The Afterpay Ltd (ASX: APT) share price has continued its poor run and dropped lower again on Thursday.

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

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

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

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

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

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

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

Is this a buying opportunity?

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

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

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

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

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

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

More reading

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

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

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The S&P/ASX 200 Index (ASX: XJO) has certainly had an interesting week. Over the past five trading days, the ASX 200 is up 0.6%. But that 0.6% hides a ‘2-speed market’.

In one lane, we have seen some ASX tech shares like Afterpay Ltd (ASX: APT) sold off. In the other, we have seen strength from the ASX banks and most of the ASX 200’s blue chip shares. One of those points of strength has been the Woolworths Group Ltd (ASX: WOW) share price.

Yes, Woolworths shares are up roughly 5% over the past five trading days. That’s a pretty strong move for an ASX giant like Woolies. To put this in perspective, Woolworths shares have risen 7.54% on today’s prices since 30 May 2014.

So why the sudden rush to buy this grocery giant?

3 reasons why the Woolworths share price might be moving higher

Dividends, baby

Firstly, we did get a market update on Tuesday that might have gotten investors a little hot under the collar. That was a dividend notice for Woolies’ interim dividend of 53 cents per share that will be paid out on 14 April (which will incidentally be the 109th anniversary of the Titanic’s unsuccessful marriage with an iceberg, not that that is relevant).

But investors would have already known that was coming, seeing as Woolies announced it as part of its earnings report last month.

Woolworths is about to get a divorce of sorts

Secondly, perhaps investors are getting excited for Woolworths’ upcoming demerger of its Endeavour Group. The company also informed investors last month that the divorce is scheduled for June 2021 after being delayed by the events of last year. Endeavour Group houses Woolworths’ bottle shop chains (Dan Murphy’s and BWS). As well as a collection of pubs the company owns.

If all goes well, Woolworths shareholders will most likely receive shares of the new company come June. Demergers tend to generate value for shareholders. We saw this displayed in dramatic form when Wesfarmers Ltd (ASX: COL) offloaded Coles Group Ltd (ASX: COL) back in 2018. Both companies have gone on to rise substantially in value from that point.

Perhaps investors are hoping for a repeat performance from Woolworths, and are piling in this week as the date nears.

The old ‘rotation’

Finally, as we have touched on earlier, this could just be the result of investors seeking out safety. The last month or two has seen the market abandon what some might call ‘risky’ shares like Afterpay for shares that could be considered ‘safe harbours’ like Commonwealth Bank of Australia (ASX: CBA), Telstra Corporation Ltd (ASX: TLS) and Woolies. Coles has also had a decent week too.

Often, the large fund managers that are responsible for most of the ASX’s short-term fluctuations tend to move in packs. Some commentators call this a ‘rotation’. It’s possible that all we are seeing in the Woolworths share price over the past week or so can just be put down to that.

More reading

• Afterpay (ASX:APT) share price hits 3-month low: Time to buy?
• 2 ASX 200 shares that keep growing their dividends
• Some of the ASX 200 companies that drove Australian exports to record levels
• Here’s why the Oceania Healthcare (ASX:OCA) share price is falling today
• What is pushing up the Atlas Arteria (ASX:ALX) share price today?

Motley Fool contributor Sebastian Bowen owns shares of Telstra Limited. The Motley Fool Australia owns shares of and has recommended Telstra Limited. The Motley Fool Australia owns shares of AFTERPAY T FPO, COLESGROUP DEF SET, Wesfarmers Limited, 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 Sayona Mining Ltd (ASX: SYA) share price is tumbling today following the launch of a renounceable rights issue. In late afternoon trade, the emerging lithium miner’s shares are swapping hands for 3.7 cents, down 5.1%.

What did Sayona announce?

Investors are offloading the Sayona share price after the company announced a rights issue that will dilute shareholdings.

According to its release, Sayona advised it has launched a renounceable rights issue to raise up to $20.4 million before costs. The 1-for-6 offer will be available to all eligible shareholders with a registered address in Australia and New Zealand.

The company has determined the issue price to be 3.2 cents per share, representing a 10.5% discount on the 30-day volume-weighted average price (VWAP).

Sayona noted that its major shareholder, Piedmont Lithium Ltd (ASX: PLL), will participate in the rights issue.

The funds received will support the company’s growth plans in Québec, Canada. This entails advancing its flagship Authier Lithium Project and the upcoming Tansim Lithium Project together with Piedmont.

The rights issue will close on 20 April 2021, with the new ordinary shares to start trading on 28 April 2021.

