Brokers across the Tasman have been hard at work picking their top share ideas for 2021.

In a recent article, The New Zealand Herald surveyed six of the country’s top share brokers and asked them for their 5 top New Zealand share picks for 2021.

New Zealand’s benchmark NZX 50 Index (NZE: NZ50G) had a blinder of a year in 2020, returning 14% to 31 December, compared to precisely 0.1% for the S&P/ASX 200 Index (ASX: XJO). It’s a bit unfair to compare the two indexes given they have very different industry compositions, but clearly something good has been happening in NZ that is worth paying attention to. Fortunately, many of the biggest NZ companies are also listed on the ASX.

The survey asked brokers to choose the securities they think will provide best short-term performance over the next 12 months. This means a company’s long-term potential is not necessarily considered. The brokers also do not get to review or change their picks throughout the year. 

With that said, here are 3 companies the NZ brokers picked will do well in 2021 that also happen to be listed on the ASX.

EBOS Group Ltd (ASX: EBO)

EBOS Group is Australasia’s largest diversified healthcare and veterinary products distributor. The company generates more than $8 billion of revenue per year and grew revenue by 26.5% in the 2020 financial year.

EBOS was picked by no less than four of the six brokers surveyed. The company was picked for its solid growth outlook and robust demand for healthcare products as well as its increasing free cash flow and strong balance sheet. Brokers also noted that the company has a ‘defensive growth profile’, which means the share price may hold up better than other companies in 2021 if volatility strikes.

Spark New Zealand Ltd (ASX: SPK)

New Zealand telecoms company Spark was also picked by four of the six brokers as a likely winner for 2021. Interestingly, most of the reasons given relate the increasing investor demand for companies like Spark, which has a strong dividend and infrastructure-like defensiveness to earnings. In 2020, Spark’s revenue grew 2.5% and net earnings increased by 4.4%.

A2 Milk Company Ltd (ASX: A2M)

Despite a shocking year in 2020, a2 Milk was picked by two of the six brokers. The brokers backing a2 Milk suggest that 2020 could be a speed bump in the company’s long-term growth story. In 2021 they expect a2 Milk to continue to diversify its distribution channels away from reliance on the daigou channel (where shoppers buy products on behalf of others and send them back to China).

Other top ASX share picks for 2021

Among the other picks from the brokers to perform well in 2021 was breathing device manufacturer Fisher & Paykel Healthcare Corp Ltd (ASX: FPH) and travel software company Serko Ltd (ASX: SKO).

The Fisher & Paykel Healthcare share price had a huge year in 2020, rocketing 50% with full year revenue growing 18%. Meanwhile the brokers highlighted that the Serko share price may stand to benefit from a recovery in travel demand as vaccines for the COVID-19 virus become more widespread.

More reading

• Why the A2 Milk (ASX:A2M) share price is down 18.5% in 2020
• What next for the a2 Milk (ASX:A2M) share price?
• 2 of the best ASX 50 shares to buy today
• Why a2 Milk, Adacel, Dusk, & Nuheara shares are charging higher
• Top brokers name 3 ASX shares to buy next week

Regan Pearson has no position in any of the stocks mentioned. You can follow him on Twitter @Regan_Invests. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Serko Ltd. The Motley Fool Australia owns shares of and has recommended A2 Milk. The Motley Fool Australia has recommended Serko Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Cimic Group Ltd (ASX: CIM) share price climbed slightly higher this morning, before dipping to its current price of $24.55 per share.

The share price movement comes on the back of a pre-market announcement from the Aussie building and construction group regarding a major sale.

Why is the Cimic share price on the move today?

This morning, Cimic announced it has completed the sale of 50% of its subsidiary, Thiess. Thiess is the world’s largest mining services provider and was previously wholly owned by Cimic.

The price received for the 50% stake implies an enterprise value of $4.3 billion. For its stake, Cimic is set to receive $2.2 billion in cash from the completed transaction.

The Cimic share price is on the move in early trade following the news but remains down more than 23% for the year.

