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The Ampol Ltd (ASX: ALD) share price is in the green today after the company cleared a hurdle to acquire Z Energy Limited.

Ampol shares are currently trading at $29.56, a 3.18% gain. In comparison, the S&P/ASX 200 Index (ASX: XJO) is up 1.41%.

The Ampol share price is also outperforming some of its ASX energy sector peers. Santos Ltd (ASX: STO) is down 0.2% and Woodside Petroleum Limited (ASX: WPL) is descending 1.58%.

The S&P/ASX 200 Energy (ASX: XEJ) index is 0.22% in the red today.

Key milestone achieved

Ampol has received clearance from the New Zealand Commerce Commission (NZCC) to acquire Z Energy Ltd (ASX: ZEL).

The approval is subject to Ampol divesting its New Zealand business, Gull. Gull owns 112 service stations, six retail properties, and a 91ML fuel import terminal at Mount Maunganui.

As Motley Fool Australia reported Monday, the petroleum company has entered a binding agreement to offload Gull for net cash proceeds of about NZ$509 million. The proceeds of this sale will help fund the Z Energy acquisition.

Commenting on the news that appears to be boosting the Ampol share price today, managing director and CEO Matt Halliday said:

We welcome the decision by the NZCC, which recognises that our commitment to fully divest Gull addresses the potential competition law issues.

The NZCC decision is an important milestone towards the successful completion of the transaction to acquire Z Energy by the end of the first half of 2022.

The news was also welcomed by Z Energy chair Abby Foote, who said:

This announcement is an important step towards the successful completion of the Scheme of Arrangement with Ampol. We are pleased with the Commission’s decision and look forward to presenting the transaction to Z shareholders at the Scheme meeting next week.

Ampol will need to complete the sale of Gull within nine months of acquiring Z Energy. This takeover is subject to a shareholder vote on 25 March, approval from the Overseas Investment Office, and court orders.

Ampol share price snapshot

The Ampol share price has slipped 0.9% this year to date but has surged 25% over the past 12 months.

In the past month, Ampol shares have dropped by almost 9% but are climbing more than 3% over the past week.

Ampol has a market capitalisation of about $6.96 billion based on its current share price.

The post Why the Ampol (ASX:ALD) share price is outperforming the energy sector today appeared first on The Motley Fool Australia.

More reading

• ASX 200 (ASX:XJO) midday update: Block and Zip shoot higher, Ampol’s acquisition boost
• Ampol (ASX:ALD) shares higher on sale of its Gull business in NZ
• Ampol share price (ASX:ALD) slips despite highest earnings since 2018 and record sales

The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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One of the many trends that have emerged in the exchange-traded fund (ETF) sector in recent years is the focus on ‘quality’ shares. While this may seem like a no-brainer, the fact remains that most ETFs follow an index that either includes most shares on a stock market, based only on market capitalisation. Or else a bunch of shares that all operate in a similar industry or theme. 

But there are far fewer that focus on finding quality companies. One of the only examples on the ASX today is the VanEck MSCI International Quality ETF (ASX: QUAL). This ETF from VanEck focuses on finding companies from around the world that share common “key fundamentals”. These include high return on equity, earnings stability and low financial leverage. 

Some of the companies we see in this ETF include Apple Inc (NASDAQ: AAPL), Microsoft Corporation (NASDAQ: MSFT) and Visa Inc (NYSE: V).

QUAL charges a management fee of 0.4% per annum.

Number of QUALity ETFs on the ASX set to expand…

BetaShares also has a quality-themed ETF. It goes by the name of the BetaShares Global Quality Leaders ETF (ASX: QLTY). This one seems to have less of a focus on tech shares than the QUAL ETF. But it does use very similar stock criteria. These are “return on equity, debt-to-capital, cash flow generation ability and earnings stability”. Some of its current top holdings include Johnson & Johnson (NYSE: JNJ), Pfizer Inc (NYSE: PFE) and Intel Corporation (NASDAQ: INTC). QLTY charges a management fee of 0.35% per annum. 

