The SEEK Limited (ASX: SEK) share price is on the move on Monday after the release of a trading update.

At the time of writing the job listings company’s shares are down slightly to $21.67.

What did SEEK announce?

This morning SEEK released a further update on how its businesses are performing during the pandemic.

According to the release, the SEEK ANZ and SEEK Asia businesses have experienced a consistent trend of improving weekly billings since their collapse in March and April.

In April SEEK’s billing declines for these businesses were in the range of -65% to -70% compared with the prior corresponding period. Whereas in June, the businesses are now observing weekly billing declines in the range of -40% to -50%.

Things are even better in China for its Zhaopin business. In February its billings were 60% lower than management’s expectations. Whereas in May, its billings improved to be around 10% behind the prior corresponding period.

Elsewhere, the company notes that its LatAm business has been significantly impacted, but both its OES business and ESV investments are performing well.

What does this mean for its FY 2020 result?

In light of the above, management is expecting revenue of approximately $1,575 million and earnings before interest, tax, depreciation, and amortisation (EBITDA) of approximately $410 million in FY 2020.

Though, it has warned that this is an estimate only to keep the market as well informed as possible. It remains subject to audit and could still be impacted by a range of factors including foreign exchange, second wave impacts, macro conditions, and business performance.

On the bottom line, SEEK expects to post a loss after tax on a reported basis. This follows its decision to recognise an aggregate non-cash impairment charge of $190 million to $230 million. This charge relates to its Brasil Online, OCC Mundial, and four non-core minority investments.

These impairments will not have any material impact on SEEK’s debt covenants. Nevertheless, SEEK has obtained a temporary increase to key covenant limits in its senior syndicated debt facility and is strengthening its balance sheet with a $175 million senior note offer.

More reading

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• Why Adairs, Nick Scali, SEEK, & Splitit shares are storming higher
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Motley Fool contributor James Mickleboro owns shares of SEEK Limited. The Motley Fool Australia has recommended SEEK Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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Last week the prime minister unveiled an infrastructure spending package designed to fast-track approvals for 15 major projects, plus an additional $1.5 billion in spending. Included in the 15 large projects is the expansion of Olympic Dam, owned by BHP Group Ltd (ASX: BHP). Moreover, it includes a $10 billion freight rail project, the Marinus interconnector, and a range of other high-profile works.

This is not counting the spending already underway in Western Australia and other states. Aside from the potential to create jobs, the spending will also fund many construction and engineering companies. Below is a range of companies I have on a watchlist as potential beneficiaries of this spending. 

Utility infrastructure

Service Stream Limited (ASX: SSM) is a great infrastructure services company. It grew out of the communications sector due to NBN spending. Today they are very active in the water, electricity and gas industries through acquisition and growth. Service Stream also has a 30% stake in the D4C consortium that has a 10-year contract with Sydney Water.

Parts and materials

No matter how this plays out, Boral Limited (ASX: BLD) is likely to see some benefit. Boral manufactures and sells infrastructure and construction materials in Australia and internationally. Thus, providing it access to stimulus packages globally. Boral has seen some hard years lately with stagnant sales and earnings growth. However, in recent days there has been a lot of excitement around the company.

Boral recently appointed a new CEO. One who, controversially, has a lot of experience from within the industry. In addition, Seven Group Holdings Ltd (ASX: SVW) recently took a 10% stake and is likely to take a board seat. Lastly, the company is undertaking a major review with Macquarie Capital and Flagstaff Partners. 

Civil contractors

Of all of the civil engineering companies in Australia, I am leaning very strongly towards NRW Holdings Limited (ASX: NWH) as a key beneficiary. The approval’s fast track will impact the company’s Olympic Dam project contract. It is also likely to fast track a decision on the Bunbury Outer Ring Road project. This project is slated to cost $852 million in total and NRW is 1 of 2 proponents accepted to bid. 

Foolish takeaway

The infrastructure spending stimulus across Australia is likely to create a mini-boom for construction, engineering and materials companies. While these 3 are the most probable beneficiaries, there will likely be a range of ASX companies lifted in the next 6 – 12 months.

More reading

• Here are 3 Australian share market trends to watch this week
• James Hardie share price in spotlight as it upgrades profit guidance
• ASX 200 Weekly Wrap: ASX back in the green
• 2 blue chip ASX 200 dividend shares to buy next week
• Where to invest for reliable dividend shares

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

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In my opinion, JB Hi-Fi Limited (ASX: JBH) shares could be one of the best ASX shares to buy right now.

It’s a big call, especially with top growth shares like Afterpay Ltd (ASX: APT) rocketing higher in 2020.