Cimic executive chair and CEO Juan Santamaria said the sale enables Cimic to “capitalise on the sector outlook and Thiess’ strong performance”.

The proceeds will be used to strengthen Cimic’s balance sheet by reducing debt and providing additional capital for organic growth.

Mr Santamaria said the retention of a 50% stake reflects the “ongoing strategic importance of Thiess” to Cimic’s business.

How has the Cimic share price performed this year?

Shares in the diversified construction group have been volatile in 2020 as the coronavirus pandemic has crimped growth.

The Cimic share price slumped to a 52-week low of $11.87 in the March bear market as investors were spooked by border closures and tightening restrictions.

Despite the lacklustre market reaction, today’s sale news is the latest move in a strong couple of months to close out the year. Shares in the Aussie company have jumped more than 30% since the end of September as the S&P/ASX 200 Index (ASX: XJO) has had one of its best quarters on record.

Cimic currently has a market capitalisation of $7.66 billion with a 6.3% dividend yield.

More reading

• The one overlooked warning sign ASX investors should watch for in 2021
• How does fiscal stimulus impact ASX share prices?
• ASX 200 down 0.6%: Flight Centre sinks, big four banks lower, Ramelius jumps
• Why the Woodside (ASX:WPL) share price slumped 33% in 2020
• 5 things to watch on the ASX 200 on Thursday

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

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One of the most exciting entrants into the world of index investing in 2020 has undoubtedly been the S&P/ASX All Technology Index (ASX: XTX), or the ‘All Tech Index’.

Before this index was launched back in March, there was no easy way to track the performance of ASX tech shares. Although many of the shares in this index happen to come under the ‘Information Technology’ ASX sector, there are some that don’t. But with the All Tech Index’s launch, there was finally a single measure of the performance of the ASX’s best tech stocks, regardless of which sector they belong to.

So, as a refresher, the S&P/ASX All Technology Index was first launched at perhaps the worst possible time for a debut: 24 February 2020. I say that because this date happened to be fairly close to the ASX 200’s peak, before the coronavirus-induced market crash hit us in March. Indeed, by 23 March, the newly formed index was down more than 42%.

But since that date, the index has been on an incredible run. At 2,886.7 points, it is currently up (at the time of writing) 43% year to date, and almost 150% from the levels we saw on 23 March.

Before we start, let’s just go over how the All Tech Index actually works. According to the ASX, there are a few criteria for a company to be included in this index. These include a requirement that 30% of a company’s shares be liquid and available for trading, a market capitalisation of at least $120 million and a $120,000 minimum in daily trading volume. The index is rebalanced quarterly, with new IPOs eligible for inclusion after one quarter.

The top 20 ASX tech shares in the All Tech Index

So let’s breakdown the ASX’s newest index, and look at how its 20 largest constituents performed in 2020:

ASX tech share	Year to date performance (as of 30 December)	Index weighting	Market capitalisation
Afterpay Ltd (ASX: APT)	285.18%	21.7%	$33.64 billion
Xero Limited (ASX: XRO)	83.54%	13%	$21.47 billion
Seek Limited (ASX: SEK)	27.3%	7.7%	$10.11 billion
Computershare Ltd (ASX: CPU)	(12.48%)	5.7%	$7.9 billion
REA Group Limited (ASX: REA)	41.63%	5.7%	$19.68 billion
Nextdc Ltd (ASX: NXT)	87.29%	4.3%	$5.59 billion
Carsales.com Ltd (ASX: CAR)	20.13%	3.8%	$4.97 billion
WiseTech Global Ltd (ASX: WTC)	31.52%	3.7%	$9.97 billion
Altium Limited (ASX: ALU)	(0.32%)	3.2%	$4.48 billion
Link Administration Holdings Ltd (ASX: LNK)	(4.29%)	2.3%	$2.99 billion
Appen Ltd (ASX: APX)	11.81%	2.2%	$3.03 billion
TechnologyOne Ltd (ASX: TNE)	0.36%	1.7%	$2.66 billion
Iress Ltd (ASX: IRE)	(17.45%)	1.6%	$2.09 billion
Megaport Ltd (ASX: MP1)	38.81%	1.6%	$2.24 billion
Webjet Limited (ASX: WEB)	(44.57%)	1.4%	$1.78 billion
Pro Medicus Limited (ASX: PME)	55%	1.3%	$3.6 billion
Kogan.com Ltd (ASX: KGN)	158.63%	1.2%	$2.04 billion
EML Payments Ltd (ASX: EML)	7.61%	1.1%	$1.54 billion
Redbubble Ltd (ASX: RBL)	414.68%	1.1%	$1.52 billion
Codan Ltd (ASX: CDA)	54.73%	1%	$2.04 billion

