Tag: Motley Fool Australia

On Wednesday I penned an article warning you not to get caught up in the gold fever sweeping through global investment markets. 

Rather than invest in historically volatile gold shares, I recommended you consider adding some healthy dividend shares to your portfolio. As a long-term investor, you’ll almost certainly find better value there over time, in my opinion.

There are a good number of quality income shares listed on the All Ordinaries (INDEXASX: XAO). Many have reduced or suspended their most recent dividend payments due to the economic fallout from COVID-19. But that’s a short-term issue. Once the economy regains traction, and it will, the dividends should flow again.

I specifically pointed to Collins Foods Ltd (ASX: CKF) as a yield stock you might want to look into further. In trading today, the Collins Foods share price is $9.53 per share. That’s right around where it was mid-day Wednesday.

But that’s fine. Unless you’re day trading — in which case, I hope you have a good supply of antacids — you shouldn’t get overly caught up in the daily price swings. Instead, look for quality shares with a track record of regular and growing dividend payments. And consider adding to your holdings when the share price falls for non-company specific reasons.

Some eye-popping gains fuelling FOMO

With that said, the fear of missing out (FOMO) can be a powerful driver.

When your friends are talking about the 80% gains they’ve made from Aussie gold miner Silver Lake Resources Limited (ASX: SLR) since the start of 2020, it’s easy to take your eyes off your 20 to 30 year investment horizon and want a ‘piece of the action’.

And Silver Lake isn’t alone. Saracen Mineral Holdings Limited (ASX: SAR) has seen its share price rocket 78% year-to-date. And the Evolution Mining Ltd (ASX: EVN) share price is up 58%.

Ironically, the same virus that’s dragging on many companies’ share prices is helping fuel gold’s rise, and supporting the companies that dig it up. In times of uncertainty, investors historically flock to haven assets like gold. And the insecurities thrown up by the coronavirus have seen the yellow metal reach record highs in US dollars. It’s currently worth US$1965 per troy ounce at the time of writing.

Which brings me to an important point…

We don’t use the greenback in Australia

Gold is right near its record highs in US dollars. But we don’t get paid in US dollars here in Oz. And we can’t spend them.

The US looks set for a period of inflation, while the Australian Bureau of Statistics just reported the Consumer Price Index (CPI) fell 1.9% in the June 2020 quarter. Australia’s annual inflation rate fell to -0.3% (or +0.3% deflation) for the year through the end of June

This is clearly visible in the exchange rate between the 2 currencies. On 20 March, 1 Aussie dollar only fetched 57 US cents. Today it’s worth 72 US cents.

You can see the same trend playing out in the gold price. Year-to-date, the gold price in US dollars is up 29.2% while in Aussie dollars it’s up a more subdued 25.8%. Still a big gain, but something to keep in mind when you hear the gold price quoted.

Should you buy ASX gold shares?

If you want to take a punt on a specific gold miner, best of luck. As we saw above, some miners have returned fantastic gains so far this year. Just don’t invest more than you can afford to lose.

If you’re looking for exposure to a wide range of gold shares with a single investment, you may want to look into the ASX-listed VanEck Gold Miners ETF (ASX: GDX).

The VanEck Gold Miners ETF holds a basket of diversified companies involved in the gold mining sector. Management costs run 0.53% per year.

According to the company website, the fund “provides exposure to publicly traded companies worldwide involved primarily in gold mining, representing a diversified blend of small-, mid- and large-capitalisation stocks.”

As at 30 June, the fund’s top 3 country weightings are 54% to Canada, 18% to the US, with Australia coming in at number 3 with 15% weighting.

Year to date, the VanEck Gold Miners ETF share price has gained 38.8%.

More reading

• Telstra and 2 more ASX shares I’d like to buy with $5,000
• 5 things to watch on the ASX 200 on Friday
• 5 things to watch on the ASX 200 on Thursday
• Is it too late to buy ASX gold shares like St Barbara?
• Musgrave Minerals share price climbs 7% on ‘bonanza’ drill results

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Collins Foods 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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Australia’s top brokers have been busy adjusting their estimates and recommendations again, leading to the release of a large number of broker notes this week.

