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This expert believes S&P/ASX 200 Index (ASX: XJO) companies will be reining in their dividend payouts next year, but those belonging to one sector might not.

Tribeca Investment Partners portfolio manager Jun Bei Liu thinks ASX 200 retailers will be boasting strong cash balances in 2022, leading to larger than average dividend returns.

Will 2022’s dividends to lag 2021’s?

Liu’s prediction comes after the total dividends paid by ASX shares in financial year 2021 were found to have increased 126% on a headline basis to $41.9 billion.

As my Foolish colleague Mitchell reported, the dividend surge was supported by strong returns from ASX 200 banks and miners.

But that might be about to change. Here’s why Liu believes that those who hold retail shares might be receiving impressive dividends in 2022.

ASX 200 retailers might lead 2022 dividends

Liu told The Age that she is looking to retailers to lead the dividend push in 2022 as they bank their cash from the pandemic. The publication quoted Liu as saying:

So far, we haven’t seen significant cash return from retailers – we’ve seen some – but there will be more… We think by February-March, you should start seeing retailers talking about it, and by August next year we’ll see pretty strong dividend returns.

However, she believes geopolitical tensions might weaken payouts. Such tensions might harm already rocky supply chain disruptions, increasing volatility, Liu commented:

The minute the market becomes more volatile, corporations will try to hold on to cash. They won’t pay it out.

It’s only prudent. So, this is something that will weigh on corporates’ intention of paying out dividends.

ASX 200 retail shares with strong dividend yields include:

• Adairs Ltd (ASX: ADH). According to Commsec, the home furnishings retailer has a dividend yield of 6.1%.

• JB Hi-Fi Limited (ASX: JBH), which Commsec states has a dividend yield of 5.3%.

• Harvey Norman Holdings Limited (ASX: HVN). Commsec lists the furniture retailers dividend yield at 6.4%.

The post Could ASX 200 retail shares deliver some dividend surprises in 2022? appeared first on The Motley Fool Australia.

More reading

• Why Adairs, EML, Fisher & Paykel Healthcare, and NRW are storming higher
• ASX retail shares in focus as CBA forecasts bumper Black Friday weekend
• Here’s why the Adairs (ASX:ADH) share price is rocketing 8% this morning
• Analysts rate these 2 ASX dividend shares as buys
• Harvey Norman (ASX:HVN) share price falls as profit before tax sinks 35.5%

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 shares of and has recommended ADAIRS FPO. The Motley Fool Australia owns shares of and has recommended ADAIRS FPO and Harvey Norman Holdings 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) seems to be intent on finishing the week on a sour note. At the time of writing, the ASX 200 is currently down by a nasty 1.97% at 7,261 points, falling steadily all day so far.

But rather than dwelling on the market’s attempts to ruin our weekend, let’s instead check out the ASX 200 shares that are currently topping the trading volume charts today, according to investing.com.

3 most active ASX 200 shares by volume this Friday

Telstra Corporation Ltd (ASX: TLS)

Blue chip telco Telstra is our first share to look at today. This ASX 200 giant has had a hefty 13.57 million of its shares swap hands so far this Friday. There have been no major news or announcements out of Telstra today. As such, we can probably place this elevated volume at the feet of the 1.24% slide to $4.03 a share that this company has endured so far. As we mentioned yesterday, Telstra is also continuing to conduct share buybacks, so this might be adding to these volumes as well.

Spark Infrastructure Group (ASX: SKI)

The renewables company Spark Infrastructure is next up today. Spark has watched a chunky 13.75 million of its shares bought and sold so far this Friday. This comes as the company announced this morning that it has received approval from the Supreme Court of New South Wales for the takeover offer from a consortium of institutional investors to acquire Spark in full. It now looks more likely than ever that Spark will soon be leaving the ASX boards for good. It’s this move that might have… sparked… so many shares trading this Friday.

Pilbara Minerals Ltd (ASX: PLS)

And our third, final and most traded ASX 200 share so far today goes to lithium producer Pilbara with a sizeable 14.37 million shares finding new owners on the markets so far. Again, there’s no official news out of Pilbara today, so this high volume is probably the result of the beating that Pilbara shares are going through as well. The company is currently down a depressing 2.3% so far today at $2.55 a share. It’s this slide that is probably the cause behind Pilbara making second place on this list.

The post These 3 ASX 200 shares are topping the volume charts on Friday appeared first on The Motley Fool Australia.

