Tag: Motley Fool

Of all the shares on the S&P/ASX 200 Index (ASX: XJO), Flight Centre Travel Group Ltd (ASX: FLT) would have to be one of the top performers for 2023 so far. Since the start of the year, this ASX 200 travel share has risen from $14.39 a share to the $21.57 we are seeing today. That’s a gain worth a whopping 49.9%.

Compare that to the ASX 200’s gain of 4.34% over the same period and it’s clear we have a real winner here.

Flight Centre is back in the green today with its share price just a whisker away from its current 52-week high of $22.10. Flight Centre shares hit that mark just a couple of days ago too, back on 9 May.

Let’s put things into some more perspective though. Although Flight Centre is up almost 50% in 2023 so far, it can still only boast of rising around 7.9% over the past 12 months:

Even so, we can’t deny it’s been a trip of a lifetime for Flight Centre investors recently.

Earlier this week, my Fool colleague Brooke examined why Flight Centre shares have had such a smooth ride over the past few months. One of the biggest factors at play is probably Flight Centre’s total transaction value, which surpassed the company’s pre-COVID highs in March.

But that begs the question: is it too late to buy Flight Centre shares today after the company has increased its market capitalisation by almost half this year alone?

Are Flight Centre shares a buy at their new 52-week high?

Well, as it happens, several ASX brokers have given their verdict on the Flight Centre share price this month. And they all seem to be on a very similar page.

Let’s start with JPMorgan. As we covered last week, JPMorgan came out with an overweight rating on Flight Centre shares, with a 12-month share price target of $22.60. That would of course be another new 52-week high for Flight Centre shares if realised.

Fellow ASX broker Citi is even more optimistic. A Citi analyst recently gave the company a $23.80 share price target, and justified this by citing a “boost in passenger numbers, more corporate travel and greater supplier margins in FY24”.

Then we have Morgans to consider. This ASX broker lifted its neutral rating on Flight Centre shares to ‘add’ earlier this month, with a lofty share price target of $26.25. That’s a potential upside of around 22% if realised.

Morgans is estimating Flight Centre will be able to jack up its earnings significantly over the next few years, with an FY2025 earnings forecast of $295.5 million. This broker is also estimating Flight Centre will be in a position to return to paying dividends in FY2024.

All in all, most ASX brokers seem united in their love of Flight Centre shares right now. So, if these brokers are on the money, it is most certainly not too late to buy into this travel share today. But let’s wait and see what happens.

 

The post Flight Centre shares are trading around 52-week highs. Too late to buy? appeared first on The Motley Fool Australia.

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More reading

• Why I think the NAB share price is a buy right now
• 5 things to watch on the ASX 200 on Thursday
• Here are the top 10 ASX 200 shares today
• Why Appen, Bank of Queensland, Kogan, and Mayne Pharma shares are dropping
• Here are the 3 most heavily traded ASX 200 shares on Wednesday

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 has recommended Flight Centre Travel Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The National Australia Bank Ltd (ASX: NAB) share price has dropped rapidly, down around 10% since 1 May 2023. It has significantly underperformed the S&P/ASX 200 Index (ASX: XJO) which is only down by 1% over the same time period.

Part of that may be due to its shares going ex-dividend, but that wouldn’t explain the majority of the decline because the dividend would only account for a few per cent.

In my opinion, NAB is one of the best ASX bank shares and I think it looks like a good time to buy it, for reasons that I will explain below.

However, just to be clear, it’s not one of my absolute favourite ASX 200 share ideas because, in my view, the big banks collectively don’t have a huge amount of growth ahead of them compared to some of the smaller businesses.

Yet, NAB now seems to be at a very good price and it would be my pick of the domestically-focused ASX bank shares.  

Cheap valuation

As we can see on the above chart, National Bank shares are down in May and down even further from February 2023. The fall of the NAB share price means that its price/earnings (P/E) ratio is now even more appealing, in my view.

The ASX bank share recently announced its FY23 half-year result, which showed that cash earnings had jumped 17% to $4.07 billion. That’s a strong profit growth number for most ASX blue-chip shares.

It’s true that lending competition is strong and has been strong over the past few years. Yet, bank lending profitability may not be as strong as it was in the 2010s. There are many smaller lenders these days that don’t need a branch network to compete with large banks.

In the FY23 first half, business and private banking saw cash earnings grow 19.9% to $1.7 billion, while corporate and institutional banking experienced a cash earnings increase of 16.6% to $940 million.