Not all tech shares see gains in 2020

As you can see, it’s been an overall positive year for the technology shares in this index. But there have also been some losers as well. Webjet stands out as the clear wooden spoon recipient here with a near-45% collapse in value over 2020 so far. We don’t have to probe too far into Webjet’s fundamentals to know why. As a travel company, the pandemic has been devastating for Webjet, which had to hold a highly dilutive share purchase plan earlier in the year to stay afloat.

Computershare, Iress and Altium were the other shares that have recorded year-to-date losses. Altium’s is a particularly interesting case. Altium shares rose more than 65% in value over 2019, and by more than 55% in 2018, so 2020 would have come as quite the shock for shareholders used to WAAAX high-octane growth from this company. Altium just never seemed to get its momentum back after the March share market crash. It’s possible that investors are finding the 6–12% revenue growth forecast for FY2021 just a little too boring compared with some of the other top ASX tech performers.

Afterpay and Xero dominate tech returns

On that note, let’s talk Afterpay and Xero, the two standout companies in this technology index. With current weightings of 21.7% and 13%, and year-to-date performances of 285% and 83.5%, respectively, these two companies have largely carried the All Tech Index in 2020.

Afterpay has had a phenomenal year. It managed to comprehensively shake off investor concerns at the start of the pandemic that it would be facing a recession-driven wave of defaults and delinquencies. Then the buy now, pay later leader announced a partnership with Chinese e-commerce giant Tencent Holdings back in May. With Tencent acquiring a 5% stake in the company, investors were reassured on Afterpay. It’s been onwards and upwards from there. The company spent the rest of the year breaking new all-time highs, most recently just a few days ago.

Also helping this company’s momentum were its FY2020 earnings. Back in August, Afterpay reported underlying sales growth of 112% and a 73% rise in earnings before interest, tax, depreciation and amortisation (EBITDA). Over the same period, Afterpay reported a 116% rise in global active customers. You could say that investors haven’t really been given a reason not to keep buying Afterpay in 2020.

Xero has delivered a similar growth story. Just last month, Xero reported stellar growth numbers for the six months ending 30 September. It announced revenue growth of 21% and subscriber growth of 19%. All in a period of just six months — no wonder Xero was also in investors’ sights in 2020.

A final note

For other top performers on the All Tech Index, it simply came down to the companies’ ability to turn the lemons of the pandemic into lemonade. Carsales benefitted from a tight market for second-hand vehicles in 2020. REA Group from a red-hot property market. Nextdc from continuing demand for back-end data services.

While there have been winners and losers in this index, I think we can fairly say that ASX tech shares haves been agile and innovative this year as a whole. And that has led to a stellar debut year for the All Technology Index.

More reading

• 2 quality ASX growth shares to buy for 2021
• ASX 200 down 0.6%: Flight Centre sinks, big four banks lower, Ramelius jumps
• Why the Redbubble (ASX:RBL) share price has rocketed 415% in 2020
• 2 ASX tech shares to buy for 2021
• ASX 200 drops lower

Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Altium, EML Payments, and MEGAPORT FPO. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Appen Ltd, Kogan.com ltd, Link Administration Holdings Ltd, and Xero. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends Pro Medicus Ltd. The Motley Fool Australia owns shares of and has recommended Pro Medicus Ltd. and Webjet Ltd. The Motley Fool Australia owns shares of AFTERPAY T FPO and WiseTech Global. The Motley Fool Australia has recommended carsales.com Limited, EML Payments, IRESS Limited, Kogan.com ltd, Link Administration Holdings Ltd, MEGAPORT FPO, REA Group Limited, and SEEK 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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Luckily for growth investors, the Australian share market is home to a large number of companies that have been tipped to grow strongly in 2021 and beyond.