But we might have to add another one to the list soon, one that covers ASX shares no less. 

According to a report in The Australian today, BetaShares is planning on launching a new, ASX-based quality ETF.

The BetaShares Australian Quality ETF is reportedly set to hit the ASX boards next month under the ticker code ‘AQLT’. The provider says that “AQLT will provide cost-effective access to a diversified portfolio of quality Australian companies selected based on high return on equity, low leverage and relative earnings stability”.

It will house a diversified portfolio of 40 companies. The report names Macquarie Group Ltd (ASX: MQG), CSL Limited (ASX: CAL), Woolworths Group Ltd (ASX: WOW) and Wesfarmers Ltd (ASX: WES) as current constituents of the index AQLT is aiming to track. 

So investors looking for a simple way to access quality shares on the ASX will soon have a homegrown option to consider as well. 

The post The ASX is set to welcome a new Quality ETF. Here’s what we know… appeared first on The Motley Fool Australia.

More reading

• Why Alibaba, JD.com, and Didi stocks rocketed higher on Wednesday
• Electro Optic (ASX:EOS) share price surges again, up 50% in a week. Here’s why
• Own Medibank (ASX:MPL) shares? Now you own a piece of this tech start-up
• ASX 200 (ASX:XJO) midday update: Block and Zip shoot higher, Ampol’s acquisition boost
• Are BOQ (ASX:BOQ) shares cheap right now? Read what analysts say

Motley Fool contributor Sebastian Bowen owns Apple, Intel, Johnson & Johnson, Microsoft, Pfizer, and Visa. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and has recommended Apple, CSL Ltd., Intel, Microsoft, and Visa. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Johnson & Johnson and has recommended the following options: long January 2023 $57.50 calls on Intel, long March 2023 $120 calls on Apple, short January 2023 $57.50 puts on Intel, and short March 2023 $130 calls on Apple. The Motley Fool Australia owns and has recommended Wesfarmers Limited. The Motley Fool Australia has recommended Apple and Macquarie Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

What happened

After days of panic-selling, a wide range of Chinese stocks staged a broad relief rally on Wednesday. Many of the stocks had fallen to 21-month lows, as investors worried about a resurgence of the pandemic in China, an ongoing regulatory crackdown, and the Chinese government’s stance on the war raging between Ukraine and Russia. While there wasn’t any company-specific news, these stocks came roaring back after government officials vowed to boost economic growth and stabilize the markets. 

Shares of Alibaba Group Holding (NYSE: BABA) gained as much as 27.8%, JD.com (NASDAQ: JD) climbed as much as 33.1%, and Didi Global (NYSE: DIDI) surged as much as 51.1%. The trio were still trading higher, up 26.3%, 30.4%, and 50%, respectively, as of 12:45 p.m. ET. 

So what

China’s Vice Premier Liu He, the country’s top economic advisor, said Beijing would take substantial steps to “boost the economy in the first quarter,” while also introducing “policies that are favorable to the market.” The comments came in the wake of a special session of the State Council’s Financial Stability and Development Committee. The committee has oversight of China’s financial and securities regulators. 

The country has faced numerous headwinds in recent months, which have weighed heavily on investor sentiment and driven Chinese stocks to their lowest level in years. The Nasdaq Golden China Dragon Index, which tracks a collection of popular Chinese stocks, plummeted 12% on Monday alone, its largest one-day decline in more than two decades. The index had also plunged 25% over the previous four trading days, as investors worried about multiple challenges facing Chinese companies. 

In recent weeks, China has been struggling to contain a resurgence of COVID-19 infections, as the number of cases recently topped a two-year high, forcing the country to initiate new, stringent lockdowns. There are restrictions in more than 11 cities and counties in the world’s most populous country, including the population centers of Shenzhen and Shanghai, and China has restricted travel and closed non-essential businesses to combat the latest outbreak.

Adding to the uncertainty, U.S. regulators have taken steps to kick a number of Chinese stocks off U.S. exchanges. The Securities and Exchange Commission (SEC) has identified five companies that could be delisted following the passing of legislation that requires Chinese companies to submit their audit records for review by U.S. regulators. 

