The Santos Ltd (ASX: STO) share price is sliding in early trade, down 3%.

Santos closed at $7.40 per share yesterday and is currently trading for $7.18.

Below we look at the highlights from the ASX 200 energy company’s 2021 full year financial results.

Note that this is the first time Santos is releasing results since its merger with former competitor Oil Search was completed in December.

Santos share price slides despite record free cash flow

• Product sales revenue of US$4.71 billion, up 39% year-on-year
• EBITDAX (earnings before interest, tax, depreciation, depletion, exploration, evaluation and impairment) of US$2.81 billion, up 48% from US$1.90 billion in 2020.
• Underlying profit increased 230% to US$946 million
• Final dividend 5 US cents per share (cps), 70% franked, up from 5.0 cps in 2020

What else happened during the year?

In 2021, Santos produced 92.1 million of barrels of oil equivalent (mmboe), up 3% from the prior year.

Sales volume slipped however, down 3% to 104.2 mmboe from 107.1 mmboe the prior year.

2021 saw Santos deliver a net profit after tax (NPAT) of US$658 million, up 284% year-on-year. The company said 2021 NPAT includes losses incurred on commodity hedging and costs associated with acquisitions and one-off tax adjustments. It attributed the NPAT leap to significant impairment that were included in its 2020 reporting.

Santos also saw its free cash flow hit a record high, surging by 103% year-on-year to US$1.50 billion.

It credited the growth in overall results to higher oil and LNG prices over the year along with the 3 weeks contribution from the Oil Search assets during the final stretch of 2021.

What did management say?

Commenting on the results, Santos CEO Kevin Gallagher said:

The highlight of the year was the completion of our merger with Oil Search. The merger delivers increased scale and capacity to drive our disciplined, low-cost operating model and unrivalled growth opportunities over the next decade – all with a vision of becoming a global leader in the energy transition…

2021 brought global energy security into the spotlight with higher prices and a supply crunch in the wake of rapidly recovering demand and a lack of investment in new supply.

It is vitally important that investment in new supply occurs and in a sustainable way. At Santos, we are focussed on supplying critical fuels more sustainably to meet society’s demand.

What’s next?

Santos forecasts that 2022 production will increase to 100–110 million mmboe. It expects sales volumes in the range of 110–120 mmboe.

The ASX 200 energy giant forecasts spending on major growth projects to be around US$1.15–US$1.3 billion. Working off an average oil price of US$65 per barrel in 2022, it expects to generate enough free cash flow to fund that growth.

While this year’s final dividend carried 70% franking credits, Santos said that based on its carry-forward tax losses, it is unlikely to generate franking credits for the next several years.

Santos share price snapshot

The Santos share price has gained 9% so far in 2022, compared to a loss of 5% posted by the S&P/ASX 200 Index (ASX: XJO).

The post Profit surge fails to boost Santos (ASX:STO) share price today appeared first on The Motley Fool Australia.

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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 Treasury Wine Estates Ltd (ASX: TWE) share price is racing higher today following the release of its half year results.

In morning trade, the wine giant’s shares jumped 13% to $11.90.

Treasury Wine jumps on half year results

• Net sales revenue down 10.1% to $1,267 million
• Net sales revenue per case up 16% to $95.60
• EBITS down 6.7% to $262.4 million
• EBITS margin improve 0.8 percentage points to 20.7%
• Net profit after tax down 7.5% to $109.1 million
• Fully franked interim dividend of 15 cents per share declared

What happened during the first half?

For the six months ended 31 December, Treasury Wine reported a 10.1% decline in revenue to $1,267 million.

This reflects softer sales across all segments. Penfolds reported a 16.3% decline in revenue to $382.7 million, Treasury Americas posted an 8.5% decline in revenue to $465.9 million, and Premium Brands saw its revenue fall 5.6% to $418.4 million.

And while is Americas and Premium Brands businesses managed to record strong EBITS growth despite these sales declines, a 19% decline in EBITS from the key Penfolds business weighed on its earnings and led to a 6.7% decline in group EBITS to $262.4 million.

