The Commonwealth Bank of Australia (ASX: CBA) share price has opened today’s trade up 1.77% at $73.68 per share, following the release of the bank’s first quarter FY21 trading update.

How did Commonwealth Bank perform in the first quarter?

For the 3 months ended 30 September, Commonwealth Bank posted an unaudited net profit after tax of $1.8 billion. This represented a fall of 16% from the prior corresponding period.

Volume growth rose across the business for the quarter versus the June period. Home lending increased by $5.6 billion, household deposits jumped to $15.8 billion and business lending lifted to $1.4 billion. This helped offset lower margins and interest rates experienced by the business through COVID-19.

Non-interest income grew 1%, driven by higher global markets trading income and insurance income from lower general insurance claims.

Operating expenses were 2% higher, excluding customer remediation provisions, to $5.2 billion. The outcome was attributed to increased investment spend and staff costs as a result of the pandemic.

The bank remains in a strong capital position. Net stable funding ratio (NSFR) stands at 125% and liquidity coverage ratio (LCR) at 146%, well above regulatory requirements.

Liquid assets totalled over $183 billion at the end of the quarter.

What did management say?

Commonwealth Bank CEO, Mr Matt Comyn, commented on the first-quarter result:

Disciplined execution of our strategy and strong operational performance continued to deliver good outcomes for our stakeholders during the September quarter.

This was highlighted in the quarter by the Bank achieving the number 1 ranking for Net Promoter Scores (NPS) in each of our core businesses (consumer, business and institutional) for the first time, while retaining our leading NPS ranking in digital banking.

He added:

Balance sheet settings remained strong, with loan loss provisioning coverage further strengthened and a CET1 capital ratio of 11.8%, up 20bpts in the quarter notwithstanding the payment of $1.7bn in 2H20 final dividends to our shareholders.

We continue to contact customers with a range of options as they approach the end of temporary loan repayment deferral periods.

About the Commonwealth Bank share price

As expected, the banking industry was hard hit by COVID-19, but has been slowly recovering. The Commonwealth Bank share price fell to as low as $53.44 during the first lockdown, prompting investor concerns. However, the bank has rallied the past few months, sitting just 10% below from where it was at the start of the year.

As Australia’s largest bank, CommBank has a price-to-earnings (P/E) ratio of 13.8.

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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 Galaxy Resources Ltd (ASX: GXY) share price has rebounded almost 50% following the Tesla Inc (NASDAQ: TSLA) battery day back in late September. Today, Galaxy announced a multi-year year offtake agreement with Chengxin Lithium Group Co Ltd. Could this be a turning point for the lithium producer? 

Tesla battery day sparks fears for lithium demand 

A take-home from Tesla’s battery day was when Elon Musk highlighted that lithium was a widely available resource, “one of the most common resources on the planet”, and that “Nevada alone has enough to power all vehicles in the US”.

This dampened the sentiment for lithium producers that hoped to ride the momentum and increasing relevancy of renewable energy and electric vehicles. On battery day alone, the Galaxy share price slumped 13%. 

Biden to accelerate shift to renewable energy 

President-elect Joe Biden plans to act on climate change immediately and ambitiously. This includes plans for a record $400 billion investment over 10 years, as one part of a broad mobilisation of public investment into clean energy and innovation. 

The breath of fresh air for the renewables industry from Trump to Biden has seen a subtle shift to bet against the fossil-fuel industry and buy renewables. The Galaxy share price has been able to enjoy the recent uplift in sentiment, increasing 17% this month and hitting pre-Tesla battery day levels. 

Multi-year offtake agreement 

On Wednesday, Galaxy signed a three-year agreement with Sichuan Chengtun Lithium Co, a wholly owned subsidary of Chengxin Lithium Group Co Ltd. Chengxin has agreed to purchase 60,000 dmt per annum (+/- 10%) of spodumene concentrate from Galaxy in each year, 2021, 2022 and 2023. To add some perspective, Galaxy shipped 16,753 dmt of spodumene concentrate in the thrird quarter and a further 15,7000 dmt in early October. 