More reading

• Here’s why the Webjet (ASX:WEB) share price is getting hammered on Friday
• The Telstra (ASX:TLS) share price is having a good month. Here’s why these top brokers are expecting more of the same
• ANZ (ASX:ANZ) share price shrugs off ASIC lawsuit
• 5 things to watch on the ASX 200 on Friday
• Here are the top 10 ASX shares today

Motley Fool contributor Sebastian Bowen owns shares of Telstra Corporation Limited. 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 shares of and has recommended Telstra Corporation 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 Commonwealth Bank of Australia (ASX: CBA) share price is in the red today, down 1.1% in afternoon trading.

That’s less than the 1.9% loss posted by the S&P/ASX 200 Index (ASX: XJO). Many blue-chip shares – particularly ASX 200 travel shares – have come under pressure from news of a new COVID variant emerging and spreading out of South Africa.

That’s today’s price action.

Below we take a look at what put CommBank in the news this week.

Brokers take bearish view on the CBA share price

The CBA share price is down 3% since last Friday’s closing bell. This was mostly driven by a 2.1% fall on Monday.

On Monday, the Motley Fool reported on what a number of leading brokers think about CommBank’s valuation. And most, as my Foolish colleague Zach Bristow reported, were bearish on the CBA share price.

Goldman Sachs recently cut its price target for CommBank to $81.74. That’s almost 14% below the current $94.72 per share. The broker aired concerns that Australia’s largest bank could lose market share in its mortgage business to increased competition from the other big banks.

Morgan Stanley and Macquarie Group Ltd (ASX: MQG) also believe the CBA share price is in for some headwinds, with both brokers having a price target of $87.50. Morgan Stanley lists CommBank’s shares as underweight while Macquarie gave the bank an underperform rating, citing, among other issues, the rock-bottom interest rate environment impacting the bank’s margins.

What’s in store for the Black Friday weekend?

If you’re wondering how retail sales might come off over the weekend, CBA had some encouraging news for ASX retail shares yesterday.

According to CommBank’s head of consumer and diversified industries in CBA’s Business Banking division, Jerry Macey:

The increase in sales in 2020 in comparison to 2019 bodes well for the Black Friday sales this coming weekend. Shoppers across the country are increasingly taking advantage of the recent move towards pre-Christmas discounting and we would expect this trend to continue this year.

CBA share price snapshot

The CBA share price hit all-time highs of $110.13 per share on 8 November. Since then it’s retraced by almost 14%, currently trading for $94.72.

Even with that retrace, CBA shares remain up around 15% year-to-date, compared to a 2021 gain of 10% posted by the ASX 200.

The post What’s happening with the CBA (ASX:CBA) share price this week? appeared first on The Motley Fool Australia.

More reading

• Top brokers name 3 ASX shares to sell today
• ASX retail shares in focus as CBA forecasts bumper Black Friday weekend
• Macquarie (ASX:MQG) is now a big four bank
• Is the CBA (ASX:CBA) share price premium relative to other big banks justified?
• Leading brokers name 3 ASX shares to sell today

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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Shares in EML Payments Ltd (ASX: EML) took off in a vertical fashion yesterday after the payments solutions provider confirmed an end to its investigation with the Central Bank of Ireland (CBI).

EML shares were on the down this week just prior to the announcement. They have reversed course over the past 2 days and now trade 32% higher at $3.62. Investors are piling in today as well, with today’s trading volume at 144% of their 4-week average volume so far.

Here are more details.

Go ahead, EML, do your thing

In the update, EML advised that the CBI has given the green light for it to establish a base and start signing customers in Ireland.

EML’s subsidiary, PFS Card Services (Ireland) Limited (PCSIL) was under the Irish regulator’s microscope after it voiced regulatory concerns with the company back in May.

At the time of the announcement, investors punished EML, wiping around half its value off the table in the days afterwards. Its share price had yet to make a recovery – until yesterday’s sprout from the soil of its 52-week lows.

Another positive from the CBI’s ruling is that no controls are set to be imposed on any of PCSIL’s new programs. The subsidiary has also agreed to work with the regulator and ensure all compliance measures are met with certainty.

One limit that was imposed, however, was a growth cap on PCSIL’s total payment volumes. The growth limitation will be in place for a year but could be removed beforehand if PCSIL verifies it is complying with all relevant measures.

The EML share price was catching bids like feeding tuna yesterday, as investors sent its share price flying from a low of $2.75 to close at $3.61.

