The Liberty Financial Group (ASX: LFG) share price has jumped up 12% after its shares made their official debut on the ASX today.

The non-bank lender has floated its shares through an initial public offer (IPO) pricing at $6 a share. At the time of writing, the Liberty Financial share price is trading up at $6.71.

More about the Liberty IPO

The company has secured $320.7 million at $6 a share through the IPO, valuing it at a market cap of $1.82 billion.

According to the prospectus pitched to investors during the book build, the group had $11.5 billion loan portfolio as at 30 June, and expects it to increase to $11.9 billion by June next year.

Liberty also forecast $838.2 million in revenue, and $153.9 million net profit in the 2021 financial year. As a comparison, the company made pre-tax profit of $70 million in FY18, and $76.1 million in FY19.  

The company was pitched to potential investors as Australia’s “10th biggest lender”, according to the prospectus.

Liberty said it decided to list on the ASX “to position it to pursue further growth opportunities in market segments in which Liberty has scale, as well as growth into emerging markets”.

Quick take on Liberty Financial

Founded in 1997 by Sherman Ma, Liberty was initially a pioneer in the sub-prime mortgage credit market, and was dubbed a “non-conforming” lender in those early years.

Since then, the company has gradually transformed itself into a leading diversified finance company in Australia and New Zealand. Its businesses now include residential and commercial mortgages, motor vehicle finance, personal loans and investments. 

Today’s IPO comes after years of failed attempts by founder Ma. The company was mentioned as an IPO candidate as far back as 2004, and again in 2005, 2006, and as recently as 2019.

After the float today, Mr Ma will maintain his 47.5% shareholding, and allows an exit for his co-founders.

More reading

• ASX healthcare shares could outperform in 2021: Fundie
• Why the Xtek (ASX:XTE) share price is rising today
• Leading brokers name 3 ASX shares to sell today
• Will China’s trade war torpedo the Rio, Fortescue and BHP share prices?
• Magellan (ASX:MFG) launches new ETF offerings

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

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ASX healthcare shares could outperform in 2021, according to the Sydney-based portfolio manager of American Century Investments.

This is despite a drop in healthcare spending this year after many nations, including Australia, postponed non-urgent care due to COVID-19. 

The fund manager expects government healthcare spending to increase significantly, as COVID-19 vaccines start to roll out globally and demand for aged care increases over the longer term.

What else did the fundie say

According to American Century Investments’ Michael Li, healthcare stocks have the potential for good relative performance based on short and long-term factors.

He cited a report from the Economist Intelligence Unit, which said that although healthcare spending had fallen during the pandemic, a recovery is expected to gather pace in 2021.

The report said that healthcare spending would rise globally by 5.5%  in US dollar terms, driven by additional expenditures as effective vaccines and treatments for coronavirus become available during the year.

Li estimates that the sector’s earnings will grow at double digits in the next two years, as healthcare companies as a group are currently valued at a discount to the market.

Li also said that the healthcare sector is set to benefit over the longer term:

From a long-term perspective, healthcare investors appreciate the significant discovery and innovation in the sector combined with ageing global demographics. That combination is driving the capability of some companies to grow at sustained, above-average rates.

According to the Australian Bureau of Statistics, the 65 and over age group currently makes up about 16% of the population, and is projected to increase more rapidly over the next decade.

Which healthcare shares on the ASX will benefit

According to Morningstar analysts, companies such as CSL Limited (ASX: CSL) and ResMed Inc (ASX: RMD) have the most to gain from greater healthcare spending and chronic disease, with Australian healthcare expenditure growth sitting higher than the OECD median.

Morningstar director of equity research Mathew Hodge has forecast double-digit compound revenue growth for CSL in the next five years, driven by the immunoglobulin portfolio.

“The plasma industry is changing, and CSL is broadening its scope to include emerging therapies,” Hodge says.

Morningstar also believes that ResMed’s strategy, which focuses on respiratory devices, will see it well-placed to benefit from the major healthcare trends promoting value-based treatment, and providing care in lower cost settings.

About the CSL share price and ResMed share price

The CSL share price is up 5% in 2020, despite the recent setback on its COVID-19 vaccine testing plans. The Resmed share price, on the other hand, has lifted 24% on a year-to-date basis.

