Tag: Motley Fool Australia

The CSL Limited (ASX: CSL) share price has been a longstanding market darling of the S&P/ASX 200 Index (ASX: XJO) and All Ordinaries (ASX: XAO). However, could it be falling out of favour against explosive tech-enabled sectors such as buy now, pay later (BNPL), the resurgence of Aussie miners or even the recent strength of retail shares? Is it time to move on or could the CSL share price be a buy at today’s prices? 

Fair growth but struggling share price 

The ASX 200 has lifted more than 30% since its initial COVID-19 sell off back in March. In the same period, the CSL share price has remained flat overall. CSL’s inability to push higher is perhaps a telltale sign of its fading position as a market darling. This comes as a surprise as many would consider CSL as a forever share that has delivered phenomenal long-term shareholder value. Furthermore, CSL is arguably in a market leading position to assist in the prevention and treatment of COVID-19. So why hasn’t the CSL share price lifted like many other ASX 200 shares such as Fisher & Paykel Healthcare Corp Ltd (ASX: FPH), ResMed Inc (ASX: RMD), Ramsay Health Care Limited (ASX: RHC) and Sonic Healthcare Limited (ASX: SHL)?

COVID-19 business update 

From a fundamental perspective, CSL provided the market with a COVID-19 update back in mid-April. This update reaffirmed its FY20 profit guidance of ~$2.110 to $2.170 million and its strong capital position of an estimated ~$1.1 billion available in liquidity. CSL stated that its plasma collection facilities will face increasing challenges amid COVID-19 restrictions, health concerns and pre-assessment requirements. Plasma collections are a foundation for CSL revenues, however its long manufacturing cycle means that today’s collections are likely to underpin sales for the next fiscal year. 

CSL’s involvement in COVID-19 research, prevention and treatment remains a wildcard as the company only stated that it is pursuing COVID-19 responses consistent with its core R&D and manufacturing capabilities. The volatile environment has meant that it will experience modest delays in capital projects and clinical trials which may lag future revenues.

Foolish takeaway

All things considered, it is positive to see that CSL has reaffirmed its profit guidance. This represents FY20 growth of 10-13% which includes a one-off cost of transitioning to a new distributor model in China. Despite the CSL share price trading at a price-to-earnings (P/E) ratio of approximately 45, I believe the quality and consistency of its earnings compensates for what is arguably an expensive valuation. 

Having said that, markets and investors may be expecting more from CSL with regards to COVID-19. The likes of Fisher & Paykel, ResMed and Ramsay Healthcare have seen material improvements in their earnings since the onset of the pandemic. The fact that CSL has reaffirmed its guidance may not be enough to prop up its share price. Furthermore, the long manufacturing cycle of plasma and the potential impact on FY21 earnings could be a potential earnings season risk. 

More reading

• 3 tips for beginners investing in ASX shares
• If you invested $10,000 in Afterpay shares last year, you’d have this much today…
• The ASX stocks that could enjoy a consensus earnings upgrade this reporting season
• These ASX healthcare shares could be fantastic long term options
• Sigma share price jumps on $172 million deal

Lina Lim has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of CSL Ltd. The Motley Fool Australia has recommended Ramsay Health Care Limited and Sonic Healthcare 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 Has the CSL share price lost its ASX 200 market darling status? appeared first on Motley Fool Australia.

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Real estate investment trusts, or REITs, have had a very tough year in 2020, with almost all suffering large share price falls. Yet, the impacts of the coronavirus pandemic have been felt differently across the sector. For example, REITs exposed to shopping malls have seen large scale devaluations of their portfolios due to the economic impacts of coronavirus.

GPT Group (ASX: GPT) is a company with a strong exposure to retail. Consequently, its recent report showed a reduction in funds from operations (FFO) of 23%. In fact, the retail sector of its diversified portfolio lost 11% of its valuation. Another REIT likely to see a large scale reduction in both FFO and statutory profit after tax is Vicinity Centres (ASX: VCX). None of this takes into account the impact of the second lock down in Victoria.

