The Crown Resorts Ltd (ASX: CWN) AGM was always going to be a tense affair with pressures building over the past few weeks. Accordingly, the Crown share price has fallen by 9% over the past month to yesterday. After today’s AGM, however, the share price has been on the rise.

Crown Resorts chair Helen Coonan and CEO Ken Barton opened the meeting with apologies, acknowledgements of failure and the drive to improve. Nonetheless, it was still a blood on the walls affair with institutional investors seeking retribution for the current situation. Prior to the meeting, Ms Coonan acknowledged  a significant protest vote ahead of the company’s AGM.

Moreover, Mr Barton apologised in writing, stating there was no “intention to mislead” the current inquiry over relations with Consolidated Press Holdings Pty Ltd (CPH), majority shareholder James Packer’s private company. There was also a formal announcement yesterday of the termination of all agreements between Crown and CPH. 

What is moving the Crown share price?

During the motions to re-elect three directors, CPH abstained from the vote on directors and on the remuneration report, citing it as the right thing to do. This had the effect of ensuring the re-election of directors, but allowing a ‘first strike’ vote against the remuneration report.

As observed by the chair earlier, there was a large protest vote against Crown directors Jane Halton, Professor John Horvath, and in particular against Guy Jalland. Guy Jalland is connected to CPH, an issue which appears to have caused some consternation and impacts on the Crown share price. 

After winning re-election with 68.54%, Prof Horvath stated he would likely resign from the board. He commented at the time: “The proxy position displayed on the screen indicates that without the vote of CPH, shareholders are not supporting my re-election today as a director.”

This was later confirmed in a release from the company. Ms Halton said she also considered resigning due to the proxy vote, but believed that overall she had “sufficient support” from shareholders.

Meanwhile, the first strike vote Crown received against the company’s remuneration report is significant. The two strikes system helps shareholders control the remuneration of directors. A first strike occurs if more than 25% of shareholders oppose a remuneration report. The second strike occurs if 25% or more of the shareholders oppose a subsequent remuneration report. 

The board is then subject to a spill motion. This is where 50% or more of the votes will force all directors to stand for re-election within 90 days. 

The road ahead

Ms Coonan apologised unreservedly for any failings during the AGM. She said the company intended to strengthen its risk management procedure, as well as its anti-money-laundering and compliance departments. The chair also pledged changes to the Crown board, adding:

In the area of board renewal, the board accepts that there needs to be an injection of new perspectives and expertise on our board… These changes need to be undertaken in a considered and thoughtful manner to ensure an orderly transition.

After a faltering start to the day, the Crown share price momentum has reversed and it is now up by 2.27% at the time of writing. Investors have clearly displayed a level of discontent with the performance of the board. Its response, the actions taken, and the promise of further action, appear to have calmed the waters. 

More reading

• Broker updates are mixed on these 6 high profile ASX 200 shares
• How will the Crown Resorts (ASX:CWN) share price fare at today’s AGM?
• 5 things to watch on the ASX 200 on Thursday
• 5 ASX 200 events to watch for this week
• ASX 200 rises 1%, Cimic (ASX:CIM) up 8% on sale

Motley Fool contributor Daryl Mather has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Crown Resorts 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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Next Thursday the Australia and New Zealand Banking GrpLtd (ASX: ANZ) share price will be on watch when the banking giant releases its full year results.

Ahead of the release, I thought I would take a look to see what the market is expecting from the bank following a turbulent year.

What is expected from ANZ?

According to a note out of Goldman Sachs, its analysts expect ANZ to report second half cash earnings (before one-offs) of $2,667 million. This will be an 8% decline on the prior corresponding period.

For the full year, this will mean cash earnings (before one-offs) of $4,080 million, down 37% on FY 2019’s result.

The broker is also expecting the bank to declare a final 40 cents per share partially franked dividend, bringing its full year dividend to 65 cents per share.

What else should you look out for?

