Tag: Motley Fool Australia

In afternoon trade the S&P/ASX 200 Index (ASX: XJO) is on course to give back a lot of yesterday’s strong gains. At the time of writing the benchmark index is down 1.1% to 6,088.4 points.

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

The Baby Bunting Group Ltd (ASX: BBN) share price is up 8% to $3.40. Investors have been buying the baby products retailer’s shares after the release of its unaudited preliminary full year results. Baby Bunting delivered a 12% increase in total sales to $405 million and expects to post a 29% to 35% lift in pro forma net profit after tax to between $18.5 million and $19.5 million. A key driver of its growth was strong online sales during the second half.

The Beach Energy Ltd (ASX: BPT) share price is up 5% to $1.56. This follows the release of the energy company’s fourth quarter and full year production update. Beach Energy reported total fourth quarter production of 6.8 MMboe, bringing its full year production to a total of 26.7 MMboe. This represents a 2% increase on FY 2019 pro forma production of 26.2 MMboe. And although its sales slumped because of the oil price collapse, the decline wasn’t as bad as many feared.

The QBE Insurance Group Ltd (ASX: QBE) share price is up 2% to $9.84. This morning the insurance giant revealed an update on its expectations for the first half of FY 2020. QBE now expects to report a first half combined operating ratio of around 104%, which reflects COVID-19 impacts of around $335 million, adverse catastrophe experience of around $60 million, and adverse prior accident year claims development of around $120 million.

The Resolute Mining Limited (ASX: RSG) share price has jumped 11% to $1.38. Investors have been buying the gold miner’s shares after the release of its second quarter update. During the quarter, Resolute achieved gold production of 107,183 ounces at an all-in sustaining cost (AISC) of US$1,033 an ounce. This means it is on course to achieve its FY 2020 guidance of 430,000 ounces at an AISC of US$980 an ounce. Resolute also revealed an average realised price of US$1,446 an ounce for the period.

More reading

• ASX 200 drops 1.1%: Big four banks fall, Resolute rockets, Afterpay tumbles
• Beach Energy share price storms higher despite Q4 sales slump
• Baby Bunting share price jumps after reporting strong growth despite COVID-19
• Resolute Mining share price on watch after solid Q2 update and guidance confirmation
• The worst performing ASX 200 oil stock is finally catching a break today

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

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The BHP Group Ltd (ASX: BHP) share price tumbled this morning after brokers downgraded the stock along with another ASX miner.

Shares in the Big Australian tanked 2.9% to $37.70 at the time of writing while the S&P/ASX 200 Index (Index:^AXJO) fell 1%.

BHP is also underperforming its peers. The Rio Tinto Limited (ASX: RIO) share price slipped 1.2% to $104.85 while the Fortescue Metals Group Limited (ASX: FMG) share price fell 1.9% to $16.43.

Hit by two downgrades

BHP is worst for wear as not one, but two brokers cut their rating on the stock. Citigroup lowered its recommendation on the stock to “neutral” from “buy” following the release of the miner’s quarterly production report.

“In terms of Citi expectations, [June quarter production] was better than expected in Copper and Iron Ore but weaker in Metallurgical and Energy Coal and Petroleum,” said the broker.

“FY20 Underlying NPAT revised down 10% to $9.1bn given FY20 prodn and financial impacts.”

Despite this, Citi kept its price target on BHP at $40 a share but with the stock trading close to this target, BHP couldn’t still be seen as a buy.

Looking fully valued

Meanwhile, Morgans also cut its rating on the miner to “hold” from “add” even though it thought BHP’s quarterly was “strong”. Only petroleum output failed to meet its expectations.

“WAIO production of 76mt was 5% above our estimate, while copper came in 9% ahead of our estimate at 414kt,” said Morgans who lifted its price target to $37.20 from $36.70 a share.

However, BHP’s recent share price outperformance means there’s little valuation upside left to justify a more bullish rating from the broker.