Due to current soft market conditions, Galaxy’s near-term sales volumes and shipping schedules will be largely dictated by the spot price that Galaxy is willing to accept and the pace customers are able to destock their inventory levels. Mt Cattlin’s current final product inventory levels plus forecast production for the fourth quarter of 2020 are sufficient to meet requirements for this quarter. 

Galaxy CEO Simon Hay said the company expected to conclude 2020 with additional shipments to customers and for Galaxy’s spodumene inventory to return to normal levels.

The drawdown of inventory combined with strong customer indications for demand in 2021 has also led Galaxy to examine the potential ramp up of Mt Cattlin back to full rate in 2021, although there will need to be sustained price increases for us to commit to the return of higher production levels. 

While there is an anticipated lithium demand surge in the medium to long term, the lithium spot price currently remains at multi-year lows. Only time will tell if the spot price will match the bullish sentiment for lithium demand and commitment to renewable energies. 

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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 and recommends Tesla. 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 Eclipx Group Ltd (ASX: ECX) share price is pushing higher this morning following the release of its full year results.

In morning trade the fleet management company’s shares up 1% to $1.71.

How did Eclipx perform in FY 2020?

Eclipx had a relatively positive year and delivered modest bottom line growth in FY 2020 despite weaker revenues.

For the 12 months ended 30 September, Eclipx recorded a 5% decline in revenue from continuing operations to $672.25 million.

However, improvements in its margins led to earnings before interest, tax, depreciation and amortisation (EBITDA) growing 4.3% year on year to $85.4 million.

Also growing in FY 2020 was its core cash net profit after tax and amortisation (NPATA), which came in 2.2% higher year on year at $47.5 million.

Management notes that against a challenging macroeconomic backdrop, the core fleet and novated business delivered a solid result. It feels this reflects the defensiveness of its underlying business.

Simplification Plan update.

The company also provided an update on its Simplification Plan, which was successfully executed one year ahead of schedule.

This has seen all six non-core divestments completed between July 2019 and August 2020.

It has also led to its $15 million cost reduction target being exceeded on an annualised basis and a 56% reduction in gross corporate debt. The latter is down from $350 million to $155 million, which is ahead of $175 million target.

Management notes that post-simplification, Eclipx is a pure-play fleet management platform, with a clear focus on growth in its three target markets. These are the Corporate, Novated and SME markets.

Outlook.

While no guidance was given for the year ahead, management spoke positively on its prospects.

It commented: “The delivery of the Simplification Plan ahead of schedule places the Group in a position of strength. This position provides the Group with confidence, going into FY21, that it will successfully implement the next phase of its strategy, Strategic Pathways. As the Group progresses through FY21, it will assess the best use of excess capital for shareholders having regard to balancing macro risk and organic growth alternatives.”

More reading

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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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The Douugh Ltd (ASX: DOU) share price is storming higher following the release of announcement today.

At the time of writing the neobank and artificial intelligence-driven financial wellness app provider’s shares are up a sizeable 16% to 32 cents.

What did Douugh announce?

This morning Douugh announced the end of its beta program ahead of a full market launch of the Douugh app in the United States in the coming days following extensive market testing and user feedback.

Douugh’s app is aiming to disrupt the business model of banking by helping people better manage their money and live financially healthier. The company’s vision is to one day become a fully autonomous financial control centre.

Management advised that the end of the beta program also marks the successful completion of a number of significant regulatory and development tasks.

In respect to its regulatory and compliance, the company has received the necessary bank approvals following the implementation and validation of advanced protocols to meet anti-money laundering and Office of Foreign Assets Control (OFAC) regulations. It has also collected significant use case data to train up its artificial intelligence-powered fraud detection engine to guard against account takeover and transactional fraud events.

What else has been done?

Management also advised that the company has been busy developing its app to ensure a superior user experience. This includes app optimisation for the latest Apple iOS software and the new iPhones.

In addition to this, the company has extended its development efforts to in-app functionality. It has made improvements such as users being able to see pending transactions. It has also rigorously tested the platform to ensure it is ready to scale and onboard a significant level of new users in anticipation of launch.

As a result of the above, management expects to submit its app to the Apple App Store on 13 November. A full market launch will be announced upon approval.

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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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In morning trade the Avita Therapeutics Inc (ASX: AVH) share price is pushing higher after the release of its first quarter update.