Goldman has suggested that investors keep an eye on the bank’s asset quality.

It commented: “We forecast a moderation of 2H20E BDDs/TL to 40bp from 55bp in the previous half and will be keeping a close eye on asset quality commentary.”

“Whilst ANZ’s overall loan deferrals as a % of total loans (<10% as of Aug-20) sit at the lower end vs peers, unlike peers, ANZ’s cumulative net new mortgage deferrals in Jun/Jul/Aug-20 as a % of the May-20 balance has actually deteriorated,” the broker added.

Another metric to watch will be its loan growth, which has been improving in recent months.

Its analysts explained: “We currently forecast FY20E loan grown of 4% and particularly note the recent improvement in ANZ’s domestic housing momentum. Post the onset of “responsible lending” regulations, ANZ’s conservative response led to a notable drop in their lending growth and by extension market share.”

“However, in the three months to Aug-20, they achieved the highest total lending growth vs the peer group driven by outperformance in housing lending (ANZ’s average growth in the 3-month period came in at 10.5% vs peers CBA at 4.3%, NAB at -2.2%, WBC at -0.2%),” it added.

Finally, the broker will be looking for commentary on the bank’s costs.

Goldman expects its second half expenses to rise 1.9% on the prior corresponding period to bring its full year total to $9,187 million or $8,800 million excluding one-offs.

However, it believes the bank is well-placed to cut its costs materially in the future and offset the deteriorating revenue environment.

The broker notes: “ANZ’s performance on costs in recent years has been superior to peers and while management remains committed to its A$8 bn expense ambition, timing around when such a target can be reached will continue to evolve subject to how the current crisis plays out. We expect to receive more detail on this issue at the result.”

Goldman Sachs has a neutral rating and $20.99 price target on ANZ’s shares.

More reading

• ASX 200 flat: Big four banks push higher, Afterpay drops, Megaport sinks 10%
• Are ANZ (ASX:ANZ) shares a buy for dividend income today?
• ASX 200 Weekly Wrap: Promises of easy money push ASX 200 to post-crash high
• ASX 200 up 0.9%: Big four banks rise, Pro Medicus jumps, miners charging higher
• ASX 200 jumps more than 1%, big ASX banks rise

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

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The Carbon Revolution Ltd (ASX: CBR) share price was soaring 14% higher today on the release of its quarterly activities report this morning.

A relative newcomer to the ASX, the Carbon Revolution share price hit an all-time high of $4.47 per share on 24 January. Then the coronavirus pandemic struck and by 23 March the share price had plummeted by 82%.

The company has come back strongly since then, with today’s gains bringing the share price up 254% from the 23 March lows.

Year-to-date, the share price is down 17%. By comparison the All Ordinaries Index (ASX: XAO) is down 6% in 2020.

What does Carbon Revolution do?

Carbon Revolution is an Australian company that innovates and commercialises carbon fibre wheels for the global automotive industry. The company designs and manufactures high-performing wheels for some of the fastest street cars and top-quality brand names in the world.

Carbon Revolution’s shares first began trading on the ASX in November 2019.

Why is the Carbon Revolution share price soaring?

Despite noting that the pandemic continued to cause disruptions as the virus impacted customers, Carbon Revolution reported quarterly recognised revenue of $11.8 million. That’s up 45.9% on the previous quarter and up 26.3% on the previous corresponding period (pcp).

Commercialisation of the company’s new “fascia” technology has also begun with initial customer approval. According to the report, the technology “dramatically improves the conversion of moulded wheels to sold wheels and, in turn, drives a significant reduction in labour cost per wheel”. The company expects its first deliveries will start in the next quarter.

In addition, Carbon Revolution announced that upgrades to its high-pressure moulding equipment and installation of a new automated face layup line have been completed. This provides it with enough moulding capacity for its contracted programs (both announced and unannounced).