However, the coronavirus has not hit all real estate shares equally hard. Some have sailed through with their business plans intact, while others have been actively growing their assets. Fortunately for investors though, the market doesn’t seem to have caught up.

Diversified real estate shares

Abacus Property Group (ASX: ABP) is a diversified REIT. According to the company’s portfolio statement, it has a balance sheet of $3.3 billion in total property assets as at H1 FY20, a significant increase from FY19. This breaks down into approximately 50.6% in office buildings, 34.4% in storage space, 6.8% in small convenience shopping centres, and about 8.2% in non-core assets.

During the pandemic if you are going to be invested in retail, then in my opinion the small convenience stores are the right ones to invest in. They generally have supermarkets as anchor tenants, along with pharmacies, medical centres and hairdressers. All businesses that are essential – even hairdressers stayed open during the original lockdown.

Furthermore, Abacus has begun to show a growing interest in accumulating storage assets. Recently it increased its holding in rival National Storage REIT (ASX: NSR) to 8.09%. This is part of the organisation’s move to a recurring annuity type income stream, instead of its previous value-add model. 

Lastly, the REIT has a price/book ratio of 0.74 (at the time of writing). This is the ratio between the current market capitalisation and the net asset value. Anything under 1 means that, in theory, you could purchase the entire company, pay off all its debts and sell the assets for a profit. This REIT trades at a reasonable price-to-earnings ratio (P/E) of 10.34, and has a trailing 12-month dividend yield of 6.93%.

Office real estate shares

I think DEXUS Property Group (ASX: DXS) is one of the best value real estate shares to buy right now. This REIT is diversified and owns $16.8 billion in office and industrial properties. Both of these sectors have survived very well through the pandemic.

Dexus also has 97.2% occupancy for its office properties and 96% for its industrial properties. Additionally, the company has a weighted average lease expiry (WALE) or average lease duration, of 4.4 years. So in the unlikely event that work from home becomes more prevalent, the company still has many years worth of leases that will have to be paid out. Personally, I think the work from home revolution has been overhyped. I do not think this will define future office work in Australia for various reasons.

Dexus is currently trading at a price/book ratio of 0.73, a very low P/E of 5.99, and pays a trailing 12-month dividend yield of 5.91%.

Safe retail shares?

Charter Hall Retail REIT (ASX: CQR) is, I think, the safest retail real estate share of any significant size available today. Like Abacus above, Charter Hall Retail owns a range of regional and sub regional shopping centres. These are in places such as Albany, Western Australia and Townsville in northern Queensland.

If you have spent any time at all in a regional centre, you would know what this means. A small mall, anchored with a shopping centre, pharmacies, bottle shops and hairdressers. Unlike their larger cousins in the big CBD areas, most of these traded straight through the lockdown, particularly in the unaffected regions. Consequently, it is likely have far less problems with rent deferrals.

Moreover, the company has recently paid $112 million for a 52% stake in a high quality distribution facility leased to Coles Group Ltd (ASX: COL) for 14 years. So not only is it surviving, it is growing.

I estimate the company is trading at a price/book ratio of around 0.76. In addition, it is trading at a relatively high P/E of 21.60 and has a trailing 12-month dividend yield of 6.42%.

Foolish takeaway

The current market volatility has many investors thinking it is easy to make a lot of money quickly on the share market. While this can be done, it is not the normal state of affairs. At some point, investors need to grapple with the issues of creating long-term value through buying great companies at reasonable prices.

All 3 of these REITs are great companies in my view. They are trading at prices below net asset value because the market has oversold them, not because they are performing badly. I am confident that these REITs will return solid share increases over the next 3–5 years, as well as continuing to pay healthy dividends. What’s more, at this low entry point your personal dividend yield will increase as the share price rises.

More reading

• Are ASX retail shares buys right now?
• Why I’ve gone cold on ASX REITs
• ASX 200 jumps 1.2%: Big four banks rise, Qantas update, Mesoblast surges
• What to look for in the Vicinity Centres FY20 report
• Results: GPT share price on watch as net profit falls 247%

Motley Fool contributor Daryl Mather has no position in any of the stocks mentioned. The Motley Fool Australia has recommended 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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It’s hard to know where to invest $10,000 in ASX shares right now. I like to keep a long-term perspective to drown out the market noise.

