Xero Limited (ASX: XRO) shares have opened the week strong today, banking a 2.5% rise to $77.19 at the time of writing. Even so, the Xero share price is still down 7.6% over the past week.

Xero is one of those shares that doesn’t seem to ever dip too much, so is this a rare buying opportunity?

Why has the Xero share price dipped?

Xero shares fell last week after the company released its FY20 results to the market. Xero reported some strong numbers, including a 26% increase in subscribers, a 30% increase in revenues and an inaugural profit of NZ$3.3 million. Free cash flow also increased by 320% to NZ$27.1 million.

But despite these numbers, investors were clearly expecting a little more out of this WAAAX market darling. Xero shares dipped in response, falling from nearly $84 on Wednesday to around $75 by the end of the week.

Does this mean Xero is a buy today?

Although the Xero share price has come off the boil, I’m still not convinced it’s at a compelling level today.

Xero is a company investors are pricing for a high growth future and it does have a long growth runway, for sure. Governments around the world are pushing for their taxpayers to switch to digital providers like Xero, which is a great long-term tailwind for the company to enjoy. Further, Xero has shown its product is extremely sticky, with most customers remaining on its platform after onboarding.

But with a current price-to-earnings ratio over 3,500, I think investors are seeing a little too much future potential based on current levels. Remember, this is a company that has just turned its first profit of NZ$3.3 million, yet has a market capitalisation of nearly $11 billion.

Furthermore, I still have concerns that Xero might run into increased competition which, in turn, may slow the astronomical rate of its subscriber growth. Intuit Inc. (NASDAQ: INTU) is one of Xero’s major competitors and has also been growing its market share in North America.

Perhaps on current prices, the market is treating Xero like a future monopoly in its cloud accounting space, rather than one of several strong players.

Foolish Takeaway

Xero is a high-quality company to be sure, and one I wouldn’t mind owning shares in at some point. But I think the current market environment is not one we should be making high-growth bets in. Therefore, today’s Xero share price is still a little out of my comfort zone. Call me if the Xero share price falls back to under $60 where it was a year ago and we might have a different conversation!

More reading

• 5 ASX 200 winners and 5 losers of the week
• ASX 200 up 0.25% this week, CBA reveals Q3
• Top brokers name 3 ASX 200 shares to sell next week
• Top brokers name 3 ASX shares to buy next week
• ASX 200 finishes up 1.4%, gold miner share prices surge

Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Intuit. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Xero. The Motley Fool Australia has no position in any of the stocks mentioned. 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.

The post Is the Xero share price a buy after last week’s dip? appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/2TcLhEb

One of the best performers on the S&P/ASX 200 Index (ASX: XJO) on Monday has been the Fortescue Metals Group Limited (ASX: FMG) share price.

At one stage today the iron ore producer’s shares were up as much as 8% to a record high of $13.53.

When its shares reached that level, it meant they had gained a sizeable 25% since the start of the year.

Not bad when you consider that the ASX 200 is down over 18% during the same period.

Why is the Fortescue share price at a record high?

Investors have been buying the iron ore producer’s shares on Monday after the price of the steel making ingredient climbed higher on Friday night.

According to CommSec, the benchmark iron ore price rose by US$2.50 or 2.8% to US$93.25 a tonne. This brought its weekly gain to a solid US$4.80 or 5.4%.

Iron ore prices have been increasing thanks to solid demand in China and production disruptions from key Brazilian miners.

Pleasingly, analysts at Goldman Sachs appear confident that iron ore prices will remain solid for some time to come. They recently ruled out a crash in the base metal’s price.

What else is supporting Fortescue’s shares?

In addition to this, with the interest rates on offer with savings accounts and term deposits at ultra low levels, income investors have been attracted to Fortescue for its generous yield.

Especially given how countless dividend favourites such as Australia and New Zealand Banking GrpLtd (ASX: ANZ) have been deferring or even outright cancelling dividend payments during the pandemic.

According to a note out of Macquarie Group Ltd (ASX: MQG) on May 1, it expects Fortescue to pay a 73.3 cents per share dividend in FY 2021. This implies a 5.5% fully franked forward dividend yield.

While that is very generous already, I suspect that if iron ore prices remain at these levels for longer, Fortescue’s free cash flows will be strong enough to pay an even bigger dividend next year.

Overall, I think this yield and its positive outlook makes it worth considering Fortescue along with fellow mining giant BHP Group Ltd (ASX: BHP).