Three broker buy ratings that have caught my eye are summarised below. Here’s why brokers think these ASX 200 shares are in the buy zone:

Australia and New Zealand Banking GrpLtd (ASX: ANZ)

According to a note out of Morgans, its analysts have retained their add rating and $21.00 price target on this banking giant’s shares. The broker has been looking at the big four bank’s dividends after APRA eased restrictions to allow them to pay out up to 50% of earnings to shareholders. As a result, the broker has pencilled in the declaration of a 25 cents per share deferred interim dividend next month by ANZ with its third quarter update. In light of this and its attractive valuation, Morgans remains positive on the investment opportunity with ANZ’s shares. I agree with the broker and would be a buyer right now.

CSL Limited (ASX: CSL)

Analysts at UBS have retained their buy rating and $331.00 price target on this biotherapeutics company’s shares. According to the note, the broker believes that demand for CSL’s flu vaccines in the northern hemisphere flu season will be strong because of the coronavirus pandemic. It feels this could underpin a strong performance for its Seqirus business in FY 2021. This could potentially offset any weakness from plasma collections. I agree with UBS and feel the recent weakness in the CSL share price is a buying opportunity for investors.

Macquarie Group Ltd (ASX: MQG)

Another note out of Morgans reveals that its analysts have retained their add rating and lifted the price target on this investment bank’s shares to $133.40. The broker was reasonably pleased with Macquarie’s first quarter update and notes that its key Banking and Financial Service business continues to perform strongly. In addition to this, it notes that the bank is very well-positioned to take advantage of opportunities that develop because of COVID-19 disruptions. I think Morgans makes some great points and Macquarie shares could be worth considering.

More reading

• ASX 200 sinks 1.5%: AMP disappoints, big four tumble, Super Retail surprises
• What’s dragging the CBA, Westpac and AMP share prices lower today?
• Telstra and 2 more ASX shares I’d like to buy with $5,000
• A top ‘coronavirus share’ to buy this August
• Why I would buy ANZ and this ASX share for dividends

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 CSL Ltd. 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.

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The Phoslock Environmental Technologies Ltd (ASX: PET) share price has fallen by more than 20% today, at the time of writing. The company released a business update after trading on Thursday, which has been badly received in the market. Phoslock sells a range of products for water management. Among them is its patented technology to clear polluted waterways of algal blooms.

What moved the Phoslock share price?

The company’s business update disclosed a number of issues likely to continue impacting it in FY21. On the one hand, the company has logistical difficulties executing awarded projects. On the other hand, it has very high receivables due to coronavirus impacts. Combined with the lower sales activity, this has resulted in a negative cash flow position for the period.

Operations

Unusually high rainfall during June and July has resulted in flooding and deterioration in water quality in several regions of China. This delayed projects underway at Shilongba, Xingyun Lake, Wuhan, Jiangsu, Zhejiang and Shanghai. In addition, the second wave of coronavirus in Beijing has caused problems due to travel restrictions. The company does, however, still have many ongoing projects that are continuing unaffected.

In Europe, authorities have suspended several projects to prioritise spending into more urgent public health issues. Projects progressing to plan are in the Netherlands, Belgium, Denmark and Italy. 

The company’s projects in Brazil are continuing as planned, despite the challenging situation that has arisen from the pandemic. Phoslock expects Brazil to achieve forecast by financial year end. Moreover, all current projects are continuing in North America.

All of these operational issues are continuing to weigh heavily on the Phoslock share price.

Management commentary

Managing Director and CEO, Lachlan McKinnon said “The first half of 2020 has been a challenging period for the business. Events outside the control of the Company have resulted in project delays, lower than anticipated revenues and a working capital and cash flow that is currently weaker than expected.

