The Zoono Group Ltd (ASX: ZNO) share price is among the best performers on the ASX this morning.

At the time of writing, the antimicrobial solutions provider’s shares are up 8% to $1.39.

What did Zoono announce?

This morning Zoono released an update on a number of company developments, including some large sales and distribution agreements.

One of those developments included testing of Zoono’s Z-71 Microbe Shield Surface Sanitiser by the Dubai Central Laboratory Department.

That test observed that there is a complete reduction of test bacteria (99.9%) on all provided material surfaces till 30 days from the initial coating, except in Rubber and Wood surfaces. The rubber and wood surface has some viable growth on the 30th day with a reduction of 90% test bacteria.

Additional testing undertaken by Intertek Caleb Brett in Dubai found a 100% reduction between the slide control recovery level and Zoono Z-71 recovery level at 24 hours, 7 days, and 30 days.

Following this comprehensive testing, Zoono has now received the Emirates Authority for Standardisation and Metrology (ESMA) Certificate of Conformity.

Supply agreements.

In light of this certification, the company has entered into a supply agreement with Fine Hygienic Paper in the Emirates and has received the initial NZ$1.5 million deposit against the first-year purchases.

The overall agreement is for five years and has minimum annual performance target volumes of NZ$21.5 million for the first 12 months. After which, it has target volumes of NZ$28.5 million in the second year, NZ$35.7 million in the third year, and then a 5% increase thereafter.

Zoono also revealed a three-year agreement in Russia with hygiene services company ECO-SALUS. By the end of the term, its volumes are expected to be a minimum of NZ$5 million a year.

New product launch.

A final development has been the launch of a new product, which management notes is diversifying its range of antimicrobial products.

The new product is a face mask treated with Zoono, protecting the wearer from pathogens over a period of time.

But this may not be the last product launch. Management advised that it continues to work with its globally recognised customers and distributors with the aim of developing new products to help them protect their staff, customers, and communities.

More reading

• Althea (ASX:AGH) share price drops lower despite major announcement
• Why the Pushpay (ASX:PPH) share price is tumbling lower today
• Why the Resolute Mining (ASX:RSG) share price is charging higher today
• The ASX bank with the best dividend yield under APRA’s new guidelines
• Why the Beacon Lighting (ASX:BLX) share price is on watch today

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.

The post Why the Zoono (ASX:ZNO) share price is jumping 8% higher appeared first on The Motley Fool Australia.

from The Motley Fool Australia https://ift.tt/3af6FST

The Althea Group Holdings Ltd (ASX: AGH) share price is out of form on Wednesday despite the release of a positive announcement.

In morning trade the cannabis company’s shares are down 2% to 49 cents.

Why is the Althea share price dropping lower?

Investors have been selling the company’s shares this morning despite it announcing that a major regulatory change has been confirmed in Australia. This change is in relation to the status of cannabidiol (CBD) in Australia.

According to the release, the Therapeutic Goods Administration (TGA) has issued its final decision on proposed amendments to the Poison Standard. These amendments will see a new Schedule 3 (Pharmacist Only Medicine) entry created for CBD.

The date of effect of the decision is 1 February 2021, which is much sooner than the original anticipated date of 1 June 2021.

What does this mean?

The amendment will allow CBD to be supplied for therapeutic use under a new Schedule 3 entry.

This new cannabis channel would allow Australian patients to purchase CBD products over the counter upon consultation with a pharmacist, without the need for a prescription.

In addition to this, the final decision includes a modification to the dose specified in the interim decision. It has been increased from 60 mg/day, up to 150 mg/day.

Althea believes the decision paves the way for its top selling full-spectrum CBD product, Althea CBD100, to be made available under Schedule 3. It is currently sold under Schedule 4, which makes it a Prescription Only Medicine.

Management commentary.

Althea’s CEO, Josh Fegan, commented: “We applaud the TGA’s final decision in this matter and are glad to see the administration listened to industry following the interim decision, and subsequently decided to increase the maximum recommended daily dose acknowledging that this dose is consistent with the expected safety profile of a Schedule 3 medicine.