Management advised that the Penfolds business was unsurprisingly impacted by reduced shipments to Mainland China, which were partly offset by strong growth across global priority markets and channels.

Management commentary

Treasury Wine’s Chief Executive Officer, Tim Ford, was pleased with the half.

He commented: “We are very pleased with our first half results, where we delivered comparable EBITS growth of 28% when taking into account the effective closure of the Mainland China market, while at the same time continuing with the implementation of important changes across the business.”

“This performance reflects the focused execution of our plans and strategic priorities, led for the first time by Penfolds, Treasury Americas and Treasury Premium Brands. Each division is now on a clear and positive trajectory towards their respective long-term growth objectives, with the benefits of separate focus and accountability already very evident throughout TWE,” he added.

“Growth and innovation”

Possibly giving the Treasury Wine share price a lift today was management’s commentary on its outlook. Mr Ford revealed that the company is embarking on a new chapter following the disruption of the last two years.

He said: “Following the past two years of significant change within TWE and the markets in which we operate, we have shifted our focus from a mindset of ‘recovery and restructuring’ to one of ‘growth and innovation’. We have great confidence that by leveraging the unique strengths of our business – our people, our brands and our asset base – we are well placed to capitalise on the significant opportunities across the global markets in which we operate.”

In respect to the second half, the company expects that trading conditions will be broadly consistent with those in the first half across all key global markets and channels.

Looking further ahead, the company’s “financial objective remains to deliver sustainable top-line growth and high-single digit average earnings growth over the long-term.”

The post Cheers! Treasury Wine (ASX:TWE) share price jumps 13% on half year results appeared first on The Motley Fool Australia.

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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 recommended Treasury Wine Estates 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 Fortescue Metals Group Ltd (ASX: FMG) share price is slipping lower on Wednesday morning. This comes as the iron ore miner released its half-year results for the 2022 financial year.

At the time of writing, the mining giant’s shares are swapping hands for $20.81, down 3.61%.

Fortescue share price backtracks on half-year result

The Fortescue share price is in the red today after the company delivered its result for the six months ending 31 December 2021. Here are some of the key highlights:

• Total revenue of US$8.1 billion, down 13% (H1 FY22 US$9.3 billion)
• Underlying earnings before interest, tax, depreciation and amortisation (EBITDA) of US$4.76 billion, down 28% (H1 FY21 US$6.64 billion)
• Underlying net profit after tax (NPAT) of US$2.8 billion, down 32% (H1 FY21 US$4.08 billion)
• Earnings per share (EPS) of US 90 cents, down 32% (H1 FY21 US$1.33 per share)
• Fully-franked interim dividend of 86 cents per share, 70% of H1 FY22 NPAT dividend payout

What happened in H1 FY22 for Fortescue?

Fortescue recorded its highest ever half-year shipments of 93.1 million tonnes, following the integration of its Eliwana project.

In addition, the company achieved industry-leading C1 costs of US$15.28 per wet metric tonne. This was 20% higher than the H1 FY21 result due to price increases of key input costs such as diesel, other consumables, labour rates, the integration of Eliwana as well as mine plan-driven cost escalation.

Overall, the miner recorded an average revenue of US$96 per dry metric tonne, a 70% realisation of the average Platts 62% CFR Index (H1 FY21 US$114/dmt, 90% realisation).

The board declared a cash position of US$2.9 billion and gross debt of US$4.6 billion at the end of the calendar year.

However, a possible catalyst for today’s fall appears to be the company’s dividend cut. Shareholders will receive an interim dividend of 86 cents per share, down 41% from the $1.47 paid in the prior corresponding period.

What did management say?

Fortescue CEO Elizabeth Gaines commented on the milestone accomplishment, saying:

Fortescue’s performance for the first half of FY22 has been outstanding and we are proud of the entire team who have delivered record half year shipments and contributed to net profit after tax of US$2.8 billion, the third highest in Fortescue’s history.