More reading

• ASX 200 up 1.35%: Gold miners and Fortescue rocket higher, big four banks tumble
• Beat falling rates with these strong ASX dividend shares
• Are these China-exposed ASX shares in danger in 2020?
• Get paid huge amounts of cash to own these ASX dividend shares
• Goldman Sachs names 5 reasons iron ore prices won’t crash

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Macquarie Group 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.

The post Fortescue share price hits a record high: Is it too late to invest? appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/2TgnvY7

I think the smartest shares to buy if you have $2,000 are ones that are seeing an acceleration of growth.

In light of the ongoing coronavirus pandemic and the share market decline, I think there are three groups of shares.

There’s one group that have seen their earnings and share prices smashed. Think of industries like retail and travel. There may be a few shares to buy in that group, but I don’t think the Flight Centre Travel Group Ltd (ASX: FLT) share price will be back above $30 any time soon.

There’s another group of shares that generally don’t seem to be significantly affected either way for the medium-term. I’m thinking of eesource shares like Rio Tinto Limited (ASX: RIO), supermarkets like Coles Group Limited (ASX: COL) and energy infrastructure like APA Group (ASX: APA). I think you need to decide if you’re happy to invest in these names, when other shares have fallen hard in price.

Finally, I think there’s another group where growth has been, or will be, accelerated by the current conditions. This largely describes business that have an important digital element to their service. I think it’s within this group that could be the smartest shares to buy if you have $2,000.

Two of the smartest shares to buy with $2,000

Pushpay Holdings Ltd (ASX: PPH) is a compelling smaller business that provides electronic donation services to not-for-profits, predominately US churches.

In this period of social distancing, having the ability to donate digitally to the church is extremely useful. Pushpay also enables churches to livestream the church service to the congregation.

The company generated excellent growth in FY20 and in FY21 it’s expecting earnings before interest, tax, depreciation, amortisation and foreign currency (EBITDAF) to approximately double.

I think Pushpay is one of the smartest shares to buy because people are shifting to electronic giving much faster than what would have happened otherwise.

Magellan High Conviction Trust (ASX: MHH) is a listed investment trust (LIT) that invests in high quality globally listed shares which have very strong economic moats. This trust has a small portfolio of names that it has high conviction in. Those businesses generally provide most of their services digitally.

Some of the shares within the trust’s holdings are Alibaba, Alphabet, Microsoft, Facebook and Visa. I think these are some of the smartest shares to buy in the world. We can get exposure to all of them with a single investment in Magellan High Conviction Trust.

Even the advertising businesses like Alphabet and Facebook could be good picks because whilst total marketing spend is obviously down, digital advertising is the best way to reach customers at the moment.

As a bonus, the trust targets a 3% distribution yield each year.

Foolish takeaway

I really think both of these shares will see stronger underlying user growth and this will help generate stronger long-term growth. At the current prices I think Pushpay could be one of the smartest shares to buy on the ASX. Magellan High Conviction Trust could be another great idea, particularly if the Australian dollar keeps strengthening.

More reading

• Why I would buy these exciting ASX growth shares right now
• ASX shares can help millennials retire before their parents
• These 4 ASX shares are at 52-week highs. Time to invest?
• Take advantage of ASX share market volatility
• Double your money with these high quality ASX shares

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended 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.

The post The smartest shares to buy if you have $2,000 appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/3dQ7TSQ

The Superloop Ltd (ASX: SLC) share price is rocketing higher today, up as much as 22.56% to an intra-day high of $1.195 per share. This surge is on the back of a trading update released to the market this morning, in which Superloop detailed strong sales momentum and affirmed FY20 guidance.

About Superloop

Superloop operates in the telecommunications space, providing independent connectivity services designing, constructing and operating networks in the Asia Pacific region.

The company owns and operates around 900 kilometres of carrier-grade metropolitan fibre networks in Australia, Singapore, and Hong Kong, connecting key data centres and commercial buildings.

Superloop’s customer base includes leading multinational companies like Morgan Stanley, Citibank, eBay and Cisco.

Q3 trading update

Superloop announced strong third-quarter core fibre connectivity sales, which included multiple high-capacity services contracted on its Indigo cable system. The company also highlighted an uptick in demand for its cybersecurity services as education providers turn to remote learning solutions amid COVID-19.

