The Australian Agricultural Company Ltd (ASX: AAC) share price is up almost 6% in late afternoon trading.

This comes after the company reported some positive figures for its first half results for the 2021 financial year.

Toady’s gains see the stock trading for $1.22 per share, up 9.5% year-to-date.

By comparison the All Ordinaries Index (ASX: XAO) is down 1.2% so far in 2020.

What does Australian Agricultural Company do?

Australian Agricultural Company is the largest integrated cattle producer in Australia. The company owns approximately 6.4 million hectares of farms, feedlots and processing plants across Queensland and the Northern Territory. That’s almost 1% of Australia’s total land mass.

Australian Agricultural Company sells its grass fed and Wagyu beef to both the domestic and export markets. Established in 1824, it claims the honour of being Australia’s oldest continuously operating company. Shares began trading on the ASX in 2001.

What did Australian Agricultural Company report to send its share price higher?

In its first half FY21 report, released this morning, Australian Agricultural Company reported it had delivered positive operating profit of $23.5 million as well as positive operating cash flow of $22.3 million. The company noted this came despite the “uncertainty and impact of COVID-19”.

Its average meat sales price increased by 14.5%, and statutory earnings before interest, tax depreciation and amortisation (EBITDA) profit improved by $18.4 million from the previous corresponding period (pcp) to reach $15 million.

Overall revenue was still down 21% from the pcp due to lower cattle sales and company brandings, which the company said is in line with impacts to Australia’s national cattle herd.

Highlighting the difficult operating conditions amid the global coronavirus pandemic, Australian Agricultural Company’s CEO said:

The full force of COVID-19 hit the restaurant sector right as we began our financial year, with our 16 food service markets severely impacted in a matter of weeks. To overcome the initial challenges and post a positive half is a notable achievement.

However, while this interim result is commendable, we are mindful there are many challenges still to come and a number of complexities to work through over the next 6 months…

Many restaurants remain closed or are having to adapt to reduced volumes and it will likely be some time before we see the food service sector return to normal.

More reading

• ASX 200 rises on mixed Thursday
• The Polynovo (ASX:PNV) share price is climbing higher today. Here’s why.
• ASX stock of the day: 8I Holdings (ASX:8IH) shares spike on profit surge
• Why the Bionomics (ASX:BNO) share price surged 8% higher today
• Metal Hawk (ASX:MHK) share price surges 35% on IPO debut

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The S&P/ASX 200 Index (ASX: XJO) rose by 0.25% to 6,547 points today.

Here are some of the highlights from the ASX:

SEEK Limited (ASX: SEK)

The company released an update about FY21 today at its annual general meeting (AGM).

It said that its revenue in the year to date had been “well above” the assumptions underlying the illustrative scenario given when it released its FY20 report.

SEEK Australia and New Zealand, SEEK’s online education services (OES) and Zhaopin have performed well above the illustrative assumptions with SEEK Asia also above those assumptions but to a lesser extent.

The ASX 200 business said that its revenue growth has been driven by a mix of rehiring of roles during previous months and growth in some sectors.

SEEK also said its early stage ventures (ESV) continue to perform well which has increased its conviction levels to re-invest.

Excluding significant items, SEEK has provided guidance of revenue to be “in the order” of $1.6 billion, SEEK’s earnings before interest, tax, depreciation and amortisation (EBITDA) is guided to be in the order of $400 million, SEEK Investments’ ESV losses to be in the order of $55 million (being SEEK’s share of losses) and reported net profit after tax (NPAT) is guided to be in the order of $50 million.

The SEEK share price dropped by 1%.

FlexiGroup Limited (ASX: FXL)

FlexiGroup announced a strategic partnership with Mastercard and also provided a business update.

The company announced that the partnership with Mastercard will expand the application and distribution of bundll, which allows for buy now, pay later (BNPL) anywhere that Mastercard is accepted.

Under the agreement, Mastercard will work with its partners to drive adoption and will support the development of the open-loop, work anywhere, pilot.

This agreement is for five years and FlexiGroup expects to deliver a sustainable growth path for humm.

Richard Wormald, division president of Mastercard Australasia, said: “While there are lots of BNPL platforms around the world, this latest development for bundll is differentiated in the way it is able to partner with existing banking systems and provide BNPL technology and products without needing to sign up local retailers, while still generating a sustainable revenue stream. With the growth of BNPL, Mastercard understands that many issuers around the world are looking to solve for this increasing consumer preference.”

