The Over The Wire Holdings Ltd (ASX: OTW) share price is having an interesting day today. Over The Wire shares are, at the time of writing, up 4.77% to $4.61 a share after closing at $4.40 yesterday afternoon. However, soon after open, the Over The Wire share price rose as high as $4.81, up almost 9% for the day before settling down to the current level.

Today’s move is the latest in what has been a pretty good few months for this company. Over The Wire shares are now up almost 30% since early January, and up almost 54% over the past 12 months. 

So who is this company? And why are Over The Wire shares rising so healthily today?

Over the Who?

Over The Wire is an IT company that provides internet and telecommunications services. The company helps businesses efficiently integrate their technology and communications infrastructure. Its main client base is mid-to-large businesses and enterprises. It has been listed on the ASX since 2015, where it has since gained more than 250% in value.

Over The Wire offers a multitude of internet connectivity options for businesses, including fibre, NBN, mobile data and wireless solutions. It also offers cloud-based products like data storage, VoIP and private networks. The company works with some big-name clients, including names like Ray White, Foodworks and National Storage REIT (ASX: NSR).

Over The Wire impressed investors mightily back in February when it reported its earnings for the 6 months to 31 December 2020. This report included a 17% increase in revenues over the prior corresponding half. Earnings before interest, taxes, depreciation and amortisation (EBITDA) also rose by 28%, while net profits after tax before amortisation enjoyed a 12% bump.

Why are Over The Wire shares climbing today?

At first glance, it’s hard to say exactly why we are seeing significant buying pressure for the Over The Wire share price today. There have been no major announcements or news out of the company since Wednesday. And those were just some paperwork, including a release regarding the company’s recently announced dividend of 1.75 cents per share. 

Zooming out though, and we can see that Over The Wire has had a few pricing spikes over the past 6 months or so. For example, the company closed at the prices of $4.10, $4.44 and $4.17 over 11-15 March last month. Perhaps we are seeing a repeat performance today. Otherwise, the big move upwards this morning might be a result of some institutional buying pressure. Over The Wire is a relatively small company, so any large fund managers buying in would conceivably cause a share price spike. 

ASX trading data does show that roughly 44,000 shares traded hands both yesterday and today so far. That’s a significant increase on the ~2,200 shares that swapped hands on Wednesday.

Whatever the cause, I’m sure Over The Wire investors are a happy lot today. At the current Over The Wire share price, the company has a market capitalisation of $273.8 million, a price-to-earnings (P/E) ratio of 54.2, and a trailing dividend yield of 0.87%.

More reading

• 3 ASX shares to buy for the real estate explosion
• 3 exciting small cap ASX shares for your watchlist
• 2 quality ASX dividend shares to buy next week
• The National Storage (ASX:NSR) share price is at a 52-week high. Here’s why
• 2 high quality ASX shares for retirees to buy today

Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Over The Wire Holdings Ltd. The Motley Fool Australia has recommended Over The Wire Holdings Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post ASX stock of the day: Over The Wire (ASX: OTW) shares bounce appeared first on The Motley Fool Australia.

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

In afternoon trade, the S&P/ASX 200 Index (ASX: XJO) is on course to end the week on a subdued note. At the time of writing, the benchmark index is down 0.1% to 7,053.2 points.

Four ASX shares that are falling more than most today are listed below. Here’s why they are sinking:

Mineral Resources Limited (ASX: MIN)

The Mineral Resources share price is down 5% to $42.92. This follows the release of a disappointing quarterly update this morning. According to the release, during the March quarter the company shipped just 4.1 million wet metric tonnes of iron ore. This compares to the average of approximately 4.8 million to 5.1 million wet metric tonnes per quarter required to achieve its guidance. Management blamed the weak shipments on a shortage of truck drivers caused by border closures.

Origin Energy Ltd (ASX: ORG)

The Origin share price has sunk 8% to $4.31. Investors have been heading to the exits in their droves after the energy company downgraded its earnings guidance for FY 2021. Origin was forced to make the downgrade due to an adverse and unexpected outcome on a domestic gas contract price review and continued headwinds in energy markets’ operating conditions. Origin is now expecting its energy markets division to post a 30% to 35% decline in operating earnings in FY 2021.