Finally, news reports from earlier this week suggested that Russia had requested military and financial assistance from China in the wake of the country’s war against Ukraine. The U.S. has imposed strict sanctions against Russia in response to the unprovoked invasion, battering its economy. Investors are concerned that a backlash would no doubt ensue if China were to back Russia, whose actions have been condemned by the majority of the free world. 

Now what

The statements by Chinese government officials were welcomed by investors, resulting in more bullish sentiment on Wall Street. 

U.S. Tiger Securities analyst Bo Pei upgraded the China internet sector to outperform (buy) from neutral (hold), positing the sector’s biggest ongoing risks are already priced into the beaten-down stocks, which have fallen dramatically in recent weeks and months. Alibaba, JD.com, and Didi Global were all cited in the upgrade. Pei also cited recent reports that suggest regulators from both the U.S. and China have been in talks and are making headway toward finding a mutually agreeable solution to the potential delisting of Chinese stocks from U.S. markets.

The recent headwinds facing Chinese technology stocks may persist, so investors should watch for further developments in these areas. That said, the willingness of China’s government regulators to address the situation was welcomed by investors, helping push these stocks up from their recent lows. 

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post Why Alibaba, JD.com, and Didi stocks rocketed higher on Wednesday appeared first on The Motley Fool Australia.

More reading

• Why Chinese tech stocks were tumbling again today

Danny Vena owns JD.com. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and has recommended JD.com. The Motley Fool Australia has recommended JD.com. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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What a week it has been for the Electro Optic Systems Hldgs Ltd (ASX: EOS) share price.

Just two weeks ago, the defence contractor’s shares were trading at a multi-year low of $1.605. That was when the ASX as a whole was looking grim due to the turmoil between Russia and the West.

However, a quick rebound ensued, particularly for the Electro Optic share price, as a number of countries ramped up their defence spending.

Investors who were brave enough to pick up some shares last week would be sitting on an incredible gain of 51%, based on the closing price last Tuesday 8 March and where the shares are trading at the time of writing today.

The Electro Optic Systems share price is currently $2.50, up 6.2%. In earlier trading, it was up by 12.3% to an intraday high of $2.64.

Let’s take a look at the company’s announcement to the ASX today.

Electro Optic undertakes strategic review

According to its release, the Electro Optic board is undertaking a strategic review to maximise shareholder value.

Recently, management has been in discussions with key parties in relation to funding options for its wholly-owned United States subsidiary, SpaceLink. This relates to the manufacture and launch of a constellation of medium earth orbit satellites to create a ‘communications superhighway for the space economy’.

In addition, Electro Optic Systems is assessing opportunities to accelerate growth in the defence and space divisions.

The board believes the company is currently undervalued given the attractive future prospects on offer.

US investment bank, Greenhill & Co. (NYSE: GHL) has been appointed as financial advisor to assist in the strategic review.

Electro Optic Systems says there is no certainty that the review will lead to any particular outcome or transaction. But it appears investors are positive about this latest initiative.

Electro Optic Systems share price snapshot

Adding impressive gains over the last week, the Electro Optic share price is up 4.6% year to date.

But the past 12 months have been a turbulent ride for shareholders, with the company’s shares sinking 55%.

Electro Optic Systems commands a market capitalisation of $354.64 million. It has approximately 150.91 million shares on issue.

The post Electro Optic (ASX:EOS) share price surges again, up 50% in a week. Here’s why appeared first on The Motley Fool Australia.

More reading

• Why is the Electro Optic (ASX:EOS) share price rocketing 16% today?
• What’s impacting the Electro Optic (ASX:EOS) share price this week?
• Could this ASX defence share be set to benefit from the Ukraine crisis?
• Electro Optic (ASX:EOS) share price plunges 13% on net loss
• Electro Optic (ASX:EOS) share price rockets 18% on ‘breakthrough’ satellite news

Motley Fool contributor Aaron Teboneras owns Electro Optic Systems Holdings Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and has recommended Electro Optic Systems Holdings Limited. The Motley Fool Australia owns and has recommended Electro Optic Systems Holdings Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Medibank Private Ltd (ASX: MPL) share price is making little headway today. It is currently flat at $3.21 having earlier jumped to $3.25.