Here are a few of my favourite listed companies that I’d love to buy with some spare cash today.

Where I’d like to invest $10,000 in ASX shares

First thing’s first, it’s important to establish a clear investment strategy. That could be a passive strategy buying exchange-traded funds like BetaShares Australia 200 ETF (ASX: A200).

If you’re an active investor, you might want to decide between value stocks or ASX growth shares.

Whatever your strategy, it’s important to have a clear idea of how and when you want to invest.

I like to consider what I think will be industries of the future. Given the increasing importance of data security and storage, I like the look of Nextdc Ltd (ASX: NXT). 

Nextdc is a leader in the industry with data centres across Australia. A strong growth profile combined with industry tailwinds makes it a buy in my books.

Some investors may not like buying at a record high but I think a long-term investor need not overthink short-term signals.

Another industry I’d like to invest in for the future is renewable energy. That means AGL Energy Limited (ASX: AGL) is on my radar.

The ASX energy share has slumped 17.2% lower this year and could be a bargain. Granted, AGL is not a pure renewables share. However, it is one of Australia’s largest energy producers with a significant interest in renewables.

If you’re investing for the long-term, I think AGL is well-placed to capitalise on any shift towards renewable energy in the decades ahead.

Finally, I’d like to invest some of that $10,000 in biotech shares. There are a couple of strong candidates at the moment but I like the look of Polynovo Ltd (ASX: PNV).

Polynovo develops innovative medical devices utilising the patented bioabsorbable polymer technology Novosorb.

The Aussie biotech company has some exciting developments as it pushes its NovoSorb BTM product towards more medical applications.

The Polynovo share price is surging higher but I think the ASX biotech share could be a strong buy for long-term growth.

Foolish takeaway

These are just a few of my favourite ASX shares to invest in for the long-term.

There are plenty of strong buys in the market right now and I think we’ll see more after the August earnings season.

More reading

• 3 tips for beginners investing in ASX shares
• If you invested $10,000 in Afterpay shares last year, you’d have this much today…
• Is the Origin Energy share price cheap or will it keep falling?
• 3 exciting ASX growth shares to buy with $3,000
• 3 ASX shares I would buy right now at these prices

Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of POLYNOVO 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 Where I’d invest $10,000 in ASX shares for the future appeared first on Motley Fool Australia.

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Now is a great time for beginners to start buying ASX shares. Yes, the market is volatile and the coronavirus pandemic has caused a lot of uncertainty.

However, that also presents a buying opportunity. On top of that, the August earnings season is really heating up.

That means ASX shares could see their prices rise or fall based on their latest earnings updates. 

Here are 3 investing tips I would have liked to have known when I first started buying ASX shares.

1. Buy high-quality ASX shares

This is the first and arguably most important step. It’s often tempting to punt on penny stocks when you first start trading.

While small-cap ASX shares can generate strong returns, they are also riskier than blue-chip companies.

If you’re just setting up your portfolio, I think it’s good to have some cornerstone investments.

That could be a high cash flow company like BHP Group Ltd (ASX: BHP). It could also be a company with a strong growth profile like Polynovo Ltd (ASX: PNV).

2. Seek out diversification

While it’s tempting to put all your money in one hot stock like Afterpay Ltd (ASX: APT), this is really not a wise choice.

Spreading your risk across multiple high-quality companies is a good idea. This reduces company-specific risk while keeping your returns high.

This can be achieved by buying a few blue-chips like BHP or CSL Limited (ASX: CSL). Another option is to buy a broad market exchange-traded fund (ETF) like Vanguard Australian Shares Index ETF (ASX: VAS).

3. Don’t overtrade with your ASX share portfolio

Overtrading is a trap for young players. Every time you buy or sell ASX shares you’ll incur brokerage and tax expenses.

The S&P/ASX 200 Index (ASX: XJO) has been volatile in 2020, which makes it tempting to buy and sell various companies.