Strike Energy Ltd (ASX: STX)

The Strike Energy share price is down 9% to 34 cents. This morning the energy producer announced the completion of a $75 million placement. According to the release, the placement attracted strong demand from local and international institutions, as well as other professional and sophisticated investors. These funds were raised at a 20% discount of 30 cents and will be used to deliver a suite of potentially transformational Perth Basin outcomes.

Whitehaven Coal Ltd (ASX: WHC)

The Whitehaven share price has continued its slide and is down a further 5% to $1.48. Investors have been selling the coal miner’s shares since the release of a production and guidance update this week. That update reveals that the coal miner’s production has been impacted by poor weather conditions and geological challenges. As a result, Whitehaven has downgraded its FY 2021 managed ROM production at the Narrabri mine.

More reading

• ASX 200 down 0.2%: Origin sinks on earnings downgrade, gold miners charge higher
• Mineral Resources (ASX:MIN) share price sinks on activities report
• Here’s why the Origin (ASX:ORG) share price is sinking 5% today
• Why BrainChip, Regis Resources, Whitehaven, & Zip shares are tumbling lower
• Why the Whitehaven Coal (ASX:WHC) share price is plunging 14%

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 Why Mineral Resources, Origin, Strike, Whitehaven shares are sinking appeared first on The Motley Fool Australia.

from The Motley Fool Australia https://ift.tt/3soVKv0

The Field Solutions Holdings Ltd (ASX: FSG) share price is soaring today after the company shared news it has secured $20 million worth of government funding.

The Australian rural, regional and remote telecommunications carrier was awarded the funding by the Federal Government’s Regional Connectivity Program Fund (RCP).

After the news broke, the Field Solutions share price soared 50%. It has since dropped to trade for 16 cents, which is still a gain of 10.71%.

Let’s look closer at the news from Field Solutions.

Delivering broadband to previously underserviced Australian areas  

Field Solutions said the funding from RCP will help it deliver new networks in 5 states and territories where broadband and connectivity are lacking.

The telecommunications company will use RCP funding to build network infrastructure in 12 local government areas. The infrastructure will span New South Wales, Queensland, Victoria, Western Australia and the Northern Territory.

Construction on the projects is expected to begin in August 2021. Field Solutions hopes to have revenue coming in from them as early as the second half of the 2022 financial year.

Field Solutions’ other projects include deploying 5G on selected networks and its aim to grow to more than 160 towers across Australia over the next 18 months.

The company estimates, across all its projects, its total grant funding pool will be in excess of $600 million. That number includes both state and federal funding.

Commentary from management

Field Solutions’ CEO Andrew Roberts commented on the company’s funding from RCP. He said:

[Field Solutions’] community approach to building telecommunications infrastructure has been recognised as a viable, cost-effective and forward looking way of delivering true broadband solutions for rural, regional and remote areas…

Our aim is to deliver feature rich, quality telecommunications services, equivalent to what is available in metropolitan areas.

Field Solutions share price snapshot

The Field Solutions share price is having a party on the ASX lately.

Currently, it’s up by 325% year to date. It’s also up by 750% over the last 12 months.

Field Solutions has a market capitalisation of around $76 million, with approximately 543 million shares outstanding.

More reading

• Field Solutions (ASX:FSG) share price lifts on partnership agreement

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.

The post Why the Field Solutions (ASX:FSG) share price shot up 50% today appeared first on The Motley Fool Australia.

from The Motley Fool Australia https://ift.tt/3e5OAXJ

The Prospect Resources Ltd (ASX: PSC) share price is in negative territory in early afternoon trade. This comes despite the company announcing the completion of a strongly supported placement.

At the time of writing, the lithium producer’s shares are tumbling 8.1% to 17 cents.

Completed placement

Investors are sending Prospect shares lower as they come to grip with impending share dilution from the company.

According to its release, Prospect has received subscriptions to raise $6.5 million from institutional and sophisticated investors. Approximately 41.9 million new ordinary shares will be allocated at an issue price of 15.5 cents apiece. This represents a discount of 16.2% on Tuesday’s closing price of 18.5 cents before the trading halt came into effect.