For comparison, the S&P/ASX 200 Index (ASX: XJO) is up 1.15% at the time of writing.

However, there is an interesting piece of news out of Medibank today. The private health insurance company has announced a new multi-million investment in a health technology company.

Let’s take a look.

Virtual health investment

Medibank has invested $10 million in the health technology company Medinet. The aim is to support the increasing role of virtual health in Australia.

Medinet is a digital platform providing patients with access to doctors online via video, audio, and chat. The platform was launched in 2019 and is being used in some GP clinics in Australia. The app is within the top five healthcare apps downloaded in the country.

Commenting on the investment, Medibank Group Executive – CEO Health Services Dr Andrew Wilson said:

People are looking for the same level of choice and convenience in their healthcare that they get in other parts of their lives. The COVID pandemic has accelerated the use and acceptance of technology-enabled healthcare, with recent research showing that 70% of Australians are willing to use virtual healthcare services.

Medinet’s platform supports this by giving patients the ability to make an appointment and connect with a GP virtually, to access scripts and referrals generated during the consult, and to have their medication delivered straight to their home.

Credit Suisse has recently rated the Medibank share price as a “buy” with a $3.50 price target. Medibank increased operating profit by 12.3% in the first half of FY22, while net profit after tax (NPAT) descended 2.7%. Policyholder numbers climbed 1.5% in the half while jumping 3.3% in 12 months.

On March 24, Medibank will pay a dividend of 6.1 cents per share.

Medibank share price recap

The Medibank share price has climbed 10% in the past 12 months, but it has fallen 4% year to date.

For perspective, the benchmark ASX 200 index has leapt 7% in the past 52 weeks.

In the past month, Medibank shares are in the red by 0.3% but they have jumped by 5% in the past week.

Medibank has a market capitalisation of about $8.9 billion based on its current share price.

The post Own Medibank (ASX:MPL) shares? Now you own a piece of this tech start-up appeared first on The Motley Fool Australia.

More reading

• Healthy upside: Expert rates Medibank (ASX:MPL) share price as a good buy
• Leading brokers name 3 ASX shares to buy today
• Own Medibank (ASX:MPL) shares? Here’s all you need to know about the latest dividend
• Medibank (ASX:MPL) share price backtracks as profit slips
• ASX 200 (ASX:XJO) midday update: Block rockets, Blackmores sinks

The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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At lunch on Thursday, the S&P/ASX 200 Index (ASX: XJO) is on track to record another strong gain. The benchmark index is currently up 1.3% to 7,266.5 points.

Here’s what is happening on the ASX 200 today:

US Fed rate increase well-received by investors

The ASX 200 index is charging higher today after investors responded positively to the US Federal Reserve increasing interest rates for the first time in more than three years. The central bank has made a 0.25% rate increase in an effort to address rising inflation without stunting economic growth. Rather than panicking about rates rising, investors appear to be interpreting the hike as a sign that the central bank has confidence in the US economy.

Tech shares rally

One of the best performing areas of the market today has been the tech sector. This follows a strong night of trade for the tech-focused Nasdaq index, which rose 3.8%. Among the best performers in the sector have been payments giant Block Inc CDI (ASX: SQ2) and location technology company Life360 Inc (ASX: 360). They have helped drive the S&P ASX All Technology index up a sizeable 3.8%, matching the Nasdaq’s gains.

Ampol acquisition plans given a boost

The Ampol Ltd (ASX: ALD) share price is rising today after its proposed acquisition of Z Energy Ltd (ASX: ZEL) was given a boost. According to the release, the New Zealand Commerce Commission has provided clearance for the acquisition on the proviso that Ampol fully divests its Gull business in New Zealand within nine months of completing the transaction.

