The Fortescue Metals Group Limited (ASX: FMG) share price has surged 3.54% higher this morning in a strong start to the year.

Today’s move continues the strong momentum we saw in 2020. Shares in the Aussie iron ore giant more than doubled last year in good news for shareholders.

So, what was the big driver for last year’s move and what’s the outlook for 2021?

Why the Fortescue share price surged in 2020

The major factor pushing Fortescue’s gains last year was a surging iron ore price.

Iron ore prices started 2020 at US$91.50 per tonne but finished the year at US$163.73 per tonne. Those are some impressive commodity price gains, especially in the midst of the coronavirus pandemic.

An infrastructure boom and sustained demand from China were big factors in pushing iron ore prices higher.

Strong iron ore demand has also boosted the Aussie dollar higher after underpinning Australia’s exports despite increasing geopolitical tensions.

How is iron ore looking this year?

No one has a crystal ball, but various sources are expecting iron ore gains to continue in 2021.

Global ratings agency S&P Global anticipates the high iron ore prices seen in recent months to continue in the first quarter of 2021.

The government’s mid-year economic and fiscal outlook (MYEFO) contained conservative forecasts for iron ore at US$55 per tonne. 

CBA senior economist Belinda Allen is predicting US$82 per tonne at the end of Q3 2021. That means a strong iron ore price could continue to support the Federal Budget and the Fortescue share price.

What about the other iron ore miners?

The Fortescue share price wasn’t the only mining share to experience strong gains in 2020.

Both the BHP Group Ltd (ASX: BHP) and Rio Tinto Limited (ASX: RIO) share prices gained but nothing like the scale of Fortescue last year.

BHP shares climbed 9.0% while Rio Tinto jumped 13.4% as at year end versus a 1.5% loss for the S&P/ASX 200 Index (ASX: XJO).

More reading

• ASX 200 up 0.8%: CBA storms higher, Link sinks, tech shares rise
• 5 things to watch on the ASX 200 on Monday
• 2 ASX dividend shares with generous yields
• Disappointments from the ASX 200’s best ever December quarter
• Highlights from the ASX 200’s best ever December quarter

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.

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In afternoon trade the S&P/ASX 200 Index (ASX: XJO) is on track to start 2021 very positively. At the time of writing, the benchmark index is up a sizeable 1% to 6,653 points.

Four shares that are climbing more than most today are listed below. Here’s why they are pushing higher:

BetMakers Technology Group Ltd (ASX: BET)

The BetMakers share price is up 3% to 69 cents. This morning the betting technology company revealed that its placement has completed successfully. BetMakers has raised $50 million (before costs) at $0.60 per new share from sophisticated and institutional investors. These funds are being used to acquire the racing and digital assets of UK-based sport betting company Sportech.

Emerge Gaming Ltd (ASX: EM1)

The Emerge Gaming share price has rocketed 18% higher to 9.3 cents. Investors have been buying the esports and gaming technology company’s shares following the release of an update on its MIGGSTER social gaming platform. According to the release, Emerge Gaming has banked its first cash receipts from the social gaming platform to the value of A$8.3 million. This covers the period 14 November to 31 December.

Infratil Ltd (ASX: IFT)

The Infratil share price is up 5% to $7.24 following an update on its data centres. According to the release, the investment company has experienced a significant increase in the value of its stake in CDC Data Centres. Infratil’s 48.1% investment in CDC is now valued at between A$2,039 million to A$2,334 million. This is up from A$1,597 million to A$1,807 million at 30 September 2020.

Tyro Payments Ltd (ASX: TYR)

The Tyro share price has climbed almost 5% to $3.34 following the release of its latest weekly update. According to the release, Tyro recorded transaction value of $2.626 billion during December. This is an increase of 19% on the same period a year earlier.

More reading

• Why the Infratil (ASX:IFT) share price is trading higher today
• Why the Emerge Gaming (ASX:EM1) share price is rocketing 33% higher today
• Why BetMakers, Flight Centre, Monash IVF, & Sydney Airport are dropping lower
• Here’s why the Betmakers (ASX:BET) share price is on watch today
• Here’s how ASX renewable energy shares have performed in 2020

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 Betmakers Technology Group Ltd and Tyro Payments. 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 Chesser Resources Limited (ASX: CHZ) share price is climbing higher today following a change in management.