The frenzy has since cooled off somewhat today, however shares are now up 18% on the month, and are starting to claw back some gains from the longer-term downtrend.

For comparison, just prior to the CBI’s investigation which started in May, EML had just reclaimed its losses from the March 2020 selloff, brought on by COVID-19. Back then it was posting record highs again, right before the news broke.

However, yesterday’s update has commentary shifting back to a more bullish tone. A recent note out of UBS updating its clients suggests that there is more life in the EML share price.

The broker retained its buy rating in the note and values EML at $4.40 per share following the update out of EML’s corner.

UBS reckons that the go ahead improves EML’s company risk profile, which in turn improves the risk and reward prospects for investors. The firm also believes it could re-rate at higher multiples in the future if European profits are high.

EML share price snapshot

These gains are welcomed for the EML share price, having posted a loss of just 1% in the past 12 months now. Despite this, it is still down 13% this year to date.

After wiping half of its value back in May, the EML share price was trading flat until October, where it began losing popularity.

It reached a 52-week closing low on 23 November, just before the CBI’s resolutions were announced, which sent EML shares back north.

The post Here’s why EML (ASX:EML) shares have surged 33% this week appeared first on The Motley Fool Australia.

More reading

• Brokers name 3 ASX shares to buy today
• These 3 ASX 200 shares are topping the volume charts this Thursday
• Why Adairs, EML, Fisher & Paykel Healthcare, and NRW are storming higher
• ASX 200 (ASX:XJO) midday update: EML rockets, NAB given ACCC green light
• EML (ASX:EML) share price rockets 17% on new programs green light from regulator

The author has no positions in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended EML Payments. The Motley Fool Australia owns shares of and has recommended EML Payments. 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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As one of the oldest blue-chip shares on the S&P/ASX 200 Index (ASX: XJO), Wesfarmers Ltd (ASX: WES) has amassed a reputation as a solid and reliable payer of dividends over many decades.

Last year that was an extremely difficult one for a number of ASX shares for obvious reasons. As such, many, including the ASX banks, were forced to slash their dividend payments. But Wesfarmers was not among that number.

The company managed to keep its biannual dividends flowing last year, and even shelled out a special dividend in October 2020.

Today, the Wesfarmers share price has lost 1.08% at the time of writing and is sitting at $58.76 a share. That’s down more than 11% from the new all-time high of $67.20 that we saw back in late August.

But as every dividend investor would know, a lower share price means a higher starting dividend yield for any new investment.

So what exactly is the Wesfarmers dividend worth in November 2021?

Breaking down the Wesfarmers dividend

Wesfarmers’ last two dividends were an interim payment of 88 cents per share that investors received in March and a 90 cents per share payment that hit bank accounts on 7 October last month.

If we plug that $1.78 in total dividends into the current Wesfarmers share price, we get a trailing yield of 3.03%. That grosses up to 4.33% if we include Wesfarmers’ full franking.

That’s arguably not too shabby, considering the current record low-interest-rate environment.

But what about the future? After all, just because a company has paid a certain dividend in the past does not at all guarantee it will do so in the future.

Well, as my Fool colleague Tristan covered earlier this week, one broker who reckons investors could be treated to even higher dividends next year is UBS.

UBS is anticipating Wesfarmers to grow its annual dividend for FY 2022 to $1.83 per share, up a healthy 2.8% from FY 2021’s $1.78 per share. If that turned out to be true, it would give this ASX 200 blue chip a forward yield of 3.12% on the current Wesfarmers share price.

The post What is the Wesfarmers (ASX:WES) dividend worth in November? appeared first on The Motley Fool Australia.

More reading

• ASX retail shares in focus as CBA forecasts bumper Black Friday weekend
• How much is the Wesfarmers (ASX:WES) dividend expected to grow in FY22?
• Only a few ASX 200 companies have received this honour and Scentre (ASX:SCG) just joined them
• Why has the Wesfarmers (ASX:WES) share price leapt 8% over the past month?
• Is the Wesfarmers (ASX:WES) share price great value or overvalued?

Motley Fool contributor Sebastian Bowen 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 shares of and has recommended Wesfarmers 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 Helloworld Travel Ltd (ASX: HLO) share price is spiralling today amid the identification of a new COVID-19 variant.

At the time of writing, the Helloworld share price is $2.06 — 5.94% lower than its previous close.

For context, the S&P/ASX 200 Index (ASX: XJO) is down 1.7% right now.

Let’s take a closer look at what we know of the variant so far.

What’s weighing on the Helloworld share price?