FlexiGroup also said that its portfolio continues to perform strongly with a downward trend in the 30+ days arrears performance for all segments of its business at September 2020 as a result of a prudent approach to credit risk and approvals.

In light of the improved credit performance and cost management, FlexiGroup expects the FY21 first half profit to be ahead of the prior corresponding period’s $34.5 million net profit.

The FlexiGroup share price finished up 5.6%.

Polynovo Ltd (ASX: PNV)

Polynovo has announced that it’s entering the European markets of Belgium, Netherlands, Luxembourg (Benelux) and Sweden through an extension of its partnership with PolyMedics Innovations (PMI) in Germany.

PMI recently placed its fourth stock order with PolyNovo since January 2020. PMI’s track record this year has convinced PolyNovo that PMI can quickly bring further growth to European revenue with the four announced additional countries.

Mr Christian Planck, the PMI CEO, said: “Our customers in the DACH region have quickly become believes in the NovoSorb BTM and we managed to capture a significant market share this year. Therefore, our team is excited about the possibility of bringing NovoSorb BTM to even more customers and patients in these additional four European markets. This geographical expansion marks an important milestone in our plan to become a leading provider of innovative burn and wound care solutions in Europe.”

The Polynovo share price rose around 3% today.

More reading

• The Polynovo (ASX:PNV) share price is climbing higher today. Here’s why.
• Why ASX bank share dividends might be surging soon
• China is a much bigger threat to the ASX bull run than COVID
• Global fund managers are bullish on these 3 things
• SEEK (ASX:SEK) share price flat despite FY 2021 guidance upgrade

Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of POLYNOVO FPO. The Motley Fool Australia has recommended FlexiGroup Limited and SEEK Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Polynovo Ltd (ASX: PNV) share price has lifted higher today on news of an international expansion. Polynovo advised the ASX it was expanding operations into multiple new countries with its ongoing partner, PolyMedics Innovations (PMI). The Polynovo share price surged up more than 4% in earlier trading before retreating to $3.02, up 2.7%, at the time of writing.

The company develops medical devices internationally, mainly to countries including Australia, New Zealand, the United States and Europe. Polynovo’s primary product is the NovoSorb biodegradable temporising matrix (BTM) used to close surgical wounds. The company also has a number of other products under development and in use. 

About the expansion

Through partnership with PolyMedics, Polynovo will expand into new countries in Europe including Belgium, the Netherlands, Luxemburg and Sweden.

The existing alliance with PolyMedics is based out of Germany and has helped Polynovo reach markets such as Germany, Switzerland and Austria. PolyMedics will boost its sales teams to extend its existing service into the new regions.

What did management say?

PolyNovo managing director Paul Brennan welcomed the expansion, saying:

We are very pleased to extend our partnership with PMI. They are an excellent sales organisation with very good relationships with surgeons not only in DACH (Germany, Austria, Switzerland) but also in Sweden, Belgium and the Netherlands.

PolyMedics CEO Christian Planck added:

Our customers in the DACH region have quickly become believers in NovoSorb BTM and we managed to capture a significant market share this year. Therefore, our team is excited about the possibility of bringing NovoSorb BTM to even more customers and patients in these additional four European markets.

This geographical expansion marks an important milestone in our plan to become a leading provider of innovative burn and wound care solutions in Europe.

The Polynovo share price

Overall this year, the Polynovo share price is up more than 64% and has almost fully recovered from the COVID-19 crash in March. Today’s climb to $3.05 sees it closing in on the all-time high price of $3.28.

The Polynovo share price has been bullish twice in the past 2 weeks, surging up 6% only a few days ago as the company announced FDA approval on a new clinical trial.

That positive news drove the share out of its 6-month range of between $2.10 and $2.77. Today’s expansion news has added to the momentum, with the Polynovo share price now seeing overall gains of 23% in November alone.

More reading

• ASX 200 rises on mixed Thursday
• Why Aurelia Metals, PolyNovo, SKYCITY, & Tyro shares are dropping lower
• Why the Polynovo (ASX:PNV) share price up 6% higher today
• Why Elders, Jumbo, Northern Star, & PolyNovo shares are charging higher
• 5 things to watch on the ASX 200 on Friday

Glenn Leese has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of POLYNOVO FPO. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The 8I Holdings Ltd (ASX: 8IH) share price has spiked today. 8I shares are up 8.33% to 20 cents a share at the time of writing, after surging as high as 22 cents a share earlier in the trading day. 8I shares closed at 18 cents a share yesterday and opened at 20 cents this morning, where they have trended back to after this morning’s spike.