More reading

• These are 8 of the best performing ASX healthcare shares of 2020 so far
• 2 ASX healthcare shares to buy for 2021 and beyond
• Why the Medical Developments International (ASX:MVP) share price is sinking lower
• ASX 200 Weekly Wrap: ASX 200 hits a 6! Thank iron ore
• 10 highly rated ASX shares to buy in 2021

Eddy Sunarto has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of CSL Ltd. The Motley Fool Australia has recommended ResMed Inc. 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 Xtek Ltd (ASX: XTE) share price is on the rise today after the company announced its United States subsidiary, HighCom Armor Solutions, has received new customer orders. This comes following Xtek gaining approval of permanent export licences for its ballistics products to Mexico City.

At the time of writing, the Xtek share price is up 1.71% to 59.5 cents after reaching as high as 61.5 cents in earlier trading. In comparison, the All Ordinaries Index (ASX: XAO) is down 0.6% to 6,859 points.

What’s driving the Xtek share price higher?

The Xtek share price is gaining ground today as investors are apparently pleased with the company’s strategic direction.

According to the company’s release, Xtek has secured an order for $2.1 million worth of ballistics products from the Mexican Government. The new contract award consists of hard amour plates and helmet products. While Xtek has fulfilled 60% of the order so far, the remaining products are expected to be delivered early next year.

The decision to export personal protective equipment to Mexico follows the approval of a warehousing distribution agreement (WDA) from the US State Department office of Directorate of Defence Trade Controls.

The WDA allows Xtek to distribute personal armour products to Mexican military and law enforcement agencies across all government levels. The agreement has a term of over 10 years with a value of up to US$50 million. Xtek is also able to apply to the US State Department for an option to increase the value of the agreement.

In addition, Xtek will appoint a new distributor to Mexico City to oversee deliveries, and accelerate future export orders. The role is expected to support the company’s strategy in establishing new international markets.

Commentary from management

Mr Phillipe Odouard, Xtek managing director, commented on the award. He said:

Previously, exports to Mexico were limited by the need to continuously request export licences for quantities of any size, with each request typically taking several weeks to be awarded – so this new license streamlines the process significantly and makes it a much more attractive opportunity to export to these Mexican customers. The orders represent the start of a new expansion into Mexico that we are confident will build significantly.

Adding to his comments, HighCom CEO Mr Mike Bundy went on to say:

… Our business development and trade compliance team members have executed on a thorough and exhaustive process to ensure our company and group globally is adhering to the strict U.S. Government trade compliance regulations while streamlining supply and delivery of critical life-saving equipment to our allies south of the border.

About the Xtek share price

The Xtek share price has been on a rollercoaster ride over the past 12 months. Its shares reached as low as 38.5 cents in March, before jolting to a 52-week high of 91 cents in July.

With the current Xtek share price sitting roughly at the mid-way mark, Xtek has been busy focusing on its growth strategy. In the last six months alone, the company has secured orders from a variety of international customers.

More reading

• Why the Xtek (ASX:XTE) share price is edging higher today
• Xtek (ASX:XTE) share price soars 7% on AGM update

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

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On Monday 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 that have just been given sell ratings are listed below.

Here’s why these brokers are bearish on these ASX shares:

AGL Energy Limited (ASX: AGL)

According to a note out of UBS, its analysts have downgraded this energy company’s shares to a sell rating and cut the price target on them to $12.25. The broker made the move after reducing its forecasts to account for margin pressures from lower wholesale electricity prices. It also has concerns over the shift to renewable energy and AGL’s reliance of coal for its electricity generation. Combined, it is expecting the company’s earnings to fall consistently over the coming years. The AGL share price is trading at $12.92 on Tuesday.

OZ Minerals Limited (ASX: OZL)

A note out of Goldman Sachs reveals that its analysts have retained their sell rating but lifted the price target on this copper producer’s shares to $16.70. The broker believes that OZ Minerals’ shares are overvalued at 1.2x net asset value. This compares to the sector average of 1x net asset value. It feels this is being caused partly by investors overvaluing the company’s Carrapateena mine. It notes that its  share price implies a value for the asset in line with the larger and higher quality Olympic Dam mine owned by BHP Group Ltd (ASX: BHP). The OZ Minerals share price is fetching $18.52 this afternoon.

Virtus Health Ltd (ASX: VRT)

Analysts at Morgan Stanley have downgraded this fertility treatment company’s shares to an underweight rating but increased the price target on them to $4.90. The broker made the move on the belief that Virtus Health’s shares are overvalued after a very strong gain in recent months. Morgan Stanley also has concerns about a long term shift to lower-value IVF services. The Virtus Health share price is trading at $5.44 today.