It is important to stress however, that we have had no project cancellations and all of our announced contracts are expected to be fulfilled in due course.”

Company performance

The Company’s pipeline remains strong with a current high confidence contract value of $380 million. Phoslock’s balance sheet also remains strong, with $35 million in cash, $15 million in receivables and no debt at the end of the period. The company has also recently received an indicative term sheet for short-term working capital debt facilities with HSBC. The Phoslock share price has fallen by 20.37% today, at the time of writing. 

More reading

• 3 unloved ASX growth shares that could make you rich
• Phoslock share price rockets 30% yesterday
• ASX stock of the day: Phoslock share price surges 21% on business update

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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The Qantas Airways Limited (ASX: QAN) share price has fallen nearly 35% since 10 June. With no end in sight to the coronavirus pandemic, it appears turbulence has well and truly set in. Here we look at what is continuing to drive the Qantas share price lower.

Flights severely impacted

Yesterday, as reported by News.com.au, the International Air Transport Association (IATA) predicted that international travel will not return to pre-COVID-19 levels until 2024. This is one year later than originally forecast by IATA and is obviously bad news for Qantas.

Additionally, in Qantas’ 2019 Annual Report, the company reported that its international segment contributed $285 million to its underlying earnings before interest and tax (EBIT). Underlying EBIT from all segments was $1.487 billion. As a result, the significant reduction in international travel is material to the financial results of Qantas. 

Similarly, its domestic segment contributed $740 million to EBIT. Due to continuing restrictions on travel within Australia, the company’s domestic segment has also been significantly impacted by the pandemic.

Qantas loyalty

The Qantas loyalty program is one segment that delivered positive EBIT growth in its 2019 Annual Report. As a result, $374 million EBIT was reported in FY 2019 compared to $345 million in FY 2018. This is represented by an 8.4% increase.

In addition, Afterpay Ltd (ASX: APT) recently announced a partnership with Qantas. This involves giving boosted Qantas Frequent Flyer points to customers when they use the buy now, pay later platform.

ACCC announcement

On 30 July 2020, in recognition of the difficult period being experienced by airlines, the ACCC proposed to continue to allow airlines to cooperate on regional routes. 

Deputy Chair of the ACCC, Mick Keogh, said “The ACCC recognises that airlines are still facing significant challenges, including exceptionally low demand, due to the ongoing impacts of the COVID-19 pandemic”.

The authorisation will extend until 30 June 2021. 

Share purchase plan

A share purchase plan (SPP) was announced to the market on 2 July 2020. The announcement followed the completion of a $1.36 billion institutional placement. Qantas is hoping to raise an additional $500 million before 5 August 2020 which is an extension to the original estimated closing date of 22 July 2020. 

Currently, at time of writing, the Qantas share price is trading at $3.23 which is 11.5% less than the $3.65 share purchase plan offer price. As a result, investors could be better off buying in the open market rather than participating in the plan, assuming the price is still trading at a discount to the SPP price next month. 

The purpose of the SPP is to support Qantas’ recovery plan, strengthen its balance sheet, improve financial flexibility, and position it to capitalise on opportunities in line with its strategy. 

Foolish takeaway

The continuing effects of the pandemic point to ongoing turbulence for the Qantas share price over the next year or two. Personally, I would avoid buying shares in Qantas in the short term as investing now appears to be a purely speculative play given all the uncertainties. I also feel the company’s capital raise only serves to reinforce the fact that Qantas is a company bleeding cash. 

More reading

• Why IOOF, IGO, Janus Henderson, & Qantas shares are dropping lower
• Is the oOh!Media share price set to run higher?
• How are 2019’s tech IPOs performing?
• Is the Qantas share price in the buy zone?
• 4 trends to invest in before August earnings season

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

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The OceanaGold Corp (ASX: OGC) share price is down 6.02% to $3.59 at the time of writing, after the company released its quarterly statement after market close yesterday afternoon.