It’s worth recognising your own behavioural flaws. If you can see where your psychological weaknesses are, you can help to mitigate the impact of these on your investment returns.

Foolish takeaway

These are tough economic times and it can be scary to invest in ASX shares right now.

However, with just a few easy tips, you can set your portfolio up for long-term success in 2020.

More reading

• If you invested $10,000 in Afterpay shares last year, you’d have this much today…
• Where is the Bega Cheese share price headed in August?
• Is the Origin Energy share price cheap or will it keep falling?
• 3 exciting ASX growth shares to buy with $3,000
• 5 things to watch on the ASX 200 on Tuesday

Ken Hall owns shares of Vanguard Australian Shares Index. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of CSL Ltd. and POLYNOVO FPO. 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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The SCA Property Group (ASX: SCP) share price is one to watch this morning after the Aussie real estate investment trust (REIT) reported its full-year earnings.

What were the financial highlights?

SCA Property posted a 22% slump in full-year net profit after tax (NPAT) to $85.5 million during the year. That was largely due to a coronavirus impact of $20.5 million with investment property valuation slipping $87.9 million.

The group’s funds from operations (FFO) edged 0.7% lower compared to FY19 figures to $140.8 million. Adjusted FFO fell 2.4% to $124.3 million as distributions slumped 15.0% from FY19.

The 12.50 cents per unit distribution that was announced this morning represents a 99.4% payout from the retail REIT.

Gearing totalled 25.6% as at 30 June 2020, down from 32.8% last year, largely thanks to $279.3 million of equity raised in April and May 2020.

Net tangible assets came in at $2.22 per unit, down by 2.2% from $2.27 in FY19. For context, the SCA Property share price closed at $2.21 per share on Monday.

What else could move the SCA Property share price?

Management also provided some key operational updates alongside the REIT’s full-year financials.

Supermarket moving annual turnover (MAT) growth came in at 5.1%, up from 2.0% last year, while discount department store MAT jumped 540 basis points to 7.6%.

Mini majors’ sale growth totalled 2.9%, compared to -3.1% in FY19, while specialty sales growth fell 1.1% in FY20.

SCA Property reported portfolio occupancy of 98.2% by gross lettable area (GLA) and has remained relatively stable since December 2014.

The REIT’s specialty vacancy rate came in at 5.1% of GLA, which is just outside the target range of 3–5%. The Aussie REIT did report that its specialty tenants had been relatively resilient, despite the tough economic environment.

The SCA Property share price will be worth keeping an eye on this morning as investors process the latest updates.

The REIT is also looking to improve its tenancy mix with a tilt towards non-discretionary tenants. Maintaining a high retention rate on renewals and a low specialty vacancy rate are other areas of focus during COVID-19.

Foolish takeaway

The SCA Property share price could be on the move in early trade following the full-year result. 

The REIT said it will continue to take a “disciplined approach” to acquisitions and noted its strong balance sheet position.

SCA Property will not provide FY21 guidance due to the ongoing uncertainty, but advised it will target a payout ratio of approximately 100% of adjusted FFO.

More reading

• 3 tips for beginners investing in ASX shares
• Challenger share price on watch after full year results and FY 2021 guidance
• Up 377% since March: Is the Mesoblast share price a buy?
• If you invested $10,000 in Afterpay shares last year, you’d have this much today…
• ASX reporting season reveals some upside surprises

Motley Fool contributor Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of Shopping Centres Australasia Property 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 could be on the move today following the release of its full year results.

How did Challenger perform in FY 2020?

For the 12 months ended 30 June 2020, Challenger reported a 4% increase in funds under management to $85.2 billion and improved Life sales across a more diversified base.

However, this was offset by significant negative investment experience relating to the COVID-19 pandemic market sell-off.

In respect to earnings, Challenger reported normalised net profit before tax of $507 million, down 8% on the prior corresponding period. This was in line with its guidance for the low end of its $500 million to $550 million range. This normalised result excludes investment experience and significant items.

Also on target was its normalised pre-tax return on equity (ROE). While it was lower year on year at 14.8%, it was 20 basis points above target.