Prospect highlighted that the strong support came from its largest shareholder, among new international and domestic institutions. The board and the management team also tapped into the company’s register.

The funds raised will be used to complete the acquisition of a further 17% interest in the Arcadia Lithium Project. This will increase Prospect’s holding to a total of 87%. In addition, the remaining monies will be used to advance the development funding process and for capital working purposes.

Settlement of the new shares is expected to take place on 23 April 2021.

Prospect managing director Sam Hosack commented:

The need for further, high-quality lithium projects to be developed in the face of a looming critical shortage in lithium-ion battery materials is becoming increasingly evident to industry and investment markets.

Arcadia is in the unique position of being the only lithium deposit that is expected to operate in the lowest cost quartile via production of both low iron spodumene concentrate for the lithium-ion battery market and high purity petalite lithium concentrate for the glass and ceramics markets.

Prospect share price snapshot

Over the past 12 months, the Prospect share price has accelerated by 70% but is flat year to date. The company’s shares reached a 52-week high of 27.5 cents in August last year, before moving in circles.

Based on the current share price, Prospect presides a market capitalisation of roughly $56.4 million, with 332 million shares outstanding.

More reading

• Why brokers are bullish on the Qantas (ASX:QAN) share price
• Can the Flight Centre (ASX:FLT) share price continue to rise?
• 2 outstanding tech ETFs for ASX investors to buy this month
• Jeff Bezos just revealed Amazon Prime’s latest subscriber number — and it’s a doozy
• Why the Neometals (ASX:NMT) share price has surged to a 52-week high

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.

The post Why the Prospect (ASX:PSC) share price is sinking 8% today appeared first on The Motley Fool Australia.

from The Motley Fool Australia https://ift.tt/32iWl71

It often feels like one step forward and two steps back for the Qantas Airways Limited (ASX: QAN) share price.

This week alone, investors had to juggle concerns that international travel is likely to remain limited until 2024, the cancellation of the AstraZeneca vaccine for under-50s and an upbeat business update from Qantas. 

While it might be a tug-of-war between the bulls and bears for where the Qantas share price will go next, brokers believe the company’s shares are in a position to outperform. 

Qantas business getting back on its feet

Yesterday, Qantas provided a number of updates regarding the ramp-up of its services. To recap its update, the company estimates that domestic travel can reach 80% of pre-COVID capacity in Q4 FY21. Looking ahead, it believes domestic travel levels could reach more than 90% by 4Q21 and 107% in FY22. 

To meet increased demand for domestic travel, Jetstar will deploy six Airbus A320 aircraft on loan from Jetstar Japan. It will also redeploy up to five of its Boeing 787-8 aircraft, usually flown on international routes, to the domestic market from mid-year until international flying returns. Overall, 90% of the group’s aircraft will be active in the fourth quarter, up from 25% during mid-2020. 

Brokers are bullish on the Qantas share price 

Macquarie has come out with an outperform rating and a $6.45 target price for Qantas shares. The broker expects FY22 domestic capacity to be approximately 110% of pre-COVID levels, supported by pent-up leisure demand, the government’s $1.2 billion aviation support package and recovering corporate travel volumes. 

Despite warnings that international travel could be off the cards until 2024, Qantas is optimistic about international borders re-opening from October 2021. 

The broker continues to monitor the COVID vaccine roll-outs in key destinations like the United States and Singapore that formed a big proportion of FY19 available seat kilometres. 

Similarly, Morgan Stanley is overweight on Qantas shares with a $5.90 target price. The broker believes the recovery in domestic capacity will allow for an organic repair to take place in its balance sheet but with a relatively small impact on profitability. Morgan Stanley says this will be supported by strong leisure figures assisted by government incentives and an early recovery in corporate travel. 

More reading

• Can the Flight Centre (ASX:FLT) share price continue to rise?
• Brokers name 3 ASX shares to buy now
• Qantas (ASX:QAN) share price edges higher on business update
• Flight Centre (ASX:FLT) share price falls despite border reopening hints
• Trashed COVID-19 vaccine targets hit ASX travel shares

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

The post Why brokers are bullish on the Qantas (ASX:QAN) share price appeared first on The Motley Fool Australia.

from The Motley Fool Australia https://ift.tt/3e5eeMe

The Flight Centre Travel Group Ltd (ASX: FLT) share price is edging higher on Friday.