Two that you might want to get better acquainted with are listed below. Here’s what you need to know about them:

ELMO Software Ltd (ASX: ELO)

The first growth share to look at is ELMO. It is a cloud-based human resources and payroll software company. It provides businesses in Australia and the UK with a unified platform to streamline processes such as employee administration, recruitment, and payroll.

ELMO has been a positive performer during the pandemic and looks well-placed to continue this trend in 2021 and over the next decade. This is thanks to strong demand for its platform and management’s plan to make earnings accretive acquisitions.

Morgan Stanley is a fan of the company and believes it is well-placed for growth. As a result, it has put an overweight rating and $9.30 price target on its shares. This compares to the current ELMO share price of $6.45.

The broker was pleased to see ELMO recently reiterate its organic growth guidance and sees positives in its recent $32 million acquisition of UK-based Breathe. These positives include market expansion and cross selling opportunities.

Xero Limited (ASX: XRO)

Xero is a leading cloud-based business and accounting software provider. Thanks to its evolution into a full service small business solution over the last few years, the company has been growing its customer numbers and recurring revenues at a rapid rate.

At the end of the first half of FY 2021, Xero delivered a 21% increase in operating revenue to NZ$409.8 million. It also reported a 19% lift in subscriber numbers to 2.45 million. The latter was driven by growth across all markets.

Since then, the company has raised US$700 million via a notes offering to support its growth. There is speculation that this could involve a major acquisition in the near future. Especially given how Xero has a track record of making bolt-on acquisitions that strengthen its offering. One of these was the acquisition of cloud-based lending platform Waddle for $80 million in August.

One broker that is particularly positive on Xero’s future is Goldman Sachs. It recently put a buy rating and $157.00 price target on its shares. Goldman Sachs believes Xero can grow its subscribers to 7.4 million by 2030 and generate NZ$3.4 billion in annual revenue from them.

More reading

• Why these 3 ASX shares smashed it in 2020
• The top 5 performing ASX SaaS shares of 2020
• The Xero (ASX:XRO) share price is up 82% in 2020
• 2 ASX tech shares to buy and hold until 2030
• 3 unstoppable ASX shares to buy

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Elmo Software. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Xero. The Motley Fool Australia has recommended Elmo Software. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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At the mid cap side of the market there are a good number of options for investors to choose from.

In fact, there are so many it can be hard to decide which ones to choose over others.

Two mid cap shares that come highly rated are listed below. Here’s what you need to know about them:

Damstra Holdings Ltd (ASX: DTC)

Damstra is a $291 million integrated workplace management solutions provider to multiple industry segments. It provides a cloud-based workplace management platform which is used by businesses globally to track, manage, and protect their workers and assets.

Among its offering are products which have become highly sought after in the current environment, such as fever detection and mobility tracking. Damstra has also recently strengthened its offering with an acquisition. It acquired Vault Intelligence, which is a software company offering solutions which combine health, safety, compliance, and risk management.

Analysts at Morgan Stanley are positive on its prospects. The broker currently has an overweight rating and $2.00 price target on Damstra’s shares. This compares to the current Damstra share price of $1.56.

Nitro Software Ltd (ASX: NTO)

Another mid cap share to watch closely is Nitro Software. It is a $600 million software company which is aiming to drive digital transformation in organisations around the world across multiple industries.

The company’s core solution is the Nitro Productivity Suite. It provides integrated PDF productivity, eSignature, and business intelligence (BI) tools to customers through a horizontal, software-as-a-service and desktop-based software suite.

The company notes that its software solution is highly scalable, serving large multinational enterprises and government agencies, as well as small businesses and individual users. At present, Nitro has over 2.2 million licensed users and over 11,000 business customers across 144 countries. This includes over 68% of the Fortune 500 and three of the Fortune 10.