In late-morning trade, the gold exploration company’s share price has risen 4.1% to 25 cents.

What did Chesser announce?

In today’s release, Chesser advised that it has appointed Andrew Grove as its new CEO. The change in the management comes as the company moves from its exploration activities to project development, in eastern Senegal.

Mr Grove’s technical, commercial and financial experience in the resources sector spans 30 years. This includes a 14-year tenure at Macquarie Group Ltd (ASX: MQG) mining finance and risk management groups.

Chesser said Mr Grove had a wealth of knowledge in operations across all phases of resources projects. Namely, the Sunrise Gold Dam project in Western Australia and his African gold mining experience at Perseus Mining Limited (ASX: PRU) as group general manager business development and investor relations.

The outgoing managing director, Michael Brown, will continue in an advisory role for the remaining time. Mr Brown’s duties will involve ensuring a smooth transition process for Mr Grove as head of the company.

Mr Grove’s position as Chesser CEO will come into effect on 1 February, 2021.

What did management say?

Commenting on the appointment, Chesser chair Mark Connelly said:

Having confirmed a significant gold discovery at the Diamba Sud project, the board of Chesser is transitioning the group’s focus from exploration to resource definition and project development.

Andrew’s unique blend of technical expertise, substantial project financing and capital markets experience, and exposure to African gold mining projects, makes him well suited to leading Chesser through the critical next phases of its development. Andrew will be based in Perth, Australia and will work closely with myself and the Australian-based directors.

How has the Chesser share price performed?

The Chesser share price has moved strongly over the past 12 months, gaining more than 226% for investors. The company’s shares hit a 52-week low of 4.5 cents last March, and reached a multi-year high of 32.5 cents in October.

Based on current share price levels, the company commands a market capitalisation of around $110 million.

More reading

• 3 mammoth IPOs of 2020
• ASX 200 Weekly Wrap: ASX hits new post-March high
• These were the best performing ASX 200 shares last week
• Why the Perseus Mining (ASX:PRU) share price is gaining today
• Why 2021 may be an even better year for ASX investors

Motley Fool contributor Aaron Teboneras 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.

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At lunch on Monday the S&P/ASX 200 Index (ASX: XJO) is on course to start the year with a strong gain. At the time of writing, the benchmark index is up 0.8% to 6,639.1 points.

Here’s what has been happening on the market today:

Bank shares higher.

The big four banks are on form today and are playing a key role in driving the ASX 200 index higher. While all the big four are recording solid gains, the best performer in the group has been the Commonwealth Bank of Australia (ASX: CBA) share price. At the time of writing, the shares of Australia’s largest bank are up a sizeable 1.4%.

Link share price sinks lower.

The Link Administration Holdings Ltd (ASX: LNK) share price is crashing lower today after the release of an update on a takeover approach by SS&C Technology Holdings. The NASDAQ listed global provider of investment and financial software made a conditional offer of $5.65 per share to acquire the company last month. Although the Link board stated that the offer undervalued Link, it still granted SS&C Technology due diligence. This was in the hope that a superior proposal would be made. Unfortunately, Link has revealed that SS&C Technology has now withdrawn its takeover proposal.

Tech shares rise.

It has been a positive start to the year for the Australian tech sector. Thanks to solid gains by tech shares such as electronic design software company Altium Limited (ASX: ALU) and artificial intelligence services company Appen Ltd (ASX: APX), the S&P ASX All Technology Index (ASX: XTX) is up 0.8% at lunch.

Best and worst ASX 200 performers.

The best performer on the ASX 200 on Monday has been the Pro Medicus Limited (ASX: PME) share price with a 4% gain. This is despite there being no news out of the health imaging software company. The worst performer has been the Link share price with a 15% decline. This follows the withdrawal of SS&C Technology’s takeover approach.