In afternoon trade, the travel agent’s shares are up slightly to $17.78.

This means the Flight Centre share price is now up approximately 37% over the last six months.

Can the Flight Centre share price keep in climbing?

The good news for investors is that it may not be too late to buy Flight Centre’s shares.

According to a note out of Macquarie Group Ltd (ASX: MQG), its analysts have retained their outperform rating and $20.00 price target on its shares.

This price target implies potential upside of approximately 8% for its shares over the next 12 months.

What did Macquarie say?

Macquarie has been looking into the travel market and notes that progress is starting to emerge in respect to the restarting of international travel.

It believes this is a big positive for Flight Centre. Particularly given that the company’s international bookings prior to the COVID-19 pandemic accounted for roughly half of its revenue.

In addition to this, Macquarie was pleased with the response to the Australia-New Zealand travel bubble. It notes that airlines have reported that bookings have been strong since the bubble announcement.

Looking ahead, Macquarie is forecasting Flight Centre’s total transaction value (TTV) to reach 50% of pre-COVID levels in FY 2022. After which, it expects it to grow to 85% of pre-COVID levels by FY 2024.

What about other travel shares?

The broker is also bullish on Qantas Airways Limited (ASX: QAN) shares. This morning the broker put a buy rating and $6.45 price target on its shares.

With the Qantas share price currently fetching $5.13, this price target implies potential upside of almost 26% over the next 12 months.

Macquarie believes that a positive travel outlook and the structural business improvements it made during the pandemic will eventually lead to higher levels of profitability.

All in all, Macquarie appears confident both the Flight Centre share price and the Qantas share price can continue their ascent during 2021.

More reading

• Brokers name 3 ASX shares to buy now
• Qantas (ASX:QAN) share price edges higher on business update
• Flight Centre (ASX:FLT) share price falls despite border reopening hints
• Trashed COVID-19 vaccine targets hit ASX travel shares
• These are the 10 most shorted shares on the ASX

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Macquarie Group Limited. The Motley Fool Australia has recommended Flight Centre Travel Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post Can the Flight Centre (ASX:FLT) share price continue to rise? appeared first on The Motley Fool Australia.

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

Exchange traded funds (ETFs) continue to grow in popularity with Australian investors.

In fact, local investors are now estimated to have invested a whopping $100 billion into them, according to the AFR.

And it isn’t hard to see why. Through a single investment, ETFs allow investors to invest in a large number of shares that they wouldn’t ordinarily have access to.

But which ETFs should you add to your portfolio? Two quality options to consider are listed below:

BetaShares Asia Technology Tigers ETF (ASX: ASIA)

The first ETF to look at is the BetaShares Asia Technology Tigers ETF. This popular ETF gives investors exposure to a number of the biggest tech shares in the Asia market.

This is certainly a great space to be in. Technological adoption in Asia is surpassing the West and is expected to underpin strong growth over the next decade.

The BetaShares Asia Technology Tigers ETF is currently invested in a total of 50 companies. This includes Alibaba, Baidu, JD.com, NetEase, and Tencent.

The latter is a multinational technology conglomerate and one of the largest companies in the world. Its communication and social platforms, Weixin (WeChat) and QQ, connect over a billion users with each other and with digital content and services.

VanEck Vectors Video Gaming and eSports ETF (ASX: ESPO)

Another ETF to consider is the VanEck Vectors Video Gaming and eSports ETF. This ETF gives investors exposure to a portfolio of the largest companies involved in video game development, eSports, and related hardware and software globally.

VanEck notes that these companies are in a position to benefit from the increasing popularity of video games and eSports. Furthermore, it notes that the fund gives investors the option to diversify their portfolio by providing opportunities away from tech giants Apple, Amazon, Facebook, Google and Microsoft.

Among its holdings are graphics processing units (GPU) producer Nvidia, games developer Take-Two Interactive (GTA, Red Dead), Electronic Arts (FIFA, Sims, Apex Legends), and Activision Blizzard (Call of Duty).