But even if NAB’s overall profit hardly grows in the next few years, I think it’s priced cheaply. Its dividend income could continue to be resilient and the ASX bank share might be able to keep growing profit with its business lending where it has a strong market share.

The NAB share price is valued at less than 11x FY23’s estimated earnings and less than 12x FY24’s estimated earnings. Yes, there is a danger that the NAB net interest margin (NIM) could fall in the coming periods, due to competition for loans and deposits, but I’d say the bank’s current lower valuation makes up for that uncertainty.

NAB dividend

At the current NAB share price, the bank could pay a grossed-up dividend yield of 9% in FY23 and FY24, according to Commsec numbers. That suggests solid cash returns, regardless of what the NAB share price does in the short term.

Dividend growth is then expected to return in FY25.

Focused leadership

The bank is doing well under the stewardship of CEO Ross McEwan in my opinion. The growth of cash earnings in the FY23 first half was particularly impressive to me. As well, it seems prudent for the bank to focus on its business customers, rather than the intense mortgage market.

In the FY23 first-half result, McEwan said that the bank is focused on “disciplined execution” of its strategy to drive sustainable growth in earnings and shareholder returns.

A “key” part of that focus has been “staying safe and maintaining prudent balance sheet settings”, positioning the bank “well” for the risks and volatility of much higher interest rates. I think this is important – a bank needs to be resilient through all circumstances, not just the boom times. This strategy can help ensure long-term success.

It also had a group common equity tier 1 (CET1) ratio of 12.2%, well above the required amount.

Foolish takeaway

NAB’s performance is impressive and this looks like an opportune time to consider the ASX bank share. At this much lower NAB share price, the valuation and dividend look attractive. Certainly, it would be the Australian-focused bank that I’d want to buy today.

The post Why I think the NAB share price is a buy right now appeared first on The Motley Fool Australia.

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More reading

• 5 things to watch on the ASX 200 on Thursday
• Here are the top 10 ASX 200 shares today
• Why Appen, Bank of Queensland, Kogan, and Mayne Pharma shares are dropping
• Here are the 3 most heavily traded ASX 200 shares on Wednesday
• Liontown share price cracks yet another all-time high on Wednesday

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 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 Scott Phillips.

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Fortescue Metals Group Ltd (ASX: FMG) looks well-placed to make hay from the $2 billion green hydrogen program tucked into the 2023 federal budget.

Commenting on the renewables cash splash on Tuesday, Energy Minister Chris Bowen said, “Renewable hydrogen is a critical enabler for future manufacturing of green metals and other products the world needs as the transformation to net-zero by 2050 gathers pace.”

FMG founder Andrew ‘Twiggy’ Forrest has positioned Fortescue as a frontrunner in green hydrogen production via the company’s green energy branch, Fortescue Future Industries (FFI).

And he’s eager to get the ball rolling.

What is green hydrogen?

Hydrogen is the most abundant element in the universe. On Earth, you’ll find some of it in gas form, while mammoth amounts are locked up in water. Or good old H2O.

Hydrogen can be separated from that oxygen by running electricity through the water. For it to be green hydrogen that electricity needs to come from renewable sources. That’s distinct from blue hydrogen, which is created using gas.

As part of its 2030 net zero carbon plans, Fortescue aims to use green hydrogen across its mining and shipping fleets including drill rigs. The S&P/ASX 200 Index (ASX: XJO) miner also aims to produce commercially viable green iron using this hydrogen energy.

Why is Fortescue urging immediate action?

Fortescue boss Twiggy Forrest is eyeing international competition among nations to be the first to successfully, and affordably produce commercial levels of green hydrogen.

“It’s a race to win this race. I recommend that they keep it simple, and they do it immediately,” he said (courtesy of The Australian Financial Review).

Forrest continued:

Remember, I’m an industrialist. I’ve done this before. I see the potential in our country of an industry at least the size of Aramco, a multi-trillion-dollar company that underpins the entire economy of Saudi Arabia and that high standard of living which 34 million people have in their country.

We have the potential of creating an industry at least that size, and having economic growth for decades, full employment for decades. That is the power of this opportunity. The $2 billion gets that ball rolling.

Bowen also indicated that the government is aiming for quick action.

“We are not mucking around. We’ve outlined the contours and there’ll be a round of consultation with the players about the detailed design,” he said.

The green hydrogen program is intended to be established this year and will most likely reward big companies, like Fortescue.