It’s been an interesting year for this company, share-price wise. It started 2020 at 9 cents a share, where it has hovered for most of the year, with occasional swings to 10 cents and 12 cents a share. Last month, 8I shares briefly spiked as high as 36 cents a share, but have trended lower since.

8I has had a rough trot since the company’s initial public offering (IPO) on the ASX back in November  2015 (almost exactly 5 years ago). 8I hit the ASX boards at $1 a share and briefly rose as high as $1.38 over the subsequent month or two. But it has been downhill ever since, with the shares reaching a low of 5.5 cents last year.

So why is the 8I share price spiking today?

Who is 8I Holdings?

8I is a Singapore-based company that claims to have a vision to “change the financial education landscape”. It was founded in 2006 when (in the company’s words) “8 individuals decided to come together to analyse companies in the stock market using the principles of value investing, a concept that was not known to many back then.” 

As you might have gathered, 8I is in the funds management business. It has one flagship fund – Hidden Champions Capital Management – which is based in Singapore and invests in public companies in the Asia-Pacific region. According to the company, its strategy is based on “value-adding, nimble and scalable growing ‘Hidden Champions’ that are typically at the forefront of their markets to achieve long-term investment returns.”

In addition to this fund, 8I also offers a financial education technology by the name of VI. VI is a proprietary stock analysis tool that analyses traditional financial data and claims to simplify “the complex stock analysis and decision-making process for equity investors into easy-to-use visuals”.

This technology is operated through a separate company called 8VI Holdings Ltd (ASX: 8VI), of which 8I is the majority shareholder.

Why are 8I shares spiking today?

Today’s dramatic share price move can likely be put down to two reasons.

First, the company’s half-yearly interim report, covering the 6 months to 30 September 2020, which was released on Monday night. In this report, 8I told investors that revenue and investment income came in at S$17.88 million, up 272% from the same period last year. That helped profits after tax rise 655% from the same period in 2019 to S$6.59 million.

The company attributed the growth in revenue and investment income to the improved performance of its restructured Hidden Champions Fund.

Second, the 8VI Holdings share price has been on a tear in recent days. As we discussed earlier, 8I holds a significant stake in 8VI, so any gains that 8VI make also boost the valuation of 8I itself.

8VI shares are up 16.18% just today, and have climbed almost 80% this week alone, giving the company a market capitalisation of $63.4 million. 8I Holdings itself has a current market cap of $70.9 million.

More reading

• Up 20% today, what’s driving the 8VI (ASX:8VI) share price?

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. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Bionomics Ltd (ASX: BNO) share price has run higher today after the company announced it has entered an agreement to licence its oncology drug candidate, BNC101, to Carina Biotech. At the market’s close, the Bionomics share price had surged 8.33% to 13 cents.

What’s pushing the Bionomics share price?

The Bionomics share price has marched higher today after the company advised that it will exclusively licence BNC101 to Carina. The agreement will see the development of Chimeric Antigen Receptor T-cell (CAR-T) therapy using Bionomics’ flagship drug. CAR-T is known to harness the body’s immune system to fight against cancer.

According to the company, BNC101 is a high-quality, humanised monoclonal antibody to LGR5, which creates copies in cancer stem cells. These occur within solid tumours including colorectal, breast, pancreatic, ovarian, lung, liver and gastric cancers. Bionomics reports that the drug has the potential to guide CAR-T therapeutic development.

Under the agreement, Carina will fund all research and development activities. Bionomics is eligible to receive up to $118 million in clinical and development milestones plus royalties. This is based on the terms that Carina can develop and market the new therapy.

Should Carina decide to sub-licence the CAR-T treatment, Bionomics will be eligible to share in the sub-licencing revenues in early clinical development. If later stages of development are reached, Bionomics has advised it will receive “a substantial double-digit portion of revenues”.

Management commentary

Bionomics Executive Chair, Dr Errol De Souza, spoke about the new partnership. He said:

We are very excited to have entered into this agreement with Carina Biotech given the opportunity CAR-T therapy offers. This innovative approach has the potential to create a new cancer treatment.