Analysts at Morgan Stanley are also positive on Nitro and have an overweight rating and $3.50 price target on its shares. The Nitro share price is currently trading at $3.14.

More reading

• 3 ASX shares to buy for 2021 and beyond
• 3 small cap ASX shares that could have a big 2021
• 2 exciting small cap ASX tech shares to buy
• 27 ASX companies just got an unwanted knock on the door
• 3 ASX tech shares that have delivered strong returns in 2020

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Damstra Holdings Ltd. The Motley Fool Australia has recommended Damstra Holdings Ltd and Nitro Software 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 pieces are in place for ASX stocks to keep rallying into 2021, but there’s one risk factor that’s been slowly creeping up on investors.

Before I delve into that, don’t call me a pessimist. If anything, I am expecting the new year to be good for the S&P/ASX 200 Index (Index:^AXJO).

Money is cheap and economic growth will be “forced” to rebound. I say forced because 2020 has set such a low bar that we can almost certainly bank on better growth rates in 2021.

Rising yields a red flag for 2021

While I am feeling upbeat, I have been watching the yield on the US 10-year government bond rising in the background.

I think this government bond (called Treasury) could derail the share market rally. For those who can remember the time before COVID‐19 dominated our entire existence, a jump in the 10-year Treasury yield triggered a share market sell-off.

The yield on the 10-year has nearly doubled since August this year to around 0.93%. This is despite the US Federal Reserve’s commitment to keep buying Treasuries to keep yields and borrowing costs low.

10-Year Treasury Yield Close to Doubling in Four-Months

Source: Marketwatch.com

Why ASX investors should watch the 10-year Treasury yield

Everything is priced off the 10-year Treasury, which is used as the “risk-free” benchmark in valuing assets.

All things being equal, the higher the risk-free yield, the lower the valuation for stocks. I don’t believe global equities have priced in this risk, and many experts in Australia may not be even paying attention.

I say this because the 10-year Australian government bond hasn’t really moved over the past six-months even as its US counterpart jumped. The Reserve Bank of Australia is doing an excellent job in holding back Aussie bond yields.

Where Treasuries go, the Aussie follows

While that works in the shorter-term, it may not over a longer-period. The Aussie 10-year has historically followed the 10-year Treasury for good reason. The question is how long can the hold the fort.

This is why investors should be keeping an eye on this, especially since Treasury yields could rise further in 2021.

This is in part driven by inflation expectations. The “breakeven” rate in the US jumped to 1.99% this year – a two year high, reported Bloomberg.

The breakeven is a key market measure on future inflation expectations, and there are several reasons why investors are expecting prices to rise.

Why bond yields could rise further in 2021

The surge in commodity prices is one clear inflationary signal. The change in US presidents is another as Biden is likely to pump more stimulus into the COVID-hit economy.

To be sure, I am not concerned about inflation as having some price pressure is good news when it’s accompanied by economic growth.

The thing I am more concerned about is the impact the risk-free rate will have on the ASX, especially at a time when stocks look priced for perfection.

By all means stay long on stocks for 2021 – just don’t get caught with your pants down.

More reading

• How does fiscal stimulus impact ASX share prices?
• Why the Woodside (ASX:WPL) share price slumped 33% in 2020
• 5 things to watch on the ASX 200 on Thursday
• ASX 200 drops lower
• Could inflation be coming in 2021?

Motley Fool contributor Brendon Lau has no position in any of the stocks mentioned. Connect with me on Twitter @brenlau.

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 S&P/ASX 200 Index (ASX: XJO) dipped nearly a percent yesterday morning and slipped again today. Theories about what might be causing this have since began to circulate. The Australian Financial Review, for example, turned to the latest US stimulus drama as a potential culprit for causing some recent waves on the share market.

Will the US stimulus actually affect ASX share prices?

The first US stimulus was approved on 25 March 2020 and came in at a whopping US$2.2 trillion. This is right around the time that the All Ordinaries Index (ASX: XAO) hit the deck, touching its record 2020 low on 23 March.