Words from management

Sayona managing director Brett Lynch touched on the potential market opportunity, saying:

Québec offers enormous competitive advantages as a lithium producer and downstream processor due to its world-class infrastructure and labour, environmentally friendly hydropower and access to the fast- growing North American battery market.

This funding will help ensure we can cement our lithium projects as key to the region’s clean energy future, with the potential for clean and green lithium hydroxide production direct to Ontario automakers and North Carolina battery makers.

About the Sayona share price

Despite today’s fall, the Sayona share price has lifted more than 400% since this time last year. However, most of the strong gains came from the start of 2021 on the back of renewed optimism in the lithium market.

Sayona commands a market capitalisation of roughly $140 million, with more than 3.7 billion shares outstanding.

More reading

• Why Airtasker, Netwealth, Piedmont Lithium, & Resolute Mining are tumbling lower
• Here’s why the Piedmont Lithium (ASX:PLL) share price is crashing 17% lower
• Piedmont Lithium (ASX:PLL) successfully completes US public offering
• Piedmont Lithium (ASX:PLL) shares in trading halt after proposed US public offering
• Why the Sayona Mining (ASX:SYA) share price is rocketing 25%

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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The Cirralto Ltd (ASX: CRO) share price has plunged almost 20% this month, with no major news announced. What’s behind the Software as a Service (SaaS) company’s share price fall seems to be a mystery.

Even more perplexing is Cirralto’s rise over the last 12 months. An investor who bought shares in the company this time last year would find themselves up by 4,810% today. Even if you bought in at the start of this year, you’d be up by 127%.

So, what’s the go with the Cirralto share price? Let’s take a look.

Crashing on the pay now, pay later wave

Cirralto may well be the horse left at the start gate amongst buy now, pay later (BNPL) providers such as Zip Co Ltd (ASX: Z1P), Fatfish Group Ltd (ASX: FFG) and IOUpay Ltd (ASX: IOU).

All the above-mentioned company’s share prices had incredible gains in February, and Cirralto was alongside them. In fact, in a single day in February, the company reached an intraday high of 22 cents, a 200% gain, without any news having been released.

When the ASX inevitably noticed this unexplained share price rise, the company stated it resulted from social media and market attention because of the BNPL frenzy of the time.

Cirralto provides digital payment services in the business to business (B2B) sphere, with one service that is essentially BNPL for B2B transactions.

Yet, the company hasn’t seemed to rise to the opportunity as investors might have hoped. Next to nothing has been announced from Cirralto since.

Capital raising

While investor excitement in Cirralto bloomed, the company took the opportunity to raise some capital.

On February 22, the company announced an $18 million placement with firm commitments, mostly from institutional investors.

While the $18 million was to develop its BNPL technology, aside from a single update, we haven’t heard much about it since.

Cirralto share price fall from grace

Between 26 February and 2 March, the company’s share price fell by 27.27%.

Cirralto managed to gain 3 cents back when it announced news of an update to its B2B BNPL service, but that quickly petered out with only 0.9 cents able to stick.

The current Cirralto share price is 20% lower than it was at the start of the month, trading for 8.8 cents. Hopefully, any investors who bought at 22 cents are still holding out hope that the company can return to its former glory.

Cirralto has a market capitalisation of around $183.7 million, with approximately 2 billion shares outstanding.

More reading

• Is the Affirm share price dragging ASX BNPL shares lower?
• 5 things to watch on the ASX 200 on Thursday
• Why Zip (ASX:Z1P) and this growth share are in the buy zone today
• Afterpay and Zip were among the most traded ASX shares last week
• ASX 200 crash anniversary: 5 of the best performing shares of the last 12 months

The post Down 20% with no news, what’s with the Cirralto (ASX:CRO) share price? appeared first on The Motley Fool Australia.

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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.

Netflix Inc (NASDAQ: NFLX) has long resisted the traditional broadcast formula of the weekly release schedule, sticking to its roots of releasing an entire seasons’ worth of episodes all at once and encouraging viewers to binge-watch the whole series.

The streaming pioneer now appears willing to at least experiment with other options. In a blog post on Tuesday, the company announced the pending release of new seasons of “two of our biggest unscripted competition series.” Brandon Riegg, Netflix’s VP of unscripted and documentary series, went on to reveal that company was “experimenting with the release format,” forcing viewers to wait for additional episodes to be released. 