“The final decision follows the Company’s announcement to shareholders that it had raised additional working capital, through an institutional placement, with a portion of those funds allocated towards the product development and registration of a range of CBD products for the potential Schedule 3 market in Australia. This decision provides confirmation of that marketplace and the Company can now proceed with its plans to have over the counter Althea products available for Australian patients in 2021,” he added.

More reading

• Cannabis share Althea (ASX:AGH) sinks 11% on capital raising and Aphria selldown
• Why Althea, Altium, Fortescue, & Retail Food Group are dropping lower
• Why cannabis company Althea (ASX:AGH) is storming higher today
• Althea (ASX:AGH) share price lifts 10% today. Here’s why
• Why the Althea (ASX:AGH) share price soared 6% today

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.

The post Althea (ASX:AGH) share price drops lower despite major announcement appeared first on The Motley Fool Australia.

from The Motley Fool Australia https://ift.tt/3qW3vtb

The Pushpay Holdings Ltd (ASX: PPH) share price has returned from its trading halt and is tumbling lower.

At the time of writing, the donor management and engagement platform provider’s shares are down 3.5% to $1.72.

Why was the Pushpay share price in a trading halt?

On Tuesday, Pushpay requested a trading halt whilst it launched a bookbuild process to facilitate the sale of a significant combined stake in the company by two existing shareholders.

Former CEO Chris Heaslip was selling 41.67 million shares and Executive Director Chris Fowler was selling 13.01 million shares.

These sales would reduce Mr Heaslip’s stake from 4% to 0.20% (which will be held by the Mission 316 Foundation) and Mr Fowler’s stake from 2.4% to 1.2%.

According to yesterday’s update, the sell down was fully underwritten at a floor price of NZ$1.75 per share. This represented a 7.4% discount to the last closing price of NZ$1.89 on 14 December.

What happened with the bookbuild?

This morning Pushpay revealed that the bookbuild was completed successfully.

According to the release, the 54.68 million shares were ultimately sold for NZ$1.79 per share, which was higher than the floor price and a discount of 5.3% to its last close price.

Pushpay advised that the book was oversubscribed and well supported, attracting bids from 22 institutional investors across New Zealand, Australia, Canada and the US. There was also strong participation from retail investors.

Pushpay’s CEO, Bruce Gordon, commented: “We are pleased to see the continued strong support for Pushpay in the market. The transaction attracted significant interest from both our existing and a number of new high-quality institutional investors.”

“The successful completion of this transaction further demonstrates that our value proposition and strategy to become the preferred provider of mission critical software to the US faith sector continues to resonate with investors,” he concluded.

FY 2021 guidance.

In case you missed it, yesterday the company also confirmed that it is on track to achieve its EBITDAF guidance of between US$54 million and US$58 million for the 12 months ending 31 March.

This represents a 116% to 132% increase, respectively, on FY 2020’s operating earnings of US$25.1 million.

However, management has warned that there are uncertainties and impacts surrounding COVID-19 and the broader US economic environment that remain.

More reading

• 3 exciting ASX tech shares to buy in 2021
• ASX 200 falls on Tuesday
• Top ASX shares to buy in 2021
• Why the Pushpay (ASX:PPH) share price is in a trading halt
• These are 10 of the best performing ASX tech shares of 2020 so far

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 PUSHPAY FPO NZX. The Motley Fool Australia has recommended PUSHPAY FPO NZX. 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 Pushpay (ASX:PPH) share price is tumbling lower today appeared first on The Motley Fool Australia.

from The Motley Fool Australia https://ift.tt/3noNOZg

In morning trade the Resolute Mining Limited (ASX: RSG) share price is charging higher.

At the time of writing, the gold miner’s shares are up 7.5% to 78 cents.

Why is the Resolute share price charging higher?

There have been a couple of catalysts for the solid rise in the Resolute share price on Wednesday.