What was in the announcement?

OceanaGold reported production of 139,385 ounces of gold in the first half of 2020. This was a 45% drop in production compared to the same period in 2019. The company reported that this was mainly due to a temporary suspension of operations at its Didipio mine. During the first half of 2020, OceanaGold had an all in sustaining cost of $1,237 on 153,343 ounces of gold sold. 

During the quarter ending June 2020, the company produced 58,678 ounces of gold. It sold 61,955 ounces of gold at an all in sustaining cost of $1,265 per ounce.

The company had revenue in the first half of 2020 of $234 million with earnings before interest, tax, depreciation and amortisation of $54.8 million.

OceanaGold reported that production guidance for 2020 would be lowered from 360,000–380,000 ounces of gold down to 340,000–360,000 ounces of gold. It attributed this to the 5-week coronavirus lockdown in New Zealand, which affected the company’s Macraes site. The lockdown was lifted on 27 April.

The company reported that guidance for all in sustaining costs on a gold sold basis for 2020 would be reduced from $1,075–$1,125 down to $1,050–$1,100 per ounce of gold.  

President and CEO of OceanaGold Michael Holmes commented on the result and the company’s plans for the rest of 2020, stating:

We look forward to the second half where we continue to expect a material increase in production at both Haile and Macraes at lower AISC plus continued advancement of our key organic growth projects including those recently outlined in the Waihi District Study.

The second quarter was expected to be our weakest in terms of production, but the results also demonstrate the impact the global COVID-19 pandemic has had on our business. We have worked hard to safeguard the health and safety of our employees through the implementation of rigorous protocols including health screening, physical distancing and disinfecting throughout our operations.

About the OceanaGold share price

OceanaGold in a multinational gold explorer and producer. The company has operations in the United States, New Zealand, and the Phillipines.

In July, the company revealed that it had completed a study for its Waihi district site. OceanaGold announced that the site had a net present value of US$931 million with a life of mine estimated to last until 2036 and beyond.

The OceanaGold share price is up 145.89% since its 52-week low of $1.46. It has returned 29.14% since the beginning of the year. The OceanaGold share price is down 13.29% since this time last year.

More reading

• UBS picks the best ASX gold miners to buy today
• Leading brokers name 3 ASX shares to buy today
• Why Domain, OceanaGold, Praemium, & TechnologyOne are tumbling lower

Motley Fool contributor Chris Chitty 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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Are you looking for some ASX share suggestions for your share portfolio?

I believe the following three companies are all excellent candidates. Here’s why all three are on my buy list right now.

3 quality ASX shares to buy right now

Ansell Limited (ASX: ANN)

Ansell develops and manufactures gloves and other personal protective equipment (PPE) in the industrial and medical markets. The sales of the company’s hand and body protection products in particular have surged during the coronavirus pandemic. This strong demand has assisted in pushing the company’s share price higher in recent months. The Ansell share price has risen more than 80% from $21.43 in late March to now be trading $38.72.

I believe that Ansell is well positioned for long-term growth driven by its strong competitive position, broad customer base and geographic diversity.

Nanosonics Ltd. (ASX: NAN)

Nanosonics manufactures and distributes disinfection system for ultrasound probes. Its core product is named the ‘trophon EPR’ disinfection system. It has achieved widespread industry recognition as the market leader in its particular niche.

Nanosonics has experienced strong revenue growth over the past few years. This revenue growth has also been reflected in a rising share price. From the beginning of 2019, the Nanosonics share price has risen more than 125% from $2.79 to now be trading at $6.28.

More recently, revenue growth for Nanosonics has continued to rise strongly, despite the challenges of the pandemic. Total revenue for the first half of FY20 amounted to $48.5 million. This was a healthy increase of 19% on the prior corresponding period (pcp).

I believe that Nanosonics’ long-term future looks bright due to the growing global demand for stricter disinfection control in hospitals.