“We envisage that this is for big projects … which means you don’t need many. You need a few big ones,” Bowen said (quoted by the AFR).

Fortescue Future Industries already has five green hydrogen projects underway in various nations.

That includes the Gibson Island project, located in Queensland, which is the closest to production.

As reported by The Australian, FFI director Guy Debelle FFI is aiming to progress Gibson Island “as soon as possible”. Fortescue expects to make a final investment decision (FID) later this year.

Asked about the $2 billion in green hydrogen funding contained in the 2023 budget, Debelle said, “Is something like this highly relevant for the economics of Gibson Island? Yeah, absolutely.”

The post ‘Do it immediately’. Why Fortescue boss Twiggy Forrest says the federal budget’s green hydrogen plans can’t wait appeared first on The Motley Fool Australia.

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More reading

• ASX hydrogen shares surge on 2023 federal budget $2b cash splash
• Fortescue share price lifts on 2023 budget’s $2 billion hydrogen program
• What’s the forecast for the Fortescue share price this month?
• 5 things to watch on the ASX 200 on Wednesday
• Fortescue’s Twiggy could wipe this ASX 300 share from the bourse. Here are the details

Motley Fool contributor Bernd Struben 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 Scott Phillips.

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The S&P/ASX 200 Index (ASX: XJO) is in the red this morning, but two stocks are bucking the trend. They’re boasting notable gains after both companies upgraded their earnings guidance.

Right now, the ASX 200 is down 0.1% at 7,248.6 points while the stocks are leaping as much as 7%.

So, without further ado, let’s dive into the updates bolstering these ASX 200 shares on Thursday.

2 ASX 200 stocks soaring on guidance upgrades

Graincorp Ltd (ASX: GNC)

Stock in ASX 200 agribusiness Graincorp is rocketing 7.04% to trade at $7.60 today.

It comes after the company increased its financial year 2023 earnings guidance on the release of its first-half results.

It’s now expected to post between $500 million and $560 million of earnings before interest, tax, depreciation, and amortisation (EBITDA) for the full year. That’s up from previous EBITDA guidance of $470 million to $530 million.

Meanwhile, its full-year net profit after tax (NPAT) is forecast to come in at $220 million to $260 million. Previously, the company expected to post $180 million to $220 million of NPAT this fiscal year.

Goodman Group (ASX: GMG)

Joining Graincorp stock in the green today is ASX 200 property group Goodman Group. Its share price is up 1.67% right now, trading at $20.12.

The market is responding positively to another guidance upgrade from the company.  It now expects to post operating earnings per security (OEPS) growth of 15% for financial year 2023.

It upgraded its OEPS growth forecast from 11% to 13.5% in February on the back of a strong first half. And that strength apparently continued in the March quarter.

CEO Greg Goodman commented on the company’s outlook:

The economic outlook remains uncertain … however, the group is in a strong position, with high occupancy, rental growth, and profitable developments largely mitigating the impact of higher capitalisation rates on valuations.

We have significant liquidity, low gearing, extensive hedging, and our partnerships remain in a strong financial position to leverage opportunities as they arise.

The post 2 ASX 200 stocks surging ahead following guidance upgrades appeared first on The Motley Fool Australia.

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More reading

• Here are the top 10 ASX 200 shares today
• Here are the top 10 ASX 200 shares today
• Brokers name 3 ASX 200 blue chip shares to buy
• Why Cleanaway, Graincorp, Healius, and PolyNovo shares are pushing higher today
• 5 things to watch on the ASX 200 on Tuesday

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 Goodman Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Core Lithium Ltd (ASX: CXO) share price is having a strong session on Thursday.

In morning trade, the lithium miner’s shares are up 5% to $1.07.

Why is the Core Lithium share price rising today?

There have been a couple of things giving the Core Lithium share price a boost this morning.

The first is news that Allkem Ltd (ASX: AKE) has agreed to merge with fellow miner Livent Corp (NYSE: LTHM) to form a $15.7 billion lithium juggernaut.

This appears to have sparked hopes that more mergers and acquisitions (M&A) activities could be in the works that unlock value in other lithium shares. Though, it is worth noting that a couple of analysts believe Core Lithium is unlikely to be a takeover or merger target on valuation grounds.

What else is happening?

Also lifting the Core Lithium share price is likely to be the release of an announcement this morning.

That announcement reveals that the company’s first spodumene concentrate shipment is underway at the Darwin Port and that the Northern Territory Government has granted the mining authorisation and approved the Mine Management Plan (MMP) for the BP33 underground project.