Bionomics retains BNC101 for other types of therapies and is continuing to search for such opportunities. This is in keeping with our corporate strategy to leverage value for our clinical oncology assets by working with other companies bringing proprietary technology to the table and providing full funding to progress development of our assets.

About the Bionomics share price

The Bionomics share price has fallen from grace over the past few years. In 2018, shares in the biopharma company reached as high as 59 cents, with today’s closing price representing nearly an 80% decline from these levels.

The company has a market capitalisation of $95.6 million. Only time will tell whether the Bionomics share price can regain its former glory.

More reading

• Metal Hawk (ASX:MHK) share price surges 35% on IPO debut
• Why the Elanor Retail Property Fund (ASX:ERF) share price is up 12% today
• Why the Aristocrat Leisure (ASX:ALL) share price can go higher from here
• Top brokers name 3 ASX shares to sell today
• Why ASX bank share dividends might be surging soon

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. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Metal Hawk Limited (ASX: MHK) share price has shined on its ASX debut, and is currently trading at 27 cents –  a 35% premium to its initial public offering (IPO) price. The mining company has, earlier today, floated its shares on the ASX and raised $5.5 million by issuing them at 20 cents each.

More about the Metal Hawk IPO

Metal Hawk is a 12-month old company that owns three gold projects in Western Australia’s prolific eastern goldfields region – namely Kanowna East, Emu Lake and Clinker Hill. Prior to the IPO, the company had secured the non-lithium rights for the Emu Lake exploration from Lithium Australia (ASX: LIT). 

Metal Hawk’s portfolio also comprises the Viking gold project – in which it recently entered a joint venture with Chalice Gold Mines Limited (ASX: CHN), allowing Chalice to earn up to 70% equity by sole funding the project over 4.5 years. This enabled the project to continue without depleting Metal Hawk’s funds.

Metal Hawk has chosen to float this year to take advantage of strong price performances in gold and nickel sulphides. Although the gold price has primarily been driven by the shift to safe assets caused by the pandemic, the nickel market is mainly fueled by expectations of increasing demand for electric vehicle batteries in the future.

More background on Metal Hawk

Metal Hawk is a Western Australian mineral exploration company focused on early stage discovery of gold and nickel sulphides. Metal Hawk holds interests in a number of quality projects in the Eastern Goldfields and Albany Fraser regions.

The company recently signed an earn-in and joint venture agreement with Western Areas Ltd (ASX: WSA), whereby Western Areas has the right to earn a 75% interest in three of Metal Hawk’s projects; Kanowna East, Emu Lake and Fraser South by spending $7 million over 5 years.

As mentioned, in September 2019, Metal Hawk also signed an option and earn-in agreement with Chalice Gold Mines under which Chalice can earn up to 70% interest in the Viking Gold project by spending $2.75 million on exploration over 4.5 years.

More reading

• 2 ASX shares making all-time highs today
• Why Aristocrat Leisure, Chalice Gold, Westpac, & Whitehaven Coal shares are charging higher
• Why the Chalice Gold Mines (ASX:CHN) share price is rocketing 16% higher
• Here are the 10 most shorted shares on the ASX
• These are the 10 most shorted shares on the ASX

Motley Fool contributor Eddy Sunarto has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Elanor Retail Property Fund (ASX: ERF) share price is shooting higher today, up 12.24% to $1.10 in late afternoon trading. This follows the company’s ASX announcement this morning reporting a major asset sale and the launch of an on-market share buyback scheme.

Today’s gains see the Elanor share price up more than 23% so far in November. Having taken a big wallop during the COVID-19-panic selling in February and March, shares remain down 10.7% year-to-date.

By comparison, the broader All Ordinaries Index (ASX: XAO) is down 1.3% so far in 2020.

What does Elanor Retail Property Fund do?

Elanor Retail Property Fund is a real estate investment trust (REIT). The company invests in Australian retail shopping centres that generate strong income. Elanor currently owns non-discretionary focused retail assets with a combined valuation of $317 million.

Shares of Elanor Retail Property first began trading on the ASX in 2016.

What’s driving the Elanor share price higher?

Elanor advised it had exchanged contracts for the sale of its Auburn Central Shopping Centre to Shopping Centres Australasia Property Group (ASX: SCP).

The $129.5 million price tag represents a 4.9% premium to the book value of $123.5 million.