… We have continued to reinvest in the business and invest in growth. Our major project, Iron Bridge is progressing well with first production scheduled in December 2022. We remain focused on managing industry cost pressures and challenges posed by Western Australia’s ongoing border restrictions, and we are working closely with the Western Australian Government and relevant authorities to ensure we have access to the specialist skills required.

What’s the outlook for Fortescue?

Looking ahead, Fortescue provided guidance for FY22, stating the following:

• Iron ore shipments in the range of 180 million tonnes to 185 million tonnes
• C1 costs between US$15.00 to US$15.50 per wet metric tonne (based on assumed average exchange rate of AUD: USD 0.72)
• Capital expenditure (excluding FFI) of US$3 billion to US$3.4 billion.

The post Fortescue (ASX:FMG) share price slips on FY22 half-year results appeared first on The Motley Fool Australia.

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Motley Fool contributor Aaron Teboneras 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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Shares in vertically integrated Australian real estate investment trust (REIT) Vicinity Centres (ASX: VCX) are rocketing today. It follows the company announcing its results for the six months ended 31 December 2021.

Vicinity Centres share price is climbing at the open on Wednesday, up 9.23% from yesterday’s close at $1.83.

Vicinity Centres back in the money

The second-largest listed manager of Australian retail property advised on a number of investment highlights today:

• Statutory net profit after tax (NPAT) of $650.2 million, up $1.04 billion from statutory net loss after tax of $394.1 million in 1H FY21
• Funds from operations (FFO) of $287.7 million or 6.32 cents per share, compared to 1H FY21 result of $267.1 million or 5.87 cents per share
• Interim distribution of 4.7 cents per share, reflecting a payout ratio of 84% of adjusted FFO (AFFO) – up from 62%
• Strong balance sheet maintained, with low gearing of 26.3% and liquidity of $1.8 billion
• FY22 FFO per security expected to be in the range of 11.8 cents to 12.6 cents
• AFFO per security expected to be in the range of 9.5 cents to 10.3 cents

What else happened this quarter for Vicinity?

The hallmark of Vicinity’s results this half was a $1 billion gain in statutory NPAT of $650.2 million, up from a loss of $320 million this time last year.

This result was underpinned by FFO of $287.7 million and “a non-cash net property valuation gain of $320.1 million.”

Even with the pandemic, Vicinity says, its Australian operations grew almost 8% in FFO year over year.

During the half, Vicinity completed 643 leasing deals, resulting in an average spread of -6.4%. This is a big jump on the 542 deals at a spread of -12.6% in 1H FY21.

It also leased 201 vacant stores during the half. As such, portfolio performance ensured that occupancy was maintained at 98.2% at the end of December 2021.

Not only that, collection of gross rental billings averaged 80% for the period, up sequentially on the previous quarter, according to the release.

Total portfolio retail sales increased by 7%, curiously a reflection of strong growth in Victoria at an increase of 17%. In states that didn’t feel much impact of COVID-19, growth was 4.5%.

“Given that NSW was in lockdown for a higher proportion of 2021 versus 2020, MAT retail sales were down 5.1%,” the company noted.

Management commentary

Speaking on the announcement, Vicinity CEO and managing director Grant Kelley said:

The first half of FY22 was another challenging period for Vicinity, our retail partners and the retail sector more broadly. However, despite continued COVID-related disruptions and a greater proportion of our assets being in lockdown this period, our disciplined approach to cash collection and retailer support, together with higher than anticipated tenant retention and resilient ancillary income underpinned our significantly improved result.

What’s next for Vicinity?

The release notes that Vicinity expects FY22 FFO per security to be in the range of 11.8 cents to 12.6 cents. While AFFO is expected to be in the range of 9.5 cents to 10.3 cents.

Vicinity is targeting a full-year distribution payout range of 95%-100% of AFFO, according to the guidance figures posted today.

“In summary, today’s result and our FY22 guidance are testament to the high-performing and resilient team we have at Vicinity and the strength of our asset portfolio and retail partnerships,” Kelly concluded.