Losing its shine

Meanwhile, the Perseus Mining Limited (ASX: PRU) slumped by over 3% at the time of writing. It too suffered a broker’s downgrade following its quarterly production update.

Credit Suisse lowered its recommendation on the gold miner to “underperform” (which means a sell) from “neutral” even as it increased its 12-month price target to $1.30 from $1.11 a share.

Perseus produced 65,000 ounces of gold in the final quarter of FY20 to take the full year gold output to 258,000 ounces.

Production and cost missed targets

This is below management’s earlier guidance of 275,000 to 295,000 ounces, which was subsequently withdrawn due to the COVID-19 pandemic.

This isn’t the only disappointment. The miner’s all-in sustaining cash cost for FY20 came in at US$972 an ounce when management was aiming for US$850 to US$950 per ounce.

“A modestly disappointing operating quarter from persistently challenging Edikan which was responsible for the 6% shortfall vs withdrawn group guidance,” said the broker.

“Sissingue continues to perform well, although its recent grade undercall is a minor concern (overall recovered reconciliation to date positive).”

If you are looking for stocks with better upside, you might want to download this free report from the experts at the Motley Fool.

They’ve picked some of their best ASX share buys for FY21 and you can find out what these are by following the link below.

More reading

• Kanye West – ASX shares for his US presidential campaign
• ASX 200 drops 1.1%: Big four banks fall, Resolute rockets, Afterpay tumbles
• Why Afterpay, BHP, Cann, & Mesoblast shares are tumbling lower
• Are you ready to invest in ASX shares?
• Should you buy ASX retail shares in July?

Motley Fool contributor Brendon Lau owns shares of BHP Billiton Limited and Rio Tinto Ltd. 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 BHP’s share price tumbles with this other ASX miner after being hit by broker downgrades appeared first on Motley Fool Australia.

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The Damstra Holdings Ltd (ASX: DTC) share price is surging following the release of its strong quarterly activities report. In morning trade the workplace management solutions shares were up 14.5% to $1.83.

How did Damstra perform in the fourth quarter?

Damstra performed very well in the fourth quarter despite the more negative outlook due to COVID-19. This was seen as users increased over the period, up from 320,000 at the end of FY19 to 404,000. The number of clients also increased by 116% to 279.

Strong performance across the business delivered revenue and other income on an unaudited basis of $22 million, up 38% from FY19. Recurring revenue represented 91% of operating revenue in FY20.

In regards to earnings, EBITDA for FY20 is expected to be $5.6 million. This is ahead of the previously stated guidance and, according to Damstra, demonstrates the delivery of attractive unit economics and strong operating leverage. The operating cash to earnings conversion for FY20 was 93%.

Damstra announced normalised positive operating cash flow of $1.9 million for the quarter, a growth of 760% compared to the prior corresponding period. However, this was down from the $3 million announced last quarter.

Normalised cash receipts also fell from Q3 down $1.6 million to $5.6 million. However, compared to the same quarter last year this result was up 57%.

The company maintains a healthy cash balance of $10.4 million, including the costs of recent acquisitions.

Damstra CEO, Christian Damstra, was particularly pleased with the company’s performance during these trying times, stating:

“Damstra has demonstrated great resilience in these trying times, and we are incredibly pleased with our results, especially the innovation in new products that we have launched to our clients. We see a structural tailwind and, given our resilient business model, we believe we are strategically wellplaced to navigate the disruptions caused by COVID-19. In Australia, strong future growth should be underpinned by future infrastructure investments from federal and state governments as part of post COVID-19 economic policies.”

What now for Damstra?

Damstra continued to demonstrate its importance as a critical business tool during COVID-19, with customers continuing to use its products. There has been increased demand for Damstra’s services across mining, construction, and telecommunications. This has been underpinned by continued product innovation, and new client wins both internationally and in Australia. It is important moving forward that the three businesses acquired during FY20 integrate effectively, with expanded products offering positions to accelerate cross-selling opportunities during FY21.

