woolworths Group Ltd (ASX: WOW) has been approached by Food Revolution

Food Revolution Group CEO, Tony Rowlinson, commented:

Being first to market with a ‘all-natural plant based’ product in the Wellness beverage category is a massive achievement. The US who lead the world regarding ‘better for you’ beverages has seen a dramatic growth of ‘all natural, pick- me up shots & tonics’ impacted by COVID -19. Preventative Foods & Beverages is the fastest growing sector within the $4.8Bn US market.

Later in the day, the company issued a clarifying note on its announcement. In it, Food Revolution states sales are exceeding expectations.

The expected run rate when Coles launched the range was that the range would sell 2 units per store per week. Following 3 weeks of the shots being available in over 160 Coles stores, the range of 3 variants are selling 6 to 7 units per store per week. This is 200% higher than expectations.

The company estimates the “[Australian] health and wellness market” to be valued at $650 million.

Food Revolution share price snapshot

Despite today’s impressive gains, Food Revolution has been on a downward trend over the past year. 12 months ago, shares in the supplier were swapping hands at 8 cents each – a 43.8% drop in share price at today’s rate.

In fact, at the end of 2018, the Food Revolution share price was as high as 20 cents.

Food Revolution’s market capitalisation is $35.3 million.

More reading

• DDH1 (ASX:DDH) share price crashes 26% lower after IPO
• Inflation ahead? Some takeaways from the AFR Wealth Summit
• Why Adairs, Afterpay, IAG, & Livetiles shares are sinking
• Why the Redflow (ASX:RFX) share price skyrocketed 50% today
• Cleanaway (ASX:CWY) share price on watch after Veolia legal warning

Motley Fool contributor Marc Sidarous has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of COLESGROUP DEF SET and Woolworths 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 DDH1 Limited (ASX: DDH) share price has hit the ASX boards this afternoon following the successful completion of its initial public offering (IPO).

At the time of writing, the drilling company’s shares are down a very disappointing 26% from its issue price to 81 cents.

What is DDH1?

DDH1 was founded in 2006 and provides a range of specialised drilling services to companies mining or exploring for mineral deposits in Australia.

Management notes that mineral exploration and mining companies have an ongoing need for drilling services to provide them with rock samples for analysis of their mineral content and other geological, chemical, and structural properties.

These companies typically use service providers such as DDH1 rather than undertaking this activity in-house.

Among its 102 customers are the likes of BHP Group Ltd (ASX: BHP), Evolution Mining Ltd (ASX: EVN) Newcrest Mining Ltd (ASX: NCM), Rio Tinto Limited (ASX: RIO), Roy Hill Iron Ore, and St Barbara Ltd (ASX: SBM).

In FY 2020, the company reported pro forma revenue of $249.8 million and EBITDA of $64.5 million. This is expected to grow to $280.2 million and $69.3 million, respectively, in FY 2021.

The DDH1 IPO

DDH1 raised $150 million from investors via the issue of 136,363,636 shares at an issue price of $1.10 per share.

Combined with the other 205,866,215 shares held by existing shareholders, this gave DDH1 a market capitalisation of $376 million upon listing.

According to the prospectus, the proceeds will be used mainly to provide certain existing shareholders with an opportunity to realise part of their investment in the company.

In addition, the company will use some of the funds for the repayment of debt and the payment of certain expenses incurred in relation to the offer.

DDH1 also notes that the listing will give it access to capital markets. It expects this to provide additional financial flexibility to pursue further growth opportunities.

Management commentary

DDH1’s Managing Director and CEO, Sy Van Dyk, commented: “The growth and success of DDH1 to date is testament to the commitment of the whole team, which strives to ensure the safety of all stakeholders while delivering exceptional service to our clients.”

“Our long-term client relationships are built on the provision of quality drilling services and a deep understanding of our client’s business needs. The Company’s significant market position reinforces the strong levels of industry recognition.”

“There is growing demand in the Australian mineral drilling sector for DDH1’s services because of increased exploration, development and production spending by minerals exploration and mining companies. As an ASX-listed company with a strong balance sheet, a committed shareholder base, a disciplined approach to growth and access to capital markets, DDH1 is well positioned to pursue its growth strategy.”