More reading

• Sonic Healthcare (ASX:SHL) share price gets fresh COVID boost
• Why Corporate Travel Management, Link, Strike Energy, & Sydney Airport are dropping lower
• Why the Link (ASX:LNK) share price is dropping 11% lower today
• 5 things to watch on the ASX 200 on Monday
• Disappointments from the ASX 200’s best ever December quarter

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 Altium. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Appen Ltd and Link Administration Holdings Ltd. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends Pro Medicus Ltd. The Motley Fool Australia owns shares of and has recommended Pro Medicus Ltd. The Motley Fool Australia has recommended Link Administration Holdings Ltd. 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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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.

What happened

Shares of biotech Moderna (NASDAQ: MRNA), maker of a COVID-19 vaccine, dropped 31.6% in December, according to data from S&P Global Market Intelligence. 

For context, the S&P 500 Index (INDEXSP: .INX) returned 3.8% last month.

We can attribute Moderna stock’s 32% drop last month to profit taking. After all, shares were up a whopping 581% in 2020 through the end of November, so it wasn’t surprising that some investors took some money off the table in December. Moderna stock ended the year with a 434% gain.  

Shares of Moderna began their long climb early in 2020 when the company announced that it was developing a vaccine to immunise against COVID-19, the disease caused by the novel coronavirus.

As the below chart shows, the stock had a sharp run-up in November. It skyrocketed 126% in that month, driven by a string of great news about mRNA-1273, which was then a messenger RNA-based vaccine candidate.

On 30 November, Moderna announced the positive final results from its phase 3 study. As I previously wrote, “It found its vaccine candidate to be 94.1% effective in preventing COVID-19, and it uncovered no serious safety concerns. Moreover, the company said that it had submitted a request with the US Food and Drug Administration (FDA) for Emergency Use Authorisation (EUA) for mRNA-1273.”

Then on 18 December came “the big news”: Moderna announced the FDA had authorised the emergency use of mRNA-1273. Shares, which had been moving downward throughout December, fell nearly 3% that day. The reason shares dropped on such terrific news is that this news was widely expected and already priced in during November.

The US distribution of the vaccine began the next day, and administration of the first of the two-dose vaccine started on 20 December.

Data by YCharts.

Now what

On 18 December, Moderna said that it expected to deliver about 20 million doses to the US government by the end of December 2020. It also expects to have between 100 million and 125 million doses available globally in the first quarter of 2021, with 85 to 100 million of those available in the US. A total of 200 million doses was ordered by the US government, which has the option to purchase up to an additional 300 million doses.

The rollout of Moderna’s vaccine to the states was slower than anticipated in December, but that’s not its fault. The federal government’s Operation Warp Speed is in charge of distribution.

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

More reading

• Moderna’s stock has surged 488% in 2020: Is it a buy for 2021?
• Here are the US shares ASX investors are buying
• How the 21st century actually started in 2020
• Where will Moderna be in 5 years?
• The most popular coronavirus stock may lose half its value by 2023

Beth McKenna 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 Zip Co Ltd (ASX: Z1P) share price struggled in the second half of 2020, falling 8%. Compare this to the Afterpay Ltd (ASX: APT) share price, which climbed more than 70% over the same period.

The underwhelming second half performance takes credit away from what was otherwise a very solid 50% increase in the Zip share price in 2020. With the successful completion of its $120 million capital raising to fuel growth in all aspects of its business, could 2021 be the year for Zip shareholders? 

Capital raising overview

Zip’s $120 million capital raising was issued at $5.34 per new share. The funds have a broad allocation throughout Zip’s business, from fuelling its strong core business in Australia and New Zealand to investing in global growth and seeking further opportunities to expand into other regions. 

US growth is accelerating

The United States market is the largest addressable retail market in the world, worth more than US$5 trillion. Buy now, pay later (BNPL) companies are eager to disrupt the retail market in the US and capture as much market share as possible. 

The Zip story so far in the US has been largely positive, with the company’s total transaction values in November increasing 205% to US$264.2 million compared to $86.6 million in November 2019. Likewise, Afterpay has experienced similar growth on a percentage basis with its US sales increasing 186% to A$1 billion in November 2020. 

The US will continue to be the centrepiece of Zip’s growth story. The company believes it has strong momentum to continue its growth trajectory through two key levers: further product innovation and strategic relationships with marquee merchants and partners. 