The Circle challenged players to “quarantine in their individual apartments and only communicate with each other via social media,” while Too Hot to Handle, offered a twist on the dating competition. In order to win, players had to keep “their hands off each other.” Riegg said the distribution schedule would give viewers “time to dissect and dish on every step of the competition as it unfolds.”

The two programs will premiere their new seasons on Wednesdays in April and June, respectively. The Circle will release four episodes at a time for three successive weeks, beginning 14 April, before the finale on 5 May. Too Hot to Handle will debut new episodes every Wednesday in June.

This isn’t the first such experiment with a weekly release schedule. Netflix released episodes of The Great British Baking Show each week in the US after the episodes originally aired in the UK. It also tested a modified release schedule with Rhythm + Flow.

Walt Disney has been wildly successful using a weekly release schedule with The Mandalorian and WandaVision, which have had longer runs in the Top 10 according to data compiled by Nielsen. This likely contributed to Netflix’s willingness to try a new format. 

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

More reading

• How much does password sharing cost Netflix?
• I want to double your money every 5 years: fundie
• ASX tech shares: A once-in-a-lifetime buying opportunity?
• 3 reasons to buy Netflix stock now
• The tech-heavy Nasdaq is now in a correction!

Danny Vena owns shares of Netflix and Walt Disney. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Netflix and Walt Disney. The Motley Fool Australia has recommended Netflix and Walt Disney. 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.

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There are a few S&P/ASX 200 Index (ASX: XJO) that keep increasing their dividend to shareholders every year.

Not many businesses in the ASX 200 have grown their dividend consistently over the last several years. The COVID-19 year of 2020 alone saw many dividend records come to an end.

But not for these two ASX 200 shares, which just announced further dividend increases:

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

Soul Patts reported its FY21 half-year result today, it announced a 4% increase of the interim dividend to 26 cents.

The investment conglomerate reported that its diversified portfolio showed resilience against market volatility.

It’s the only company in the S&P/ASX All Ordinaries (ASX: XAO) to have increased the dividend every year for the past 20 years. It also boasts that its total shareholder return over the past two decades has been 1,189%, outperforming the market by 5.6% per annum over the last 20 years.

The ASX 200 dividend share continues to make new investment to diversify its portfolio. For example, it just gained exposure to kiwi fruit farming in Western Australian thanks to an acquisition.

A key highlights for the Soul Patts business was the performance of Round Oak Minerals which is benefiting from strong commodity prices such as copper.

Soul Patts managing director Todd Barlow said:

WHSP maintained good cash generating across the portfolio throughout the period impacted by COVID-19. Cash generation from the portfolio continues to be strong and supports our ambitions to maintain increasing dividends over time.

We continue to have liquidity available for new investments and have a strong pipeline of opportunities which we believe will deliver superior risk adjusted returns.

At the current Soul Patts share price, it has a grossed-up dividend yield of 2.7%.

Brickworks Limited (ASX: BKW)

Brickworks is a diversified property business which has buildings product divisions in both Australia and the US.

Today’s result showed that the Australian division is performing strongly, whilst there are signs of higher demand in the US.

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

It is the other two asset groups that funds Brickworks continually growing dividend. During the period, Soul Patts paid $33 million of dividends to Brickworks – an increase of 3%. The defensive portfolio of Soul Patts is expected to continue to generate growing earnings and dividends to Brickworks.

Brickworks also owns a 50% ownership of a good industrial property trust, which saw net trust income increase by 7% to $16 million thanks to rent reviews and additional developments. It also benefited from a $40 million revaluation profit on the value of the properties.

The ASX 200 share hasn’t cut its dividend for 45 years. It currently offers a grossed-up dividend yield of 4.3%.

Brickworks is expecting that the completion of facilities being constructed in its property trust over the next two years will lead to a significant uplift in rental income and the asset value.

More reading

• Some of the ASX 200 companies that drove Australian exports to record levels
• Here’s why the Oceania Healthcare (ASX:OCA) share price is falling today
• Why the Soul Pattinson (ASX:SOL) share price is climbing higher today
• What is pushing up the Atlas Arteria (ASX:ALX) share price today?
• Why Brickworks, McPherson’s, MedAdvisor, & Premier Investments are storming higher

Motley Fool contributor Tristan Harrison owns shares of Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia owns shares of and has recommended Brickworks and Washington H. Soul Pattinson and Company Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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ASX 200 (ASX: XJO) companies have undoubtedly aided Australia’s record $8.1 billion trade surplus in February. The figure, courtesy of the Australian Bureau of Statistics (ABS), represents 3 consecutive months of an $8 billion+ trade surplus.