Third-quarter connectivity sales totalled $5.6 million on an annualised basis, a strong result compared to the $7.8 million recorded in the first half of FY20. The company also continues to see improvements in its book-to-bill cycle due to greater focus on “on-net” services, which allow Superloop to deliver and invoice services quicker.

In addition, Superloop has been experiencing a significant rise in demand for its Internet/IP network over the last few months. This has been driven by the changing traffic profile and volume in response to the shift towards work from home arrangements, video conferencing, and streaming services. As a result, Superloop experienced more than 30% growth in traffic across its global network within a matter of weeks.

The company noted there is still significant spare capacity on most of its international routes, providing further room for it to grow this business segment without a meaningful increase to costs.

FY20 guidance

Due to its strong third-quarter result and the initiatives undertaken by its cost-saving program ‘Project Vulcan’, Superloop is in an operating cash flow positive position and continues to operate comfortably within its debt facility headroom.

The company previously downgraded its earnings guidance upon announcing its first-half FY20 results back in February. Due to the downside risk of COVID-19, Superloop revised its earnings before interest, tax, depreciation and amortisation guidance to $12 million to $15 million for the full year. This morning, Superloop confirmed it is tracking towards the midpoint of this guidance.

Today’s update was certainly well received by the market, causing Superloop shares to open 12.82% higher. At the time of writing, the Superloop share price is sitting 17.95% higher for the day at $1.15.

More reading

• ASX small-cap sector rallies strongly during April

Cathryn Goh has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of SUPERLOOP FPO. 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.

The post Small-cap ASX telco rockets 23% higher on strong sales momentum appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/3bHhDgI

With so many shares to choose from on the Australian share market, it can be hard to decide which ones to buy.

The good news is that brokers across the country are doing a lot of the hard work for you.

Three top shares that leading brokers have named as buys this week are listed below. Here’s why they are bullish on them:

Aristocrat Leisure Limited (ASX: ALL)

According to a note out of Goldman Sachs, its analysts have reaffirmed their buy rating and lifted their price target on this gaming technology company’s shares to $30.00 ahead of its half year update. The broker appears confident that its Digital business will have performed very strongly in the first half and offset weakness in the poker machines business. It expects Digital revenues to increase 30% to $1,067 million, whereas Land-based revenues are forecast to fall 10% to $1,116 million. I agree with Goldman Sachs and believe Aristocrat Leisure would be a great long term option.

Breville Group Ltd (ASX: BRG)

Analysts at UBS have retained their buy rating and lifted the price target on this appliance maker’s shares to $22.50. According to the note, the broker was pleased to see Breville deliver strong sales growth between January and April. And while it suspects that some sales could have been brought forward by the work from home initiative, it remains positive on its future growth. Especially given the company’s plan to expand into new markets. I think UBS is spot on and this quiet achiever could be a decent option for investors.

Zip Co Ltd (ASX: Z1P)

A note out of Morgans reveals that its analysts have retained their add rating and lifted the price target on this buy now pay later provider’s shares to $3.40. According to the note, the broker was pleased with Zip Co’s performance in April. And while it notes that its sales growth has slowed and its bad debts have lifted, these were still positive results given the pandemic. It has revised its earnings forecasts higher and its price target accordingly. I think Morgans has made a good call and Zip Co would be worth considering.

More reading

• Why Aristocrat Leisure, Newcrest, Santos, & Zip Co shares are charging higher
• These are the 10 most shorted ASX shares
• What to watch on the ASX 200 next week
• Broker tips 10 ASX 200 shares for a post-coronavirus recovery
• ASX 200 drops 1.7%, Xero reports a profit

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 ZIPCOLTD FPO. 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.

The post Leading brokers name 3 ASX shares to buy today appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/2ZawWfv

The S&P/ASX 200 Index (ASX: XJO) edged 0.25% higher last week, with the ASX miners’ strong performance offsetting falls in other sectors.

Higher commodity prices saw miners lead last week’s gains, with iron ore prices seeing a sustained rise since the start of the month as Chinese production resumes. 

While the mining sector was enjoying gains, these 5 ASX shares didn’t fare so well, coming in as the biggest fallers last week.

Corporate Travel Management Ltd (ASX: CTD)

Corporate Travel Management led the fallers last week dropping 11.8% to $10.53. The company provides travel solutions spanning corporate, events, leisure, loyalty, and wholesale. Understandably, it has been hit hard by coronavirus travel restrictions. 