UK launch in progress 

The Zip team has experienced delays with its proposed United Kingdom launch in the second half of 2020. The company believes it has has established the foundations to capitalise on the UK opportunity with enterprise merchants such as JD Sport and Boohoo secured. According to Zip, its pipeline is also gaining traction and its global relationships are being leveraged to drive growth.

The UK market represents a substantial opportunity for Zip, with the region’s retail turnover totalling 394 billion pounds (A$700 billion) in 2019. This compares to Australia’s $392.6 billion in retail turnover in the same year. 

The UK market is shaping up to deliver significant revenue for the already established Afterpay, with its UK sales soaring 315% in November to A$0.2 billion compared to the prior corresponding period. 

Exploring global opportunities 

The real wildcard in Zip’s proposed growth plan is its new markets division. This division hit the ground running with two new investments covering the United Arab Emirates and European regions. Spotii is headquartered in the UAE and focused on the Gulf Cooperation Council consisting of Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the UAE. Another of Zip’s investments, Twisto, is a leading payments platform operational in the Czech Republic and Poland, with the ability to deliver passport licensing across the European Union. 

Foolish takeaway

The Zip share price is currently trading at $5.46 at the time of writing, surpassing its capital raise issue price. The company has ambitious plans to target more geographies, accelerate its US growth and finally launch in the UK in 2021. Currently trading nearly 50% below its 52-week high, it will be interesting to see what 2021 brings for the Zip share price. 

More reading

• These are the 10 most shorted shares on the ASX
• The Afterpay (ASX:APT) share price rocketed 300% higher in 2020
• 3 exciting ASX payment shares to buy in January
• Disappointments from the ASX 200’s best ever December quarter
• Highlights from the ASX 200’s best ever December quarter

Lina Lim has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of ZIPCOLTD FPO. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Avita Medical Inc (ASX: AVH) share price has lost more than 60% over one year, despite the company showing growth and delivering record revenues in FY20.

Is the Avita share price a good buy at this level, and what of its prospects for 2021?

First, the numbers…

Avita is currently a loss-making company. It posted a record full-year revenue of $14.3 million in FY20, which translated to a bottom line loss of $43 million. 

Revenue has kept growing however, with the company reporting a first-quarter FY21 revenue of $US5 million, a 59% increase over the same quarter prior year.

Avita is also in a healthy financial position, and held US$66 million in cash and no debt as at 30 September.

The RECELL flagship product

The company’s business revolves around the rollout of its RECELL technology product in the United States.

RECELL basically aims to replace the traditional skin graft procedure in patients with burns injury. 

The device helps surgeons use a small sample of a patient’s own skin to produce a suspension of spray-on skin cells, which can then be applied to a patient’s burn site in as little as 30 minutes to regenerate a new outer layer of skin.

The procedure uses less than 5% of the size normally required in a graft, and has been clinically demonstrated to heal the burn site as effectively as a skin graft.

The technology was invented by an Australian doctor, Fiona Wood, who used the product in an experimental capacity when treating the victims of the Bali bombings in 2002.

However, it wasn’t mass-commercialised until recently, when the company obtained Food and Drug Administration (FDA) approval in the US in 2018, with first launch only in 2019.

Target market and size

RECELL’s current target market is concentrated in the 134 burn centres in the US, with approximately 14,000 adults with second or third degree burns treated at those burn centres each year.

Despite being approved in Europe, China, and Australia, Avita is not actively selling into these markets – preferring to focus on a roll-out in the US over the next 18 months.

However, in Japan the company is expected to launch in fiscal 2022, with the market size in that country approximately at 6,000 burn victims per year.

Future prospects

Although the current US approval of the RECELL system is limited to adult burn wounds, the applications could be much broader.

Clinical trials are currently under way for RECELL to be used outside burn centres – including for general cosmetic surgery, soft-tissue reconstruction, and paediatrics use.

This gives the company a good tailwind for future revenues.

However , there are other competitive products in burns care in the market, including NovoSorb made by Polynovo Ltd (ASX: PNV).

About the Avita share price

As mentioned, the Avita share price has lost about 60% over the year. The company is dual listed on the Nasdaq.

With the possibilities of the RECELL product just explained and clinical trails under way, who knows where the share price will go to in 2021.

At the time of writing, Avita’s share price is almost unchanged for the day at $4.94. The company commands a market cap of $330 million.