Since that day, the All Ords has maintained an upward — albeit bumpy — crawl. It’s actually pretty close to where it was when 2020 first started off, shortly before COVID-19 came through and started kicking economies all over the place.

In spite of this, ASX share prices have managed to maintain a steady rise, leaving some investors wondering how long it will keep up.

What about economic stimulus in Australia?

Interestingly, the Morrison Government first announced its $17.6 billion stimulus plan on 12 March 2020 — but the All Ords continued sliding downwards. It wasn’t until after 24 March, right around the US announcement, things started looking up.

From 31 March through to the end of April, some ASX companies really came roaring back. For example, Wesfarmers Limited (ASX: WES) gained nearly 10% and Domino’s Pizza Enterprises Ltd. (ASX: DMP) shot up over 12%. 

Across the board, the All Ords was up over 7% for the period. Judging by these numbers, it seems like March’s stimulus gave some ASX shares a nice nudge along.

What happens when the money stops?

Australia and the US obviously aren’t alone in the scramble to keep money moving while managing the terrible impacts of coronavirus. The European Union, for example, has proposed “the largest stimulus package ever”.

As far as stimulus money is concerned, we’ve heard a lot this year about money going out. I’m looking forward to 2021, when we’ll learn more about how the money gets spent afterwards and what that might mean for the ASX next year.

More reading

• Why the New Energy Solar (ASX:NEW) share price is climbing higher today
• As we bid farewell to 2020, don’t miss this lesson…
• Why the Woodside (ASX:WPL) share price slumped 33% in 2020
• Why the Wesfarmers (ASX:WES) share price is up 24% in 2020
• 5 things to watch on the ASX 200 on Thursday

Motley Fool contributor Gretchen Kennedy has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of Wesfarmers Limited. The Motley Fool Australia has recommended Domino’s Pizza Enterprises Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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In afternoon trade the S&P/ASX 200 Index (ASX: XJO) is on course to end the year in a disappointing fashion. The benchmark index is currently down 0.7% to 6,637.7 points.

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

BetMakers Technology Group Ltd (ASX: BET)

The BetMakers share price down 4% to 67 cents. This morning the betting technology company released an update on its share purchase plan. The company is aiming to raise $10 million via a non-underwritten share purchase plan at 60 cents per share. This follows the successful completion of its $50 million placement to institutional and sophisticated investors to acquire assets from UK-based Sportech PLC.

Flight Centre Travel Group Ltd (ASX: FLT)

The Flight Centre share price is down almost 4% to $15.87. Investors have been selling Flight Centre’s shares after the COVID-19 outbreak in New South Wales spread into Victoria. The latter state has recorded three new cases. This has led to South Australia shutting its border to New South Wales completely and sparked fears that the domestic travel market recovery could be delayed.

Monash IVF Group Ltd (ASX: MVF)

The Monash IVF share price has fallen 2% to 77 cents. This fertility company’s shares have come under pressure this month after being hit by a class action. These proceedings are in relation to the company’s non-invasive preimplantation genetic screening technology. The claim does not specify an amount of damages sought.

Sydney Airport Holdings Pty Ltd (ASX: SYD)

The Sydney Airport share price has dropped 1.5% to $6.35. This also appears to have been driven by the spread of COVID-19 across New South Wales and into Victoria. Given how important the Melbourne-Sydney route is for the airport, this latest COVID-19 outbreak could be a big blow to Sydney Airport’s recovery.

More reading

• Can the Flight Centre (ASX:FLT) share price fly again in 2021?
• ASX 200 down 0.6%: Flight Centre sinks, big four banks lower, Ramelius jumps
• Here’s why the Betmakers (ASX:BET) share price is on watch today
• ASX 200 shares hardest hit by COVID-19 in 2020
• ASX 200 up 0.65%: Big four banks rise, tech shares charge higher, Flight Centre jumps

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Betmakers Technology Group Ltd. The Motley Fool Australia has recommended Flight Centre Travel Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Flight Centre Travel Group Ltd (ASX: FLT) share price has been the most badly affected in the beaten down travel sector this year.