The Helloworld share price is suffering alongside its ASX 200 peers today as the UK Health Security Agency’s CEO Jenny Harries stated a new COVID-19 variant is “a clear reminder to everyone that this pandemic is not over”.

South Africa’s National Institute for Communicable Diseases (NICD) announced it had documented the variant yesterday. The mutation has initially been named B.1.1.529.

The UK has slammed its borders shut to 6 African nations on the back of the discovery. It claimed several mutations, including a change in the virus’ protein spike, could make the variant resistant to vaccines, harder to treat, or easier to spread.  

The NICD stated that, as of yesterday, there have been 22 cases of B1.1.529 in South Africa.

Another 2 cases have been identified in Hong Kong. Authorities there believe it might have spread from a traveller arriving from South Africa. Cases have also been found in Botswana.

Travel between the UK and the 6 banned nations will resume once the UK’s hotel quarantine system is up and running.

When it is operational, travellers to the UK from South Africa, Botswana, Lesotho, Eswatini, Zimbabwe, or Namibia will need to pay for and complete a 10-day stint in hotel quarantine.

The Helloworld share price isn’t alone in its suffering today.

The Webjet Limited (ASX: WEB) and Flight Centre Travel Group Ltd (ASX: FLT) share prices have fallen 4.8% and 5.9% respectively.

What’s going on with Australia’s borders?

According to reporting by News.com.au, Australian Health Minister Greg Hunt told a press conference this morning Australia’s border restrictions won’t be changing. The publication quoted Hunt as saying:

If the medical advice is that we need to change [border restrictions], we won’t hesitate…

At this point in time, there’s very little traffic directly between South Africa and Australia.

We also happen to be very, very highly vaccinated now… that’s a very different position from [where we were] when the Delta variant emerged in India

The post Why is the Helloworld (ASX:HLO) share price tumbling 6% on Friday? appeared first on The Motley Fool Australia.

More reading

• Here’s why ASX 200 travel shares are getting hammered today

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 shares of and has recommended Helloworld Limited. The Motley Fool Australia owns shares of and has recommended Helloworld Limited. The Motley Fool Australia has recommended Flight Centre Travel Group Limited and Webjet 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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When it comes to ASX dividend shares, there are certainly a lot to choose from if an investor is seeking income. Most companies on the S&P/ASX 200 Index (ASX: XJO) pay a dividend, which immediately gives you a few options, to say the least.

So how does one find the right needles in this haystack of potential income-producing investments? Taking a look at what some of the ASX’s expert investors reckon can always be of assistance.

So here are 3 ASX dividend shares that are currently rated as ‘buys’ by some of the ASX’s most well-known brokers.

3 ASX dividend shares top brokers rate as buys today

National Australia Bank Ltd (ASX: NAB)

As an ASX bank, NAB’s reputation as one of the ASX’s heaviest dividend payers has long been standing. Just today, we charted this bank’s journey from paying 60 cents in dividends per share in 2021 to $1.27 per share in 2021. Broker Goldman Sachs currently rates NAB shares as a buy with a 12-month share price target of $31.15.

Goldman likes NAB’s exposure to the business banking sector, which it sees as stronger than some of the other ASX banks. It also sees NAB’s strong capital position as a positive and notes its current dividend payout ratio of 68%, which indicates its dividends could grow further in the coming years. NAB shares currently have a dividend yield of 4.58%.

South32 Ltd (ASX: S32)

ASX 200 diversified miner South32 is another share that Goldman Sachs rates as a buy right now, a ‘conviction buy’, no less. Goldman currently rates South32 with a 12-month share price target of $4.40. That implies a potential upside of almost 24% on current pricing.

While South32 may have a current dividend yield of 1.84%, Goldman reckons the miner will be able to pay out much stronger dividends going forward on the back of higher commodity prices.

It sees the current South32 share price as offering a forward dividend yield of between 12 and 13% for both FY2022 and FY 2023.

Coles Group Ltd (ASX: COL)

Coles is our last dividend share to check out today. As my Fool colleague James discussed this morning, Coles is currently rated as an ‘add’ by broker Morgans. Morgans is seeing Coles at a share price of $19.90 in a year’s time, implying a potential upside of roughly 10%.

But Morgans is also expecting Coles to shell out 61 cents per share in fully franked dividends for FY 2022, equalling the payouts shareholders have enjoyed over the past 12 months. That implies Coles’ current yield of 3.38% is sustainable going forward.