More reading

• Why AVITA, IDP Education, Over the Wire, & Viva Energy shares are dropping lower
• 7 top ASX biomedical shares in 2020
• ASX 200 down 0.4%: NIB jumps, a2 Milk rebounds, WiseTech sinks lower
• These are the 10 most shorted shares on the ASX
• ASX 200 Weekly Wrap: ASX hits new post-March high

Eddy Sunarto has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Avita Medical Limited and POLYNOVO FPO. The Motley Fool Australia has recommended Avita Medical 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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If you thought COVID‐19 was “so 2020”, think again as the Sonic Healthcare Limited (ASX: SHL) share price surged higher on the first trading day of the New Year.

The SHL share price jumped 3.6% to $33.33 in morning trade. This makes the medical diagnostics group the top performer on the S&P/ASX 200 Index (Index:^AXJO).

In case you were wondering, the Pro Medicus Limited (ASX: PME) share price and Evolution Mining Ltd (ASX: EVN) share price are in second and third spots, respectively.

COVID testing blitz boosts SHL share price

Interest in Sonic Healthcare is probably given a boost by the new COVID outbreak in Sydney leading up to Christmas.

While authorities are doing a commendable job in suppressing the outbreak, the virus has spread to neighbouring Victoria. The list of “hotspots” in both states are also growing and governments in both states are urging residents to get tested.

Pressure builds to boost testing rates

The number of tests done in New South Wales in the last 24 hours stands at 22,275. Deputy Premier John Barilaro says testing rates are too low and he wants this to increase to as much as 50,000 a day, reported the Australian Financial Review.

Testing capacity at Victoria is also being ramped up with many turned away after waiting in line for hours to get a test.

There is a very real chance that other states will be joining the rush to test residents.

Rush for testing sites could spread

Queensland Health detected traces of COVID-19 at two more sites in South East Queensland on New Year’s Eve.

The new sites are Bundamba in West Moreton and Merrimac on the Gold Coast. Wastewater tests last week also revealed positive results at seven sites across the state. These include Victoria Point, Oxley Creek, Goodna, Fairfield, Cairns North, Redcliffe and Nambour.

The only way for authorities to get on top of the COVID outbreak is to undertake mass testing. This should be good news for Sonic Healthcare as its labs are among the facilities used by state governments.

Sonic Healthcare benefits from COVID tests

Sonic also undertakes testing in other countries, including the United States. Global cases of COVID-19 have continued to soar despite the approval and roll-out of a vaccination program.

The Sonic Healthcare share price actually came under pressure on the vaccine news as many assumed the number of tests would fall significantly as the vaccinations in the US and UK commenced.

But the number of shots administered are much smaller than originally forecasts and it seems like the naysayers were wrong in their bearish assumptions.

Foolish takeaway

On the flipside, the surge in COVID testing could be a double-edged sword for Sonic. Other routine tests that it usually undertakes will have to make way for the deadly pandemic.

Nonetheless, Sonic is still seen to be better placed to benefit from the fresh COVID outbreak than its peers, like hospital operator Ramsay Health Care Limited Fully Paid Ord. Shrs (ASX: RHC) and drug developer CSL Limited (ASX: CSL).

More reading

• Disappointments from the ASX 200’s best ever December quarter
• 2 ASX blue chip shares tipped as buys for 2021
• Top ASX shares to buy in January 2021
• Here’s how the S&P/ASX All Technology Index fared in 2020
• What happened to the CSL (ASX:CSL) share price in 2020?

Brendon Lau owns shares of CSL Ltd. and Evolution Mining Limited. Connect with me on Twitter @brenlau.

The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of CSL Ltd. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends Pro Medicus Ltd. The Motley Fool Australia owns shares of and has recommended Pro Medicus Ltd. The Motley Fool Australia has recommended Ramsay Health Care Limited and Sonic Healthcare 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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In late morning trade the S&P/ASX 200 Index (ASX: XJO) is on course to start the year on a high. The benchmark index is up 0.9% to 6,645.4 points at the time of writing.