The company’s cash balance at the end of this quarter was $19.6 million. It said the business was funded for its FY21 operational goals.

Looking ahead, the company expects strong sales growth in the 2021 financial year. In addition, over the next 3 quarters, net cash flow from operating activities will be positive. The report also noted that the Federal Government JobKeeper package should support a proportion of wages while the company remained eligible under the JobKeeper scheme.

The Carbon Revolution share price has retreated slightly since its 14% morning high. It is now trading at $2.80, up 11.55% at the time of writing. On a day the All Ords is slipping, it appears that investors are happy with the company’s quarterly performance.

More reading

• The ResApp (ASX:RAP) share price is soaring 10% today. Here’s why.
• WISR (ASX:WZR) share price jumps higher on strong trading update
• Why did the Forbidden Foods (ASX:FFF) share price tumble 5% today?
• ASX 200 Weekly Wrap: Promises of easy money push ASX 200 to post-crash high
• Why the Nickel Mines (ASX:NIC) share price is up 16% today

Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Carbon Revolution Limited. The Motley Fool Australia has recommended Carbon Revolution 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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The Immutep Ltd (ASX: IMM) share price is heading lower today after the company announced its quarterly report for Q1 FY21. At the time of writing, the Immutep share price has dropped 3.85% to 25 cents.

About Immutep

Immutep is a biotechnology company that develops new immunotherapy treatments for cancer and autoimmune diseases. The company boasts partnerships with some of the world’s largest pharmaceutical companies including Merck & Co. Inc. (NYSE: MRK), Pfizer Inc. (NYSE: PFE) and GlaxoSmithKline plc (NYSE: GSK).

Immutep’s main product is eftilagimod alpha (IMP321), a soluble fusion protein, which is in clinical development for the treatment of cancer. The company has two other clinical candidates (IMP701 and IMP731) that are fully licensed to major pharmaceutical partners, and a fourth candidate (IMP761) which is in pre-clinical development.

The Immutep share price has traded relatively flat during 2020, losing a little under 4% despite the effects of the global pandemic.

Quarterly update

The Immutep share price is today edging lower as the company announced its quarterly activities report. During the September quarter, a number of the company’s important clinical trials were underway.

In regards to Immutep’s Tacti-002 phase II clinical trial, the company reported encouraging results. These results showed three patients had complete responses with a further five seeing partial responses.

The Tacti-002 trial is evaluating the efficacy of the combination of IMP321 with Merck & Co’s Keytruda drug in up to 109 patients with cancer.

The company’s other main clinical trial, Inisight-004, is also progressing well. This has shown 41.7% of patients demonstrating a response to the combination therapy of IMP321 and Avelumab (a human antibody). This represents a 33% improvement on the previous interim data.

Finally, the biotech’s preclinical drug, IMP761, is also showing good signs of progress according to the report.

Financials

The company reported very weak cash receipts from customers which could explain today’s falling Immutep share price. Cash receipts from customers for the quarter were $23,000, compared to $128,000 last term.

Moreover, total net cash outflows were $3.34 million for the quarter. Whereby total net cash inflows from operating activities during Q4 FY2020 were much higher, coming in at $0.12 million.

Immutep’s cash balance was $22.7 million as of 30 September, with the company stating that its cash runway extends to the end of calendar year 2021, beyond several significant data read-outs.

Immutep share price summary

The Immutep share price reached a pre-COVID high of 50 cents in February this year before plummeting as low as 10 cents in March. Despite making a partial recovery since its March lows, the Immutep share price is still trading 50% below its 52-week high. 

More reading

• Why the Genetic Signatures (ASX:GSS) share price is surging 5% higher today
• The Suncorp (ASX:SUN) share price is slightly lower on day of AGM
• PayGroup (ASX:PYG) share price falls despite positive update
• Top brokers name 3 ASX shares to sell today
• Why you should pay attention when management buy (or sell) ASX shares

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

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The market may be struggling on Thursday, but that hasn’t stopped the Genetic Signatures Ltd (ASX: GSS) share price from charging higher.