Both imports and exports grew by 2% in the period. The value of imports rose by $577 million, mainly due to an increase in road vehicles, especially eclectic vehicles. Increasing car sales are seen by some as a reflection of growing consumer confidence. The value of exports increased by $502 million. The main driver of this was metals other than iron (up 38%), cereals (up 14%), meat (up 39%), petroleum (up 28%), coal (up 5%), and textile fibres (up 112%).  A boom for ASX 200 companies.

Cereal exports equalled $1.3 billion for the month. The agricultural product represented 4% of total exports and the figure is the highest on record.

Export growth was heavily offset by iron ore, which declined by $833 million, or 6%. Iron ore exports to China decreased by $1.2 billion alone. Logically, this means iron ore exports to other nations increased by roughly $400 million.

According to the Australian Financial Review (AFR), the decrease in exports to China, once adjusted for the Lunar New Year, are only down 0.9% on the previous month. Total exports to China declined by $990 million, or 8%.

Compared to February 2020, however, iron ore exports are up 60%. Cereals are up a whopping 153% over the 12 months. In total, exports rose 17% in a year.

While the statistics reflect the economy as a whole, a strong influence on them are undoubtedly ASX 200 companies. Let’s examine some of the largest companies in these booming export industries.

The largest ASX 200 companies in the growing export industries

BHP Group Limited (ASX: BHP)

BHP, with a market capitalisation of $209.3 billion, is Australia’s largest miner and largest exporter of iron ore.

For the 6 months ending 31 December 2020, BHP recorded revenue growth of 15% compared to the prior corresponding period (pcp) to total $25.6 billion. Earnings before interest, tax, depreciation and amortisation (EBITDA) jumped 21% to US$14.7 billion.

Cash flow was up 39% on the pcp to equal $5.2 billion.

Despite the fall in iron ore exports in February, its price has been at record highs recently. Driven mostly by ever-increasing Chinese factory output, the iron ore price is sitting at US $160 a tonne, almost double from 1 year ago. As of writing, shares in the mining giant were steady with a price of $44.68. Its value is 43% higher than this time last year.

Woodside Petroleum Limited (ASX: WPL)

Woodside is Australia’s largest ASX 200 petroleum company with a market capitalisation of ($23.7 billion).

In its full-year results for the calendar year 2020, Woodside posted a net loss of US $4 billion. Revenue was down 26% for the year, driven by a 33% decline in the average price of oil per barrel oil equivalent (boe). For 2020, the average boe price was US $32. At one point last year, the price of oil crashed below zero to minus US $40 boe. Oil demand was (and continues to be) severely affected by the coronavirus pandemic.

Currently, crude oil is trading at around US $60 boe. Its price jumped 5% over the last few days due to a cargo ship running aground in the Suez Canal.

As of writing, shares in the petroleum company are up 1.45% and trading for $24.55. Its share price has increased by 41.32% over the last 12 months.

Newcrest Mining Ltd (ASX: NCM)

The large increase in non-iron metal exports was driven largely by gold. The largest gold miner in the ASX 200 is Newcrest Mining. It has a market cap of $20.6 billion.

In its half-yearly results for FY21, Newcrest declared a statutory profit increase of 134% on the pcp. It was $553 million for the period. Underlying profit, also $553 million, was 98% higher.

Revenue of $2.17 billion was up 21%, while earnings per share (EPS) increased 121% over the first half FY20 results.

The stellar results for Newcrest were driven by historically high gold prices. At current, gold is trading in the commodities market for US $1733.58 an ounce. In July last year, the price of gold peaked at US $2068.90 an ounce – it’s highest price in at least half a century.

Currently, the Newcrest share price is $25.21 – up 0.64%. Its value has decreased 2.59% since this time last year.

Whitehaven Coal Ltd (ASX: WHC)

Whitehaven is the largest coal producer in the ASX 200. It has a market cap of $1.9 billion.

In its half-year results for the financial year, Whitehaven posted a loss of $94.5 million. In the pcp the company made a net profit of $27.4 million. The company attributed the loss to the COVID-pandemic and its effect on coal prices.

Revenue was $699.3 million – down 21%, while EBITDA crashed 79% to $37.2 million.

The price of coal has somewhat recovered since its lows of last year. Currently, it is sitting at US $91.50 a tonne. Australian coal is currently being embargoed by China, but there are signs China may ease the total ban on the energy resource from Australia.