In respect to the former, a shipment of approximately 5,500 tonnes of on-specification 5.6% Li2O spodumene concentrate is on its way to long-term customer Sichuan Yahua. This relates to previously announced sale agreements.

As for the latter, the company notes that the Northern Territory Government granting the mining authorisation and MMP is the final step in the approvals process for BP33 ahead of a potential investment decision.

BP33, which would be the second proposed mine at the Finniss Project, is located within trucking distance of the Grants open pit, crusher and DMS plant. It currently has a mineral resource of 10.1Mt @ 1.48% Li2O.

Core Lithium Chief Executive Officer, Gareth Manderson, said:

Core Lithium would like to acknowledge the support of the Government of the Northern Territory. We have been able to commence operations at Finniss in a favourable market when it can deliver benefits for the NT and all its stakeholders due to the professional and efficient processes for approvals. The BP33 development approval is another example of this.

The first export of Finniss’ spodumene concentrate was delivered safely to port ahead of schedule. This is a significant milestone for the Core business, our shareholders and the Finniss Lithium Operation. With the resumption of full mining activities at Grants, we were also able to produce, transport and load an additional 2,000 tonnes onto the St Andrew as part of our sales agreements with Yahua. Our focus now is to safely complete commissioning of the Dense Media Separation (DMS) plant at Finniss and ramp up our integrated operation.

The post Here are 2 big reasons why the Core Lithium share price is surging today appeared first on The Motley Fool Australia.

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More reading

• Here are the top 10 ASX 200 shares today
• What’s with ASX 200 lithium stocks today?
• Here are the top 10 ASX 200 shares today  
• Here are the 3 most heavily traded ASX 200 shares on Monday
• What’s the outlook for the Core Lithium share price in May?

Motley Fool contributor James Mickleboro has positions in Allkem. 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 Scott Phillips.

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It certainly has been a great year for Iperionx Ltd (ASX: IPX) shares.

Since the start of 2023, the ASX titanium stock has rocketed 44% higher.

What is Iperionx?

IperionX’s is aiming to be the leading developer of low carbon titanium for advanced industries including space, aerospace, electric vehicles and 3D printing.

The company holds an exclusive option to acquire breakthrough titanium technologies that can produce titanium products that are low carbon and fully circular.

This includes producing titanium metal powders from titanium scrap at its operational pilot facility in Utah, United States.

In addition, it intends to scale production at a Titanium Demonstration Facility in Virginia and holds a 100% interest in the critical minerals Titan Project. The latter has the largest JORC resource of titanium, rare earth, and zircon rich mineral sands in the United States.

Clearly a lot to get excited about!

Can this ASX titanium stock keep rising?

While it is impossible to say whether this ASX titanium stock can keep rising after its heroics so far in 2023, the company’s chair, Todd Hannigan, appears to believe it can.

That’s because, according to a change of director’s interest notice, he recently picked up a total of 847,970 ordinary shares through an on-market trade. This came at a cost of $842,269, so clearly he means business.

It is worth noting that insider buying is often seen as a bullish indicator as few people know a company better than their management team or board of directors.

So, for its chair to put that amount of money into this ASX titanium stock, it would seem that he believed he was buying shares at a discount.

Time will tell if that is the case.

The post This ASX titanium stock is up 44% in 2023, and the chair just bought $800,000 worth of shares! appeared first on The Motley Fool Australia.

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More reading

• NextDC share price halted amid $618 million cap raise
• Why are Allkem shares rocketing 14% higher today?
• What might the Allkem mega merger mean for Pilbara Minerals shares?
• Why is the Westpac share price sinking today?
• Here are 2 outstanding ASX 200 growth shares brokers rate as buys

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 Scott Phillips.

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S&P/ASX 200 Index (ASX: XJO) lithium share Pilbara Minerals Ltd (ASX: PLS) is rocketing amid news peer Allkem Ltd (ASX: AKE) is to merge with Livent Corp (NYSE: LTHM), creating a $15.7 billion monolith.

Right now, stock in Pilbara Minerals is up 7.25%, trading at $4.88 a share.

At the same time, the Allkem share price is soaring 14.37% to $14.765 while Livent shares leapt 5% overnight to close at US$25.50 apiece.

No doubt, some market watchers are wondering what the merger news could mean for Pilbara Minerals.

What might Allkem’s merger mean for Pilbara Minerals shares?

Allkem has hit headlines overnight with a merger plan that would make Pilbara Minerals the second largest pure-play lithium share on the ASX.