In afternoon trade the specialist molecular diagnostics company’s shares are up over 5% to $1.99

Why is the Genetic Signatures share price charging higher?

Investors have been buying the company’s shares following the release of its first quarter update this morning.

According to the release, Genetic Signatures delivered record quarterly revenue of $10.5 million for the three months ended 30 September. This was a 50% increase on the previous quarter and a massive 585% higher than the prior corresponding period.

Pleasingly, management notes that it was cashflow positive during the quarter, adding $3.4 million in net cash from operating activities.

What were the drivers of its growth?

Management advised that it experienced strong demand for COVID-19 testing kits from customers in Australia.

It notes that COVID-19 testing in Victoria remained high as the state faced a second wave of infections. In addition, although the number of active cases in New South Wales was controlled, customer demand for testing kits continued throughout the period.

Genetic Signatures’ CEO, Dr John Melki, commented: “We are very pleased to report an exceptional quarter of revenue growth and positive cashflow. Strong demand from our customers following the second wave of COVID-19 infections, particularly in Victoria, contributed to the result.”

But it wasn’t just the domestic market contributing to its sales growth, Genetic Signatures also reported strong demand internationally.

“We are achieving good traction in EMEA, while our US sales team is actively pursuing COVID-19 opportunities under the recent FDA Emergency Use Authorisation (EUA) guidance. As countries around the world battle to keep infection rates under control, extensive testing remains an essential tool for safely re-opening economies,” added Dr John Melki.

Outlook.

Management believes the company is well placed to assist the pandemic globally due to its 3base technology.

North America represents the largest diagnostics market globally and the company is continuing to build inventory of its kits to ensure it can supply new customer contracts in the region. If successful, it believes this could represent a step change in revenue.

However, it warned that COVID-19 testing volumes globally remains fluid. As a result, it advised that the predictability of future revenue is difficult and dependent on measures imposed by various governments. This includes quarantining, travel restrictions, testing strategies, and reimbursement rates. As such, no guidance was given for the coming quarter or full year.

More reading

• Why Afterpay, Genetic Signatures, Qube, & Serko shares are charging higher

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

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The Suncorp Group Ltd (ASX: SUN) share price has fallen slightly tp $8.82 after the company’s AGM today.

The AGM confirmed Suncorp’s performance during FY20 and reported on the progress of changes for the post-COVID world. Due to divestments of Australian Life, Capital S.M.A.R.T, and ACM Parts businesses, Suncorp was able to generate windfall earnings. This was despite the impacts on the insurance industry of bushfires, drought and the COVID-19 pandemic. However, more interesting are the indications of future performance.

Suncorp in the post-COVID-19 world

The company pointed to the positive impacts of the work from home phenomenon during the lockdown. Suncorp has been developing flexible work capabilities since the Brisbane floods of 2011, and is working on more hybrid models in the future. It also noted that the ability to attract a wider range of talent was significant, while there were also efficiencies to be gained. 

Moreover, the lockdown has accelerated transformation to digitisation and automation. Thus removing pinch points in the process, and providing some hope for productivity improvement. 

Suncorp chair Christine McLoughlin said artificial intelligence and its underlying technologies were “reshaping the insurance industry”, from distribution, to underwriting and claims. “For example, connected devices and sensors including drones can work together to speed up traditional claims assessment methods, or even detect issues before they occur,” she said.

Commenting on the issue of transformation, Suncorp CEO Steve Johnson told shareholders:

Our program of work to reset our business post-COVID-19 is well underway. We have made changes to our business model, the structure of our group and to our team.

We are removing duplication, streamlining decision making and ensuring everyone at Suncorp understands their role in driving improved customer and shareholder outcomes in our core insurance and banking businesses.