More reading

• Inflation ahead? Some takeaways from the AFR Wealth Summit
• Why Adairs, Afterpay, IAG, & Livetiles shares are sinking
• Why the Redflow (ASX:RFX) share price skyrocketed 50% today
• Cleanaway (ASX:CWY) share price on watch after Veolia legal warning
• The Anteris (ASX:AVR) share price is down today but has soared 150% in 3 months

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 DDH1 (ASX:DDH) share price crashes 26% lower after IPO appeared first on The Motley Fool Australia.

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The Australian Financial Review (AFR) is today hosting a ‘Wealth Summit‘ of eminent figures in the business and investing world.

Here are some of the highlights from the morning session:

Inflation ahead: Goldman Sachs CEO

The chief executive of the famous US investment bank Goldman Sachs, David Solomon, joined the Wealth Summit earlier today. Mr Solomon spoke at length about that dreaded topic of discussion of late – inflation. He told the summit that there are signs that inflation is a threat in many countries that is growing “maybe more quickly than people are expecting”.

Solomon told the Summit that “I do think we’re going to see some inflation… The question is how much, at what pace, how quickly, what are the impacts: that’s much harder to predict”. Interestingly, he also poured cold water on the idea of working remotely. That’s something that (as we all know) has grown immensely in popularity thanks to the pandemic. Solomon thinks that the office offers an environment that encourages spontaneity, something he thinks is not so prevalent in a working-from-home environment.

Overall though, Mr Solomon is bullish on both economic growth and stock markets going forward: “We have an environment that is constructive for economic activity, for asset prices and it’s quite bullish if you are looking at economic activity”.

Allianz economist: Disconnect between markets and economy

Solomon’s bullishness isn’t shared by the chief economist of the Greman insurance giant Allianz though. The AFR reports that Dr Mohamed El-Erian has identified what he sees as a “massive disconnect between financial markets and the economy”. He says this can lead to “market accidents”. One such ‘accident’ he discusses is the Nasdaq Composite (INDEXNASDAQ: .IXIC) correction over the past month: “The NASDAQ entered correction territory. There is excessive risk-taking. No one wants to make mistakes and they can happen quickly”.

Dr El-Erian also stated that there are four ways to describe the state of the economy and markets right now: “dispersion, debt and disconnect and inequality”. It seems Solomon and El-Erian are playing good cop, bad cop.

Peter Costello calls monetary policy “morphine”

Former Treasurer and chair of the Future Fund, Peter Costello, also spoke at the summit. He described the current Reserve Bank of Australia’s monetary policy as “morphine”, noting that rates are at near-zero levels and are backed up by a large quantitative easing (QE) program:

“These rates are emergency rates, they are for emergencies”, he told the Summit. He hopes rates will be lifted much earlier than the 2024 date the RBA has set, saying “We’d hope patients aren’t on morphine when they recover… We want the patient, the economic patient, out of the emergency room”.

More reading

• Why Adairs, Afterpay, IAG, & Livetiles shares are sinking
• Why the Redflow (ASX:RFX) share price skyrocketed 50% today
• Cleanaway (ASX:CWY) share price on watch after Veolia legal warning
• The Anteris (ASX:AVR) share price is down today but has soared 150% in 3 months
• Insiders have been buying Sydney Airport (ASX:SYD) and this ASX share

Motley Fool contributor Sebastian Bowen 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 Inflation ahead? Some takeaways from the AFR Wealth Summit appeared first on The Motley Fool Australia.

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In afternoon trade on Tuesday the S&P/ASX 200 Index (ASX: XJO) is pushing higher again despite a selloff in the tech sector. At the time of writing, the benchmark index is up 0.35% to 6,763.3 points.

Four ASX shares that have failed to follow the market higher today are listed below. Here’s why they are sinking:

Adairs Ltd (ASX: ADH)

The Adairs share price is down 8% to $3.50. A good portion of this decline is attributable to the homewares retailer’s shares trading ex-dividend this morning for its fully franked interim dividend of 13 cents per share. This dividend will be paid to eligible shareholders in a couple of weeks on 25 March.