At present, the Whitehaven share price is down 0.83% and sitting at $1.795. The share price is 1.79% lower than 52 weeks ago.

GrainCorp Ltd (ASX: GNC)

GrainCorp is the largest agricultural focused business included in the ASX 200 with a market cap of $1.2 billion. It is the largest publicly listed cereals exporter in the country.

2 days ago, GrainCorp announced it was forecasting EBITDA to reach $240 million by 2023-24. Last month, the company updated its earning guidance to indicate it expects to make a net profit between $60 million to $85 million. In FY20, it made a $16 million loss.

The largest cereal exported by Australia (and GrainCorp) is wheat. As of writing, wheat is trading for US $622.25 a bushel on the commodities market. Its price is down 5% over the past month and 2.85% for the year to date.

GrainCorp’s share price is currently up 2.4% and swapping hands for $5.12. Its value is 76.55% higher than this time last year.

More reading

• This primitive commodity is set to overtake the iron ore price rally
• Here’s why the Oceania Healthcare (ASX:OCA) share price is falling today
• What is pushing up the Atlas Arteria (ASX:ALX) share price today?
• ASX 200 up 0.3%: Brickworks impresses, Resolute hammered, Netwealth crashes
• Why the NSW floods failed to push ASX agriculture shares under water

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

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The Airtasker Ltd (ASX: ART) share price has only been with us on the ASX for 2½ days now. And yet, it’s brought us more drama than a Shakespearean tragedy.

As we covered at the time, Airtasker shares gave its institutional and insider investors a very nice debut when it listed 65% above its asking price. But for any investors trying to buy in at the market open, it was a pretty flat day.

But yesterday was when investors really stepped on the gas. The Airtasker share price opened more than 7% higher than where it closed Tuesday at $1.05 and rocketed all the way up to $1.96 in intra-day trading yesterday, a rise of 88%.

That’s also more than 200% above Airtasker’s listing price of 65 cents a share. Airtasker ended up closing yesterday at $1.74 share.

Airtasker share price ‘going to the moon’ and back

But the drama continues today. At the time of writing, the Airtasker share price is down a hefty 18% to $1.435 after opening at $1.75 a share this morning. Talk about making a strong opening statement on your ASX debut!

It is worth stating that such extreme volatility like what we have just discussed isn’t exactly normal on the ASX. Even in this day and age.

In fact, what we have seen over the past 2½ days is redolent of the whole GameStop Corp (NYSE: GME) stock price saga. This saga has been playing out over the past three months or so over in the United States.

If you’re unfamiliar with this story, it involves massive price swings on both the upside and the downside. It was initially fuelled by a Reddit group known as WallStreetBets.

Social influencers at play?

This comparison gels with a report from the Australian Financial Review (AFR) today. The AFR reports that Airtasker’s meteoric rise has been felled by social influencers pushing millennial and Gen Z investors into the stock.

The report says that statements like “Let’s send Airtasker to Saturn” and “The real question is when do we start using rocket emojis?” were being thrown around on an ASX version of WallStreeBets on Reddit called ASX Bets.

Another Gen Z investor apparently told the AFR they bought Airtasker shares “for the LOLs”, and that “we are having too much fun to care”.

Wild stuff.

So what’s next for the Airtasker share price? Well, who the heck knows, to be frank. But it’s certainly one for the popcorn! At the current Airtasker share price, the company now has a market capitalisation of $687.5 million.

More reading

• Airtasker (ASX:ART) share price sinks 17% after explosive IPO
• Why Airtasker, Netwealth, Piedmont Lithium, & Resolute Mining are tumbling lower
• ASX 200 rises, Airtasker soars again, Westpac considers NZ
• Airtasker (ASX:ART) share price surges a further 86% higher
• How does Airtasker (ASX:ART) stack up against its peers?

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.

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The Westpac Banking Corp (ASX: WBC) share price has come under pressure this week following a couple of announcements.

The banking giant’s shares have continued their decline on Thursday and are currently down 0.5% to $24.05.

What did Westpac announce?

Earlier this week Westpac announced that the Reserve Bank of New Zealand (RBNZ) has instructed its Westpac New Zealand business to commission two independent reports concerning its risk governance and liquidity risk management.

It also told Westpac that its New Zealand business would have to hold additional liquid assets until the central bank is satisfied that the previously required remediation work has been effective.

Not long after revealing this news, Westpac released a second announcement revealing that it was now reviewing its New Zealand business and assessing whether a demerger would be in the best interests of shareholders.

Is the demerger a good idea?