More reading

• UBS just downgraded these outperforming ASX mining stocks
• Is AGL (ASX:AGL) really offering a 7% dividend yield today?
• These were the best performing ASX 200 shares last week
• What do big brokers think about soaring commodity prices and ASX mining shares?
• Why the Oz Minerals (ASX:OZL) share price, up 61% this year, could run higher

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Virtus Health 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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As Australia emerges from its hard-fought battle to contain COVID-19, the last thing the nation needs is a trade war with its largest export market.

Yet China, whose own economic growth has slowed in the wake of the pandemic, appears intent on making an example of Australia. Even if that comes at a cost to its own economy.

Why?

As the Australian Financial Review reports:

China has intensified punishment against Australia because of the Morrison government leading calls for an inquiry into the origins of the coronavirus pandemic as well as criticism of China’s human rights record and militarisation of the South China Sea and banning of Chinese tech company Huawei.

Aussie coal off the China menu

Since November, China has slapped hefty import tariffs on cotton, wine, timber, seafood, barley, and meat.

While painful to everyone involved in those industries, they represent a small percentage of Australia’s total export earnings to China.

Which is why coal, Australia’s third biggest export earner into China in 2019 (trailing LNG and iron ore) looks to have officially joined the list of sanctioned Australian goods.

For the past weeks Australian coal has been unofficially on the list of targeted imports, with dozens of laden ships denied entry into Chinese ports. This has already resulted in rising thermal coal prices in the Chinese market.

But China’s government appears more concerned with further punishing Australia than about rising energy costs back home. And $14 billion of Aussie coal exports look to be in imminent jeopardy.

According to the AFR:

After months of an unofficial ‘go slow’, China’s National Development Reform and Commission reportedly issued an edict on Saturday banning Australian coal, ostensibly to deal with surging coal prices.

According to state-run media outlet The Global Times, China’s top economic advisory body decided to allow power stations to import coal without any clearance restrictions, with the exception of Australia.

Trade Minister Simon Birmingham demanded an explanation, saying: “I urge Chinese authorities to immediately rule out these reports of what, if accurate, would appear to be the use of discriminatory practices against Australian coal.”

Is Aussie iron ore China’s next trade war target?

Most leading analysts believe China can ill afford to ban Australia’s iron ore. Particularly as Brazil’s iron mines struggle with inclement weather and continuing virus impacts.

Chinese steel factories are on track to set record levels of production this year. And any crimp in iron ore supplies would see their costs rise.

As SCMP reports:

Crude steel production [in China] is set to reach a record high of 1.05 billion tonnes this year, a global record which accounts for more than 70 per cent of expected global output.

In the first 11 months of the year, imports of the mineral increased 11 per cent year on year to 1.07 billion tonnes, with Australia supplying more than 60 per cent.

Chris Richardson is a Deloitte partner and leading economist. According to Richardson (quoted by the Guardian):

Where China knows it is most at risk is iron ore. China is the world’s key customer, but Australia is the world’s key supplier. That’s why analysts have said China wouldn’t act on Australian iron ore, as it would cost them lots. However, markets are still worried that China may do something.

But cracks are appearing in these bullish assertions, and market fears may prove well-founded.

This headline comes from this morning’s Australian, ‘ Beijing demands “please explain” on iron ore prices’.

The article notes:

Australia’s largest mining companies — BHP and Rio Tinto — have been asked to explain to Chinese steel manufacturers why their iron ore prices are so high as the surging $85bn export undermines Beijing’s eight-month trade retaliation campaign against the Morrison government.

Rio, Fortescue and BHP share prices at risk in trade war escalation

The 3 biggest suppliers of the $85 billion worth of Aussie iron ore exported to China each year are BHP Group Ltd (ASX: BHP), Rio Tinto Limited (ASX: RIO) and Fortescue Metals Group Limited (ASX: FMG).

All 3 have benefited from iron ore prices trading near 7-year highs. Last Thursday, iron ore hit US$158 (AU$212) per tonne. At time of writing, it’s trading at US$154 per tonne.

This has helped the BHP share price lift 7.2% year-to-date, atop the company’s 4.2% dividend payout.

Rio Tinto, which paid a 5% annual dividend yield, has seen its share price gain 11.4% so far this year.

And Fortescue’s share price is up 99.4%, alongside the company’s 8.2% dividend payout.