But here’s why I think the Aussie retailer could be a strong ASX share to buy and hold for the long-term.

Defensive earnings

JB Hi-Fi has already proven it can be a defensive buy when times are tough. The S&P/ASX 200 Index (ASX: XJO) has slumped 11.75% in 2020, while the JB Hi-Fi share price has climbed 4.7% higher.

JB Hi-Fi has been a beneficiary of shifting consumer spending habits throughout the coronavirus pandemic. Strong government stimulus during the crisis has helped to prop up the economy and stimulate some discretionary spending.

This stimulus, combined with a shift towards work from home, means JB Hi-Fi has seen strong electronics sales and enjoyed solid defensive earnings, at least in 2020.

The JB Hi-Fi share price is actually up 70.1% since its low on 25 March and is now closing in on its record high of $46.09 per share.

Impressive online presence

I think JB Hi-Fi’s strong online presence is absolutely critical to its ability to compete in the Aussie retail sector moving forward. In my opinion, JB Hi-Fi has a solid user interface and user experience, as well as a strong digital marketing strategy.

That’s good news for the JB Hi-Fi share price, particularly if we see a continued decline in brick-and-mortar retail stores in coming decades.

Strong dividend share

The JB Hi-Fi share price has experienced strong capital gains in recent years, on top of being a solid dividend share.

Shares in the Aussie retailer are yielding 3.78% right now, which in my view is a good return in the current market.

There aren’t many ASX shares out there with a solid base for the future, capital gains and dividends. That could make investors look closely at investing in JB Hi-Fi as a diversification option in their portfolios.

Foolish takeaway

The JB Hi-Fi share price has been rocketing higher in recent months, but there could be more growth on the way.

I like the technical environment despite potential headwinds for Aussie retail. I wouldn’t rely on JB Hi-Fi as a defensive share in the future, but more spending on home office setups could be good news for the short to medium-term.

There’s no magic answer to investing in ASX shares. All we can do is stick to a buy-and-hold strategy and remember we’re investing in companies with long-term prospects, not just buying and selling shares.

The JB Hi-Fi share price is trading at a price-to-earnings ratio of 17.65 right now, so it might not be a cheap buy. However, if you like capital gains and dividends, I think it could be one to add to the watchlist.

More reading

• Here are 3 Australian share market trends to watch this week
• Is the a2 Milk share price a buy after falling nearly 5% on Friday?
• The NAB share price has fallen 24%. Should you buy?
• James Hardie share price in spotlight as it upgrades profit guidance
• ASX 200 Weekly Wrap: ASX back in the green

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

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There is a range of Australian share market trends that I think will continue across this week. Some have been building for a few weeks while others only started recently. 

Real estate trading

Real estate trading will likely continue to be very heavy this week. Australian real estate investment trusts (A-REIT) have been among the heaviest-traded shares on the Australian share market over the past 3 weeks. The trading has benefitted companies like office investor DEXUS Property Group (ASX: DXS). However, it has been a little undecided over retail-exposed REITs.

Of all the major real estate companies, it is Scentre Group (ASX: SCG) and Vicinity Centres (ASX: VCX) that have seen their share prices drop marginally. I think this is likely to continue this week. Despite the HomeBuilder package, I think the reality surrounding the housing market is likely to sink in, possibly impacting GPT Group (ASX: GPT), in particular.

Discretionary retail shares

The release of the ABS Retail Trade survey appeared to catch the market off-guard. The survey announced a rise in retail turnover of 16.3% in May 2020. The largest rise in the survey’s 38-year history. This provided a lift to the Australian share market when the survey was released during Friday’s trading. I believe this lift will continue through this week.

It included larger companies like Wesfarmers Ltd (ASX: WES), Harvey Norman Holdings Limited (ASX: HVN) and JB Hi-Fi Limited (ASX: JBH). However, it is also likely to focus attention on small caps like Lovisa Holdings Ltd (ASX: LOV) and Accent Group Ltd (ASX: AX1).

Construction and building

The government’s infrastructure spending package is going to be a slow-burning trend in the Australian share market over the next few weeks. However, I expect investors to be taking positions during this week. The federal government announced fast-track approval processes for 15 major projects as well as an additional $1.5 billion in infrastructure funding. This is aside from any spending currently underway within each state. 

Many engineering companies are likely to benefit from this. Yet I think that Boral Limited (ASX: BLD) is going to benefit no matter what. Boral is the largest supplier of construction materials throughout Australia. It also has an international presence in the US and other countries. As such, it is likely to benefit from stimulus spending in many regions.