At the time of writing the regenerative medicine company’s shares are up 2% to $6.23.

How did Avita perform in the first quarter?

For the three months ended 30 September, Avita reported total global revenue of US$5.1 million. This was up 56% on the prior corresponding period.

This revenue is made up almost entirely of its U.S based RECELL revenue, which came in 59% higher than the same period last year at US$5 million.

This was driven by a 27.2% increase in procedural volumes to 496 and the addition of 9 new accounts in the first quarter. The latter brings its total accounts to 86.

Avita reported a gross margin of 82% for the first quarter of 2021, compared with 81% in the same quarter last year.

However, its operating expenses are still vastly greater than the money it is bringing in. Operating expenses were US$14.9 million for the first quarter, up from US$8.3 million for the prior corresponding period.

Management advised that this increase was primarily driven by the additional costs incurred from its dual listed entity on the NASDAQ and the ASX, along with the commencement of pivotal clinical trials for the treatment of paediatric scald injuries, soft tissue reconstruction, vitiligo and other research and development activities aiming to further promote the RECELL System.

In light of this, Avita posted a net loss of US$10.2 million for the quarter. This led to the company finishing the period with a cash balance of US$65.8 million.

Outlook.

Due to the uncertainty surrounding the COVID-19 pandemic, management advised that it will not be providing financial guidance at this time.

However, it will continue to evaluate its guidance policies and anticipates providing an update at the time of its second quarter earnings announcement based on available information at that time.

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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 Avita Medical Limited. The Motley Fool Australia has recommended Avita Medical 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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We all know the deep, heavy quiet of an ANZAC Day commemoration service.

The minute’s silence, when we stop, together, to reflect on the sacrifices paid by our service men and women in our country’s name.

I was moved to think about that silence when I again read this description on the RSL’s website:

“At 11.00 am on 11 November 1918 the guns fell silent as hostilities ceased on the Western Front, ending four years of death and destruction. Earlier that day, at 5.00 am, the Germans signed an armistice in a railway carriage at Compiègne. In the following year, the Treaty of Versailles made the cease-fire permanent.”

I can only imagine the other-worldly silence of that moment, 102 years ago.

After years of fighting, of gunshots and explosions, near and far, all of a sudden there would have been… silence.

I imagine some of our Diggers may have embraced their mates, overcome by the moment.

I imagine others might have just exhaled deeply, trying to comprehend the end of what had, minutes earlier, been a life and death struggle.

So much death. Destruction. Loss. Sacrifice.

The mates who wouldn’t be on the ship with them for the long journey home.

And the rest, who returned, but would never be the same.

I think about the silences in the homes of families whose loved ones would not return. 

I think about the deep, painful silences of those who returned, but forever bore the mental and physical scars of their service.

Tragically, while November 11, 1918 marked the end of The Great War, its other moniker, The War To End All Wars, was sadly optimistic.

The Great War was, of course, renamed World War I, a name change forced, two decades later, by The Second World War.

Thankfully, the human cost of war has been slowly falling, since; yet it has continued.

And so November 11, originally known as Armistice Day, to remember that original cease fire, became Remembrance Day: a day for Australia and her allies to remember the sacrifice of those who died in the service of their country in all wars and war-like conflicts, and the sacrifice of those who returned, but were forever changed.

They all paid a heavy price. Some, the ultimate price.

“Greater love hath no man than this, that a man lay down his life for his friends” the Christian bible tells us.

I’m not religious, but that remains one of life’s great truisms.

And so, we still stop, today, at 11am, for one minute’s silence.

I would encourage you to do the same.

To remember.

They went with songs to the battle, they were young,

Straight of limb, true of eye, steady and aglow.

They were staunch to the end against odds uncounted;

They fell with their faces to the foe.

They shall grow not old, as we that are left grow old:

Age shall not weary them, nor the years condemn.

At the going down of the sun and in the morning

We will remember them.

Lest We Forget.

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Motley Fool contributor Scott Phillips 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 three ASX shares I’m going to mention in this article are rated as ‘buys’ by several brokers.

Broker recommendations give an indication where market analysts think there are buying opportunities for investors. Share prices change all the time, so sometimes a broker could think an ASX share is a buy at one price and perhaps a sell if it were significantly higher.