Finally, investors will be eagerly awaiting the acquisition of Vault Intelligence Limited (ASX: VLT) that was announced earlier this year. It is expected to be concluded by the end of October 2020.

More reading

• Why Sezzle and these ASX tech shares just hit record highs
• Vault Intelligence share price soars 19% following takeover offer

Daniel Ewing has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Damstra Holdings Ltd. The Motley Fool Australia has recommended Damstra Holdings 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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There are some ASX dividend shares that you can buy right now that Warren Buffett would probably want in his own portfolio. If he focused on ASX shares. 

I think Warren Buffett is one of the greatest investors in the world. He has a particular investment style which has worked wonderfully over the decades. He only invests in what he can understand, which helps him avoid some blow-ups.

Here are three dividend shares that could be good long-term picks for income:

Washington H. Soul Pattinson and Co. Ltd (ASX: SOL)

Soul Patts is one of the best dividend shares on the ASX in my opinion. It’s actually fairly similar to Berkshire Hathaway in terms of how it operates.

Both of them invest for the long-term in listed and unlisted businesses. Whilst Berkshire Hathaway is invested in businesses like Apple and US banks, Soul Patts is invested in businesses like TPG Telecom Ltd (ASX: TPG), Australian Pharmaceutical Industries Ltd (ASX: API) and Clover Corporation Limited (ASX: CLV). Some of Soul Patts’ unlisted investments include resources, agriculture and swimming schools.

Soul Patts has actually been listed since 1903, so it has excellent longevity. I think it’s the type of business that you could own forever. I certainly plan to be a very long-term shareholder. Warren Buffett’s favourite holding period is forever.

In terms of being a dividend share, it has great credentials. It has paid a dividend every year in its listed life going back to 1903. Soul Patts has increased its dividend each year since 2000. It has guided that it plans to increase its dividend later this year, despite COVID-19.

Soul Patts has a grossed-up dividend yield of 4.2%.

Brickworks Limited (ASX: BKW)

I think Brickworks is another of the best dividend shares on the ASX. I think it’s a Warren Buffett share because Clayton Homes is one of the larger divisions of Berkshire Hathaway. There will always be long-term demand for quality property-related services and products in my opinion.

Interestingly, Brickworks is actually one of Soul Patts’ largest investment positions and Brickworks owns a large amount of Soul Patts shares. The Soul Patts investment is one of the main reasons why Brickworks has been able to pay a reliable dividend to shareholders. Brickworks has seen pleasing growth in the capital value of its Soul Patts shares as well as rising dividend payments.

Brickworks also owns a 50% stake of a quality industrial property trust, along with Goodman Group (ASX: GMG). The idea is to build high quality industrial properties which are benefiting from the growth of e-commerce and the need for better logistics for many businesses. Two huge warehouses will soon be built for Amazon and Coles Group Limited (ASX: COL) which should materially increase the rent and valuation of the property trust.

Brickworks is a great dividend share because its dividend is sustained just from the two segments I’ve mentioned, which pay very defensive cashflow to Brickworks. The property trust and Soul Patts shares alone fund Brickworks’ current dividend.

Brickworks hasn’t cut its dividend for over 40 years. The dividend share currently has a grossed-up dividend yield of around 5%.

The business also has the potential to make large earnings in the fuure from its building product divisions once COVID-19 is over, particularly in the US. I think the best time to buy cyclical shares is as close to the bottom of the cycle as you can (in share price terms).

APA Group (ASX: APA)

APA Group is another Warren Buffett dividend share pick in my opinion. Berkshire Hathaway Energy and railroads are two of the largest businesses within Buffett’s business. I think APA is somewhat a mix of these two businesses.

The business owns a vast network of 15,000km of natural gas pipelines around Australia with a presence in every mainland state and the Northern Territory. It also owns or has interests in gas storage facilities, gas-fired power stations and renewable energy generation (wind and solar farms). APA owns, or manages and operates, a portfolio of assets worth more than $21 billion and delivers half the nation’s natural gas usage.