Vicinity Centres share price snapshot

In the past 12 months Vicinity Centres has held gains, up 14.33% on the year, based on the current price. With today’s boom in the Vicinity share price, year to date the REIT is up 8.58%.

The post Sky high profits: Vicinity Centres (ASX:VCX) share price rockets 9% following half-year results appeared first on The Motley Fool Australia.

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

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

Stocks in the electric vehicle (EV) sector have attracted loads of attention following the success of Tesla‘s (NASDAQ: TSLA) stock and now its business. Tesla reported net income of more than $5.5 billion in 2021. That helped confirm the company could profitably grow as the EV sector matures, which many supporters and shareholders have preached for several years.

That has attracted speculative investors looking for “the next Tesla” and has driven valuations to astronomical levels for several companies, like Rivian Automotive, that have barely begun delivering vehicles. But several of China’s EV companies have already proven they can manufacture at scale. Although there are unique risks associated with these businesses, there are also concrete reasons why those who want exposure to the sector should consider investing in them now. 

Targeting the right markets

There’s a reason why Tesla’s first manufacturing facility outside the United States was built in China — it’s the largest automotive market in the world. Chinese EV makers have been working to take advantage of that, too. Nio (NYSE: NIO), XPeng (NYSE: XPEV), and Li Auto (NYSE: LI) have each been increasing sales quickly over the past two years. 

Although they’re building off of a much smaller base than Tesla, these three Chinese EV makers increased vehicle sales between 109% and 263% in 2021 compared to 2020 levels. And though Nio, XPeng, and Li are completely focused on electrified vehicles, Chinese internal combustion and EV automotive giant BYD (OTC: BYDDY) is producing many more new energy vehicles (NEVs), which are defined as both electric and plug-in hybrid models. Sales volume for BYD new energy vehicles soared 218% to more than 600,000 in 2021. It also told investors it expects to potentially double that in 2022 to 1.2 million, reports industry follower CnEVPost.

Though focused mostly on China to this point, these companies also plan to expand beyond those borders. BYD is a global company already, and Nio has established a presence in Norway. Nio has also said it plans to move into Germany, the Netherlands, Sweden, and Denmark in 2022. The International Energy Agency (IEA) predicts China and Europe will continue to dominate EV sales over the next decade, as shown below. 

Competition and other risks

The IEA Global EV Outlook for 2021 predicts two scenarios for EV sales over the next decade. The first, more conservative, view is based on stated governmental policy objectives. The second assumes a more aggressive sustainable development push that results in EV sales obtaining a 34% share of the automotive market by 2030 — more than double what the stated policy is expected to achieve. 

Though competition is ramping up from both start-up companies and established legacy automakers, both scenarios provide ample opportunity for the Chinese EV companies to continue growing sales. 

To be sure, Chinese EV companies and their respective shares carry added geopolitical risks. For this reason, investors should size allocations appropriately. But based on businesses that have already shown they can be successful, and markets that provide ample opportunities, investors wanting exposure in the sector shouldn’t overlook these companies. 

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

The post These 3 charts show why you might want exposure to China’s EV makers appeared first on The Motley Fool Australia.

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Howard Smith owns BYD, NIO Inc., and XPeng Inc. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and recommends BYD, NIO Inc., and Tesla. 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.

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

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The Nearmap Ltd (ASX: NEA) share price is on the move on Wednesday morning following the release of its half year results.

At the time of writing, the aerial imagery technology and location data company’s shares are up 8% to $1.33.

Nearmap share price higher on strong half year results

• Annual contract value (ACV) portfolio up 28% to $147.7 million (or $143.3 million in constant currency)
• Reported statutory revenue up 23% to $67.5 million
• Reported statutory loss after tax of $11.9 million. This includes $9 million spent supporting its research and development (R&D) initiatives
• Group cash balance of $110 million and no debt
• Outlook: ACV portfolio now expected to close FY 2022 at the upper end of the $150 million to $160 million guidance range.