The post 3 ASX dividend shares brokers rate as buys right now appeared first on The Motley Fool Australia.

More reading

• Why the Shopping Cntrs Austrls (ASX:SCP) share price is lagging today
• What is the NAB (ASX:NAB) fully franked dividend worth in November?
• Top broker gives its verdict on the NAB (ASX:NAB) share price
• Is the Coles (ASX:COL) share price a buy in the lead up to Christmas?
• 5 things to watch on the ASX 200 on Friday

Motley Fool contributor Sebastian Bowen owns shares of National Australia Bank Limited. 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 shares of and has recommended COLESGROUP DEF SET. 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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As the end of 2021 draws closer, fund managers are already sharpening their pencils and running the numbers on which ASX shares could make a bucketload for investors in the year ahead.

Two small-cap companies have made their way into the top picks of two distinguished brokers. Here’s a look at why these shares are a buy in 2022 according to the experts.

These ASX shares make fundies’ 2022 wishlist

Jumbo Interactive Ltd (ASX: JIN)

According to Arden Jennings of Ausbil Investment Management, shares in ASX-listed Jumbo make for an attractive proposition. The online lottery business has been humming along this year, producing record numbers. In its FY21 full-year results, Jumbo reported a 17% increase in revenue to $83.3 million. Meanwhile, underlying net profit after tax climbed 7% higher to $28.3 million.

Jennings, a portfolio manager of a small and micro-cap fund, highlighted an expected increase in the chance of jackpots next year following a change to the Oz Lottery. Bigger jackpots tend to correlate with larger ticket sales, which would benefit the company.

In addition, Jennings shared an appreciation for Jumbo’s approach to international expansion. In November 2019, it acquired UK digital lottery solution provider Gatherwell. More recently, Jumbo announced the acquisition of Stride, opening the gates to the Canadian lottery market.

A big positive, in Jennings’ opinion, would be if the company could get ahold of a US state lottery business in the next 12 to 24 months.

Estia Health Ltd (ASX: EHE)

The other number one ASX share for 2022 is from Tobias Yao of Wilson Asset Management. In Yao’s opinion, the ASX-listed residential aged care provider could be set for a big year in 2022. Despite the lingering concerns of COVID-19, Estia has returned ~24% to shareholders this year, but there could be more to come from Yao’s view.

Importantly, an end to the regulatory uncertainty is anticipated by the fund manager. This would remove a layer of skepticism towards the sector. Additionally, the government spending outlined in the federal budget could give companies like Estia a boost.

Finally, Yao mentioned the heightened merger and acquisition activity within the sector. At a market capitalisation of ~$570 million, the ASX share might find itself a suitor in 2022.

The post Fundies reveal their 2 top ASX shares for 2022 appeared first on The Motley Fool Australia.

More reading

• Why Chalice, De Grey, Estia Health, and Fortescue shares are racing higher
• Why Jumbo, Link, News Corp, and REA shares are storming higher

Motley Fool contributor Mitchell Lawler owns shares of Jumbo Interactive Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended Jumbo Interactive Limited. The Motley Fool Australia has recommended Jumbo Interactive 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 Flight Centre Travel Group Ltd (ASX: FLT) share price is suffering amid headlines a new COVID-19 variant has spurred some countries to implement new border restrictions.

The United Kingdom has halted flights from 6 African nations after South Africa’s National Institute for Communicable Diseases (NICD) announced it has identified a new COVID-19 variant, currently named B.1.1.529.

At the time of writing, the Flight Centre share price is $17.37, 6.21% lower than its previous closing price.

For context, the S&P/ASX 200 Index (ASX: XJO) is down 1.3% right now.

Why is the Flight Centre share price falling?

The Flight Centre share price is struggling today after the announcement of a new hurdle facing the world’s reopening.

As of yesterday, South Africa had recorded 22 cases of the B.1.1.529 variant. Another 2 cases have been found in a Hong Kong hotel where it could have spread from a traveller arriving from South Africa. Cases have also been identified in Botswana.

The variant includes a large number of spike protein mutations, as well as mutations in other parts of the viral genome. These mutations might change the effectiveness of vaccines, treatments, and spread.

In a statement, NICD acting executive director Prof Adrian Puren stated:

[O]ur experts are working overtime with all the established surveillance systems to understand the new variant and what the potential implications could be.

The CEO of the UK Health Security Agency, Jenny Harries, also commented:

This is the most significant variant we have encountered to date and urgent research is underway to learn more about its transmissibility, severity, and vaccine-susceptibility… This is a clear reminder to everyone that this pandemic is not over.