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

Corporate Travel Management Ltd (ASX: CTD)

The Corporate Travel Management share price is down 2.5% to $17.06. Investors have been selling this corporate travel booking company’s shares after COVID-19 spread from New South Wales and into Victoria. This has sparked concerns that the domestic travel market recovery could take longer than expected. In addition, rising cases in Europe and the United States is impacting investor sentiment.

Link Administration Holdings Ltd (ASX: LNK)

The Link share price has sunk almost 13% lower to $4.84 after providing an update on a takeover approach by SS&C Technology Holdings. Last month the NASDAQ listed global provider of investment and financial software made a conditional offer of $5.65 per share to acquire 100% of Link. While management felt the offer undervalued the company, it granted SS&C Technology due diligence. However, this morning it revealed that the takeover proposal has now been withdrawn. 

Strike Energy Ltd (ASX: STX)

The Strike Energy share price is down 3.5% to 27 cents following an update on its West Erregulla operations. According to the release, an unexpected significantly over-pressured gas column has been intercepted. As this has the potential to exceed the current design tolerance of its existing well, the company has suspended drilling while additional engineering is undertaken.

Sydney Airport Holdings Pty Ltd (ASX: SYD)

The Sydney Airport share price is down 1% to $6.33. This also appears to be due to concerns over the recovery of the domestic travel market. With Victoria closing its border to New South Wales, Australia’s busiest travel route will be largely out of action for the near term.

More reading

• Why the Link (ASX:LNK) share price is dropping 11% lower today
• The ASX sectors hardest hit by COVID-19 in 2020
• Here’s how the S&P/ASX All Technology Index fared in 2020
• Why BetMakers, Flight Centre, Monash IVF, & Sydney Airport are dropping lower
• Top fundie names these 2 ASX shares as buys

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 Link Administration Holdings Ltd. The Motley Fool Australia owns shares of and has recommended Corporate Travel Management Limited. The Motley Fool Australia has recommended Link Administration Holdings Ltd. 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 Infratil Ltd (ASX: IFT) share price is lifting this morning after the company released an update on the valuation of its investment in Canberra Data Centres (CDC).

At the time of writing, the Infratil share price is trading up 1.8% at $7.04.

Increase in demand driving value

After the independent valuation, Infratil’s 48.1% investment in CDC is now valued at between $2,039 million to $2,334 million, as at the end of December 2020. This is a substantial increase from the previous valuation in September, ranging between $1,597 million to $1,807 million.

The nearly 28% uplift in value, from the bottom end of valuer estimates, is reportedly a result of accelerated demand in both new and existing customers for its data centre services. This surprise uptake has the company expecting existing data centres to reach capacity sooner than first thought.

Infratil said it would provide further details of CDC’s growth plans at the company’s investor day on 16 February.

The price for performance

The New Zealand-based infrastructure investment company implements an incentive model. The fee payable by Infratil acts as a monetary reward to the entities for delivering growth in the value of the investment.

The revised value of its CDC investment is expected to increase the international portfolio annual incentive fee (IPAIF) to $147.6 million. This is up from $57.7 million since the provided September estimate.

Infratil noted that it has not assessed incentive fees since September in regards to other investments.  These investments include Tilt Renewables Ltd (ASX: TLT), Longroad Energy, Retire Australia, and Australian Social Infrastructure Partners.

The final IPAIF will be payable to investments on 31 March 2021.

What’s next?

The Infratil share price has performed solidly over the last year, returning 39.9% in the last 12 months. This compares to the S&P/ASX 200 Index (ASX: XJO) which fell 2.17%.

The company performance has not gone unrecognised either – with AustralianSuper lobbying a takeover bid back in early December. This offer was rejected by the board, as they believed it undervalued the high quality and unique portfolio of assets.

Infratil expects it will conclude its strategic review of its investment of Tilt Renewables within the next 6 months. The company conveyed the potential of divestment of the renewable energy provider back in December.

More reading

• Here’s how ASX renewable energy shares have performed in 2020
• ASX 200 up again on Wednesday
• Infratil (ASX:IFT) share price on watch after rejecting AustralianSuper takeover approach
• Why the Infratil (ASX:IFT) share price rocketed 21% higher today
• ASX stock of the day: Tilt (ASX:TLT) share price rockets 17% to new all-time high

Motley Fool contributor Mitchell Lawler 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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