When the crisis hit, Corporate Travel Management embarked on a comprehensive cost reduction program. The cost base has been reduced to $10–$12 million a month, down from $27–$27 million a month. This has been achieved through a combination of retrenchment, temporary stand downs, government initiatives such as JobKeeper, the elimination of non-essential expenditure, and reduced capex. 

Corporate Travel benefits from its business model in which a high proportion of costs are variable. With a small physical footprint, the business saves on rent, with about 70% of its costs being people-related. This enabled a swift resizing of the business. The travel agent is one of the few that has not yet raised capital to shore up liquidity. 

Domestic travel restrictions are likely to ease prior to international restrictions. This will benefit Corporate Travel, which is leveraged to the domestic market – about 60% of its total transaction volumes are domestic in nature. Domestic activity is highly profitable for Corporate Travel, particularly in Australia/New Zealand and Europe. 

Challenger Ltd (ASX: CGF)

Shares in Challenger fell 10.9% last week to finish the week at $4.24. Challenger shares remain down 59% from their February high as the financial services company continued to feel the effects of the market sell-off in March. 

Total assets under management decreased 8% to $79 billion in the March quarter, with performance reflecting the effect of the coronavirus pandemic on investment markets and consumer activity. Annuity sales declined during the period reflecting ongoing advisor disruption and the impacts of the pandemic. 

The challenges faced by financial advisors in the wake of the Royal Commission have been exacerbated by the pandemic, impacting the ability to onboard new customers and effectively engage existing customers. This confluence of disruptive events is expected to continue to impact sales in the near term, and it is unclear what the impact on 4th quarter sales will be.

Unibail-Rodamco-Westfield (ASX: URW)

Unibail-Rodamco-Westfield shares dropped 10.4% last week to close the week at $3.79. The shopping centre operator has suffered due lockdowns in Europe, which have impacted its properties in the region. 

Lengthened lockdowns mean conventions and exhibitions remain on hold, and foot traffic at shopping centres is down. Unibail’s convention and exhibition business in France has been affected, alongside retail activity in parts of Europe. 

COVID-19 had a limited effect on the group’s March quarter turnover as rents are paid quarterly in advance in most of Europe and monthly in the US. The impact of the epidemic will be felt in the current quarter although at this stage it is too early to reliably estimate its extent. 

Through to 29 February, Unibail’s tenant sales were up 2.8%, consisting of 3.3% in Europe and 1.6% in the US. Unibail’s turnover for the first 3 months of the year was up 1.8%, largely due to property development and project management revenues. This was partially offset by disposals completed in 2019 and mandated cancellation of major events in March. 

Jumbo Interactive Ltd (ASX: JIN) 

Jumbo Interactive shares closed last week down 9.8% at $11.86. Prior to last week, Jumbo Interactive shares had climbed 18% during May, so last week’s result may have been a result of profit taking. 

Jumbo Interactive is a digital lottery retailer with over 2 million customer accounts. Its flagship service, Oz Lotteries, processes over $150 million in lottery ticket sales per annum. There hasn’t been a lot of news out of Jumbo Interactive of late. Interruptions from COVID-19 have been relatively minor thanks to the virtual nature of online lottery sales. 

Prior to the onset of the COVID-19 crisis, almost 74% of Australian lottery tickets were sold via retail channels. With the push to working, spending, and learning online during the crisis, Jumbo Interactive is well placed for an increase in lottery demand. 

Trading performance for FY20 includes forecast total transaction values of $335 to $341 million. Revenue is predicted to be $68.5–$69.9 million, up from $65.2 million in FY19. Profit is estimated to be in the range of $24.4–$25.3 million, down from $26.4 million last year. 

Incitec Pivot Ltd (ASX: IPL)

Shares in Incitec Pivot fell 9.6% last week to finish the week at $1.98. The fertiliser company announced a $600 million equity raising last Monday with shares issued at $2. The company also decided not to pay an interim dividend for the half year. 

Incitec Pivot said the raising was “pre-emptive” and aimed at increasing resilience in the current environment. Funds will be used to repay drawn balances of syndicated facilities. The fertiliser producer reported a 54% increase in profits in 1HFY20, which came in at $65 million. Demand for fertiliser is currently strong following good rainfall across eastern Australia. 

CEO Jeanne Johns said, “although COVID-19 has not had a significant impact on our business operations to date, global economic uncertainty is likely to impact customer demand and heighten the risk to recovery in commodity prices.”