Dicker Data Ltd (ASX: DDR)

Dicker Data is Australia’s largest value added distributor of hardware, software, cloud and other emerging technologies.

The company achieved another strong set of financial numbers for the six months ending 30 June 2020. Total half year revenue from ordinary activities was up by 18.1% to $1,006 million.

The Dicker Data share price has risen nearly 84% from a low of $4.10 on 23 March to currently be trading at $7.54.

Strong recent demand has been driven by a surge in the requirement for additional remote and virtual work solutions during the pandemic. 

Dicker also pays an attractive dividend yield of 4.04%, fully franked.

Foolish takeaway

Ansell, Nanosonics and Dicker Data are three ASX shares that I would be happy to own as part of my share portfolio. All three companies have strong market positions in their respective industries and strong growth prospects over the next three years.

More reading

• 3 underloved ASX healthcare shares with strong comeback potential
• Why I would buy Telstra and this ASX dividend share
• Nanosonics and 2 other ASX healthcare shares to buy
• Why PolyNovo and these ASX healthcare shares could be long term market beaters
• Does the second wave of COVID-19 make these ASX 200 healthcare shares a buy?

Phil Harpur owns shares of Nanosonics Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Nanosonics Limited. The Motley Fool Australia owns shares of and has recommended Dicker Data Limited. The Motley Fool Australia has recommended Ansell Ltd. and Nanosonics 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 coronavirus pandemic has had a significant effect on ASX shares in 2020. It’s initial onset sparked the bear market in February and March but then also saw many ASX shares surge with changing consumer behviour resulting from lockdown restrictions. Whilst Victoria is still battling a second wave, I believe that even as the economy emerges from the pandemic, some ASX shares will continue benefitting from changing consumer preferences. Despite the phenomenal rally in their share prices already over the past year, I’m confident the following three ASX shares are still well positioned for continued growth over the coming years.

3 ASX shares to continue benefitting from coronavirus

Marley Spoon AG (ASX: MMM)

I was really impressed by this company’s latest quarterly report. After a significant rally in the past year of a whopping 410.94% (at time of writing), I still believe the Marley Spoon share price has further to run. Particularly because of rising coronavirus cases in Victoria and along the east coast of Australia right now.

However, the uptick in services like those offered by Marley Spoon may also represent a structural change in how people buy their groceries. Marley Spoon’s chairman, Deena Shiff told shareholders this week that “Looking beyond the second quarter results which we released today, the acceleration of demand has not only brought forward our point of operating EBITDA (earnings before interest, tax, depreciation, and amortisation) profitability, but we also believe, represents a structural change in the markets in which we operate”.

In my view, we could be witnessing just the beginning of a very bright future for the Marley Spoon share price. 

Goodman Group (ASX: GMG)

I believe Goodman Group is benefitting from the shift to online shopping, particularly due to the company’s warehouses. During a time when other companies are eliminating, cutting or deferring dividends, Goodman Group was able to maintain a 15 cent per unit distribution to investors, payable next month.

Additionally, the Goodman Group share price has recently reached a 52 week high of $17.14. Its share price has, however, pulled back slightly from this to be currently trading at $16.96.  

In a May update, the group stated “Despite the challenging global environment, customer demand in the online, logistics, food, consumer goods and digital economy, is supporting portfolio fundamentals and development activity”. As a result, Goodman Group has a high occupancy rate for its properties of 97.5% and strong demand for its properties continue.

Kogan.com Ltd (ASX: KGN)

Earlier this month, Kogan announced a business update showing continued strong growth in its business across both sales and profitability. As consumers are shifting to online purchases in increasing numbers, I believe the company could continue to be a beneficiary.

Founder and CEO, Ruslan Kogan said “In early July we celebrated four years since listing the company on the ASX, and we are now proud to have delivered four consecutive years of significant growth in sales and earnings.” I believe this trend could continue well into the future as consumers are growing more accustomed to online shopping. 