Pilbara Minerals’ $13.6 billion market capitalisation would be dwarfed by that of the entity born from Allkem and Livent. But that’s likely the only direct implication the ASX 200 favourite might expect from the merger of its peers.

Still, the news might have left some Pilbara Minerals investors wondering if the lithium giant could kick off its own merger and acquisition (M&A) campaign.

Well, unfortunately for M&A fans, management shut down hopes of any such activity in the near future. Speaking on the release of the company’s latest quarterly report, CEO and managing director Dale Henderson said:

We’ve got a very full plate delivering on our organic growth strategy … that remains the focus and M&A is well down the list.

But that’s not to say a suitor won’t come knocking for Pilbara Minerals.

Could the ASX 200 lithium stock be a takeover target?

Morgans tipped Pilbara Minerals as a potential takeover target last month after industry giant Albemarle approached the ASX’s Liontown Resources Ltd (ASX: LTR), as my Fool colleague James reported.

Interestingly, the broker foresaw Allkem’s M&A news, saying:

We see both [Allkem] and [Pilbara Minerals] as potential targets in addition to the ongoing interest in [Liontown]. The relative attractiveness of each depends on the needs of the buyer. 

Morgans noted that Allkem was priced cheaper on some measures, but offered less spodumene.

Meanwhile, Pilbara Minerals was said to offer faster exposure to lithium, but a smaller resource base and was more expensive per tonne of lithium carbonate equivalent. Morgans continued last month:

[Pilbara Minerals’] size would restrict interest to larger mining houses, international chemicals companies, battery producers or OEMs.

The broker has an add rating and a $5 price target on Pilbara Minerals shares.

On the other hand, Goldman Sachs doesn’t expect a suitor to knock on the lithium producer’s door. The broker has a neutral rating and a $4.10 price target on Pilbara Minerals shares.

The post What might the Allkem mega merger mean for Pilbara Minerals shares? appeared first on The Motley Fool Australia.

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More reading

• Here are the 3 most heavily traded ASX 200 shares on Wednesday
• The 3 best lithium and rare earths ASX shares to buy right now
• Here are the top 10 ASX 200 shares today
• Here are the 3 most heavily traded ASX 200 shares on Tuesday
• Why Arafura Rare Earths, Imugene, Pilbara Minerals, and Worley are charging higher

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 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 Scott Phillips.

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The NextDc Ltd (ASX: NXT) share price is frozen today at $11.78 at the company’s request.

The S&P/ASX 200 Index (ASX: XJO) tech share has been a strong outperformer in 2023. As you can see in the chart below, the NextDC share price is up 31% year to date.

The NextDC share price freeze will lift on Monday after management announces the outcome of the institutional component of an accelerated entitlement offer.

What’s all that about?

Read on.

Why is the ASX 200 tech company raising $618 million?

This morning NextDC reported it will develop two new data centres as part of its regional expansion strategy.

The centres will be constructed on recently acquired commercial property sites in Kuala Lumpur, Malaysia and Auckland, New Zealand.

The new projects, alongside an accelerated fit out at its S3 centre, will be funded by a $618 million fully underwritten 1 for 8 pro-rata accelerated non-renounceable entitlement offer.

The offer prices of $10.80 per share represents a discount of just over 8% from the current NextDC share price.

This led NextDC to also update its FY23 guidance. The new forecast is for:

• Data centre services revenue in the range of $350 million to $360 million (previously the upper end of the $340 million to $355 million range)
• Underlying earnings before interest, taxes, depreciation and amortisation (EBITDA) in the range of $192 million to $196 million (previous range: $190 million to $198 million)
• Capital expenditure in the range of $670 million to $720 million (previous range: $620 million to $670 million)

Commenting on the new developments that could offer the NextDC share price some tailwinds in the year ahead, CEO Craig Scroggie said, “Building upon the success we have achieved in Australia over the past decade, we aim to replicate our proven business model in these new markets.”

Hinting at further growth plans, Scroggie added, “New Zealand and Malaysia are just the first greenfield geographic expansion opportunities outside of Australia.”

NextDC share price snapshot

The NextDC share price is up 15% over the past full year. Longer-term the ASX 200 tech share has gained 57% over five years.

The post NextDC share price halted amid $618 million cap raise appeared first on The Motley Fool Australia.

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Motley Fool contributor Bernd Struben 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 Scott Phillips.

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Allkem Ltd (ASX: AKE) shares are shooting higher on Thursday morning.