The business boasts of very reliable annual cashflow. APA’s distribution is funded from that cashflow. That cashflow is steadily growing as APA invests into new energy projects which should boost cashflow further.

APA has grown its distribution every year for the past decade and a half. It currently has a distribution yield of 4.5%.

Foolish takeaway

I think Warren Buffett would like all three of these ASX dividend shares. Considering nearly all of Warren Buffett’s wealth is tied up in Berkshire Hathaway shares, I think he’d probably go for Soul Patts with its good internal diversification. It would be my pick as well.

More reading

• Should infrastructure be part of your investment strategy?
• 2 ASX shares for growth and dividends
• 3 of the best ASX dividend shares for income
• 4 ASX shares I’d buy with $4,000
• 2 quality ASX 200 shares to buy and hold beyond 2027

Tristan Harrison owns shares of Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Clover Limited. The Motley Fool Australia owns shares of and has recommended Brickworks and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia owns shares of APA 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.

The post 3 Warren Buffett dividend shares you can buy today appeared first on Motley Fool Australia.

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The ASX healthcare sector is definitely one of my favourite share market sectors. The demand for healthcare products and services, both locally and internationally only continues to grow. Demand is being driven by an ageing global population and continuing advances in healthcare treatments and supporting technologies.

Here we examine 2 of my top ASX healthcare shares picks right now: ResMed Inc (ASX: RMD) and Ramsay Health Care Limited (ASX: RHC).

ResMed

ResMed has evolved over the last 30 years to become one of the world’s leading sleep treatment companies. The company’s healthcare devices target sleep apnoea and other respiratory conditions.

ResMed has been one of the star performers on the ASX over the past decade.  Since the beginning of 2012, the ResMed share price has risen more than 10-fold from $2.49 to now be trading at around $29. More recently, over the past 12 months, the ResMed share price has continued to perform strongly, increasing by 64%.

ResMed continues to perform well financially and recorded a very strong 47% increase in non-GAAP net income during the third quarter of FY 2020.

I remain confident that the strong demand for ResMed’s products will continue over the next decade. Demand will be driven by the growing need for sleep apnoea treatments. It is estimated that around 1 billion worldwide are impacted by sleep apnoea.

Ramsay Health Care

Another ASX healthcare share on my buy list right now is Ramsay Health Care. Ramsay has evolved over the past few decades, from a small Australian hospital operator, to now become Australia’s largest private healthcare provider.

The company has been impacted by the ban on non-essential surgeries during the coronavirus pandemic.  However, elective surgeries are now recommencing in a number of the 11 countries in which it operates.

Ramsay managed to successfully sign a number of key government deals recently in Australia and the United Kingdom. These will help to support its hospitals during the further challenges it will face during the pandemic.

I remain optimistic about Ramsay’s long term future. The demand for high quality hospitals will only increase over the next decade.

With a fall in the Ramsay Health Care share price since the beginning of the pandemic, I believe now could be a good buying opportunity for patient long term investors.

Foolish Takeaway

Both ResMed and Ramsay are 2 quality ASX healthcare shares that are in my buy zone right now. Both companies have entrenched market positions and a growing international presence. The high demand for their products and services is only likely to increase over the next decade.

More reading

• ResMed share price rockets to record highs
• My top 5 ASX growth shares to buy in FY 2021
• Want to beat the market? Try these 3 ASX growth shares
• How to get rich by investing in small cap ASX shares
• Invest like Warren Buffett and buy and hold these excellent ASX shares

Motley Fool contributor Phil Harpur owns shares of ResMed Inc. The Motley Fool Australia has recommended Ramsay Health Care Limited and ResMed Inc. 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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Kanye West launched his campaign tour for the United States presidential election last weekend. ASX investors may ask themselves why this relevant to their stock portfolios. I believe that there are two main reasons:

1. US presidential election years always have a big impact on the stock market, both in the US and abroad. This is true both in the lead up to the election and also in the following years, as either side seeks to implement their philosophies and policies.
2. Kanye West may or may not be who you think should be president, but his commercial success (and that of his wife Kim Kardashian-West) is undeniable. Two keys to Kanye’s success have been his marketing prowess and his ability to form strategic partnerships. 