Located in New South Wales, Auburn Central is anchored by Woolworths Group Ltd (ASX: WOW), ALDI and Tong Li supermarkets.

Settlement is expected in mid-December 2020.

Elanor reports it will use the money to repay $94.1 million in debt, reinstate distributions suspended due to COVID-19’s impact, and start an on-market buyback of up to 10% of its issued shares.

Management commentary

Commenting on the sale, fund manager Michael Baliva said:

Since ERF acquired the property in 2016, we have been focused on executing our strategy to unlock value through actively repositioning the asset. This has resulted in Auburn Central being converted from a large sub-regional asset to a triple-supermarket neighbourhood centre.

The sale of Auburn Central generates a 24.5% IRR to ERF investors and highlights our capability in unlocking the value of our assets through actively repositioning the retail mix to nondiscretionary focused offerings.

Elanor Investors Group CEO Glenn Willis added:

ERF is a “value-add retail real estate fund” with a focus on retail assets that provide opportunities for strong investment returns. We are pleased with the sale of Auburn Central following the successful execution of the fund’s repositioning strategy at the asset. The fund is well-positioned to grow through the acquisition of further high-quality, value-add retail properties.

More reading

• These beaten-up shares are about to pick up: Moody’s

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of Shopping Centres Australasia Property Group and Woolworths Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Aristocrat Leisure Limited (ASX: ALL) share price could be going higher from here according to one leading broker.

In afternoon trade the gaming technology company’s shares are down slightly to $34.51, but analysts at Goldman Sachs believe there’s decent upside to come for its shares.

What has been happening?

On Wednesday Aristocrat released its full year results for FY 2020 and, as expected, revealed a sizeable drop in profits because of the COVID-19 pandemic.

In case you missed it, for the 12 months ended 30 September, Aristocrat reported a 5.9% decline in operating revenue to $4,139.1 million and a 31.8% reduction in earnings before interest, tax, depreciation and amortisation (EBITDA) to $1,089.4 million.

This was driven by a 32% decrease in Aristocrat Gaming (Land-based) revenue due to the impact of COVID-19 customer venue closures and social distancing restrictions. This revenue decline was almost offset by an impressive performance by Aristocrat Digital segment.

The latter segment delivered double-digit growth in bookings, revenue, and profit during FY 2020. Management noted that its RAID: Shadow Legends game continued its impressive growth trajectory, generating US$368 million in bookings.

Was this a good result?

According to a note out of Goldman Sachs, Aristocrat Leisure beat its forecasts for both revenue and earnings in FY 2020. It was also impressed with its cash conversion and notes that its net leverage remained steady.

In light of this, the broker has held firm with its buy rating and lifted its price target on the company’s shares to $37.00.

This price target implies potential upside of approximately 8.5% over the next 12 months including dividends.

Goldman commented: “Despite the challenging backdrop, ALL delivered a high quality result in our view given i) demonstrated scalability of digital, with margin expansion, and significant ABPDAU growth despite lower DAU (focus on quality), ii) better-than-expected US land based performance, both in terms of outright sales and growing its install base while maintaining marketing leading avg fee per day, and iii) strong cashflow generation in the half while balance sheet strength clearly remains a highlight.”

“Looking ahead, management remain focused on positioning ALL for further growth, targeting to maintain/enhance land based share, bookings growth across digital, and continued D&D investment (above historical levels) to drive sustained long term growth. Therefore we continue to view ALL as well-placed to leverage off its strong balance sheet and above peer D&D spend to capture further share gains or M&A opportunities,” it concluded.

More reading

• ASX 200 rises again on Wednesday
• Why Aristocrat Leisure, Chalice Gold, Westpac, & Whitehaven Coal shares are charging higher
• ASX 200 up 0.35%: Aristocrat FY 2020 results, big four banks higher, a2 Milk update
• Aristocrat Leisure (ASX:ALL) share price in focus after FY 2020 results
• 5 things to watch on the ASX 200 on Wednesday

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. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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

Unfortunately, not all shares are in favour with them right now. Three ASX shares that have just been given sell ratings by brokers are listed below.

Here’s why these brokers are bearish on them:

ASX Ltd (ASX: ASX)

According to a note out of Morgan Stanley, its analysts have retained their underweight rating and cut the price target on this stock exchange operator’s shares to $67.90. The broker has reduced its earnings estimates on the belief that the company will have to increase its operating expenses to ensure the stability of its trading systems. Particularly given the company’s plan to replace the CHESS distributed ledger in the coming years. In addition to this, lower interest rates are expected to weigh on its margins slightly. The ASX share price is fetching $81.75 this afternoon.

