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The Pilbara Minerals Ltd (ASX: PLS) share price is bouncing higher on Monday, up 6.28% to $2.20.

The past two weeks have proved a volatile period for the lithium sector, with most ASX-listed lithium shares experiencing a 10-20% drawdown.

That said, the Pilbara Minerals share price is still up 152% year-to-date, down from a peak year-to-date performance of 181% on 11 August.

What’s driving the Pilbara Minerals share price on Monday?

Broad based buying across the ASX lithium sector

ASX lithium shares are rallying across the board on Monday.

Established producers including Orocobre Limited (ASX: ORE), Mineral Resources Ltd (ASX: MIN) and IGO Ltd (ASX: IGO) are up 5.42%, 2.41% and 3.80% respectively.

Prospective explorers such as Liontown Resources Ltd (ASX: LTR), Lake Resources NL (ASX: LKE) and Charger Metals NL (ASX: CHR) are also catching bids, rallying a respective 5.88%, 14.55% and 5.35%.

The broad-based buying for lithium shares is likely a key driver for the rebound in Pilbara Minerals shares on Monday.

Lithium ETF rebounds last Friday

The Global X Lithium & Battery Tech Exchange Traded Fund (ETF) is another useful gauge for how the lithium market is performing. The ETF, which is listed on the US market, rallied 1.97% higher on Friday, within 2.5% of all-time highs.

The lithium ETF invests in the full lithium cycle, from mining and refining the metal, to battery production and automakers.

The ETF performance reflects a similar narrative as the Pilbara Minerals share price, bouncing off recent lows and within an arm’s reach of all-time highs.

Pilbara Minerals FY21 results

The Pilbara Minerals share price tumbled 4.11% on Thursday, 26 August after the company released its FY21 results.

The company delivered pleasing top-line growth with lithium shipments up 142% to 281,440 dry metric tonnes (dmt) driving a 108.9% revenue increase to $175.8 million.

Despite the significant operational improvement and jump in sales, Pilbara Minerals reported an FY21 net loss of $51 million.

Looking ahead, Pilbara Minerals forecasts FY22 production between 460-510,000 dmt and shipments between 440-490,000 dmt.

The company expects costs to be higher in FY22-23 due to elevated strip ratios, production ramp-up and the restart of its Ngungaju operation.

The post Why the Pilbara Minerals (ASX:PLS) share price is surging 7% today appeared first on The Motley Fool Australia.

More reading

• Why ASX lithium shares are having a bumper start to the week
• The materials sector is leading ASX 200 shares today
• When was the best ever day on the Pilbara Minerals (ASX:PLS) share price chart?
• These 3 ASX 200 shares were flying around the share market this Friday
• Brokers name 3 ASX shares to buy today

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

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The AGL Energy Limited (ASX: AGL) share price has sunk into the red during afternoon trade on Monday.

AGL shares are now changing hands at $6.55 apiece, an approximate 4% drop from the open.

Let’s investigate why the AGL share price is down today.

What’s in front of the AGL share price today?

Today’s slide in the red for the AGL share price extends the loss it has posted over the last six to eight months.

In the near term, AGL shares have faced selling pressures on the back of the energy giant’s FY21 earnings on 12 August, which came in well behind FY20 on key measures.

In its report, AGL recognised a 10% decrease in revenue from the year prior, whilst underlying profits compressed by 34% to $537 million.

Earnings per share (EPS) to shareholders fell by 32% to 86 cents, whereas the company decreased its FY21 dividend by 24% year over year to 75 cents.

In fact, AGL also opted to suspend its special dividend program, where it had originally planned to pay 25% of underlying profits over the coming two years.

AGL shares have given away 14% — or $1.05 per share — since the company reported its FY21 earnings. Consequently, today’s decline signals a new 52-week low for the company’s share price.

In addition to this, AGL also announced its plans to demerge and form two separate ASX-listed entities, Accel Energy and AGL Australia. The AGL share price immediately slumped on the news.

There is no market sensitive information for the company today. Therefore, it stands to reason that today’s dip into the red may be a continuation of a greater downward trend for the AGL Energy share price.

AGL Energy share price snapshot

The AGL Energy share price has had a rough year to date, posting a loss of 45% since January 1. This extends the loss over the previous 12 months to 56%.

Both of these results have lagged the S&P/ASX 200 index (ASX: XJO)’s climb of 25% over the past year.