Future risks

On future risks, Suncorp said the impact of climate change was one of its most material issues. The company’s climate related plans and policies support advocacy and collaboration to drive better decisions. Mr Johnson said that increased climate change and risk increased costs. He added that out of every dollar in disaster funding, only 3 cents was spent on preparation, with 97 cents spent on recovery. 

Suncorp share price performance

Although the share price is 1.62% lower in today’s trading, it has risen by 4.9% over the past month. At the time of writing, it is trading at a price to earnings (P/E) ratio of 18.5, and has a trailing 12-month dividend yield of 4.08%.

More reading

• Invest your Suncorp dividends in these ASX shares today
• Top brokers name 3 ASX dividend shares to buy today
• Leading brokers name 3 ASX shares to buy today

Motley Fool contributor Daryl Mather 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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PayGroup Ltd (ASX: PYG) shares are falling today following the company’s release of its quarterly update to the market. At the time of writing, the PayGroup share price is down 3.45% to 56 cents.

Let’s take a deeper look and see how the human capital management (HCM) solution company performed for Q2 FY21.

Q2 result

For the period ending 30 September, PayGroup reported substantial growth, most notably from its software-as-a-service (SaaS) offering.

Operating cash flow for the three months achieved a surplus of $1.1 million, up 10% on the prior quarter. This was represented by volume increases of its Astute SaaS timesheets due to improved business confidence. Further support of growth in this segment is forecasted as a result of government budget initiatives.

TalentOz, which was acquired by PayGroup in July this year, has made progress offering 11 new complementary HCM modules, taking the total number offered by PayGroup to 27 modules.

The company won $5.4 million in contracts for the first half of the year, equivalent to 98% of total contract value in FY20. Last week, PayGroup secured a contract win with Volvo Group Singapore, valued at $120,000. This also has the possibility of further opening up a new addressable market within the automotive industry. 

Costs associated with running the business were broadly in line with Q1 FY21. PayGroup said it will continue to execute its cost efficiency plan, with expected savings of $1.5 million for FY21. This will be realised in areas such as hosting technology and corporate costs.

PayGroup closed the quarter with a cash balance of $5.3 million, supported by a successful capital raise that was undertaken in September.

Outlook

PayGroup advised it is on track to continue its momentum in H2 FY21. The creation of its ‘hire-to-retire’ HCM module is seeing a significant number of new customer signings across the Asia Pacific region.

PayGroup Managing Director, Mr Mark Samal, commented on the company’s performance and ongoing opportunities, stating: 

Our recent contract wins, with high quality customers such as Volvo Group Singapore, are testament to our expansion strategy and goal of offering our customers a full-service solution. Not only does this increase our addressable market but gives us significant scope to increase revenue opportunities from existing clients. We are also seeing Asian and Middle Eastern economies rebound strongly and expect continued growth momentum in H2 FY21.

PayGroup share price summary

The PayGroup share price has been on a rollercoaster ride for shareholders this year. The company’s shares were averaging around the 70 cent price mark from late last year until COVID-19 took effect.

Reaching an all-time low of 43.5 cents in March, its shares quickly recovered. In the months following, the PayGroup share price hit a 52-week high of 90.5 cents, before gradually falling again to 56 cents at the time of writing.

More reading

• PayGroup (ASX:PYG) share price moves higher on contract win
• What’s driving the PayGroup (ASX:PYG) share price higher 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. 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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On Wednesday 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 ASX shares that have just been given sell ratings by brokers are listed below.

Here’s why these brokers are bearish on them:

Afterpay Ltd (ASX: APT)

According to a note out of UBS, its analysts have retained their sell rating and $28.25 price target on this payments company’s shares. This follows the announcement of a partnership with Westpac Banking Corp (ASX: WBC) that will see Afterpay offer savings accounts and cash flow tools. While the broker expects this to support customer retention and transaction frequency, it doesn’t believe the impact on its earnings to be overly material. In light of this, it retains its sell rating and lowly price target. The Afterpay share price is trading at $100.71 this afternoon.