More reading

• Infrastructure shares boosted by government spending
• Is there a better buy than JB Hi-Fi shares today?
• James Hardie share price in spotlight as it upgrades profit guidance
• ASX share price winners and losers of last week
• ASX 200 Weekly Wrap: ASX back in the green

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

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The Challenger Ltd (ASX: CGF) share price won’t be going anywhere on Monday after the annuities company requested a trading halt.

Why is the Challenger share price in a trading halt?

Challenger requested a trading halt this morning while it launches an equity raising which aims to further strengthen its capital position and provide flexibility to enhance earnings.

Challenger’s equity raising comprises a fully underwritten institutional placement of $270 million and a non-underwritten share purchase plan aiming to raise up to $30 million.

These funds will be raised at $4.89 per new share, which represents an 8.1% discount to the last close price of $5.32.

Management notes that the equity raising will further strengthen Challenger Life’s capital position during this period of ongoing market uncertainty. This will be achieved by initially increasing its regulatory capital position to 1.78 times APRA’s prescribed capital amount and its common equity tier 1 ratio to 1.17 times the prescribed capital amount.

How will Challenger deploy these funds?

Challenger intends to prudently and progressively deploy the capital raised. This will be primarily used in investment grade fixed income opportunities that are expected to be return on equity (ROE) accretive for shareholders.

Once fully deployed, Challenger’s defensive portfolio mix will be maintained, and the Life business’ prescribed capital amount ratio is expected to return to around the top end of its target range of 1.3 times to 1.6 times on a pro forma basis.

Managing Director and Chief Executive Officer, Richard Howes, commented: “Challenger is in a strong capital position with the raising further strengthening CLC’s balance sheet, and providing the opportunity to seek out compelling ROE accretive investment opportunities over time.”

“In response to the impact of ongoing market volatility, we have reduced capital intensity and maintained a strong capital position by repositioning the portfolio to more defensive settings. This has increased the cash and liquids we have on CLC’s balance sheet to over $3 billion,” he added.

One positive from the market volatility is that Challenger is seeing a lot of opportunities for it to deploy capital.

Mr Howes explained: “Following the pandemic market sell-off, fixed income asset risk premiums have widened significantly and we are now seeing opportunities, primarily in investment grade, to selectively invest this cash and liquids balance and generate pre-tax ROEs in excess of 20% on the capital backing these investments.”

“This is well above our pre-tax ROE target of the RBA cash rate plus a margin of 14%. Importantly, we can capture these opportunities, while maintaining our current defensive portfolio settings, with a high weighting to investment grade fixed income,” he concluded.

More reading

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• Should I keep my stake at the current Monadelphous share price?

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

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In morning trade the Altium Limited (ASX: ALU) share price has come under pressure after the release of a trading update.

At the time of writing the electronic design software company’s shares are down 7% to $33.70.

What did Altium announce?

In May, Altium released an update and warned that its performance in the fourth quarter of FY 2020 was being impacted by the pandemic.

It was optimistic that the launch of attractive pricing and extended payment terms would drive volume in challenging market conditions.

However, while these initiatives are driving strong seat growth, management advised that the increase in revenue for FY 2020 will be short of consensus estimates.

This is the result of new lockdowns in China and an increase in COVID-19 cases in parts of the US, which are having an impact on Altium’s final sprint to the close of the financial year.

Management notes that historically, the company closes a significant amount of its second half business in the last two weeks of June. But this year, sales run rates in June are falling short of what would be required to achieve the market’s expectations.

Altium CEO, Aram Mirkazemi, commented: “Our strategy to support our customers and to increase volume under COVID-19 conditions through attractive pricing and extended payment terms is driving strong seat growth and will get us close to or just surpass our key target of 50,000 subscribers.”

“However, we are feeling the revenue impact of this strategy. While we are likely to deliver solid revenue growth, this will land marginally behind latest analyst consensus for the full year,” he added.

Commenting on the pricing and payments strategy, Mr Mirkazemi believes Altium has made the right move.

He explained: “We see Altium’s approach to COVID-19 pricing and extended payment terms as the right thing to do to support our customers in this challenging environment and to not lose momentum as we enter the next phase of growth.”

But these initiatives won’t be around for much longer, with the company increasing its prices again from 1 July. An Altium Designer one-year subscription will be $9,945 in July, compared to $7,185 at present. It will also remove the extended payment terms from 1 September 2020.

More reading

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• This is why the Altium share price could be a buy right now
• How to become wealthy by investing $1,000 into ASX shares

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

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The A2 Milk Company Ltd (ASX: A2M) share price hit an all-time record high of $20.05 last Thursday. Rather than pushing higher, its shares fell 4.23% on Friday. Could this be an opportunity to buy a2 Milk shares at a discount? 

What caused the sell off of a2 Milk shares? 