Furthermore, Kogan recently undertook a capital raising to provide the company with the financial flexibility to act quickly on future opportunities and acquisitions. 

On the down side, however, Kogan is awaiting a penalty decision from a recent Federal Court Judgement which has caused the company’s share price to take a tumble from to its record high. Despite this, the Kogan share price is up a staggering 241% in the past year. 

More reading

• Why AMP, FlexiGroup, Marley Spoon, & Origin shares are tumbling lower
• Coles and Wesfarmers share prices reach for new highs. Should you invest?
• A dirt-cheap ASX dividend share to add to your portfolio today
• Results: Marley Spoon share price surges 40% on market update
• Why Afterpay, Fortescue, Marley Spoon, & Splitit shares are racing higher

Matthew Donald 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 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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The ANZ region may not have a tech sector anywhere near the size of those in the United States, Europe, and China, but it certainly is home to a good number of quality tech companies. Many of which I believe are worthy of a spot in most portfolios.

Two of my favourites are listed below. Here’s why I like them:

Altium Limited (ASX: ALU)

Altium is easily one of my favourite tech shares on the Australian share market. It is a software-as-a-service company that provides an award-winning printed circuit board (PCB) design platform. PCBs are the small boards you find in almost all electronic devices. Given the proliferation of electronic devices due to the rapidly growing IoT and AI markets, demand for its software has been growing at a very strong rate in recent years.

The good news is that management doesn’t expect this demand to ease any time soon. In FY 2020 it expects to have just over 50,000 software subscriptions. It is then targeting market domination and 100,000 subscriptions by FY 2025. Given the quality of its software and its leadership position in the industry, I’m confident Altium will achieve its goals.

Nearmap Ltd (ASX: NEA)

Nearmap is a leading aerial imagery technology and location data company. It allows businesses to access high resolution aerial imagery, city-scale 3D datasets, and integrated geospatial tools. What I like about this product is that it means users can conduct accurate virtual site visits without needing to leave the home or office. This ultimately enables informed decisions, streamlined operations, and significant cost savings.

In FY 2020 Nearmap expects to report annualised contract value of $103 million to $107 million in FY 2020. While this is a large number, it is only a very small slice of a global aerial imagery market which is estimated to be worth US$10.1 billion. Due to the quality of its offering, which has been boosted by the release of Nearmap AI this year, I beleive the company in a position to capture a growing slice of this market over the next decade. This should drive strong recurring revenue growth and could propel the Nearmap share price notably higher.

More reading

• Is this your last chance to buy Altium shares for a good price?
• These could be outstanding buy and hold options for ASX investors
• 2 ASX shares to buy and 2 to avoid as deflation bites
• WAAAX or FAANG? Which ASX tech shares to buy in 2020
• 3 of the best ASX tech shares to buy and hold until 2030

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 and recommends Altium. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Nearmap Ltd. The Motley Fool Australia has recommended Nearmap 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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The Origin Energy Ltd (ASX: ORG) share price has fallen 4.26% so far today after the energy provider released its quarterly report for the period ending June 2020.

Origin reported that the COVID-19 pandemic has impacted natural gas and electricity demand, with some customers facing financial difficulties. But Origin received record distributions from the Australia Pacific LNG joint venture (APLNG), with the joint venture delivering record production in FY20. 

What does Origin Energy do?

Origin Energy operates in the electricity and gas markets. One of Australia’s largest energy retailers with approximately 4.2 million customers, it services both large energy customers and the residential market.

Origin is a key player in Australia’s energy supply chain, involved in power generation, including wind and solar technologies, as well as gas exploration and production. The company has a 47.5% interest in the APLNG joint venture, which is Australia’s largest producer of coal seam gas. 

What did Origin report? 

Origin received record cash distributions from the APLNG joint venture of $1,275 million in FY20. This was at the top end of guidance and up from $974 million in FY19. The joint venture delivered record production. Full year revenue, however, declined 5% with increased production offset by gas inventory movements and lower domestic prices. Its gas production in the June quarter declined 3% in response to low demand as a result of the COVID-19 pandemic. 