This morning analysts at Goldman Sachs advised that they have been looking over the implications of a demerger.

The broker believes there are three key points for consideration in assessing this plan. They are as follows:

1: Growth and returns profile of the New Zealand business:

“We note that in FY20, the New Zealand division of WBC earned an ROE of 8.9% (ex-notables), compared to the broader WBC group (ex-NZ) of 3.2%. In both cases, if we adjust the FY20 BDD/total loans charge for a more normalised level (i.e. c. 20 bp), we note the NZ ROE (ex-notables) was 10.5% and the WBC group (ex-NZ) was 9.4%. However, clearly the RBNZ’s objective of increasing the level of capital in the New Zealand banking system will adversely impact the relative NZ ROE trajectory going forward. To this end, we previously estimated that the FY19 NZ major bank ROE of 14% would fall by 5% to 9% assuming the NZ$20 bn required increase in Tier 1 capital was entirely funded by equity.”

2: Risk of dis-synergies in case of a demerger:

“We think this risk is ameliorated by the fact that the RBNZ has been progressively structurally separating the operations of the New Zealand business from the Australian parents, from the perspective of funding, capital, and, more recently, broader operations, including systems.”

3: Risk of credit rating downgrade for New Zealand business in case of a demerger:

“In the past, we have seen situations where a parent announcing a potential demerger led to credit rating agencies deciding to downgrade the credit rating of the demerged subsidiary. According to the company, WBC’s New Zealand entity gets a three notch rating upgrade from Standard and Poor’s (and one notch from Moody’s and Fitch) due to the ownership by the Australian parent.”

Is the Westpac share price in the buy zone?

After weighing the pros and cons of the demerger plan, Goldman Sachs remains positive on Westpac and has retained its buy rating and $25.94 price target.

Based on the current Westpac share price, this implies potential upside of almost 8% excluding dividends. Including them, this stretches to approximately 12.5%.

More reading

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Motley Fool contributor James Mickleboro owns shares of Westpac Banking. 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 Nanoveu Ltd (ASX: NVU) share price is one of the best performers on the ASX today, rocketing by nearly 90%. This comes after the company announced a milestone new customer will begin using its Nanoshield products.

At the time of writing, shares in the nanotechnology company are swapping hands for 10 cents apiece, up 88.68%.

Nanoshield is a self-disinfecting film composed of PET foil with a special resin layer, containing an active copper component. The film has undergone scientific testing to guarantee its anti-viral and anti-bacterial properties. It has been proven to eliminate 99.99% of OC43, a viral strain affecting humans that is also a surrogate for COVID-19.

Nanoshield can be applied to a number of surfaces including mobile phone covers, tablets, cases, and other products.

What’s driving the Nanovue share price?

Investors are driving the Nanovue share price to a new 6-month high on the back of a positive update.

According to its release, Nanovue has secured leading food and beverage solutions provider, Nestlé Professional as its latest customer.

The partnership will entail Nestlé Professional using customised Nanoshield screen protectors for its out of home coffee machines. In addition, specific Nanoshield products will be available for ‘We Proudly Serve Starbucks’ coffee machines in selected markets.

This follows Nestlé Professional’s own evaluation program which scientifically tested Nanoshield products at its facility in Switzerland. The results are expected to be publicly released in a peer reviewed journal in due course.

While no fixed term contract was signed, the order for Nanoshield is expected to generate $50,000 of revenue for Nanovue.

What did management say?

Nanovue executive chair and CEO Alfred Chong commented:

We are fortunate to be working with Nestlé, such a great global partner, Nestlé who understands the importance of Nanoshield and its efficacy in protecting against viruses– particularly against the COVID-19 virus.

Together both organizations have a strong desire to develop solutions which enable better health and safety outcomes for consumers in the new environment in which we are all now living.

Nestlé Professional head of R&D Zenon Mandralis added:

We continue to explore a wide range of novel solutions such as ordering through apps, touchless machines, and screen protectors to support our customers.

The screen protections are a great solution because they can be easily used on current beverage machines and complement existing enhanced hygiene measures, we already have in place for our coffee solutions.

The Nanovue share price has been accelerating by around 43% year to date however the bulk of those gains have been delivered today. Nanoveu shares reached a 52-week high of 11 cents in May last year. Following today’s gains, the company has a market capitalisation of around $15 million .

More reading

• Why the Nanoveu (ASX:NVU) share price is roaring 14% higher

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 Nanovue (ASX:NVU) share price rockets 89% on new customer win appeared first on The Motley Fool Australia.

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