Best and worst ASX 200 performers

The best performer on the ASX 200 on Thursday has been the Zip Co Ltd (ASX: Z1P) share price with a 12% gain following the tech rally. Going the other way, the worst performer has been the Graincorp Ltd (ASX: GNC) share price with a 4.5% decline. This is despite there being no news out of the grain exporter.

The post ASX 200 (ASX:XJO) midday update: Block and Zip shoot higher, Ampol’s acquisition boost appeared first on The Motley Fool Australia.

More reading

• The Block (ASX:SQ2) share price is soaring 11% today. Here’s why
• Is the party over for ASX 200 gold shares?
• ASX 200 shares open with a bang following US interest rate rise
• The Woolworths (ASX:WOW) share price has only added $4 in 8 years. Have the dividends been worth it?
• 5 things to watch on the ASX 200 on Thursday

Motley Fool contributor James Mickleboro owns Life360, Inc. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and has recommended Block, Inc., Life360, Inc., and ZIPCOLTD FPO. The Motley Fool Australia owns and has recommended Block, Inc. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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Shares in Bank of Queensland Limited (ASX: BOQ) are inching higher on Thursday and currently trade 1% in the green at $8.36.

Whilst there’s been nothing remarkable out of the banks’ corner today, its share price has spiked hard in the past week.

In fact, ASX financials have strengthened in the past week as a sector, after being stuck in a 3-month long sideways channel where prices bounced off the $7.55–$7.60 mark three times until testing the $8.40 level once more.

Are BOQ shares cheap right now?

Firstly let’s clearly define cheap. We aren’t talking price here – we’re talking good old fashioned fundamentals, in other words, how the share price is trading relative to its ‘intrinsic’ valuation.

So depending on how one looks at it, they could be viewed as cheap. For example, analysts at the various investment firms covering BOQ are heavily bullish on the stock.

According to Bloomberg data, more than 73% of analysts covering the bank have it as a buy and the consensus price target is $9.90.

Analysts typically won’t advocate for their clients to buy a stock if it is overvalued’; in other words, if its market price is trading above their calculated valuation.

Obviously, shares can be valued in numerous ways, including discounted cash flow, merger & acquisition activity, earnings multiples and relative valuation to peers just to name a few.

In any sense, the brokers come up with an ‘intrinsic’ or ‘fair’ valuation, sometimes even based on a blend of these factors. Then, if the stock is trading below this figure – and a number of other fundamentals stack up as well – it is considered to be ‘undervalued’.

Remember – price is what you pay, value is what you get.

Keep in mind however that just because a stock is trading below its fair value doesn’t mean it’s undervalued. It could be poor value, as well. That’s why a holistic approach is used.

Nevertheless, if 73% of the analysts covering BOQ rate it as a buy, this has at least something to do with valuation and the dislocation between share price and intrinsic or relative value.

For example, JP Morgan, in a recent note on Commonwealth Bank of Australia (ASX: CBA) said it sees the bank underperforming “given…a very stretched relative valuation vs peers”.

The broker also made similar remarks in its assessment of BOQ, stating that, “given the large valuation discount vs peers”, the market might be overlooking key moving parts in the bank’s growth engine.

Morgans also said that it sees “exceptional value in BOQ stock” in a recent note, further hammering in that nail.

In addition to this information, BOQ is also currently trading below the consensus price target, at a 17% discount.

BOQ share price snapshot

Even after the recent surge, in the last 12 months the BOQ share price is down 3% and is underperforming the benchmark. However, this year to date shares have climbed 4% into the green as ASX financials regain strength.

Over the previous 5 days of trading, it has surged another 9%.

The post Are BOQ (ASX:BOQ) shares cheap right now? Read what analysts say appeared first on The Motley Fool Australia.

More reading

• 2 dividend shares analysts rate as buys with big yields and even bigger upside
• Top brokers name 3 ASX shares to buy today
• Bargain buy? Broker tips Bank of Queensland (ASX:BOQ) share price to rise 37%
• The Bank of Queensland (ASX:BOQ) share price has lost half its value in 15 years. How is the bank’s turnaround strategy going?
• Is the Westpac (ASX:WBC) share price the cheapest bank to buy right now?