On the bottom line, Challenger posted a normalised net profit after tax of $344 million, which was down 13%. On a statutory basis, the company reported a net loss after tax $416 million, reflecting significant Life investment experience losses from the pandemic-related market sell-off.

In light of the uncertain conditions, investment market volatility, and its intention to maintain a strong capital position while optimising earnings, the Challenger board has decided not to pay a final dividend in FY 2020. This means its interim dividend of 17.5 cents per share will be the only dividend it pays this year, down from 35.5 cents per share in FY 2019.

Managing Director and Chief Executive Officer, Richard Howes, commented: “While investment losses resulting from the major COVID-19 market event have impacted our net statutory performance, our strategy of growing funds under management and diversifying our revenue base demonstrates underlying business resilience.”

The chief executive appears optimistic that Challenger can overcome structural changes occurring in the wealth management market.

He explained: “Our domestic annuities sales continue to be impacted by structural changes to the wealth management market, and this year have been additionally affected by new age pension means test rules and the COVID-19 disruption. We are quickly evolving our business in response to the changes, and we are seeing positive signs that we are well positioned to rebuild momentum in the new market environment.“

FY 2021 outlook.

The annuities company is expecting its normalised net profit before tax to decline again in FY 2021. It has provided guidance for normalised net profit before tax in the range of $390 million to $440 million. This represents a 13.2% to 23% decline year on year.

This guidance assumes Challengers Life’s strong capital position will be prudently deployed over the course of the year, with the deployment of up to $3 billion in cash and liquids into higher returning investments. Management advised that this reflects an intention to maintain defensive portfolio settings and carefully manage expenses.

Challenger continues to target a normalised pre-tax return on equity of the RBA cash rate plus 14%. Though, it warned that its performance against this target is heavily reliant on the speed of capital deployment and market conditions.

And in respect to dividends, the company is maintaining its target normalised dividend payout ratio of between 45% and 50% and expects to return to paying dividends in this range when conditions allow.

More reading

• 5 things to watch on the ASX 200 on Tuesday
• It’s ASX reporting season! Here’s what to watch out for this week
• 5 things to watch on the ASX 200 next week
• Why the Challenger share price is tumbling lower today

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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The Mesoblast Limited (ASX: MSB) share price has been a big success story in 2020. The Mesoblast share price has now rocketed 377.5% higher since bottoming at $1.02 per share in the March bear market.

What does Mesoblast do?

Mesoblast is a leading Aussie biotech company that specialises in regenerative medicine. 

The company has a number of innovative cellular medicines to treat serious and life-threatening diseases.

Specifically, Mesoblast seeks to provide treatments for inflammatory ailments, cardiovascular disease and back pain.

It also has a number of potential product candidates in Phase 3 trials including treatment for acute respiratory distress syndrome due to COVID-19 infection.

The Mesoblast share price has been a top performer for a number of years and is up 137.6% since 1 January.

Why is the Mesoblast share price surging higher?

It was a good start to the week for shareholders as the company’s shares surged 10.7% higher on Monday.

That was despite no major announcements from the ASX biotech company.

I think investors are anticipating some good news in the coming days or weeks. It’s not uncommon to see a company’s share price surge ahead of a big announcement such as a successful trial result or product announcement.

There’s no firm date for Mesoblast’s full-year result but it did report its FY19 result on 30 August 2019.

I think the Mesoblast share price is certainly one to watch. There is obviously strong momentum behind the stock but investors are pricing in a lot of future growth.

That means the FY20 result looms as a real trigger point. If Mesoblast’s earnings and research and development pipeline are promising, I’d expect the biotech share to climb higher.

However, if we see a soft result or further headwinds in FY21, investors may pull back from the current valuation.

Foolish takeaway

Whether you’re a biotech investor or not, the Mesoblast share price rise has been impressive.

The August full-year result looms as a real make or break for the company’s shares this year.

I’m quietly confident of an outperforming result from Mesoblast. I think the company has enough in the way of promising potential products that it is on track for further success in 2020 and beyond.

Either way, I’ll be watching any announcements from the Aussie biotech company closely this month.