St Barbara Ltd (ASX: SBM)

A note out of Macquarie reveals that its analysts have retained their underperform rating and cut the price target on this gold miner’s shares to $2.30. According to the note, the broker has reduced its earnings estimates after downgrading its gold price forecasts for the coming years. It believes improvements in 10-year U.S. bond yields will put pressure on the precious metal. The St Barbara share price is trading at $2.58 on Thursday.

United Malt Group Ltd (ASX: UMG)

Analysts at Credit Suisse have downgraded this commercial maltster’s shares to an underperform rating but lifted the price target on them to $4.23. This follows the release of its FY 2020 results this week. Although that result was ahead of its expectations, it notes that this was partly due to government assistance and temporary cost reductions. Something which may not be repeated in FY 2021. Credit Suisse also appears to have concerns over a contraction in the craft brewing market. The United Malt share price is changing hands for $4.59 this afternoon.

More reading

• Why the United Malt (ASX:UMG) share price has lifted 4% higher today
• ASIC rips into ASX again as more systems go down
• What caused the ASX outage on Monday trading?
• ASIC to investigate if ASX is fit to hold market licence
• ASX trading halt to remain in place for the rest of the day

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. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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One of the biggest shifts in sentiment we have seen so far in 2020 on the S&P/ASX 200 Index (ASX: XJO) is arguably in the banking sector. ASX bank shares have had a shocker of a year, if the numbers are anything to go by.

The ASX’s largest bank, Commonwealth Bank of Australia (ASX: CBA) actually hasn’t faired too badly. The CBA share price was trading at $79.88 at the start of the year, just a whisker above the current share price (at the time of writing) of $77.91. However, the high of $91.05 that CBA saw in February (just before the coronavirus-induced market crash) still looks out of reach (for now anyway).

But it’s a different story for the other big four banks. The National Australia Bank Ltd (ASX: NAB) share price is sitting at $22.47 today after rising more than 15% over the past month. But that’s still 8.5% below where NAB shares were on 2 January, and more than 18% off their February highs. It’s a similar story with Australia and New Zeland Banking Group Ltd (ASX: ANZ) shares.

But Westpac Banking Corp (ASX: WBC) is arguably the ASX bank that has faired the worst. The Westpac share price is today asking $19.79 after climbing 14% since 4 November. But Westpac is still more than 18% below where it was at the start of 2020, and more than 23% off its February highs.

ASX bank dividends to make a return?

One possible explanation for ASX bank shares being sold off could be due to the dividends they are paying in 2020 and beyond (or lack thereof). ASX banking shares have always had a reputation as income giants on the ASX 200, typically offering grossed-up yields between 5% and 8% in any given year.

But 2020 has seen dividends from this sector dry up considerably. Take Westpac. It didn’t even pay an interim dividend in 2020 for the first time in at least three decades. And its final dividend for 2020, to be paid on 18 December, will come in at 31 cents per share, down from 80 cents per share in 2019.

But that could shift in 2021.

Part of the reason banking dividends have been so scarce in 2020 is because of APRA (the Australian Prudential Regulatory Authority). Back in May, APRA actually told (‘guided’ was the official term) the ASX banks to keep their dividends low for the sake of stability in the financial sector. As part of this ‘guidance’, APRA ‘suggested’ banks keep their payout ratios below 50% of earnings.

Dividend mana from APRA

But according to reporting in the Australian Financial Review (AFR) yesterday, APRA might be about to loosen this guidance. The AFR reports that APRA chair, Wayne Byres, speaking at the AFR’s Banking and Wealth Summit, told participants APRA will “soon revise the 50 per cent earnings cap on dividend payouts to shareholders, indicating this may be relaxed”.

The AFR quotes Mr. Byres as stating the following:

On the whole, I think the outlook has improved, bank capital has certainly increased, the economic situation looks more positive…We don’t want to be complacent, but I think it is time we look at the issue [of the cap] again.

If that does come to pass, we could well see dividends from the big four banks tick up again in 2021 and beyond. If you were wondering why ASX banking shares have been so dramatically on the rise in November so far, you might have just found your answer.

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Motley Fool contributor Sebastian Bowen owns shares of National Australia Bank Limited. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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