2 ASX shares for Kanye West’s US presidential campaign

I have selected the first ASX share because I believe that it could likely see increased volatility during the US presidential election. This could present a nice entry point for patient investors to acquire this quality ETF at a discount. The second share is a great example of how businesses can use partnerships and a strong brand to rapidly grow both locally and internationally.

Betashares NASDAQ 100 ETF (ASX: NDQ) – US tech behemoths

Betashares NDQ aims to track the performance of the NASDAQ-100 Index (before fees and expenses). The NASDAQ-100 comprises 100 of the largest, non-financial companies listed on the NASDAQ market, and includes many companies that are at the forefront of the new economy.

Surprisingly, given the current circumstances, the NASDAQ is actually up nearly 22% for the year, driven higher by the surging FAANG stocks. With prices and some valuations higher than before COVID-19, news coming out of the US presidential election could cause this ETF to be more volatile than normal. That could present buying opportunities for long-term investors.

Afterpay Ltd (ASX: APT) – Partner now, profit later

Afterpay is a true Australian success story. The buy now, pay later company has been one of the top performing ASX shares of recent years, surging from $2.95 in June 2017 to $72.42 at the time of writing. That is an incredible 25 fold increase in the Afterpay share price and the company now boasts a market capitalisation of over $20 billion!

Similar to Kanye West’s partnership with Adidas, this ASX share has had a lot of success partnering with bigger, more established networks recently. The company initially targeted larger Australian and then international retail brands, which has proven a successful strategy. Now, as Afterpay gains popularity and looks to broaden its reach, it has reached agreements with the likes of Apple Inc (NASDAQ: AAPL), Alphabet Inc (NASDAQ: GOOG) and Visa (NYSE: V). Although these partners may have considerable negotiating leverage, they also vastly increase Afterpay’s reach and potential upside.

Foolish bottom line

As an investor in ASX shares, it is worth paying attention to significant international news like the US presidential election. Both Afterpay and Betashares NASDAQ 100 ETF could be impacted by the election and news such as Kanye West commencing his campaign.

More reading

• ASX 200 drops 1.1%: Big four banks fall, Resolute rockets, Afterpay tumbles
• Why Afterpay, BHP, Cann, & Mesoblast shares are tumbling lower
• Are you ready to invest in ASX shares?
• Should you buy ASX retail shares in July?
• Apple Plans to Be 100% Carbon Neutral by 2030

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Lloyd Prout 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 Alphabet (C shares), Apple, and Visa. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of BETANASDAQ ETF UNITS. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool Australia has recommended Alphabet (C shares), Apple, and BETANASDAQ ETF UNITS. 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 De Grey Mining Limited (ASX: DEG) share price is currently up 4.1% following news the company’s Hemi project has grown with its new Aquila extensions. This is good news for the company that has seen a recent slump in its share price thanks to the issue of new shares at prices of 28 cents and lower. The De Grey share price is currently trading at 75 cents.

What Happened?

De Grey announced that the Hemi project scale has grown with the new Aquila extensions. Aquila extensional drilling has continued after promising results were found at Hemi. The mine continues to find high grade mineralisation gold at various depths with gold found as deep as 350 vertical metres below surface. The finds indicate the potential for new gold zones between the Aquila and Brolga sites. Some of the highlights from the release are as follows:

• 39m @ 3.2g/t Au from 180m in HERC097D including 17.6m @ 4.6g/t from 195.7
• 31.8m @ 2.0g/t Au from 180m in HERC094D including 10.3m @ 3.2g/t from 180.4m
• 23m @ 2.0g/t Au from 246m in HERC100D including 0.7m @ 41.4g/t from 246.9m
• 33m @ 1.1g/t Au from 151m in HERC082D

De Grey Technical Director, Andy Beckwith, noted: “Aquila continues to grow as we extend drilling laterally and at depth. Mineralisation remains open in all directions with limits yet to be defined. The new aircore drilling to the west of Aquila has now extended the overall strike potential to 1.6km.”