More reading

• Why Kogan and these ASX shares just hit new record highs
• ASX 200 jumps 1.2%: Big four banks rise, Qantas update, Mesoblast surges
• These were last week’s best performing ASX shares
• ASX 200 Weekly Wrap: Surging commodity prices snap ASX 200’s losing streak
• These were the best performing ASX 200 shares last 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 Up 377% since March: Is the Mesoblast share price a buy? appeared first on Motley Fool Australia.

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Afterpay Ltd (ASX: APT) shares have been hot property in 2020. The Afterpay share price has jumped 136.8% this year and smashed its record high time and again.

We’ve all got a little bit of regret about not buying Afterpay in recent times. That said, here’s how much $10,000 invested in Afterpay shares 12 months ago would be worth today.

What $10,000 in Afterpay shares is worth today

Impressively, Afterpay shares are up 205.8% since 12 August 2019. That’s despite the coronavirus pandemic and the March bear market which saw Afterpay fall to as low as $8.01 per share.

That means a $10,000 investment last August at $23.72 per share would have netted you 421 shares.

Multiplied by yesterday’s closing price of $72.54, that investment would be worth $30,539.34. Ouch, that hurts.

What about other top ASX growth shares?

It may seem like Afterpay is a one in a million company. That may well be the case, but there are other strong ASX growth shares on the market.

A $10,000 investment in CSL Limited (ASX: CSL) 5 years ago would be worth more than $30,000 today.

Similarly, the A2 Milk Company Ltd (ASX: A2M) share price has rocketed an eye-watering 2,588.7% in 5 years.

That means $10,000 worth of A2 Milk shares would be worth $268,863.56 today. That’s up there with Afterpay shares amongst the top ASX growth shares.

The Nextdc Ltd (ASX: NXT) share price has jumped 359.6% in 5 years to $11.95 per share. The Aussie data centre operator is hot property right now and just hit a new all-time high.

Where can I find the next Afterpay?

I think this August earnings season could provide a big clue. It looks like we’re starting to see a “two-speed” economy right now.

That means some companies and industries are outperforming while others are hammered by the coronavirus pandemic restrictions.

I’d keep an eye on Afterpay shares ahead of its August earnings result. It’s a similar story for other hot tech shares like Nextdc with investors pricing in a strong growth trajectory.

I think hot industries like renewable energy and cybersecurity could also be worth watching for the next Afterpay in 2020.

More reading

• 3 tips for beginners investing in ASX shares
• A2 Milk Company share price on watch after naming its new CEO
• 5 things to watch on the ASX 200 on Tuesday
• 4 ASX shares I’m expecting big things from this reporting season
• Sigma share price jumps on $172 million deal

Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of CSL Ltd. The Motley Fool Australia owns shares of A2 Milk and 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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As week 2 of ASX reporting season rolls on we are starting to see the impact of the COVID-19 pandemic in results. Nonetheless there have been some upside surprises in the retail sector, largely driven by the shift in consumer spending. We take a look at reporting season so far. 

Insurers doing it tough

FY20 has been a tough one for insurers, with the double whammy of COVID-19 and summer bushfires. Insurance Australia Group Ltd (ASX: IAG) saw profits fall 60% compared to FY19 due to natural perils and investment market volatility. Although gross written premium growth of 1.1% was in line with guidance, no final dividend was declared. Negative cash earnings of over $100 million in the second half mean the 10 cent interim dividend paid in March 2020 equated to nearly 83% of FY20 cash earnings. This was in excess of IAG’s full year payout policy of 60–80% cash earnings. 

Genworth Mortgage Insurance Australia Ltd (ASX: GMA) reported a statutory loss of $90 million in 1H20. COVID-19 impacts including write-downs and loss reserves drove the result, which compared to an $88.2 million profit in 1H19. While Genworth delivered high volume in its core lenders mortgage insurance business, net claims incurred increased to $101.1 million reflecting additional COVID-19 loss reserving. 