Motley Fool contributor Zach Bristow has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Block Inc CDI (ASX: SQ2) share price is going gangbusters today. At the time of writing, it’s up 10.87% at $158.45.

It has been two weeks since the fintech’s shares were last (briefly) at this level.

What’s going on with the Block share price?

Block shares are rising along with most of the S&P/ASX 200 Index (ASX: XJO). The ASX 200 is currently up by 1.19%.

Several ASX 200 financial and technology shares are currently surging higher including Pinnacle Investment Management Group Ltd (ASX: PNI), Zip Co Ltd (ASX: Z1P), Magellan Financial Group Ltd (ASX: MFG), and WiseTech Global Ltd (ASX: WTC). They are up 8.23%, 11.19%, 6.39%, and 5.53% respectively.

The US Federal Reserve has increased its interest rate by 25 basis points, the first increase in a few years.

Overnight, the US tech shares rallied after what some analysts called a “dovish” increase, according to reporting by the Australian Financial Review, rather than a 50 basis point increase which was being considered before the Russian invasion of Ukraine.

The US-listed Block Inc shares jumped by 12.6% overnight, so the ASX-listed Block shares are seeing a similar increase.

What’s next?

The Block share price has gone up 6.8% over the past month despite all the volatility.

But broker Macquarie thinks that Block shares can rise a lot more. The Block share price target is $230, which is a potential rise of around 45% in the next year.

The broker thinks that Block can grow its average revenue per user (ARPU) as users utilise more of Block’s overall offering.

The post The Block (ASX:SQ2) share price is soaring 11% today. Here’s why appeared first on The Motley Fool Australia.

More reading

• Why Arafura, Block, Magellan, and Qantas shares are storming higher
• Why Block, Breville, Megaport, and Webjet shares are falling today
• ASX 200 (ASX:XJO) midday update: Block falls, Nickel Mines jumps
• 5 things to watch on the ASX 200 on Friday
• Why is the Block (ASX:SQ2) share price soaring 8% today?

Motley Fool contributor Tristan Harrison owns Magellan Financial Group. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and has recommended Block, Inc., PINNACLE FPO, and ZIPCOLTD FPO. The Motley Fool Australia owns and has recommended Block, Inc. and PINNACLE FPO. The Motley Fool Australia has recommended Macquarie Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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Is it possible that the South32 Ltd (ASX: S32) share price could go above $6 in 2022? One expert thinks so.

This company has operations spread across the world in Australia, Southern Africa and South America. It produces several different commodities including bauxite, alumina, aluminium, metallurgical coal, manganese, nickel, silver, lead and zinc.

South32 shares have had a volatile start to the year, going as low as $3.74 and reaching as high as $5.36 earlier in March. At the time of writing, the South32 share price is down 0.63%, trading at $4.74.

What could happen next?

The brokers at Macquarie think that the ASX mining share has plenty of potential for growth over the next 12 months.

Macquarie believes that the commodity outlook is looking stronger for many of South32’s commodities including nickel, copper, coal and aluminium. That’s why the broker increased its profit expectations for South32 for FY22 and FY23.

The South32 share price target from Macquarie is $7. That implies a potential rise of more than 40% over the next year, if the broker ends up being right.

This ASX mining share is also expected to see strong free cash flow over the next couple of financial years. This could lead to South32 deciding to distribute elevated shareholder payouts.

Potential dividends

Bigger profits can lead to larger dividends for investors. How big could the dividend be this year and next year?

At the current South32 share price, Macquarie estimates that the FY22 grossed-up dividend yield will be 11.8% in FY22 and 12.6% in FY23.

Recent earnings wrap

A month ago, the ASX mining share announced its half-year result for the six months to December 2021, showing some of the growth that Macquarie is expecting for FY22.