Investment site MarketIndex regularly collates the ratings of brokers together to assess what the broker community collectively think are opportunities. Just because several brokers think something is a buy doesn’t mean it’s guaranteed to do well, but it may reveal some insights.

With that in mind, here are three ASX shares that brokers like:

BHP Group Ltd (ASX: BHP)

BHP Group is one of the largest resource businesses in the world. The ASX share produces a number of commodities including iron ore, copper and oil.

According to the ASX, it has a market capitalisation of $106 billion, making it one of the biggest businesses listed in Australia.

BHP is rated as a buy by at least 10 analysts, although there are also at least six that think it’s only a ‘hold’.

The BHP share price is down 7.5% since the start of 2020, though it fell to almost $25 in March. In FY20 BHP reported that its continuing profit from operations declined by 11%, however underlying attributable profit only declined by 4%. This result was supported by stronger iron ore prices and continuing Chinese demand, which mostly offset weaker markets in coal and petroleum.

BHP’s FY20 dividend was cut by 10% to US$1.20 per share. Using the same dollar in Australian dollars, it offers a trailing grossed-up dividend yield of 6.9%.

Coles Group Ltd (ASX: COL)

Coles is one of Australia’s biggest supermarket businesses. It operates a nationwide network of Coles supermarkets, as well as a liquor business with brands such as Liquorland.

According to the ASX, Coles has a market capitalisation of $23.6 billion, it’s one of the largest 20 ASX shares.

Coles is rated as a buy by at least eight analysts, though it’s rated as a ‘hold’ by at least five as well.

The supermarket ASX share recently reported in its FY21 first quarter that its food sales continue to be elevated with Victoria’s COVID-19 restrictions. In the first quarter, supermarket sales rose 9.8% and total first quarter sales grew 10.5% after it was helped by liquor sales going up 17.4%.

That quarter came after FY20 sales increased by 6.9% and underlying net profit grew by 7.1%.

At the current Coles share price, it has a trailing grossed-up dividend yield of 4.6%. It’s also trading at 23x FY21’s estimated earnings according to Commsec.

GPT Group (ASX: GPT)

GPT is one of the largest property groups on the ASX, with a market capitalisation of approximately $9.2 billion.

It’s rated as a buy by at least nine analysts, though there are also two that believe it’s a ‘sell’.

GPT has a mix of retail, office and logistics buildings in its property portfolio.  

In its recent FY20 first half result it reported negative property valuation movements of $711.3 million as a result of effects of the pandemic on its retail assets. However, it still generated funds from operations (FFO) – net rental profit – of $244.5 million which allowed it to pay a distribution of 9.3 cents per unit.

In its latest quarterly operational update for the three months to 30 September 2020, it said that its rent collection rates averaged 90% of third quarter billings, up from 67% in the second quarter.

Whilst it still wasn’t able to provide distribution guidance, Commsec has a distribution forecast of 18.8 cents for 2020, which translates to a distribution yield of 4% at the current GPT share price.

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The AMP Limited (ASX: AMP) share price has had a dismal 2020. In fact, it really has had a dismal performance its whole listed life, if this share price graph is anything to go by:

AMP shares closed at $1.70 yesterday. That’s not too bad considering the company’s 52-week low is $1.08. But it’s not great if you consider that, in the 23 years AMP has been a public company (it demutualised in 1997), its all-time low is also $1.08, whereas its all-time high is approximately $10.84, which it hit way back in 2007.

AMP’s reputation as one of Australia’s oldest and most trusted wealth managers took a potentially fatal hit during the 2018 Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry. The subsequent appointment of a new CEO in Francesco de Ferrari was supposed to herald a turnaround for the company. However, AMP seemed to raise the white flag earlier this year when it declared all parts of its business open for a possible sale. The company is already sitting on a potential takeover offer of $1.85 per share from the United States-listed Ares Management Corp (NYSE: ARES). AMP’s flagship life insurance business has already been offloaded. We also got the news last month that AMP is closing its range of exchange-traded fund (ETF) offerings. And that was on top of revelations of a sexual harassment scandal at the company.

AMP’s true worth?