DEXUS Property Group (ASX: DXS)

A note out of Morgan Stanley reveals that its analysts have retained their underweight rating and $8.15 price target on this property company’s shares following its first quarter update. Although the update revealed distribution guidance ahead of the broker’s expectations, it hasn’t been enough for its to change its rating. It continues to see tough times ahead of DEXUS due to rising unemployment, lower occupancy rates, and potential rental declines. The DEXUS share price is changing hands for $9.35 on Thursday.

Domino’s Pizza Enterprises Ltd (ASX: DMP)

Analysts at Citi have retained their sell rating but lifted their price target on this pizza chain operator’s shares to $67.40. According to the note, the broker believes Domino’s is well-placed for growth in the current environment. It also suspects that a new geographic expansion could be coming. Possibly into South Korea or Poland. However, it feels this is more than priced into its current share price. As a result, it stays firm with its sell rating. The Domino’s share price is fetching $87.57 today.

More reading

• Why you should pay attention when management buy (or sell) ASX shares
• Why Domino’s, Oil Search, Resolute, & Zip shares are dropping lower
• Broker updates are mixed on these 6 high profile ASX 200 shares
• 3 super reasons to buy ASX 200 shares today
• The best ASX shares to buy during a market crash

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool Australia has recommended Domino’s Pizza Enterprises 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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I think that it’s important that investors pay close attention to when management of a business decide to buy or sell their ASX shares. 

Why it matters

The leadership of a business are the ones that should be most committed to the cause. At least, that’s how I think it should be.

If people decide that they want to sell their shares, that can raise some questions.

But if the management want to buy shares, then that could be a really good indicator of the positive outlook for the company. The idea is that management only buy shares for one reason: they think the share price represents good long-term value.

I like to see management buy shares a similar price to what regular investors can buy shares at on the market.

Insiders have the best knowledge of a company’s operations. They are the management of the company. Or perhaps it’s directors buying who have excellent knowledge of the business and know the management closely.

I’d actually prefer to see more management buy shares more often. It would be a fair defence to say they shouldn’t have all of their financial eggs in one basket, but I think management should show a commitment to the business they’re leading. Putting your own money on the line is one of the best ways to align yourselves with the people that you’re supposedly running the company for.

Here are some recent positive management movements:

I’ve been pleased to see pretty hefty purchases of Washington H. Soul Pattinson and Co. Ltd (ASX: SOL) shares by the Millners.

Geoff Wilson has been buying up shares of WAM Global Limited (ASX: WGB) and Wam Alternative Assets Ltd (ASX: WMA).

There have been some insider buys of Transurban Group (ASX: TCL) shares and Nanosonics Ltd (ASX: NAN) shares.

Sales can be a worry

There are lots of different reasons why management apparently choose to sell their shares.

Selling to pay tax is a common reason. Diversifying their portfolio could be a reason. Maybe they need the money to buy a property. Divorce can be a reason.

An ASX share sale can worry investors because it could mean management are deciding to cash out before some bad news is coming.

There have sadly been plenty of examples where management sell and then, a few months later, some bad news is announced. It’s not necessarily illegal, it’s just not a good look and shareholders may lose confidence in management. A company will sometimes go through tough times, that’s understandable, but management shouldn’t be bailing out just before the bad news.

But a sale doesn’t always mean poor performance

There have been some sales by ‘insiders’ in recent times in businesses that have gone on to keep growing profit and the share price. A share sale may simply be an honest attempt to diversify.

The leadership of Afterpay Ltd (ASX: APT) and Kogan.com Ltd (ASX: KGN) have previously sold a portion of their shares at a much lower price than today’s share prices.

There was a big selldown of Pushpay Holdings Ltd (ASX: PPH) shares not too long ago, but now the Pushpay share price is close to trading at its all-time high.