Retailers surprise on upside 

Despite the impact of store closures and the economic downturn, ASX retailers have performed strongly so far. Nick Scali Limited (ASX: NCK) reported net profits of $42.1 million, above recent guidance and on par with the previous year despite the impacts of store closures. Revenue loss from the store closures is estimated to be approximately $9 million to $11 million, with full year revenue of $262.5 million. But once stores reopened, sales surged, with May and June sales orders up by 72% year on year. 

Adairs Ltd (ASX: ADH) also saw strong sales. The omni-channel homewares retailer reported a 12.9% increase in group sales for FY20 despite the impact of store closures. Online sales accounted for 31.9% of the total $388.9 million. Online furniture subsidiary Mocka performed ahead of expectation with sales growth of 50.2%. The retailer has reduced net debt to $1 million and declared a final dividend of 11 cents per share. This represents 72% of underlying net profit after tax for 2H FY20. 

Who else is reporting? 

There are a host of ASX companies due to report in coming days and weeks. This week we’ll hear from Commonwealth Bank of Australia (ASX: CBA), Breville Group Ltd (ASX: BRG) and Newcrest Mining Ltd (ASX: NCM), amongst others. Next week, JB Hi Fi Limited (ASX: JBH), Kogan.com Ltd (ASX: KGN) and Altium Ltd (ASX: ALU) will reveal their results. 

More reading

• Why Kogan and these ASX shares just hit new record highs
• 5 things to watch on the ASX 200 on Tuesday
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Kate O’Brien owns shares of Altium. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Altium. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Kogan.com ltd. The Motley Fool Australia has recommended Kogan.com ltd. 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 Monday the S&P/ASX 200 Index (ASX: XJO) was on form and stormed almost 1.8% higher to hit a three-week high of 6,110.2 points.

While this is positive, a number of shares on the local market are performing even better, and some have even been hitting record highs.

Three that have achieved this feat are listed below. Here’s why they are flying high right now:

Ansell Limited (ASX: ANN)

The Ansell share price continued its ascent and hit a record high of $40.40 on Monday. The health and safety products company’s shares have been very strong performers this year thanks to increasing demand for its personal protective equipment during the pandemic. One broker that believes this increase in demand is structural and not a one off is Credit Suisse. For this reason, the broker put an outperform rating and $42.50 price target on its shares this week. This could mean that there’s still room for its share price to push higher.

Kogan.com Ltd (ASX: KGN)

The Kogan.com share price continued its remarkable run on Monday and stormed to a new record high of $20.77. Investors were fighting to get hold of the ecommerce company’s shares again yesterday after it revealed that its strong growth continued during July. According to the release, Kogan added an incremental 126,000 active customers during the month. This lifted its total active customers to a massive 2,309,000. Thanks to this strong customer growth and the continued shift to online shopping, Kogan reported a 110% increase in monthly gross sales and a 160% lift in gross profit for July.

Mesoblast limited (ASX: MSB)

The Mesoblast share price was on form again on Monday and hit a new record high of $4.88. The biotech company’s shares have been on fire this year thanks to excitement around its lead product candidate remestemcel-L. This excitement has been building since the recent release of its quarterly update. With the update, the company’s Chief Executive, Dr Silviu Itescu, commented: “Remestemcel-L has two imminent major milestones, the interim analysis in the ongoing Phase 3 trial of remestemcel-L in COVID-19 patients with acute respiratory distress syndrome and the FDA advisory committee panel review of our submission for potential approval of RYONCIL (remestemcel-L) in children with steroid-refractory acute graft versus host disease.” He added: “Together with the upcoming Phase 3 read-outs in chronic heart failure and back pain, these key milestones will take the Company into the most significant period in its history.”

More reading

• Up 377% since March: Is the Mesoblast share price a buy?
• ASX reporting season reveals some upside surprises
• The ASX stocks that could enjoy a consensus earnings upgrade this reporting season
• Are ASX retail shares buys right now?
• 4 ASX shares I’m expecting big things from this reporting season

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 Kogan.com ltd. The Motley Fool Australia has recommended Ansell Ltd. and Kogan.com ltd. 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 Why Kogan and these ASX shares just hit new record highs appeared first on Motley Fool Australia.

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