At the time of writing, the lithium miner’s shares are up 14% to $14.76.

This means the Allkem share price is now up 30% since this time last year, as you can see on the chart below.

Why is the Allkem share price shooting higher?

Investors have been scrambling to buy Allkem shares today after it announced an agreement to merge with lithium giant Livent Corp (NYSE: LTHM).

Allkem, which is no stranger to mergers, will combine with Livent in an all-stock merger of equals. This will create a US$10.6 billion (A$15.7 billion) leading global lithium chemicals producer.

And while there are still quite a few hurdles to jump through, if all goes to plan, the company expects the transaction to close by the end of 2023.

If it does, it will see “NewCo” listed on the NYSE with a secondary listing on the ASX. Allkem shareholders will own approximately 56% and Livent shareholders will own the balance.

Reaction

Wall Street responded positively overnight, driving the Livent share price over 5% higher to US$25.50.

This equates to A$36.95 at current exchange rates. So, with an agreed exchange ratio of 2.406 NewCo shares per Livent share (and Allkem shareholders getting one NewCo share per share), this values the Allkem share price at A$15.63. Which explains why Allkem shares are shooting higher today.

Investors appear excited by the prospect of the two companies joining forces for a number of reasons. This includes its proposed vertically integrated business model with the scale and expertise to meet the rapidly growing demand for lithium chemical products.

In addition, NewCo’s run-rate operating cost synergies are estimated to be approximately US$125 million (pre-tax) per annum. It also expects to realise approximately US$200 million in one-time capital expenditure savings. That’s US$325 million in value creation just there!

All in all, the way Allkem shares are performing today appears to indicate that the market agrees with the company’s CEO, Martín Pérez de Solay, when he says:

I believe Allkem shareholders will realize significant benefits from the Transaction as the business transforms into a truly global player with listings in the US and Australia.

The post Why are Allkem shares rocketing 14% higher today? appeared first on The Motley Fool Australia.

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More reading

• 5 things to watch on the ASX 200 on Thursday
• Allkem share price on watch amid $15.7b mega lithium merger with Livent
• Here are the top 10 ASX 200 shares today
• What’s with ASX 200 lithium stocks today?
• Add these ASX growth stocks to your portfolio today: analysts

Motley Fool contributor James Mickleboro has positions in Allkem. 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 Scott Phillips.

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The Westpac Banking Corp (ASX: WBC) share price is taking another tumble on Thursday morning.

At the time of writing, the banking giant’s shares are down 3.5% to $20.92.

This means the Westpac share price is now down 7% since the start of the month.

However, this decline is a bit different to the others. This decline is, in many respects, actually something positive for shareholders.

Why is the Westpac share price falling?

The weakness in the Westpac share price on Thursday is due to the bank’s shares going ex-dividend for its upcoming dividend payment.

Earlier this week, Australia’s oldest bank released its half-year results and reported a 22% increase in profit to $4 billion. This was underpinned by a combination of solid net interest income growth and lower expenses.

In response to this profit growth, the Westpac board elected to declare a 70 cents per share fully franked interim dividend. This was a sizeable 15% increase year over year, much to the delight of shareholders.

Well, at yesterday’s market close the rights to that dividend payment were locked in. This means that anyone buying Westpac shares today won’t be entitled to receive this payout. The rights will instead stay with the seller.

And given how the cash funding the dividend is part of the valuation of a company, a company’s share price will usually drop in line with the payout to reflect this. After all, new buyers don’t want to pay for something that they won’t receive.

What’s next?

Firstly, eligible shareholders can look forward to receiving this fully franked 70 cents per share dividend towards the end of next month on 27 June.

After which, if Goldman Sachs is on the money with its estimates, they can also look forward to another fully franked 70 cents per share dividend with its full-year results later this year.

This will mean a full-year dividend of $1.40 per share, which based on the Westpac share price at yesterday’s close, equates to a generous fully franked 6.45% yield.

The post Why is the Westpac share price sinking today? appeared first on The Motley Fool Australia.

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More reading

• 5 things to watch on the ASX 200 on Thursday
• Top brokers name 3 ASX shares to buy today
• Hoping to bag the boosted Westpac dividend? You’ll need to buy shares today
• The Westpac share price could offer a 20% return: Goldman Sachs
• 5 things to watch on the ASX 200 on Tuesday

Motley Fool contributor James Mickleboro has positions in Westpac Banking Corporation. 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 Westpac Banking Corporation. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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