Nonetheless, Incitec Pivot says the long-term demand fundamentals of the mining and agricultural sectors remain compelling. 

More reading

• Is the Mirvac share price about to soar?
• ASX 200 up 1.35%: Gold miners and Fortescue rocket higher, big four banks tumble
• Meet the ASX 200 company that just posted a 90% surge in profit
• These 5 ASX shares were last week’s biggest gainers
• 3 ASX 200 shares to watch this week

Kate O’Brien has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Jumbo Interactive Limited. The Motley Fool Australia owns shares of and has recommended Challenger Limited and Corporate Travel Management Limited. The Motley Fool Australia has recommended Jumbo Interactive 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.

The post The 5 ASX shares that were last week’s biggest fallers appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/2Tfwedf

The Mirvac Group (ASX: MGR) share price has been under pressure since the start of the year. The Aussie real estate investment trust (REIT) has fallen 33.33% lower and is underperforming the S&P/ASX 200 Index (ASX: XJO) by quite a margin.

However, coronavirus restrictions are starting to ease around the country and there’s now some hope of an economic uptick. That’s good news for Aussie businesses and individuals generally, but could it also mean the Mirvac share price is about to soar higher?

Is the Mirvac share price about to soar?

Shares in the Aussie REIT have been smashed in the space of a few months. I think the current $2.12 per share valuation reflects the uncertainty we’re seeing in the domestic and global economies.

And, across the sector, it’s not just Mirvac’s share price that has slumped lower in 2020. In fact, most of the Aussie REITs have shed billions in value in the wake of the pandemic.

One of the biggest concerns for investors is rental income. There have been very public stand-offs between retail tenants and their landlords. Mirvac is a major commercial real estate owner and developer which means it could be vulnerable to any changes in rent.

Clearly, COVID-19 restrictions have affected foot traffic in shopping centres. That’s piled pressure on the Aussie retail sector which was already struggling before the pandemic. However, with restrictions starting to be relaxed, there could be light at the end of the tunnel.

Hopefully, this is good news for the Mirvac share price in 2020. The big question is whether or not Aussies will continue to spend despite the tough economic times.

If the answer is yes, Mirvac could be set to benefit from better than expected earnings. The group’s residential real estate business may also benefit from low interest rates and continued demand for housing. Both of these levers could benefit shareholders in the form of sustained dividends.

Foolish takeaway

There’s no doubt the Mirvac share price is under pressure right now. I would say it’s far from certain where the REIT’s value will go from here.

On the one hand, we could see a recovery for Mirvac’s residential and retail assets. However, fewer workers in the city could be bad news for Mirvac’s office and industrial assets, and the economic climate remains uncertain.

The Mirvac share price could be set to soar, but I think it remains a speculative buy until we see the group’s earnings in August.

More reading

• The 5 ASX shares that were last week’s biggest fallers
• ASX 200 up 1.35%: Gold miners and Fortescue rocket higher, big four banks tumble
• Meet the ASX 200 company that just posted a 90% surge in profit
• These 5 ASX shares were last week’s biggest gainers
• 3 ASX 200 shares to watch this week

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.

The post Is the Mirvac share price about to soar? appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/2ZboX1A

At lunch on Monday the S&P/ASX 200 Index (ASX: XJO) is on course to start the week with a strong gain. The benchmark index is currently up a sizeable 1.35% to 5,477.2 points.

Here’s what has been happening on the market today:

Big four banks drop lower.

The ASX 200 may be charging higher, but the same cannot be said for the big four banks. At lunch all four banks are trading lower and are acting as a drag on the market. The Westpac Banking Corp (ASX: WBC) share price is the worst performer in the group with a decline of almost 1%. Investors may have concerns that the Reserve Bank could take rates into negative territory in the near future.

Gold miners rocket higher.

One area of the market which is performing particularly strongly is the gold mining industry. Newcrest Mining Limited (ASX: NCM) and the rest of the gold miners are rocketing higher today after the gold price hit a seven-year high on Friday and then continued its ascent on Monday. At the time of writing the S&P/ASX All Ordinaries Gold index is up a massive 5.9%.

Fortescue record high.