But China’s sabre ratting could put further share price gains in jeopardy.

Atop its desire to punish Australia over mounting political disputes, China is eager to secure cheaper prices for its record steel output.

Indeed, most analysts believe iron is currently overpriced.

ANZ senior commodity strategist Daniel Hynes told Reuters: “Fundamentals suggest a price between $US90 and $US110/tonne is the fair value at the moment.”

China’s next move in the trade war remains unknown. As does the future price of iron ore.

But shareholders in Rio, BHP and Fortescue will undoubtedly be watching China’s policy decisions closely.

More reading

• ASX 200 down 0.1%: APRA removes bank dividend restrictions, Fortescue slides, Zip higher
• Why Althea, Altium, Fortescue, & Retail Food Group are dropping lower
• Why the Afterpay (ASX:APT) share price is not the only rising star this year
• Leading brokers name 3 ASX shares to buy today
• Why the Fortescue (ASX:FMG) share price is up 28% in December

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. 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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Magellan Financial Group Ltd (ASX: MFG) is one of, if not the, most successful Australian fund managers on the ASX (or off it, for that matter). Just last week, Magellan told the markets it has close to $103 billion (specifically $102.996 billion) in assets under management, which included net inflows of $26 million for the month. That’s a lot of money to be taking a clip from every year.

Over the past two years or so, Magellan shares have appreciated by almost 120%, turning Magellan co-founder and chief investment officer Hamish Douglass into a billionaire.

Magellan has successfully tapped into an appetite in the Australian investor for access to some of the best companies in the world outside the ASX.

Magellan’s flagship Global Fund has returned an average of 15.67% per annum over the past decade. That has clearly turned heads given that this fund (across both its listed and unlisted offerings) has more than $15 billion in assets under management alone.

But Magellan has been busy in recent months. It has just completed an amalgamation of some of its listed and unlisted funds into single entities. That’s why investors can now choose to buy open-ended managed fund units directly from Magellan or on the ASX, or closed-ended shares just on the ASX. As an example, the Global Fund now trades on the share market as Magellan Global Fund (ASX: MGF), as well as Magellan Global Fund Open Class (ASX: MGOC).

Magellan launches new ‘Core’ ETFs

But we got some more exciting news from Magellan today. The company has announced it is launching a new series of exchange-traded funds (ETFs), most of them under a new ‘Core’ brand. These funds aren’t listed on the ASX, but rather on Chi-X, an alternative share market to the ASX in Australia.

These new funds (and ticker symbols) are as follows;

• MFG Core International Fund (CXA: MCSG)
• MFG Core ESG Fund (CXA: MCSE)
• MFG Core Infrastructure Fund (CXA: MCSI)
• Magellan Sustainable Fund (CXA: MSUF)

You might notice that the last one stands out. The Magellan Sustainable Fund is not part of this ‘Core’ series, but rather an actively managed fund dedicated to ethical investing. It will set investors back with a management fee of 1.35% per annum.

But turning back to this ‘Core’ series, the idea is that these ETFs provide a broader and less ‘active’ approach than Magellan’s existing funds. For one, instead of Magellan’s standard fee of 1.35% per annum (which applies to the Global Fund), these ETFs will only charge 0.5% per annum.

Additionally, each fund will reportedly hold between 70 and 90 companies (70 to 100 for the Infrastructure Fund). By comparison, the Global Fund aims for between 20 and 40, and Magellan’s High Conviction Trust (ASX: MHH) holds just 8 to 12. The Global Fund also has the mandate to keep between 0% and 20% of its value in cash (the High Conviction Trust aims for between 0% to 50%). Meanwhile, the Core funds have a maximum of 10% cash (5% for the Infrastructure Fund), with “an aim to be fully invested”.

Why this new range?

The reason for this new range? Magellan CEO Brett Cairns had this to say:

The MFG Core Series has been under development for several years and extends the successful approach that has been applied by our institutional Core Infrastructure Fund and mandates for the past 10 years. This approach actively constructs diversified portfolios of high-quality companies leveraging Magellan’s research, and manages them using a proprietary process…

We believe the series provides an attractive lower cost alternative for those wishing to gain an exposure to Magellan’s research and investment expertise but are not necessarily seeking our full actively managed portfolio services. We have also had considerable interest from retail investors and advisers in making our sustainable investment strategy available to the retail market in Australia.