What happened during the first half?

For the six months ended 31 December, Nearmap reported a 28% increase in ACV to $147.7 million.

This reflects further strong growth in the North America market, with ACV rising 57% over the prior corresponding period to US$55 million. This was the third consecutive record half of growth for the segment and means its ACV now exceeds the ANZ portfolio.

The strong growth in North America was driven by demand from Roofing, Insurance, and Government markets. ACV from these markets grew 62% over the prior corresponding period. The Insurance side of the business now accounts for almost 40% of Nearmap’s North American ACV.

This ultimately led to North American average revenue per subscription rising 29% to US$22,350.

Over in the ANZ market, Nearmap performed positively. It delivered an 8% increase in ACV to $71.9 million. Management advised that SME and midmarket segments continue to perform well, with encouraging improvements in the Enterprise market.

Management commentary

Nearmap’s Chief Executive Officer and Managing Director, Dr Rob Newman, commented: “Nearmap has delivered yet another exceptional result on the back of continued record performance in North America and an extension of our market leadership in Australia and New Zealand.”

“This has been enabled by our ongoing commitment to invest in our leading Research & Development initiatives, which are delivering strong returns and will continue driving our future growth. Refinements to our go-to-market strategy in North America eighteen months ago are now embedded into our business and today’s results demonstrate our team in North America are continuing to deliver outstanding results for our customers,” he added.

Outlook

In light of its strong first half performance, Nearmap now expects to hit the top end of its $150 million to $160 million guidance range in FY 2022.

Dr Newman commented: “We have delivered another record half of ACV growth whilst maintaining our Balance Sheet strength, this leaves us well positioned to continue our investment and execution of our go-to-market strategy. Core to our leadership is investment in our product and technology and we will focus this investment on ensuring we continue to provide increasing value to our customers.”

“We will complete prototype testing and commence manufacturing of our world leading aerial camera system, HyperCamera3. This represents a major milestone and will enable us to fly even higher and faster than we do today, significantly extending our already industry leading competitive advantage. This is ground-breaking technology being designed and manufactured right here in Australia and is the key priority for us for the remainder of FY22,” he concluded.

The post Nearmap (ASX:NEA) share price jumps 8% on ‘exceptional result’ appeared first on The Motley Fool Australia.

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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. owns and has recommended Nearmap Ltd. The Motley Fool Australia owns and has recommended Nearmap Ltd. 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 S&P/ASX 200 Index (ASX: XJO) officially fell into correction territory late last month after tumbling more than 10% in the first few weeks of 2022.

And the stocks hit hardest? Tech shares. The S&P/ASX 200 Info Tech Index (ASX: XIJ) is still down 20% year to date.

Fortunately, the generally indiscriminate drop has created many buying opportunities, according to Montgomery Investment Management  chair and chief investment officer, Roger Montgomery.

Let’s take a look at 2 of the ASX 200 tech shares he thinks are trading for bargain prices.

Is now the time to buy ASX 200 tech shares?

“The current equity correction has taken a lot of the froth out of the market,” Montgomery wrote in a piece published by Livewire. “But caught up in the carnage have been a number of high-quality companies with years of growth ahead.”

And carnage it has been. The market – particularly that of tech stocks, due to how they’re valued ­– has been dragged down amid talks of rising rates.

However, Montgomery believes there are now some beaten-down tech shares investors could take advantage of this year.

“The current equity correction will cull much of the leverage and froth built up in recent years,” he said. “What it won’t do is change the course of growth for many high-quality companies.”

He comforted wary investors, saying setbacks are a normal part of the market and investing cycle. He continued:

The market has been swinging manic-depressively for centuries. From wild bouts of optimism – when only the most enthusiastic appraisals will be entertained, to periods of deep depression – when sellers are willing to sell even the best companies for cents in the dollar, investors can count on one thing: opportunity.

Now is therefore the time to rebalance portfolios, taking advantage of the lower prices and [price-to-earnings (P/E)] deratings that have been experienced by some of the highest quality names in the market.