According to reporting by ABC News, Australian Health Minister Greg Hunt has acknowledged the variant. However, he hasn’t acted to change Australia’s border restrictions. The publication quoted Hunt as saying: “If the medical advice is that we need to change [our border restrictions], we won’t hesitate.”

The Flight Centre share price isn’t alone in its tumble today. The share prices of Qantas Airways Limited (ASX: QAN) and Webjet Limited (ASX: WEB) are both down around 5%.

News of the B1.1.529 variant follows reports that Belgium increased COVID-19 restrictions and Austria entered a lockdown earlier this week. The measures to prevent spread followed the outbreak of a fourth wave of cases in parts of the continent.

Additionally, new COVID-19 cases surged 16.1% in the United States last week.

The post What is going so wrong for the Flight Centre (ASX:FLT) share price today? appeared first on The Motley Fool Australia.

More reading

• Here’s why the Webjet (ASX:WEB) share price is getting hammered on Friday
• Why are ASX 200 travel shares having such a shocker today?
• How do you value the Flight Centre (ASX:FLT) share price?
• Why is the Flight Centre (ASX:FLT) share price tumbling 6% to a 2-month low?
• Here’s why ASX 200 travel shares are getting hammered today

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. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Flight Centre Travel Group Limited and Webjet 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 Shopping Cntrs Austrls Prprty Gp Re Ltd (ASX: SCP) share price is underperforming its peers today after getting hit by a broker downgrade.

Shares in the neighbourhood shopping centre operator tumbled 1.7% to $2.85 during lunch time trade.

It doesn’t help that the S&P/ASX 200 Index (Index:^AXJO) is getting sold off, although other mall operators are holding up better than the Shopping Centres Australasia (SCA) share price.

The Unibail-Rodamco-Westfield CDI (ASX: URW) share price is flat. The Vicinity Centres (ASX: VCX) share price dipped 0.4% and Scentre Group (ASX: SCG) share price shed 1.1%.

SCA share price hit by downgrade

A downgrade by Macquarie Group Ltd (ASX: MQG) is a likely explanation for the underperforming SCA share price.

Macquarie’s decision to cut its rating on the ASX property group to “neutral” comes even as the broker upgraded its forecasts for the shares.

The increase in earnings estimates is driven by SCA’s recent acquisitions. But Macquarie warns that growth will be more difficult to come by from here.

Running out of puff

“Over the last five years, SCP has on average acquired ~$230m of assets p.a. SCP has now acquired $348m of assets in 1H22,” said the broker.

“However, with gearing now ~36% on a pro-forma basis, there is more limited headroom for further acquisitions.

“In addition, SCP has also flagged a potential shift into funds management on behalf of institutional equity. With cap rates compressing in key sub-sectors, we believe this is a signal SCP is finding it more difficult to acquire assets above their WACC.”

One also shouldn’t forget that it takes time for funds management platforms to generate meaningful earnings.

COVID winner losing its shine

This leaves the SCA share price vulnerable to a sell-off after its 14% rally this year. The regional mall operator has been a beneficiary of the COVID-19 lockdowns as more Aussies shop local.

The tenants at these centres are usually the major supermarket chains, which also benefited from the rolling lockdowns. This explains why the Woolworths Group Ltd (ASX: WOW) share price and Coles Group Ltd (ASX: COL) share price have held up over the course of the pandemic.

What is the SCA share price worth?

But the tide is turning for SCA even though the shop local theme will remain a feature on the retail landscape, added Macquarie.

“However, the share price implies ~60bps of cap rate compression (or 12% increase in asset valuations), which we believe captures this upside risk,” said the broker.

“With a more limited balance sheet, and downside risk to free cashflow, we downgrade to Neutral.”

Macquarie’s 12-month price target on the SCA share price is $2.94 a share.

The post Why the Shopping Cntrs Austrls (ASX:SCP) share price is lagging today appeared first on The Motley Fool Australia.

More reading

• Here’s why the Webjet (ASX:WEB) share price is getting hammered on Friday
• ANZ (ASX:ANZ) share price shrugs off ASIC lawsuit
• Is the Coles (ASX:COL) share price a buy in the lead up to Christmas?
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Motley Fool contributor Brendon Lau owns shares of Macquarie Group Limited. 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 shares of and has recommended COLESGROUP DEF SET and Shopping Centres Australasia Property Group. 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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