More reading

• How to turn $20,000 into $950,000 in 10 years with ASX shares
• These were the worst performing ASX 200 shares last week
• Why the Magellan (ASX:MFG) share price dipped lower today
• Top brokers name 3 ASX shares to sell today
• ASX stock of the day: Platinum (ASX:PTM) shares up 6%

Motley Fool contributor Sebastian Bowen owns shares of Magellan High Conviction Trust. 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 IOUpay Ltd (ASX: IOU) share price is pushing higher on Tuesday following the release of an operational update.

In afternoon trade the fintech and digital commerce software solutions provider’s shares are up 3% to 16 cents.

What did IOUpay announce?

This morning the company released a comprehensive operational update covering its business activities and new product development initiatives.

According to the release, the company has signed merchant service agreements with two payment gateway providers in Malaysia. This includes one of the top three in Malaysia based on the number of active merchants and customer payment transactions.

It has also now received approval from the card issuing and merchant acquiring partnership bank of one of the two payment gateways. This enables IOUpay to process buy now pay later transactions for its merchant customers using credit and debit card payments processed by the company’s platform.

IOUpay advised that the bank is one of Malaysia’s largest commercial banks with 7,000+ ecommerce merchants and 10,000 instore merchants.

What else is happening?

IOUpay has signed a subscription for service agreement with Malaysia’s leading credit reporting agency, CTOS Data Systems.

It has also been approved and certified by CTOS as a CTOS Trusted Party. This makes it one of approximately 150 entities in Malaysia with the certification. The others comprise banks, major non-bank financial institutions, credit card companies, and insurance companies.

CTOS is understood to have approximately 75% market share of the credit reporting market in Malaysia. It has information on 2 million companies and 15 million individuals, 7 million unique legal records, and 4 million trade references.

Buy now pay later platform enhancements.

Finally, the company also revealed that it has completed the development and testing of core system functionality and interoperability of its buy now pay later transaction processing platform and service offering as scheduled.

These enhancements have been made to the Customer, Merchant, and Administration Systems. They include essential and proprietary system access and security, user feature sets and interface, combined with processing, administration, compliance and reporting functionality.

More reading

• Amazon’s driverless electric vehicle is coming
• Why Amaysim, Orocobre, Pacific Smiles, & Xero shares are pushing higher
• Downer (ASX:DOW) share price edges higher on divestment news
• Woolworths (ASX:WOW) buyout makes ACCC anxious
• SILK Laser (ASX:SLA) share price up 6% after completing IPO

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

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

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

Earlier this year, Amazon.com Inc (NASDAQ: AMZN) purchased Zoox, a six-year old start-up seeking to create autonomous driving vehicles from the ground up. It reportedly paid over $1.2 billion in the deal, making it one of Amazon’s largest ever acquisitions.

On Monday, the company revealed the Zoox vehicle and its plans for the fully autonomous electric vehicle. Amazon is planning to compete with Uber Technologies Inc (NYSE: UBER) and Lyft Inc (NASDAQ: LYFT) using the Zoox electric vehicle (EV) as a driverless robotaxi, according to a Bloomberg report.

The EV can carry up to four people, travel in either direction, doesn’t contain a steering wheel, and has a maximum speed of 75 miles per hour. Its two battery packs are enough for the vehicle to run up to 16 hours on a single charge. The company plans to launch an app-based ride hailing service in some U.S. cities, including San Francisco and Las Vegas, as well as overseas. 

Zoox chief technology officer Jesse Levinson said the vehicle has passed all safety crash tests, according to the Bloomberg report. It navigates using spinning laser sensors and cameras on each corner of the vehicle, giving it the ability to see a complete field of vision at all times. 

CEO Evans also said the EV “could move packages” at some point, referring to the possibility of creating a fleet of autonomous delivery vehicles, though she said there are no current plans for that. 

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

More reading

• Shopify stock’s 166% rally in 2020 isn’t sustainable
• Better buy: Amazon vs. GameStop
• Is the share market starting to look like it did in 1999?
• Better buy: Amazon vs. Peloton
• ASX stock of the day: Linius (ASX:LNU) share price blasts up 30% on product debut

Howard Smith owns shares of Amazon. John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Amazon. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends Uber Technologies and recommends the following options: short January 2022 $1940 calls on Amazon and long January 2022 $1920 calls on Amazon. The Motley Fool Australia has recommended Amazon. 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) is fighting hard to get into positive territory today but keeps falling short. In early afternoon trade the benchmark index is down 0.2% to 6,644.8 points.