The first is a rebound in the gold price overnight. According to CNBC, the price of the precious metal has risen 1.4% to US$1,857.50 an ounce. This was driven by optimism that major COVID stimulus is coming in the United States.

In addition to this, an announcement released yesterday evening by Resolute appears to have gone down well with investors.

What did Resolute announce?

Resolute has announced a binding agreement to sell its Bibiani Gold Mine in Ghana to China’s Chifeng Jilong Gold Mining Co.

According to the release, the two parties have agreed a total cash consideration of US$105 million. This comprises a US$5 million deposit on the signing of the agreement and US$100 million on completion.

The latter is expected by March 2021, subject to the satisfaction of government approvals and other conditions.

Resolute’s interim Chief Executive Officer, Stuart Gale, commented: “Resolute is proud of its contribution to Ghana and pleased that our investments at Bibiani in exploration, feasibility studies, and community support will provide a strong base for future success and value creation. I am confident that Resolute’s positive legacy in Ghana, and the interests of all stakeholders in Bibiani, will be protected and enhanced under Chifeng’s ownership.”

Chifeng’s Executive Chairman, Wang Jianhua, believes the operation fits well with its strategic focus.

He explained: “The transaction is consistent with our strategic focus on our core operating assets together with balance sheet improvement. We are delighted to have secured such a significant gold mining asset in the current market. Resolute has defined an exciting future for Bibiani as a high margin, long life underground gold mining operation. Chifeng will immediately invest the required capital, and provide the necessary expertise, to recommission Bibiani as an operating gold mine in the shortest possible timeframe.”

What’s next?

Resolute has agreed not to participate in any discussions for competing offers for Bibiani. It is also required to notify Chifeng if any superior proposal is received for Bibiani, following which Chifeng has 20 business days to match the offer.

If Chifeng does not match the offer, either Chifeng or Resolute may terminate the agreement, upon which a break fee of US$10 million will be payable by Resolute. The break fee is also payable by Resolute if Chifeng terminates the agreement due to a breach of its obligations under the agreement.

More reading

• Why Kathmandu, Resolute, Select Harvests, & Treasury Wine Estates are dropping lower

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.

The post Why the Resolute Mining (ASX:RSG) share price is charging higher today appeared first on The Motley Fool Australia.

from The Motley Fool Australia https://ift.tt/2WlbUbw

ASX bank dividends are back in focus after our banking regulator removed the caps on bank distributions.

This is a win for banking bulls who believe that the unshackling of dividends will help the sector catch up to the S&P/ASX 200 Index (Index:^AXJO) in 2021.

The question many will be asking is how much can ASX banks now afford to pay as we emerge from the COVID‐19 economic mayhem?

ASX banks can sustain a 10% ROE and 70% payout

The Australian Prudential Regulation Authority (APRA) no longer requires banks to limit payout ratios at under 50%. Prudence is still expected of them in respect to bank dividends, of course.

Goldman Sachs has put on its thinking cap and worked out that ASX banks can sustainably pay without upsetting APRA.

The broker believes the sector can sustain an average return on equity (ROE) of around 10%, which would support a dividend payout ratio of 70% while keeping the CET1 ratio at more than 10%.

ASX bank with the best dividend yield

“We note that our FY22E sector dividend forecast supports an average nominal yield of >5%, while the gap between the sector’s dividend yield grossed up for franking credits and the 10-year bond rate is still trading at more than one standard deviation cheap,” said Goldman.

But the ASX bank with the best dividend yield for the current financial year is the Westpac Banking Corp (ASX: WBC) share price.

The broker is tipping the bank to pay a full year dividend of 97 cents a share, up from the 31 cents it paid in FY20.

Franking is cream on the cake

Investors won’t need to wait till FY22 to get a circa 5% yield from the Westpac share price. The bank is already sitting on a yield of 4.9% based on yesterday’s closing price, based on Goldman’s estimates.

If you included franking credits, the yield jumps to nearly 7%. Not bad in this near zero interest rate environment!