More reading

• 3 high quality ETFs for ASX investors to buy
• 2 highly rated ASX tech shares to buy this month
• Love tech shares? This ASX ETF is a great buy today
• 2 compelling ASX shares to buy in April 2021
• Is this the best ETF that ASX investors can buy today?

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended BetaShares Asia Technology Tigers ETF. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post 2 outstanding tech ETFs for ASX investors to buy this month appeared first on The Motley Fool Australia.

from The Motley Fool Australia https://ift.tt/3ac307d

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

It took 13 years for Amazon (NASDAQ: AMZN) to add 100 million customers to its Prime customer loyalty program, but it took just 3 years to add the next 100 million.

In his annual letter to shareholders, his final as CEO of the e-commerce giant, Jeff Bezos said Amazon Prime has surpassed 200 million subscribers globally. What’s even more impressive is that Amazon has added more than 50 million new members since January 2020, when Bezos announced the company had exceeded 150 million Prime members.

Amazon announced earlier this year that Bezos will step down as CEO and transition to the role of executive chair, effective in the third quarter of 2021. He used the shareholder letter to provide some insight into his plans. In his new role, Bezos said he will “focus on new initiatives,” without providing specifics. “I’m an inventor. It’s what I enjoy the most and what I do best. It’s where I create the most value.”

He also pushed back against the perception of downtrodden Amazon employees, as they’re frequently portrayed in the media. “When we survey fulfillment center employees, 94% say they would recommend Amazon to a friend as a place to work,” he said. However, in a nod to the recent lopsided vote against a union at an Alabama warehouse, Bezos said, “We need to do a better job for our employees.”

Bezos also shared a letter from customers who originally purchased two shares of Amazon stock for their son’s birthday back in 1997, saying it was “all we could afford at the time.” The letter writers, identified as Mary and Larry, recounted the various stock splits that eventually turned those two shares into 24. We don’t know the exact date of the purchase, since it was redacted, but Amazon shares sold for a split-adjusted high of $5.40 in late 1997.

At current prices, the total value of those 24 shares is more than $80,000, illustrating the power of time for investors.

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Danny Vena owns shares of Amazon. The Motley Fool owns shares of and recommends Amazon. The Motley Fool recommends the following options: long January 2022 $1920.0 calls on Amazon and short January 2022 $1940.0 calls on Amazon. The Motley Fool has a disclosure policy.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

More reading

• Better buy: Microsoft vs. Alphabet
• Analyst: Amazon still has a 70% upside potential over three years
• The stock that I’d hold for the next 5 years: fundie
• Tesla and Palantir were some of the most popular US shares last week
• Better buy: Amazon vs. GameStop

Danny Vena owns shares of Amazon. John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Amazon and recommends the following options: long January 2022 $1920 calls on Amazon and short January 2022 $1940 calls on Amazon. The Motley Fool Australia has recommended Amazon. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post Jeff Bezos just revealed Amazon Prime’s latest subscriber number — and it’s a doozy appeared first on The Motley Fool Australia.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

from The Motley Fool Australia https://ift.tt/3e8zyjW

The Neometals Ltd (ASX: NMT) share price is on the charge today. Shares in the Aussie miner have rocketed 7.9% higher at the time of writing to 48 cents per share – a new 52-week high.

Why is the Neometals share price surging higher?

The big news today was a new agreement to sell titanium to a Chinese titanium slag producer. Neometals has signed a memorandum of understanding (MOU) with Jiuxing Titanium Materials (Liaonging) Co. Ltd.

That news has helped propel the Neometals share price to a new 52-week high during Friday trading. According to the release, the MOU contains an evaluation framework and key commercial terms.

That MOU will help the parties work towards a binding formal offtake agreement for the supply of 800,000 dry tonnes per annum (dtpa) of mixed gravity concentrate or 500,000 dtpa of ilmenite and 275,000 dtpa of iron-vanadium concentrate for a 5-year period on a take-or-pay basis from first production.

It’s a significant agreement that centres on Neometals’ Barrambie Titanium and Vanadium Project. Neometals says that the Barrambie site is the most advanced, undeveloped hard-rock titanium mineral resource in the country.

The Neometals share price is climbing on the back of the update which included a set of next steps. Neometals will mine a 250-tonne bulk sample from Barrambie and transport mixed concentrate to China.