COVID-19 has had noticeable impacts on Origin’s electricity demand. While residential demand increased following the implementation of lockdowns, business demand fell significantly. Business demand has recovered somewhat with the easing of restrictions, but remains below pre-pandemic levels. FY20 electricity volumes were down 7% across retail and business reflecting a combination of milder weather, lower SME customers, and COVID-19 impacts in the final quarter. FY20 gas volumes were down 4% due to lower business volumes. 

Earlier this month, Origin announced post-tax charges which would reduce statutory profit after tax by $1,160–$1,240 million and underlying profit after tax by around $10 million would be recognised in FY20. The non-cash charges relate to revised commodity price assumptions, economic impacts of the pandemic, and the transition to a lower carbon energy supply. 

What is the outlook for Origin? 

CEO Frank Calabria recognised the joint venture highlights in FY20, citing its record production, high plant reliability, and reduction in capital and operating costs.

“Origin received record cash distributions from Australia Pacific LNG, demonstrating the value of this world-class asset to our business,” he commented.

The company has been focused on supporting customers facing financial difficulties, as well as minimising the impacts of the pandemic on the business. Origin reported that it has extended its commitment not to disconnect those in financial distress and to waive late payment fees until 31 October.

At the time of writing, the Origin share price is down 35.85%, year to date, and down 31% on this time last year. 

More reading

• Why AMP, FlexiGroup, Marley Spoon, & Origin shares are tumbling lower
• These shares were the ASX 200’s biggest losers last week
• 3 things that will impact on ASX shares this reporting season
• BlueScope’s earnings to halve as it takes $200m write-down
• Origin Energy share price flat on non-cash charge of $1.2 billion

Motley Fool contributor Kate O’Brien 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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In early afternoon trade the S&P/ASX 200 Index (ASX: XJO) is on course to end the week in a disappointing fashion. At the time of writing the benchmark index is down 1.7% to 5,949 points.

Four shares that have not let that hold them back today are listed below. Here’s why they are pushing higher:

The Afterpay Ltd (ASX: APT) share price is up 1.5% to $69.88. Investors have been buying Afterpay and other tech shares today after their U.S. counterparts pushed higher overnight. Although the Dow Jones and S&P 500 indices tumbled lower, the tech-heavy Nasdaq index recorded a solid gain.

The Bapcor Ltd (ASX: BAP) share price is up 2.5% to $6.29. This appears to have been driven by the release of a positive update by Supercheap Auto owner, Super Retail. That update revealed that the Supercheap Auto business recorded a 6.3% increase in like-for-like sales and a 7.6% jump in total sales in FY 2020. This bodes well for Bapcor given their similar target markets.

The NRW Holdings Limited (ASX: NWH) share price is up almost 6% to $1.80. This morning the contract services provider revealed that the Southwest Connex Alliance has been named as the preferred proponent for the Bunbury Outer Ring Road project. NRW is a 40% partner in the Southwest Connex Alliance. The project is fully funded for $852 million and is expected to have a duration of three and a half years.

The Super Retail Group Ltd (ASX: SUL) share price is up 9% to $8.85. Investors have been buying the retailer’s shares after the release of a stronger than expected full year update. Super Retail revealed that its sales bounced back very strongly in May and June. This led to total sales growth of 4.2% in FY 2020. The company also expects to deliver growth in its pro forma EBITDA. This is expected in the range of $327 million and $328 million, up from $315 million in FY 2019. This excludes one-offs such as employee underpayment remediation costs.

More reading

• ASX 200 sinks 1.5%: AMP disappoints, big four tumble, Super Retail surprises
• Want to start investing? Here’s how
• Is the Fortescue share price too expensive?
• Super Retail share price rockets after surprisingly strong FY 2020 performance
• Why Afterpay, Fortescue, Marley Spoon, & Splitit shares are racing higher

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