Another ASX financial with a high dividend yield

The only large cap ASX financial stock that can match Westpac on yield is the Suncorp Group Ltd (ASX: SUN) share price.

Suncorp may not technically be a bank, but it’s on a yield of 5.2% before franking, according to Goldman.

The broker is recommending investors buy the Westpac share price and Suncorp share price. But the bank that it’s really bullish on is the National Australia Bank Ltd. (ASX: NAB) share price.

Goldman rates the NAB share price as a “conviction buy”. NAB is the only bank to be included on this list.

More reading

• Why the Beacon Lighting (ASX:BLX) share price is on watch today
• Here’s how ASX 200 bank shares have performed in 2020 so far
• Why ASX banks are licking their lips right now
• 5 things to watch on the ASX 200 on Wednesday
• ASX 200 falls on Tuesday

The post The ASX bank with the best dividend yield under APRA’s new guidelines appeared first on The Motley Fool Australia.

from The Motley Fool Australia https://ift.tt/37roxYZ

The Beacon Lighting Group Ltd (ASX: BLX) share price is one to watch this morning after the company provided a key announcement before the market open.

What did Beacon Lighting announce today?

Beacon provided updated sales and net profit after tax (NPAT) guidance for the 26 weeks ending 27 December 2020. The Aussie retailer said trading conditions have supported online sales channels which has been reflected in strong sales performance year to date.

The company’s first-half group sales guidance for FY2021 is now sitting at $147.0 million to $152.0 million. That’s a significant increase on Beacon Lighting’s prior year actual sales of $122.5 million.

Beacon provided NPAT guidance of $19.5 million to $21.5 million, more than double the $9.5 million actual NPAT from the first half of 2020.

The Beacon Lighting share price will be one to watch in early trade following the latest trading update from the $317.1 million market capitalisation retailer.

CEO Glen Robinson noted the “terrific momentum” in a period which has been “very difficult” for so many businesses. The latest update reflects the improving trading and economic conditions across Australia with online-focused retailers performing strongly.

Beacon International sales continue to be “exciting” for the company alongside the improved store, online and trade traffic performance for the group.

How has the Beacon Lighting share price been performing?

Shares in the Aussie retailer are up 19.3% to $1.42 per share in 2020 including a 222.7% gain since the bottom of the March bear market.

In comparison, the S&P/ASX 300 Index (ASX: XKO) is down 0.7% for the year and trading at 6,609.8 points despite a strong final quarter of trading heading into Christmas.

The Beacon Lighting share price is trading at a price-to-earnings (P/E) ratio of 14.1 with a dividend yield of 3.5% p.a. prior to Wednesday’s market open.

Foolish takeaway

The Beacon Lighting share price is one ASX small-cap share to watch in early trade following the Aussie retailer’s latest sales and NPAT guidance update.

More reading

• The ASX bank with the best dividend yield under APRA’s new guidelines
• Here’s how ASX 200 bank shares have performed in 2020 so far
• 5 things to watch on the ASX 200 on Wednesday
• ASX 200 falls on Tuesday
• ASX 200 down 0.1%: APRA removes bank dividend restrictions, Fortescue slides, Zip higher

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.

The post Why the Beacon Lighting (ASX:BLX) share price is on watch today appeared first on The Motley Fool Australia.

from The Motley Fool Australia https://ift.tt/387DWwv

This has been a frustrating year for shareholders of California-based healthcare company ResMed Inc (ASX: RMD). Despite the ResMed share price rising almost 25% to $27.41 so far in 2020, shareholders have had to endure a fair amount of volatility to get here. It seemed like every time ResMed shares looked set to cross over the psychological $30 barrier, they ended up crashing lower.

What does ResMed do?

ResMed develops medical equipment for the treatment of respiratory conditions, with a particular focus on sleep apnoea. Early in the COVID-19 pandemic, the company announced it had ramped up production of various ventilator systems and equipment to help treat coronavirus patients suffering from respiratory complications.

What has driven the ResMed share price volatility?