Jiuxing will blend and batch smelt 100 tonnes in its commercial titanium smelter with negotiation of full-form offtake agreements and BOO/T agreements.

Foolish takeaway

The Neometals share price has charged higher to a new 52-week high in early afternoon trade. That comes on the back of a significant milestone deal for its Barrambie Project.

Today’s MOU announcement brings Neometals one step closer to a major, binding supply agreement to a leading Chinese titanium producer.

That has buoyed investors spirits and pushed shares in the Aussie mining group higher.

More reading

• Why the Neometals (ASX:NMT) share price is shooting 8% higher
• ASX lithium shares are surging across the board. Here’s why

Motley Fool contributor Ken Hall 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 Neometals (ASX:NMT) share price has surged to a 52-week high appeared first on The Motley Fool Australia.

from The Motley Fool Australia https://ift.tt/3x27YgC

The Monadelphous Group Limited (ASX: MND) share price surged to a more than one-month high as the so-called “Rio Tinto Limited (ASX: RIO) discount” was unwound.

The Monadelphous share price surged 5.7% to $11.40 during lunch time trade, making it the best performer on the S&P/ASX 200 Index (Index:^AXJO).

In contrast, the Beach Energy Ltd (ASX: BPT) share price is in second place with a 4.6% increase and Altium Limited (ASX: ALU) share price is third with a 3.9% gain.

Monadelphous share price trades without Rio Tinto discount

Investors got excited with the Monadelphous share price after management said it was reached an out-of-court settlement with its client Rio Tinto.

The legal threat was a big overhang on the Monadelphous share price since for nearly a year. An adverse court ruling against the engineering contractor could have brought the group to its knees.

Rio Tinto launched court proceedings against Monadelphous in August last year. The mining giant was claiming $493 million in damages during a fire at its iron ore processing facility at Cape Lambert.

Large liability that’s hard to price

Rio Tinto blamed Monadelphous for the fire, which happened during a maintenance shutdown that was managed by Monadelphous.

While claims tend to be exaggerated ahead of a court battle, Monadelphous would have been in deep trouble even if Rio Tinto won half of what it wanted.

After all, the contactor’s FY20 earnings before interest, tax, depreciation and amortisation (EBITDA) only amounted to around $90 million.

Monadelphous’ settlement provides more than one tailwind

While Monadelphous wouldn’t say how much it had to pay to keep Rio Tinto at bay, it did say that the settlement is covered by the proceeds of insurance.

Both parties now consider the matter resolved.

That’s good news. But what’s also a big positive is that Monadelphous appears to have managed to keep its working relationship with Rio Tinto.

“Monadelphous highly values its long-term business relationship with Rio Tinto,” said the contractor in its ASX statement.

“[Monadelphous] is pleased that this matter has been resolved amicably, and is looking forward to continuing to work closely with this very important customer into the future.”

Is the Monadelphous share price about to re-rate?

I won’t be surprised to see the Monadelphous share price run higher from here. The ASX share has underperformed the market over the past year as it’s barely above breakeven.

In contrast, ASX miners have soared. The Fortescue Metals Group Limited (ASX: FMG) share price surged 82% over the period, while the BHP Group Ltd (ASX: BHP) share price added 51% and Rio Tinto increased by 31%.

There are worries that ASX mining shares are starting to look fully valued. This means laggards that are exposed to high-flying commodity prices could be next to fire up.

Monadelphous share holders like myself will be keeping our fingers crossed!

More reading

• Why you should buy these 2 defensive ASX shares today
• Why Eagers Auto, Mayne Pharma, Monadelphous, & Newcrest are pushing higher
• Eagers Automotive (ASX:APE) share price edges higher on trading update
• ASX 200 down 0.2%: Origin sinks on earnings downgrade, gold miners charge higher
• 5 things to watch on the ASX 200 on Friday

Brendon Lau owns shares of Beach Energy Limited, BHP Billiton Limited, Monadelphous Group Limited and Rio Tinto Ltd. Connect with me on Twitter @brenlau.

The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Altium. 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 Monadelphous (ASX:MND) share price surges as Rio Tinto (ASX:RIO) overhang lifts appeared first on The Motley Fool Australia.

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