What now for the De Grey share price?

The De Grey share price has been on a miserable run since it rocketed more than 107% in June. It is now down around 20% in July. However it is still likely to benefit from the rising gold prices, with gold recently flirting with its nine year high. Furthermore, the company is well backed by fund managers like John Forward, who have made impressive returns with the share price rising about 1400% this year.

More reading

• Azure Minerals share price rockets 24% on acquisition news
• Why De Grey, Openpay, Woodside, & Zip shares are dropping lower
• De Grey Mining share price plunges another 13% lower today
• Why the De Grey share price rocketed more than 107% in June
• De Grey Mining share price plunges 5% despite announcing “excellent” gold recoveries

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

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At lunch on Wednesday the S&P/ASX 200 Index (ASX: XJO) has given back a good portion of yesterday’s gains. The benchmark index is currently down 1.1% to 6,085.9 points.

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

Big four banks drop lower.

The big four banks have all dropped lower on Wednesday and are weighing on the ASX 200 index. The worst performer in the group has been the National Australia Bank Ltd (ASX: NAB) share price with a 1% decline. The Commonwealth Bank of Australia (ASX: CBA) share price isn’t far behind with a 0.9% decline.

Resolute impresses.

The Resolute Mining Limited (ASX: RSG) share price is zooming higher today after the release of its second quarter update. For the quarter ending 30 June 2020, Resolute achieved gold production of 107,183 ounces at an all-in sustaining cost (AISC) of US$1,033 an ounce. This puts it on course to achieve its FY 2020 guidance of 430,000 ounces at an AISC of US$980 an ounce. The company also revealed an average realised price of US$1,446 an ounce for the period.

Tech shares come under pressure.

After rocketing higher on Tuesday, the tech sector has run out of steam today. The likes of Afterpay Ltd (ASX: APT) and WiseTech Global Ltd (ASX: WTC) are dropping lower in response to an overnight pullback on the tech-heavy Nasdaq index. At the time of writing the S&P/ASX 200 Information Technology index is down a sizeable 2.4%.

Best and worst ASX 200 shares.

The best performer on the ASX 200 on Wednesday has been the Resolute Mining share price. The gold miner’s shares are leading the way with a 10% gain following its Q2 update. The worst performer on the index has been the Mesoblast limited (ASX: MSB) share price with a 7.5% decline. This appears to be down to profit taking after some strong gains on Tuesday following a positive announcement.

More reading

• Kanye West – ASX shares for his US presidential campaign
• Why Afterpay, BHP, Cann, & Mesoblast shares are tumbling lower
• Are you ready to invest in ASX shares?
• Should you buy ASX retail shares in July?
• Why Mesoblast might be the best ASX healthcare growth share to own right now

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of AFTERPAY T FPO and WiseTech Global. 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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Audinate Group Ltd (ASX: AD8) shares are in a trading halt this morning after the media technology company announced a $40 million equity raising. Funds are earmarked to accelerate growth and strengthen the company’s balance sheet. The additional capital will also provide flexibility to pursue acquisitions that complement Audinate’s medium-term objectives. 

What does Audinate do?

Audinate is a leading provider of professional digital audio networking technologies. The company’s Dante platform distributes audio signals over computer networks, with networked digital capability replacing analog cabling. Software based audio-visual (AV) systems are replacing hardware systems, transforming the AV industry. Dante is an ‘AV Application Stack’ comprising software, hardware, and products such as microphones, speakers, and cameras. Audinate’s technology has been used by Sydney Trains, The Super Bowl, and Wembley Stadium. 