So what are AMP shares worth today? The market tells us around $1.70 per share, which values AMP at a market capitalisation of $5.83 billion. But new reporting from the Australian Financial Review (AFR) has a different take.

The AFR reports that number crunchers at Swiss investment bank UBS Group AG (NYSE: UBS) have calculated that AMP shares could be worth as much as $2.45 (with a market cap of $8.4 billion). Before AMP shareholders get too excited though, there’s a catch.

That price comes from valuing a broken up AMP. That is, if AMP is dismembered into its various parts and sold off, AMP shareholders could receive as much as $2.45 per share in cash. But the range UBS gave was actually $1.45-$2.45.

That upper range comes from an estimation that AMP’s most profitable division – AMP Capital – could be worth as much as $1.31 per share. It gives the AMP Bank division a potential valuation of 37 cents a share, and its New Zealand wealth management arm 12 cents. The Australian wealth management division receives an estimated value of 74 cents a share.

With this estimation, AMP shareholders might happily accept a breakup, even if it means the dismal end of a 171-year-old institution.

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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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There are some ASX small cap shares worth buying and owning according to fund manager Naos Asset Management.

What is Naos Asset Management’s investment approach?

Naos is led by chief investment officer (CIO) Sebastian Evans. NAOS Small Cap Opportunities Company Ltd (ASX: NSC) is one of the listed investment companies (LIC) operated by Naos.

That particular LIC looks at businesses with market capitalisations between $100 million and $1 billion.

The fund manager has a number of investment focuses. It looks for businesses that are good value with long term growth potential. With its portfolio, Naos believes it’s better to have a quality portfolio rather than numerous holdings. That’s why it only holds around 10 positions in each fund, with each ASX share representing a high-conviction position.

Naos invests in the small cap ASX shares for the long-term. It considers the performance and the liquidity of its positions whilst ignoring the index. Performance can sometimes be quite variable when compared to the index.

It looks to invest purely in industrial companies whilst also considering the ESG factors (environmental, social and governance).

What are some of the small cap ASX shares that it thinks are opportunities?

In its latest monthly update for 31 October 2020, Naos gave the latest commentary for some of its small cap ASX share positions:

Eureka Group Holdings Ltd (ASX: EGH)

Naos says that Eureka Group is a provider of quality and affordable rental accommodation for independent seniors within a community environment. Eureka owns 30 villages and manages a further nine villages with a total of 2,147 across Queensland, Tasmania, South Australia, Victoria and New South Wales.

Eureka recently completed the acquisition of two affordable rental seniors accommodation villages – one is in Cairns and the other is in Hervey Bay. The acquisition price was a total of $13 million.

Naos believes that, in a world of record low interest rates together with a highly fragmented industry, the asset portfolio that the small cap ASX share owns will command a significantly reduced cap rate and therefore have the capability to increase the net tangible assets (NTA) going forward. Eureka may not need to issue more shares to fund its bolt-on acquisitions as it can continue to sell non-core assets. Naos also thinks there are other ways for Eureka to build scale in what remains a very attractive asset class for certain investors.

MNF Group Ltd (ASX: MNF)

Naos describes MNF as a founder led software company, which specialises in proprietary digital network infrastructure for voice communications.

The fund manager says that MNF provides voice carriage and value-added software services to some of the world’s largest software companies and wants to expand into the APAC region.

Naos noted that MNF recently provided FY21 earnings before interest, tax, depreciation and amortisation (EBITDA) guidance of $40 million to $43 million, with the mid-point implying year on year growth of 8.6%. The wholesale business continues to perform well, with volumes remaining elevated and is expected by Naos to remain so during the rest of FY21.  

The new Singapore network will launch commercially in March for the small cap ASX share but is not expected to benefit the FY21 earnings profile, though customers are already being brought on board.

However, headwinds continue for its audio-conferencing business and volume has been lost on minutes trading because of the reduction of international roaming.

Naos believes that a significant amount of shareholder value can be realised if the direct and wholesale divisions are split either through a divestment or demerger by the small cap ASX share.

More reading

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Motley Fool contributor Tristan Harrison owns shares of NAO SMLCAP FPO. The Motley Fool Australia owns shares of and has recommended MNF Group 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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