The ResMed share price plunged 7% the day the company released its full year results to the market back at the beginning of August. This was despite ResMed reporting a 13% increase in revenues year on year to US$3 billion, and a 40% jump in net operating profit.

Revenues across most geographies were boosted due to increased demand for ResMed’s ventilators during the COVID-19 pandemic. However, demand for the company’s sleep devices in key markets across the United States, Canada and Latin America declined during the year.

ResMed’s first quarter FY21 results, released late October, told a similar story, and yet the share price rose sharply in response. Revenues for the quarter increased 10% against the prior comparative period to US$751.9 million, while net operating profit surged 27%.

Again, the result was driven primarily by increased sales of ventilators, partially offset by decreased demand for sleep devices in the US, Canada, and Latin America. Selling, general and administrative expenses also continued to decline due to prudent cost management during the pandemic.

Due to how similar these two results actually were, it’s hard to say why the market responded so differently to them. However, it’s worth noting that there was a fair amount of noise in ResMed’s FY19 result as the company settled some large legal expenses that year, which inflated the relative year-on-year performance for FY20. The first quarter result for FY21 excludes a lot of that noise, giving a cleaner picture of the company’s underlying performance.

There is also the simple fact that general optimism around the rollout of a COVID-19 vaccine early in 2021 has boosted the performance of the ASX more broadly. The release of ResMed’s FY20 results coincided quite closely with the introduction of Melbourne’s harshest lockdown, and Victoria’s COVID-19 cases were spiking. The performance of the broader S&P/ASX 200 Index (ASX: XJO) was languishing during this period, and only really started gathering momentum again in early November – around the time ResMed released its first quarter FY21 result.

The biggest disappointment for ResMed shareholders is that the company has underperformed relative to New Zealand-based competitor Fisher & Paykel Healthcare Corp Ltd (ASX: FPH). The Fisher & Paykel share price has gained close to 44% so far this year without the same level of volatility.

As COVID-19 vaccine rollouts progress throughout the world in 2021, it will be interesting to track both companies’ earnings to see how dependent they have been on increased ventilator sales.

More reading

• ASX healthcare shares could outperform in 2021: Fundie
• These are 8 of the best performing ASX healthcare shares of 2020 so far
• 5 ASX shares rated as buys by top fundie
• ASX stock of the day: Immutep (ASX:IMM) shares blast up 60% on trial news
• 2 fantastic ASX healthcare shares to buy for 2021

Motley Fool contributor Rhys Brock has no position in any of the stocks mentioned. 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.

The post The ResMed (ASX:RMD) share price is up 25% in 2020 appeared first on The Motley Fool Australia.

from The Motley Fool Australia https://ift.tt/3mo69V0

The ASX banking sector, and ASX bank shares by extension, are implicitly the cornerstone of the S&P/ASX 200 Index (ASX: XJO) Not only do the big four ASX banks make up close to a fifth of the overall ASX 200 by weighting, but the banks are also some of the most-held shares in the retail investor community.

Investors have long been attracted to the banks for their strong, often iconic brands, formidable position in their respective markets, and (of course) a reputation for hefty, fully franked dividend payments.

But 2020 has brought its own unique challenges to the banking sector, which has been evident in the banks’ share price performance over 2020 so far. So let’s have a look at how the ASX bank shares have come through 2020. As a benchmark in this endeavour, the ASX 200 is currently carrying a 0.9% loss year to date:

ASX Bank Share (by market capitalisation)	YTD share price gain (as of 15 December)	Dividends paid in 2020 (cents/share)	2020 trailing dividend yield	Market Capitalisation
Commonwealth Bank of Australia (ASX: CBA)	3.99%	298	3.59%	$147.37 billion
National Australia Bank Ltd (ASX: NAB)	(4.84%)	60	2.57%	$76.93 billion
Westpac Banking Corp  (ASX: WBC)	(17.61%)	31	1.56%	$71.98 billion
Australia and New Zealand Banking Group Ltd (ASX: ANZ)	(6.44%)	60	2.61%	$65.24 billion
Macquarie Group Ltd (ASX: MQG)	–	315	2.29%	$49.72 billion
Bendigo and Adelaide Bank Ltd (ASX: BEN)	(5.18%)	31	3.32%	$4.96 billion
Bank of Queensland Limited (ASX: BOQ)	7.42%	12	1.53%	$3.56 billion