What are the details of the capital raising? 

Audinate is seeking to raise $28 million via a placement to institutional and sophisticated investors at $5.15 per share. This will result in the issue of around 5.4 million new shares representing approximately 8% of Audinate’s existing issued share capital. The placement price of $5.15 represents a 9.5% discount to the last traded price. 

A share purchase plan is being offered to raise up to an additional $12 million. Funds will be used to accelerate growth opportunities, strengthen Audinate’s leadership position in the AV industry, and develop its video capabilities. Audinate will increase investment in engineering, R&D capabilities, and business infrastructure as well as accelerating investment in additional video and software products. The funds will also shore up the balance sheet in the uncertain COVID-19 period and provide flexibility to pursue potential M&A opportunities. 

How has the Audinate share price been performing? 

The Audinate share price dropped to a low of $2.51 in March. It has, however, since gained 127% and was trading at $5.69 before the trading halt was called. Despite the recovery in the Audinate share price since March, it is still well below its 2020 high of $9. Over the 12 months to 30 June, Audinate reported unaudited revenue of US$20.4 million. Cash on hand at 30 June was A$29.3 million. 

Audinate CEO, Aidan Williams, commented “Whilst we have faced headwinds associated with COVID-19 and recovery timing is uncertain, our confidence in the strength of our technology and business model remains high. Delivering our medium-term strategic priorities will ensure that Audinate is well placed to benefit from economic recovery as it occurs in our markets around the world.”  

More reading

• Afterpay and 1 other ASX tech share to buy and hold beyond 2030
• Why Audinate, Breville, Zip Co, & Zoono shares are sinking lower today
• Audinate share price sinks on trading update
• 3 quality ASX shares to buy right now with $3,000
• Are these small cap ASX tech shares future stars?

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 AUDINATEGL FPO. The Motley Fool Australia has recommended AUDINATEGL 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 S&P/ASX 200 Index (ASX: XJO) has run out of steam on Wednesday and is dropping lower. In late morning trade the benchmark index is down a sizeable 0.9% to 6,099.5 points.

Four shares that have fallen more than most today are listed below. Here’s why they are tumbling lower:

The Afterpay Ltd (ASX: APT) share price is down 3.5% to $72.44. Investors appear to be taking profit after the payments company’s shares raced higher on Tuesday following a strong day for tech shares. Afterpay isn’t the only tech share tumbling lower today. At the time of writing, the S&P/ASX 200 Information Technology index is down 2.5%.

The BHP Group Ltd (ASX: BHP) share price has fallen 2.5% to $37.81. Investors may be selling the mining giant’s shares today after they were downgraded by analysts at Citi. According to the note, the broker has downgraded BHP’s shares to a neutral rating with a $40.00 price target. Citi appears a little underwhelmed with the company’s production guidance for FY 2021 and has revised its earnings estimates to reflect this.

The Cann Group Ltd (ASX: CAN) share price is down 5% to 62.5 cents. This morning the cannabis company released an update on its share purchase plan. It confirmed that it is seeking to raise up to $10 million at a price of 40 cents per share. This represents a massive discount of 51.2% to the last closing price prior to the announcement of its placement.

The Mesoblast limited (ASX: MSB) share price is down 6.5% to $3.46. This appears to have been driven by profit taking after a strong gain on Tuesday. Investors were buying the biotech company’s shares following the announcement of a review date for its remestemcel-L treatment by the U.S. FDA. The review will assess data supporting Mesoblast’s application for approval for remestemcel-L in the treatment of steroid-refractory acute graft versus host disease in children.

More reading

• Are you ready to invest in ASX shares?
• Why Mesoblast might be the best ASX healthcare growth share to own right now
• Are ASX 200 shares overvalued right now?
• 5 things to watch on the ASX 200 on Wednesday
• ASX 200 jumps 2.6% on vaccine hopes and jobkeeper

Motley Fool contributor James Mickleboro 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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