In HY22, South32 revealed underlying revenue rose 32% to US$4.6 billion. The underlying earnings before interest, tax, depreciation and amortisation (EBITDA) increased 138% to US$1.87 billion. Underlying earnings before interest and tax (EBIT) rose by 288% to US$1.51 billion. Underlying earnings per share (EPS) surged 671% higher to US21.6 cents.

Confidence on long-term commodity prices

The company says that its portfolio is well-positioned for a rapid global transition to a low carbon economy. Demand for most of its commodities is expected to grow “significantly” with the uptake of low carbon technologies.

South32 said that long-term aluminium prices are expected to be supported by higher inducement cost projects, excluding China, powered by green energy. Alumina prices are expected to be supported by Chinese domestic bauxite depletion and environmental policy, together with higher raw material costs.

Copper prices are expected to be supported because the commodity is going to play a key role in the global decarbonisation and energy transition.

Zinc supply is expected to fall by 3.5% per annum to 2030, requiring investment in new mine supply.

The metallurgical coal price will be underpinned by strong demand from India and other emerging Asian markets.

South32 share price valuation

Based on Macquarie’s FY22 profit estimate for South32, the ASX mining share is valued at under 6x FY22’s projected earnings.

The post Can the South32 (ASX:S32) share price crack $6 this year? appeared first on The Motley Fool Australia.

More reading

• These 3 ASX 200 shares are topping the volume charts on Wednesday
• Brokers name 3 ASX mining shares to buy today
• Why are ASX 200 mining shares having such a dire day?
• Why Goldman says to buy these ASX coal shares right now
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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Macquarie Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Poseidon Nickel Ltd (ASX: POS) share price has returned from its trading halt and is racing higher on Thursday.

In morning trade, the nickel developer’s shares jumped almost 13% to 98 cents.

The Poseidon Nickel share price has since pulled back a touch but remains up 9% to 9.5 cents at the time of writing.

Why is the Poseidon Nickel share price shooting higher?

Investors have been bidding the Poseidon Nickel share price higher today after the company became the latest (indirect) recipient of a Modern Manufacturing Initiatives (MMI) Grant from the Australian Federal Government.

According to the release, Pure Battery Technologies (PBT), in partnership with Poseidon Nickel, has been granted a $119.6 million MMI grant to advance a proposed battery material refinery hub in Kalgoorlie, Western Australia.

The release explains that the battery material refinery hub is targeting initial production of up to 50,000tpa of precursor Cathode Active Material (pCAM), with potential for further production expansion in time.

“Wonderful news”

Poseidon Nickel’s Managing Director and CEO, Peter Harold, was very pleased with the news.

He commented: “This grant is wonderful news for Poseidon and PBT and a major vote of confidence by the Federal Government supporting PBT’s plans for the Kalgoorlie pCAM Hub. This project will add significant value to the battery minerals it processes, and Poseidon is well placed to be a major beneficiary given it has the potential to be a significant supplier of feed to PBT’s proposed PCAM Hub from our existing 400,000 tonne nickel resource base and nickel concentrators at Black Swan and Lake Johnston.”

“Given the nature of the processing route, being direct to pCAM, and the proximal location of the proposed pCAM Hub to our mines, there is an opportunity to enhance the margins on our concentrates,” he added.

What now?

At present, PBT and Poseidon Nickel only have a memorandum of understanding (MoU) in place. This means that the two parties will now need to execute a definitive supply agreement to take things forward.

The company explained: “The MoU noted that obligations of the parties were not binding or enforceable unless and until a Definitive Agreement has been entered into. The receipt of the grant is a major milestone for the pCAM Hub project and will be a key driver for the parties to formalise their collaboration through the proposed Definitive Agreement.”

The post Poseidon Nickel (ASX:POS) share price surges 13% higher on ‘wonderful news’ appeared first on The Motley Fool Australia.

More reading

• Here’s why the Poseidon Nickel (ASX:POS) share price is on ice today
• GameStop 2.0? What you need to know about the nickel short squeeze and how it’s impacting ASX shares
• What’s up with the Poseidon Nickel (ASX:POS) share price on Friday?
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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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