And what are those names? Here are the 2 ASX 200 tech shares Montgomery thinks are going cheap after the tech sell-off.

2 ASX 200 tech shares trading for a bargain

Megaport Ltd (ASX: MP1)

Megaport is No. 1 on Montgomery’s list of beaten down stocks with strong valuations.

The expert says it’s P/E ratio has tumbled 33.7% since 4 January, putting it squarely in the bargain zone.

The Megaport share price has slipped 28% year to date to trade at $13.69 at Tuesday’s close.

REA Group Limited (ASX: REA)

While REA doesn’t have a home in the ASX 200 tech sector, it does operate online-only real estate advertising platforms.

It houses realestate.com.au, flatmates.com.au, and Mortgage Choice.

Montgomery says REA’s P/E ratio has dropped 15.9% year to date.

It’s shares’ value has also fallen 19% since the start of 2022 to reach $137.95.

The post 2 quality ASX 200 tech shares with ‘years of growth’ ahead: broker appeared first on The Motley Fool Australia.

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Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and has recommended MEGAPORT FPO. The Motley Fool Australia has recommended MEGAPORT FPO and REA 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 Insurance Australia Group Ltd (ASX: IAG) share price has shot up since delivering its FY22 half-year results last Friday.

At yesterday’s market close, IAG shares finished 0.42% higher at $4.74. That means its shares have gained almost 7% in the past week for investors.

In context, the S&P/ASX 200 Index (ASX: XJO) edged 0.51% lower to 7,206.9 points on Tuesday.

What’s the go with the IAG dividend?

In the half-year report for the 2022 financial year, IAG reported a mixed performance across key metrics.

In summary, gross written premium (GWP) lifted by 6.2% to $6,570 million over the previous corresponding period. This was primarily driven by new customer growth and strong retention across motor and home lines in the Australian business.

Insurance profit, however, tumbled by 57.7% to $282 million over H1 FY21. The sharp fall was attributed to significant natural peril costs largely from severe weather events in October.

Overall, net profit after tax (NPAT) rose to $173 million, compared to a loss of $460 million in the prior year.

Based on IAG’s cash earnings of $176 million, the IAG Board declared an unfranked interim dividend of 6 cents per share. This represents a 14.2% decline from the 7 cents declared in the prior comparable period.

Management noted that the latest dividend equates to a payout ratio of 84% of cash earnings.

The company’s dividend policy is to distribute 60%-80% of cash earnings in any full financial year.

When can IAG shareholders expect payment?

IAG will pay the interim dividend to eligible shareholders next month on 24 March.

However, to be eligible, you’ll need to own IAG shares before the ex-dividend date which is today, 16 February. This means if you want to secure the dividend, you will need to purchase IAG shares by today at the latest.

In addition, the company is offering a dividend reinvestment plan (DRP), with the election date falling on 18 February.

The issue price per share will be the average market price, with no discount for participants. Shares allocated under the DRP are likely to be purchased on-market.

The post Here’s everything you need to know about the IAG (ASX:IAG) dividend appeared first on The Motley Fool Australia.

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Motley Fool contributor Aaron Teboneras 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 owns and has recommended Insurance Australia 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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Goldman Sachs has been busy running the rule over some recent results and has picked out a couple of ASX 200 shares it thinks investors should be buying.

Here are the two ASX 200 shares the broker rates very highly:

IDP Education Ltd (ASX: IEL)

Goldman Sachs is a fan of this language testing and student placement company. Following its better than expected half year result last week, the broker commented that IDP is “a structural grower with risks diminishing.”

Its analysts have upgraded their earnings estimates for the second half (and beyond) on the expectation of a recovery in the Australian student placements

Goldman said: “We expect a stronger than usual 2H for IDP driven by an emerging recovery in Australian Student Placements, continued strength in Multi-destination SP and greater than initially forecast synergies in the Indian IELTS operations. There were also some one-off costs in 1H22 that shouldn’t repeat, such as A$4m of make-good staff costs as compensation for cuts taken in the pcp. We have increased our FY22 EBIT 7.6% to A$150m. FY22/FY23/FY24 EPS estimates increase +6.3%/+1.3%/+1.2%.”