With the above sales, investors didn’t need to worry long-term, partly due to COVID-19 bringing forward digital adoption. 

Foolish takeaway

If you’re invested in ASX shares, you want to see that management have skin in the game. Either with a large existing holding or they are purchasing new shares on the market.

Be wary of sales. A sell won’t always mean bad news is coming, but I wouldn’t exactly call it a positive. However, if a business does drop then it could be good value to buy – that’s why I think about the A2 Milk share price. I reckon A2 Milk is a good long-term buy today.

More reading

• Why it makes sense to invest in ASX shares
• MyDeal (ASX:MYD) share price rockets 120% higher following IPO
• Broker updates are mixed on these 6 high profile ASX 200 shares
• ASX 200 shares hit by multiple takeovers
• 3 super reasons to buy ASX 200 shares today

Tristan Harrison owns shares of Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Kogan.com ltd, Nanosonics Limited, and PUSHPAY FPO NZX. The Motley Fool Australia owns shares of and has recommended Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia owns shares of AFTERPAY T FPO and Transurban Group. The Motley Fool Australia has recommended Kogan.com ltd, Nanosonics Limited, and PUSHPAY FPO NZX. 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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After agreeing to sell 50% of its stake in the world’s largest mining services provider, Theiss, Cimic Group Ltd (ASX: CIM) has been warned it may see its credit rating downgraded. As is common in large merger and acquisition (M&A) transactions, Standard & Poor’s (S&P) is analysing the impact of the transaction and has placed Cimic’s credit rating on ‘CreditWatch negative’. This means it may lower.

S&P believes the disposal could reduce the business scale and diversity of the Cimic Group parent shareholder, Actividades de Construccion y Servicios SA (ACS). In addition, the ratings agency believes it may add complexity to the group structure and governance.

Rationale of the Cimic Group decision

Thiess delivers open cut and underground mining services in Australia, Asia and Africa. The company delivered an earnings before interest, taxes, depreciation and amortisation (EBITDA) margin of 34%. This is is well above the group’s adjusted EBITDA margin of 8.3%. Hence, S&P have the view that Theiss’ mining activities have supported the group’s business diversification and profitability margin, and they complement Cimic’s civil engineering and construction business. 

ACS group is using most of its available rating headroom in coping with the effects of the pandemic. S&P anticipates a drop in the ratio of funds from operations (FFO) to debt. It sees this metric  declining to 28%-31% from 32.3% in 2019, and then recovering to above 30% in 2021. To maintain the ‘BBB’ credit rating, S&P expects to see this at around 30% to 40%. 

The ratings agency is also questioning Cimic Group’s operational and strategic direction. This includes understanding the future role of Thiess in Cimic’s future operations and growth strategy. Moreover, it expressed concern over the operating constraints inherent within a joint-venture structure. Accordingly, S&P expects the company’s credit metrics will weaken, regardless of how it applies the proceeds from the sale.

Company trading

Cimic saw its share price rise by almost 5% on the day it announced the 50% sale of Theiss. However, signs that accounts may not be reliable surfaced yesterday. The company was forced to reveal that it will not get the $1.1 billion of revenue it booked from the Gorgon project. During FY20, the company also had to write off $1.8 billion after being unable to recover debts owed for projects built during the Dubai property bubble.

The Cimic Group share price remains down by 33% in year-to-date trading. However, it has a trailing 12 month dividend yield of 7.14%.

More reading

• Why CIMIC, Megaport, Mesoblast, & Temple & Webster shares are dropping lower
• CSL (ASX:CSL) share price and 2 other ASX stocks among latest broker “buy” ideas
• ASX 200 rises 1%, Cimic (ASX:CIM) up 8% on sale
• ASX 200 up 1%: Crown sinks on AUSTRAC news, South32 & CIMIC storm higher
• CIMIC (ASX:CIM) share price 5% higher after agreeing to sell 50% of Thiess

Motley Fool contributor Daryl Mather 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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