ASX banks have a year to forget

As you can see, 2020 has been a difficult year for ASX bank shares. All but CBA, Macquarie and Bank of Queensland have gone backwards over the year to date, with Westpac leading the charge (so to speak) with a 17.61% year-to-date slide. Interestingly, Macquarie was exactly flat for the year on yesterday’s closing share price.

It’s worth pointing out that most of the factors that have led to this weak performance have been macro in nature, thus affecting all of the banks in equal measure. First and foremost has been the coronavirus-induced recession we have seen this year – the first in almost three decades for the Australian economy.

Banks are usually regarded as cyclical shares, rising and falling in line with economic growth. When the economy is growing, there is typically higher demand for credit and less pressure on loan delinquency. But the reverse is also true. Most consumers in the economy don’t tend to want to borrow money amid the employment uncertainty, falling asset prices and falling incomes that a recession often brings.

However, this recession has seen an unprecedented intervention by governments into the economy. Programs such as JobKeeper and the coronavirus supplement have mitigated much of the damage that the recession brought on, which is likely why the losses in the ASX bank sector year to date haven’t been, frankly, larger. Remember, back in the global financial crisis of 2008-09, CBA shares fell from over $60 a share to under $24. Luckily, ASX bank shareholders escaped that kind of carnage this time around.

Interest rates, dividends weigh on share prices

We have also seen interest rates hit record lows in 2020. Australia looks set to finish the year with a cash rate of just 0.1%, which is practically zero. When rates are this low, it affects the banks’ ‘spread’, or the difference between what the banks pay in interest on deposits, and the interest they receive on loans. Since the interest they pay on deposits is also approaching zero, there isn’t too much room for the banks to lower interest rates on mortgage rates and loans without cutting into profitability. This is also a likely factor at play here.

However, it is worth discussing the divergence between the different banking shares. CommBank is up 4% for the year, whilst Westpac is down close to 18%. We can’t explain that away with ‘macro’ factors. Well, the answer is probably simple.

CBA was the only ASX bank fortunate enough to have an interim payment hit its shareholders’ bank accounts before the coronavirus recession got going back in early March. That is why we see a far higher trailing dividend yield for CBA shares in 2020 than most of the other ASX banks. Additionally, CBA was not forced to raise capital in the midst of the pandemic, unlike NAB.

Meanwhile, ANZ deferred its interim dividend, whilst Westpac declined to pay one altogether, along with Bendigo Bank and Bank of Queensland. Additionally, Westpac was also hit with a whopping fine of $1.3 billion back in September, a corporate record. This would have further impeded the bank’s ability to pay dividends.

All in all, most ASX investors would have felt the impact of the ASX banking sector on their personal wealth, whether that be through direct ownership of shares, ASX 200 index funds or their superannuation funds

More reading

• Why ASX banks are licking their lips right now
• 5 things to watch on the ASX 200 on Wednesday
• ASX 200 falls on Tuesday
• Here are the US shares ASX investors are buying
• ASX 200 down 0.1%: APRA removes bank dividend restrictions, Fortescue slides, Zip higher

Motley Fool contributor Sebastian Bowen owns shares of National Australia Bank Limited. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post Here’s how ASX 200 bank shares have performed in 2020 so far appeared first on The Motley Fool Australia.

from The Motley Fool Australia https://ift.tt/3gRmX5J

Despite near-zero interest rates, the big ASX-listed banks have some excellent news to see in the new year.

Evidence from multiple sources is showing that the housing market is heating up for a massive post-COVID surge.