The Fortescue Metals Group Limited (ASX: FMG) share price climbed 7% to a record high of $13.40 this morning. Investors have been buying the iron ore producer’s shares after the price of the steel making ingredient climbed above US$90 a tonne. Solid demand in China and production disruptions in Brazil have supported the iron ore price. Fortescue remains on course to deliver record shipments and profits in FY 2020.

Best and worst ASX 200 performers.

The best performer on the ASX 200 on Monday has been the Saracen Mineral Holdings Limited (ASX: SAR) share price with a 10% gain. Investors have been buying its shares after the rise in the gold price. The worst performer has been the Macquarie Group Ltd (ASX: MQG) share price with a decline of over 3%. A good portion of this decline is attributable to its shares trading ex-dividend this morning.

Returns as of 7/4/2020

Motley Fool contributor James Mickleboro owns shares of Westpac Banking. The Motley Fool Australia owns shares of and has recommended Macquarie Group 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.

More reading

• The 5 ASX shares that were last week’s biggest fallers
• Is the Mirvac share price about to soar?
• Meet the ASX 200 company that just posted a 90% surge in profit
• These 5 ASX shares were last week’s biggest gainers
• 3 ASX 200 shares to watch this week

The post ASX 200 up 1.35%: Gold miners and Fortescue rocket higher, big four banks tumble appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/2X39rlO

The Village Roadshow Ltd (ASX: VRL) share price has soared as much as 18.98% higher this morning after the entertainment company released details of a revised takeover proposal from private equity firm BGH Capital.

Shortly before this announcement, the company also provided further insight into the impact on COVID-19 on its operations, along with an update on its liquidity and funding position.

Takeover proposal

This morning, Village Roadshow announced it has received a revised, non-binding proposal from BGH Capital to acquire all of its shares by way of a scheme of arrangement.

Village Roadshow stated that following careful consideration of the revised proposal, it has entered into a transaction process deed with BGH. Under this deed, BGH will have the opportunity to undertake confirmatory due diligence and negotiate transaction documentation over a 4-week period on an exclusive basis.

BGH Capital’s revised bid is for up to $2.40 per share, representing a 35.98% premium to Friday’s closing price of $1.765. However, this is significantly lower than the $4 per share offer from BGH Capital announced earlier in the year.

The revised $2.40 offer price consists of a base offer of $2.20 per share plus an additional $0.20 per share subject to Movie World, Sea World, and Village’s cinema locations being re-opened by the time shareholders meet to vote on the proposal.

COVID-19 impact

Along with the takeover news, Village Roadshow also provided a trading update to the market this morning.

On 23 March, Village Roadshow made the move to close its Gold Coast theme parks, which include Movie World, Sea World, and Wet’n’Wild. These parks, along with Village Roadshow’s entire cinema circuit, remain closed.

The company’s other businesses, Roadshow Distribution and Marketing Solutions, continue to operate at a reduced capacity. However, these businesses are much smaller in size and would not usually contribute a material portion to earnings.

Village Roadshow stated it is in regular contact with local, state and federal government authorities in regard to the easing of restrictions and social distancing measures.

Liquidity position and funding

As stated in today’s announcement, Village Roadshow is undertaking a number of initiatives to preserve capital and reduce costs. This includes working with landlords and other suppliers to reduce operating expenditure and deferring non-essential capital expenditure where possible.

The company has stood down all employees not performing essential tasks and senior executives have agreed to pay cuts until 30 June 2020. Village Roadshow is participating in the government’s JobKeeper scheme to support the continued employment for eligible staff, including those who have been stood down.

While its key businesses remain closed, the company expects its underlying operating cash costs (inclusive of the JobKeeper subsidy) to be between $10 million to $15 million per month. Operating costs will then accelerate during the ramp-up phase when the company prepares to re-open its locations.

The company stated it is in advanced discussions with lenders to increase its debt financing facilities. As at 30 April 2020, it was in a net debt position of around $284 million, which consisted of $342 million of gross debt and $58 million of readily available cash. Village Roadshow expects its net debt position to increase to $315 million at 30 June 2020.

More reading

• Small-cap ASX telco rockets 23% higher on strong sales momentum
• Leading brokers name 3 ASX shares to buy today
• The 5 ASX shares that were last week’s biggest fallers
• Is the Mirvac share price about to soar?
• ASX 200 up 1.35%: Gold miners and Fortescue rocket higher, big four banks tumble

Motley Fool contributor Cathryn Goh 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.

The post Village Roadshow share price soars 19% higher on revised takeover bid appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/2zJTh8Y