The broker retained its buy rating and lifted its price target to $35.00. This implies 28% upside based on the current IDP share price of $27.28.

Megaport Ltd (ASX: MP1)

This network as a service company’s shares are also in favour with the team at Goldman Sachs.

Following the release of its first half results, the broker reiterated its buy rating and confidence that its growth will accelerate in the second half.

The broker explained: “We believe incremental commentary today was broadly positive and supportive of our 2H22 revenue acceleration (+42%/+48% in 1H/2H), driven by MVE and Partner channel traction.”

“We note: (1) Revenue per MVE customer grew to $11k (vs. $5k at FY21), with the company expecting it to largely stabilize at these levels (some dilution from smaller customers expected, but the new Fortune 500 customer was > $15k and expected to grow meaningfully over time); (2) Strong volume growth is expected, noting the MVE pipeline grew to 202 (vs. 129 at FY21); (3) Data centre rollout to accelerate in 2H to c.+40 (incl. 4 in Mexico, vs. +6 in 1H22); (4) MCR trends were highlighted as a very positive development (+20% connection in 6 months); (5) APAC trends were positive across all markets; Europe was better than we expected, ahead of meaningful channel upside.”

Goldman has a buy rating and $19.90 price target on the company’s shares. This suggests there is 45% upside for investors based on the current Megaport share price of $13.69.

The post Goldman Sachs names 2 ASX 200 shares with major upside potential appeared first on The Motley Fool Australia.

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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. owns and has recommended Idp Education Pty Ltd and MEGAPORT FPO. The Motley Fool Australia has recommended MEGAPORT FPO. 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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With interest rates at such low levels, at least for now, income investors may want to look at the dividend shares listed below for a source of income.

Here’s why these two ASX 200 dividend shares have been rated as buys:

Coles Group Ltd (ASX: COL)

The first ASX dividend share for investors to consider is retail giant.

This supermarket giant could be a top option thanks to its favourable dividend policy, long track record of same store sales growth, strong market position, and its sprawling store network.

In respect to the latter, Coles has over 800 supermarkets, over 900 liquor retail stores, and over 700 Coles express stores. But management isn’t settling for that and continues to expand its network and invest in its online business. The latter includes the construction of new smart distribution centres with automation giant Ocado.

Citi is positive on Coles. The broker currently has a buy rating and $19.60 price target on its shares.

As for dividends, it is forecasting fully franked dividends of 65 cents per share in FY 2022 and 72 cents per share in FY 2023. Based on the current Coles share price of $16.55, this will mean yields of 3.9% and 4.35%, respectively.

Commonwealth Bank of Australia (ASX: CBA)

Another ASX 200 dividend share for investors to consider is Australia’s largest bank, CBA. While its shares have bounced back strongly from recent lows following a better than expected half year result, it may not be too late to invest,

That’s the view of the team at Bell Potter, which last week upgraded the banking giant’s shares to a buy rating with a $108.00 price target.

The broker commented: “Cash NPAT was nearly on par with 2H21, a great outcome. There was also investment in operational execution (in line with the bank’s strategic priorities) coupled with a return of excess capital to shareholders of $2bn.”

Thanks to its strategic strengths of scale, brand, and diversification, which are supported by an irreplaceable infrastructure comprising over 1,100 branches, 3,800 Australia Post agencies, and nearly 3,600 ATMs, Bell Potter appears confident on the future and is forecasting earnings and dividend growth over the coming years.

Bell Potter is forecasting fully franked dividends per share of $3.87 in FY 2022 and $4.07 in FY 2023. Based on the current CBA share price of $99.49, this will mean yields of 3.9% and 4.1%, respectively.

The post 2 ASX 200 dividend shares analysts love appeared first on The Motley Fool Australia.

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