“It seems likely that residential property transactions will increase by a quarter in 2021 as, in addition to homebuyers, we’re now seeing property investors also returning to the fold — lured by the prospect of neutral-to-positively geared investments,” said BuyersBuyers.com.au chief operating officer Pete Wargent.

“Now it’s notable that they’re feeling confident enough to buy again.”

Commonwealth Bank of Australia (ASX: CBA) has noticed the effects of the Reserve Bank’s November rate cut among Australian households.

“Home buying spending intentions jumped higher last month, which was consistent with our expectations that the improvement in the Australian economy and the further interest rate cuts associated would see a restrengthening of the home buying market,” said CBA chief economist Stephen Halmarick.  

National Australia Bank Ltd (ASX: NAB) home ownership executive Andy Kerr said mortgage applications were at a frenzy at the moment.

“First home buyers are back in the market at levels we haven’t seen for a decade,” he said.

“Demand has been supported by historically low interest rates and more government support, such as the First Home Loan Deposit Scheme and HomeBuilder. A brief pullback in property prices also helped first-home buyers as the uncertainty of COVID-19 put many plans on ice, with investor demand slowing noticeably.”

Low margin but higher volume

This is all excellent news for the major banks like NAB, CBA, Westpac Banking Corp (ASX: WBC) and Australia and New Zealand Banking Group Ltd (ASX: ANZ).

Their fortunes have always had a strong correlation to the health of the Australian real estate market.

Yes, extremely low interest rates this time don’t leave the banks much margin — but the volume of new clientele might soothe the pain.

BetaShares chief economist David Bassanese said the low rates had “dramatically improved housing affordability” and real estate prices would jump up next year.

“The [COVID-19] peak-to-trough decline in national house prices has been only around 2% — far less than even some of the best-case scenarios touted only a few months ago,” he said.

“I personally anticipated a decline closer to 10%”

Most experts agree with Bassanese that the market is hot again and housing prices would ramp up in 2021. Earlier this month, a Finder survey found 24 out of 28 finance experts forecasting that real estate prices would exceed 2019 levels in the coming year. 

Even the Reserve Bank thinks Australian banks will be just fine, despite the ultra-low rates that it set.

“Australian banks are better prepared than they were prior to the GFC,” head of financial stability Jonathan Kearns said in a speech on Tuesday.

“Their much higher liquid asset holdings helped earlier this year. Banks are well capitalised. Importantly they have large buffers which are there to be used, not preserved, and will enable them to continue lending and supporting their customers, and so the economic recovery.”

A crazy year for real estate

Wargent said the way the property market panned out this year has been remarkable.

“2020 has been one of the most unusual years on record for real estate markets in Australia,” he said.

“We came into the year with relatively low unemployment and confidence running at a solid clip, but as the first quarter of the calendar year progressed it became increasingly clear that significant disruption could be on the cards.”

But just a half-year later, real estate has flipped around once again.

ASX-listed banks and their shareholders had more good news on Tuesday. 

Financial watchdog Australian Prudential Regulation Authority (APRA) announced it would no longer require banks to retain at least half of their earnings. This means the companies are free to restore dividends back to the high levels traditionally seen in the Australian finance sector.

More reading

• 5 things to watch on the ASX 200 on Wednesday
• ASX 200 falls on Tuesday
• Here are the US shares ASX investors are buying
• ASX 200 down 0.1%: APRA removes bank dividend restrictions, Fortescue slides, Zip higher
• APRA removes dividend restrictions for the banks

Motley Fool contributor Tony Yoo 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 ASX banks are licking their lips right now appeared first on The Motley Fool Australia.

from The Motley Fool Australia https://ift.tt/37nYEc8

Global share markets are rising whilst the world anticipates a COVID-19 vaccine. There are some ASX shares that could be worth watching.

Here are three options that are displaying growth credentials:

Australian Ethical Investment Limited (ASX: AEF)

Australian Ethical is a fund manager that aims to invest ethically on behalf of its investors. Its funds try to avoid businesses that are doing harm to the environment, people and animals. Australian Ethical invests in companies that are creating new technologies, building a clean future, finding medical solutions, create more sustainable products and so on.