The travel company’s share price is down by 60% over the year, as the coronavirus pandemic stopped international travel dead in its tracks.

Could the Flight Centre share price pick itself up in 2021 when travel resumes? 

First, the losses 

In FY20, the company delivered an underlying loss before tax of $510 million, excluding COVID-19-induced expenses of $339 million. On a statutory basis, therefore, Flight Centre delivered a loss of $849 million before tax.

The company said that this loss was incurred entirely since March, as the company reported underlying profit before tax in the order of $150 million before the pandemic hit.

Full border closures along with heavy restrictions and a complete halt on domestic and international travel hit the company’s bottom line hard.

Saving the sinking ship

Management said it acted quickly to stabilise the ship. This was done primarily by cutting costs, which has resulted in a very lean cost base – one that could ensure breakeven at 40% of pre-COVID total transaction volume (TTV) going forward.

The company also quickly secured $1 billion of liquidity, including $700 million injected by shareholders in April and May.

In addition, the company also applied for and received the JobKeeper subsidy for its retained employees in Australia. The net benefit of this program is expected to be between $40 million and $50 million from October 2020 to March 2021.

With the cost base slashed significantly, the company said it should be able weather the storm until conditions improve.

Strategy going forward

In its annual general meeting (AGM) held in November, the company outlined strategies for its post-COVID turnaround.

It said that it will focus on its corporate travel unit, as it believes that segment will recover first, ahead of the leisure unit. 

It will also focus on its strategic investments including Ignite (now 100% owned), and its tech businesses TP Connects and WhereTo.

Digital transformation will be the name of the game in 2021 and beyond.

The company said it will accelerate investments in innovative and disruptive technology. This will include investment in state-of-the-art data and reporting, including new COVID dashboards and safety products.

About the Flight Centre share price

The Flight Centre share price has had a volatile year, plummeting by as much as 77% in March, before recovering to current levels.

At the time of writing, the Flight Centre share price is trading at $16.02, down almost 3%.

The company commands a market cap of $3.3 billion.

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

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The New Energy Solar Ltd (ASX: NEW) share price is climbing higher today, following the company’s decision to sell its interest in Mount Signal 2.

At the time of writing the New Energy Solar share price is 0.5% higher to 86 cents. In comparison, the All Ordinaries Index (ASX: XAO) is down 0.2% to 6,931 points.

Sale of Mount Signal 2

This morning, New Energy Solar announced the sale of up to a 50% stake in its solar plant Mount Signal 2 (MS2) to US Solar Fund PLC. (USF).

The purchase price for a split stake in MS2 is valued between US$44 million to US$46 million. Management said that this is based on the last audited net asset value made for MS2 of US$89.5 million as at 30 June, 2020.

The sale of MS2 will comprise of two tranches. The first tranche will be an immediate acquisition of a 25% equity interest for the agreed price of US$23 million. The optional second tranche is an additional 25% interest for US$23 million. The latter can be increased or decreased by up to US$1 million based on achieving performance targets. It’s worth noting that the second tranche can be exercised within 12 months of taking up the first tranche.

Completion of the first part of the sale is expected to be finalised sometime within the first quarter of 2021. New Energy Solar stated that the first of these funds received will be used to repay its outstanding debt. Should the sale of the second tranche follow through, the company will consider allocating funds towards additional capital management initiatives.

What did management say?

New Energy Solar CEO Mr John Martin commented on the deal:

MS2 is a substantial and well-situated project with a 20-year PPA with Southern California Edison. In light of the decision to sell NEW’s Australian assets and focus on the US market, selling a smaller initial portion of the equity in MS2 this year is an outcome that suits NEW’s positioning as it will maintain management of the asset. We look forward to entering into this partnership with USF.

About the New Energy Solar share price

The New Energy Solar share price has failed to perform in 2020 after reaching as high as $1.37 this time last year. At the current price of 86 cents, the company’s shares have plummeted 36%, compared to the All Ords which is up almost 2% for the year.

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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. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post Why the New Energy Solar (ASX:NEW) share price is climbing higher today appeared first on The Motley Fool Australia.

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