Four shares that have not let that hold them back today are listed below. Here’s why they are pushing higher:

Amaysim Australia Ltd (ASX: AYS)

The Amaysim share price has risen 3.5% to 75.5 cents. This morning the junior telco received a takeover approach from WAM Capital Limited (ASX: WAM). The fund manager has offered a number of options for shareholders to consider. One being 1 new WAM share for every 2.7 Amaysim shares. This represents an offer of 83.3 cents. WAM has also offered cash of 69.5 cents per share or a combination of the two.

Orocobre Limited (ASX: ORE)

The Orocobre share price has climbed 3.5% higher to $4.26. This is despite there being no news out of the lithium miner. However, investors could be responding to a broker note out of UBS late last week. Its analysts have a buy rating and an improved $4.90 price target on Orocobre’s shares. UBS believes the company is well-placed to benefit from rising lithium prices.

Pacific Smiles Group Ltd (ASX: PSQ)

The Pacific Smiles share price is up a further 4.5% to $2.50. Investors have been buying the dental practice operator’s shares after the release of a strong trading update on Monday. One broker that was impressed is Morgan Stanley. This morning its analysts retained their overweight rating and lifted their price target on the company’s shares to $3.00.

Xero Limited (ASX: XRO)

The Xero share price has pushed a further 3.5% higher to $149.19. The cloud-based business and accounting software provider’s shares were given a boost this week when they were added to the illustrious ASX 50 index at the next quarterly rebalance. The Xero share price hit a record high $149.58 just after lunch.

More reading

• Amaysim (ASX: AYS) announces takeover as it prepares to delist
• Here’s why Bubs (ASX:BUB) and this ASX share are underperforming in 2020
• Why ASX oil stocks could replace the ASX tech boom in 2021
• Why the Webjet (ASX: WEB) share price is climbing higher
• Why the Xero (ASX:XRO) share price just hit a new record high

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 Xero. 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 Downer EDI Limited (ASX: DOW) share price is on the rise today after the company announced the divestment of its Western Australian open cut mine business. During mid-morning trade, the Downer share price has inched 0.76% higher to $5.32.

What’s driving the Downer share price?

Investors appear to be mildly pleased by the company’s latest market update, gradually driving the Downer share price higher.

According to its release, Downer has entered into an agreement to sell its mining services business, Open Cut Mining West, to Maca Ltd (ASX: MLD).

This follows Downer’s announcement earlier this month it was selling 70% of its laundry business to Adamantem Capital for $155 million. In addition, Downer announced at the same time it had refinanced its debt obligations through a $1.4 billion loan facility.

The sale of the Western Australian asset will include fleet and inventory, current liabilities, and the swapping over of existing contracts.

Downer is set to receive over $200 million in cash for the sale of the open cut mine. This will consist of $175 million for the asset itself, and around $30 million to provide flexibility within working capital. A deferred amount of $66 million will be paid in 12 equal-monthly instalments to Downer once the transaction is completed.

Pending customary conditions being met, Downer expects completion of the sale to happen early next year.

Downer CEO remarks

The CEO of Downer, Mr Grant Fenn, spoke about the company’s direction in trimming down its mining operations.

An important part of our Urban Services strategy is to exit our capital-intensive Mining business. The sale of Open Cut Mining West follows the sale of Downer Blasting Services, the Snowden consulting business and our share in the RTL Mining and Earthworks joint venture. The proceeds received from these four transactions is in line with the carrying value of these businesses.

We remain in active discussions with a number of interested parties in relation to the other parts of the Mining portfolio namely Open Cut Mining East, Underground, and the Otraco tyre management business.

How has the Downer share price performed in 2020?

The Downer share price is still a long way from reaching its pre-COVID highs, at which time it was tracking at around $8 to $9.

Since reaching a multi-year low of $2.59 in March, however, Downer shares have recovered 105%. The company currently has a market capitalisation of $3.7 billion.

More reading

• ASX 200 flat on Wednesday
• Why the Downer (ASX:DOW) share price is climbing higher today
• ASX stock winners from the $23 billion Victorian state budget
• Revealed: Shares that’ll shoot up with a COVID-19 recovery
• Why the Downer (ASX:DOW) share price is outperforming today

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 Downer (ASX:DOW) share price edges higher on divestment news appeared first on The Motley Fool Australia.

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