According to the ASX it currently has a market capitalisation of $562 million.

In FY20 the ASX share reported that revenue was up 22% to $49.9 million. It generated a performance fee of $3.6 million from outperformance of the Emerging Companies Fund, which was 350% higher than FY19’s performance fee.

Underlying profit after tax grew by 42% to $9.3 million whilst actual net profit after tax grew by 46% to $9.5 million. Excluding the impact of the performance fee, revenue and underlying net profit both rose by 15%. The total dividend per share of 6 cents was 20% higher than FY19.

This result came from a 19% increase of funds under management (FUM) to $4.05 billion with net inflows of $660 million (which was 100% higher than last year). Australian Ethical also said that customer numbers went up 20%.

This result was followed up by the first quarter of FY21 where total FUM increased by 6.5% to $4.32 billion thanks to $150 million of net inflows and $110 million of market performance.

However, the Australian Ethical share price has fallen by 45% in just under six months.

A2 Milk Company Ltd (ASX: A2M)

A2 Milk is a business that produces a number of dairy products for consumers, it has a reputation for quality. Some of those dairy products include infant formula, liquid milk, milk powder and A2 Milk. Ophir High Conviction Fund (ASX: OPH) is a high-performing fund manager that holds A2 Milk as one of its largest positions and still really likes the long term potential of the business.

According to the ASX, A2 Milk has a market capitalisation of almost $10 billion.

The A2 Milk share price has fallen by around a third in just under five months. The company has warned for a while that FY21 could be impacted by COVID-19 effects and a moderation of economic activity, which could impact parts of the supply chain.

In the first half of FY20 it’s also suffering from the pantry destocking effect and lower daigou sales because of reduced tourism from China and international student numbers. A2 Milk also said it was hit by the stage 4 lockdown in Victoria which disrupted corporate daigou.

The ASX share is expecting its revenue to fall by around 4% to 10% in the FY21 first half to be in a range of NZ$725 million to NZ$775 million. The full year revenue is expected to keep growing and rise by 4% to 10% to NZ$1.8 billion to NZ$1.9 billion.

However, A2 Milk said its underlying China infant formula business is performing soundly as well as the liquid milk business in Australia and the US. Management believes the impacts on the daigou channel are temporary. A2 Milk noted that its daigou infant formula sales is only one part of its multi-channel and multi-product strategy into China.

Betashares Asia Technology Tigers ETF (ASX: ASIA)

This exchange-traded fund (ETF) is an ASX share that gives exposures to 50 of the largest Asian technology businesses outside of Japan.

Some of those names include Samsung, Taiwan Semiconductor Manufacturing, Tencent, Meituan, Alibaba and JD.com

More than half of the ETF is invested in Chinese businesses. There’s another 20.2% allocated to Taiwan, 17.4% is weighted to South Korea and 5.1% is invested in Indian tech shares. The remainder is invested in Hong Kong and ‘other’.

In terms of sector allocation, almost a third is invested in internet and direct marketing retail, semiconductors make up 18.7% of the ETF and 16.8% is invested in interactive media and services. Other tech sectors make up the rest of the ETF’s allocations. 

The ETF has a 0.67% annual management fees and it has delivered average returns per annum of 32.3% since inception in September 2018.

More reading

• Top ASX shares to buy in 2021
• 3 ASX ETFs to buy in 2021
• 10 highly rated ASX shares to buy in 2021
• 5 ASX shares rated as buys by top fundie
• 2 popular international ETFs for ASX investors to buy

Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Australian Ethical Investment Ltd. The Motley Fool Australia owns shares of and has recommended A2 Milk and BetaShares Asia Technology Tigers ETF. The Motley Fool Australia has recommended Australian Ethical Investment Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post Got cash to invest? Here are 3 ASX growth shares to buy appeared first on The Motley Fool Australia.

from The Motley Fool Australia https://ift.tt/3agK8F8