Afterpay Ltd (ASX: APT)

The Afterpay share price has sunk 7.5% to $102.80. Investors have been selling Afterpay and other tech shares on Tuesday following another poor night of trade on the tech-heavy Nasdaq index. This has been driven by concerns over rising bond yields. The declines have been so heavy that the S&P/ASX All Technology Index (ASX: XTX) is down a sizeable 2.8% at the time of writing.

Insurance Australia Group Ltd (ASX: IAG)

The IAG share price crashed 10% lower to $4.32 before being hurriedly placed into a trading halt. No details have been provided for the halt as of yet, but it could be related to its exposure to the Greensill collapse. Reports in the Financial Times claim that John Hempton raised concerns to APRA about the level of insurance extended to Greensill by IAG.

Livetiles Ltd (ASX: LVT)

The Livetiles share price has fallen over 4% to 22.5 cents. This appears to have been driven by weakness in the tech sector and a broker note out of Citi this morning. Although the broker has a neutral rating and 28 cents price target on its shares, it has warned that another capital raising is likely to be required in the near future due to its cash burn.

More reading

• ASX 200 up 0.7%: Vocus jumps on takeover update, Afterpay crashes 9%
• The tech-heavy Nasdaq is now in a correction!
• Why the Afterpay (ASX:APT) and Zip (ASX:Z1P) share prices are under pressure again
• Why ASX 200 tech shares could be in for another wild session
• ASX All Technology Index teetering on verge of a bear market

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 AFTERPAY T FPO and LIVETILES FPO. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends ADAIRS FPO. The Motley Fool Australia has recommended ADAIRS FPO and LIVETILES FPO. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post Why Adairs, Afterpay, IAG, & Livetiles shares are sinking appeared first on The Motley Fool Australia.

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The Redflow Ltd (ASX: RFX) share price skyrocketed by more than 50% in late morning trade following the company’s largest ever battery sale. At the time of writing, the energy storage company’s shares have dropped back slightly to 7.5 cents, up 38.88%.

It’s worth noting that when news broke out, Redflow shares surged to as much as 9.1 cents, reflecting a 68.5% increase.

What’s pushing the Redflow share price higher?

The Redflow share price reached astronomical highs today as investors welcomed the company’s latest update.

Redflow advised that it has entered into an agreement with international waste recovery company Anergia to supply batteries to its Rialto Bioenergy Facility, located east of Los Angeles. The deal will see Redflow supply Anaergia an energy storage system consisting of 192 zinc-bromine flow batteries. This will enable the facility to store and supply a maximum of two megawatt hours of energy, reducing pressure off the system during peak times.

Once operational, the Rialto Bioenergy Facility will convert 700 tonnes of organic waste and 300 tonnes of biosolids per day into renewable natural gas and fertiliser for farms and vegetable gardens. Redflow stated that it will be North America’s largest landfill diverted organic waste digester facility.

The deal will generate total revenue, excluding taxes, of more than $1.2 million for Redflow. It will be paid in various stages once certain fulfilments have been met. They include signing, shipment, delivery of goods, and contract completion, which is expected to occur sometime in the third quarter of 2021.

What did management say?

Redflow managing director and CEO Tim Harris hailed the company’s largest ever single sale and deployment of batteries. He said:

Anaergia’s Rialto Bioenergy Facility provides the ideal use case for Redflow zinc-bromine flow batteries. Our batteries thrive on heat and hard work, which is exactly what Anaergia requires from them.

This project also enables Redflow to establish a presence in California, where we can offer commercially-proven zinc-bromine flow battery solutions to the broader Californian and US energy market, which is expected to rapidly transition to renewable energy. We are very excited about the potential for Redflow in California and the broader US market.

The Redflow share price is up over 95% in the past 12-month period, and 160% year-to-date.

More reading

• Why the Redflow (ASX:RFX) share price rocketed 39% higher today

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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