On Friday, the a2 Milk share price fell on no news, despite the S&P/ASX 200 Index (ASX: XJO) closing up 0.10%.

The slump could be attributed to the a2 Milk share price rising 10% during the week, with shares hitting $20 for the first time and the company reaching a record $14 billion market capitalisation. Rather than pushing higher, investors might have taken this opportunity to sell shares to lock in profits. 

Is the a2 Milk share price a buy?

It is a fragile time to be buying shares, given how much the market has run up. Not only is the US and South America struggling to contain the coronavirus, but there are increasing fears of a second wave across Europe, China and Australia. Quantitative easing and record money supply across the world has created a serious discrepancy between the real economy and the markets. It is difficult to tell if the markets will continue pushing, or if a correction is imminent.

Despite the inherent risks in the broader economy and markets, I believe the a2 Milk share price is fair value at today’s prices. The company has a strong track record of consistent growth and the coronavirus may incite further tailwinds for its revenues moving forward. 

a2 Milk provided the market with a trading update and FY20 outlook on 22 April. The update highlighted that the business has continued to experience strong revenue growth across all key regions, particularly in its infant nutrition products sold in China and Australia. a2 Milk’s 3Q20 revenue was above expectations – the company attributed this result primarily to changes in consumer purchase behaviour and impulsive pantry stocking. 

The company’s 2H20 earnings before interest, tax, depreciation and amortisation margin is also anticipated to be higher than previously expected. Expanding margins have been driven by higher revenue from higher margin nutritional products, partly due to consumer pantry stocking in 3Q20, favourable foreign exchange rate movement, and lower than expected costs for travel. 

The overall performance for FY20 should see ongoing revenue growth across its key regions supported by its significant investment in marketing for China and US. Notwithstanding the uncertainty, it anticipates revenue for FY20 in the range of $1,700 million to $1,750 million. This would represent a 30.4% to 34.2% increase on FY19 revenue. 

Foolish takeaway

If the broader market is sold off, then the a2 Milk share price will get dragged down along with it. While I wouldn’t be in a hurry to buy a2 shares, I believe the company is fundamentally in a good place and continued earnings momentum should be expected. 

More reading

• Is there a better buy than JB Hi-Fi shares today?
• The NAB share price has fallen 24%. Should you buy?
• Where to invest $10,000 into ASX shares right now
• James Hardie share price in spotlight as it upgrades profit guidance
• My ASX share for the week

Motley Fool contributor Lina Lim has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of A2 Milk. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The National Australia Bank Ltd. (ASX: NAB) share price has fallen 24.2% lower in 2020 but is the ASX bank share in the buy zone?

Why the NAB share price has slumped 24.2%

ASX bank shares were under real pressure during the February/March bear market. Investors panicked with many thinking that bank balance sheets could be stressed by mass loan defaults across the economy.

However, as we now know, this hasn’t proven to be the case. A combination of record government stimulus measures and a better-than-expected pandemic response has left the Aussie banks in a solid position.

So while the NAB share price is down 24.2%, it could have been much worse. The real question is whether or not NAB is a cheap buy at its current valuation.

Is NAB a cheap buy right now?

In order to determine whether the NAB share price is cheap, it pays to compare it to some of its peers.

The Westpac Banking Corp (ASX: WBC) share price is down 25.0% this year while Commonwealth Bank of Australia (ASX: CBA) shares have fallen 14.0%.

If we use the S&P/ASX 200 Index as a benchmark, which is down 11.1% for the year, then all 3 of these ASX 200 bank shares are underperforming in 2020.

While the big four are similar, it’s not as simple as saying that because NAB’s share price has fallen more than CommBank’s has, it’s an automatic buy.

NAB trades at a price-to-earnings (P/E) multiple of 16.8 times. Compared to CommBank which is at 12.46 and Westpac at 13.64, this would appear to make NAB a touch expensive.

It’s also true that NAB is yielding 6.1% right now compared to the higher-paying Westpac and CommBank yields of 9.6% and 6.3% respectively.

Of course, dividend yields can be misleading, especially with the ASX banks currently holding back on distributions under APRA’s orders.

However, from what I can see, the NAB share price isn’t a cheap buy right now. ASX bank shares, in general, could be undervalued, but I don’t think NAB is a real stand-out at $18.67 per share.

More reading

• Is there a better buy than JB Hi-Fi shares today?
• Is the a2 Milk share price a buy after falling nearly 5% on Friday?
• James Hardie share price in spotlight as it upgrades profit guidance
• ASX 200 Weekly Wrap: ASX back in the green
• Beat low interest rates with Telstra and these ASX dividend shares

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

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