The post Here’s why the AGL (ASX:AGL) share price is down today appeared first on The Motley Fool Australia.

More reading

• August hasn’t been a great month so far for the AGL (ASX:AGL) share price
• Here’s why the AGL (ASX:AGL) share price is down 6% in a week
• How does the AGL (ASX:AGL) earnings result compare to Origin?
• When was the worst-ever day on the AGL (ASX:AGL) share price chart?
• The AGL (ASX:AGL) share price is underperforming the ASX 200 in 2021

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

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The Woodside Petroleum Limited (ASX: WPL) share price has stepped into the red during afternoon trade on Monday.

Whereas the S&P/ASX 200 index (ASX: XJO) is up 0.16% from the open, Woodside shares are currently 0.89% in negative territory, trading at $20.11.

Let’s investigate further.

What’s up with the Woodside share price today?

Woodside shares are edging lower despite strengths in the oil markets on Monday. Brent crude is now priced at $72.96 per barrel at the time of writing, up 0.36% on the day.

However, WTI Crude is currently down 0.13% at $68.65 a barrel, which could help explain why the Woodside Petroleum share price is struggling today.

Irrespective of the current state of the oil markets, Woodside shares have been trending down over the last few weeks.

Back on 13 August, Woodside shares took a hit after significant backlash from climate authorities on the approval of the company’s Scarborough project in WA.

The company’s share price immediately gave away 11.7%, running from $22.19 to a low of $19.60 on 19 August. In fact, the Woodside Petroleum share price has declined by 16.5% over the last three months, as its Scarborough project continues to push through.

Woodside shares have also faced pressure after the company confirmed a merger with the petroleum arm of BHP Group Ltd (ASX: BHP) on 18 August.

Shareholders have voiced concerns over the merger, highlighting ESG risks amongst others.

As there is no market-sensitive news for the company today, it’s possible today’s dip is part of a wider downward trend for Woodside shares over the last 3 to 6 months.

The same can be said for the share prices of Woodside peers Santos Ltd (ASX: STO), down 17% over the last six months, and Oil Search Ltd (ASX: OSH) down 12% over the same time. Santos and Oil Search are locked into their own merger-saga.

Woodside share price snapshot

The Woodside share price has had a choppy year to date, posting a loss of 11% since January 1.

Despite this, Woodside shares are around 6% in the green over the past 12 months.

The results have lagged the broad index which has posted a return of about 25% over the past year.

The post Woodside (ASX:WPL) share price struggles despite rise in oil price appeared first on The Motley Fool Australia.

More reading

• ASX 200 Weekly Wrap: A mixed bag of earnings dominates ASX
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• If you invested $1,000 in Woodside (ASX:WPL) shares a decade ago, here’s what it would be worth now
• 5 things to watch on the ASX 200 on Friday
• 5 things to watch on the ASX 200 on Thursday

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

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The Moneyme Ltd (ASX: MME) share price is sinking on Monday despite a record full-year result from the Aussie fintech.

Moneyme share price fallss despite record result

Moneyme released its results for the full year ended 30 June 2021 (FY21) this morning. Some of the key takeaways from the update include:

• Record originations up 115% on the prior corresponding period (pcp) to $384 million
• Record customer receivables up 149% on pcp to $333 million
• Record revenue up 21% on pcp to $58 million
• Cash net profit after tax (NPAT) up 16% on pcp to $12 million

The strong headline growth figures weren’t enough to stop the Moneyme share price sinking lower. Shares in the Aussie consumer credit business are down more than 4% on Monday afternoon to $2.04.

What happened for Moneyme in FY21?

Today’s record result was underpinned by strong product growth and improved financing structure for the Aussie lender. Moneyme established a new major bank warehouse facility to lower funding costs by 55% on FY20 while lowering charge-offs by 25% on pcp to 5%.

The Aussie credit business launched MoneyMe+ and Autopay — two new products focused on point of sale (POS) credit and auto financing respectively.

Moneyme increased loan values for higher credit customers and further diversified its receivables base in FY21. Higher cost efficiencies and improved loan book quality also boosted the company during the year.

What did management say?

Moneyme Managing Director and CEO Clayton Howes said:

We had an outstanding year. The growth execution in the business has been extraordinary and the team delivered — a bigger business, a suite of breakthrough products opening new categories, exceptional customer experiences, big new funding structures and market beating results.

We more than doubled our customer receivables and delivered 3x the future contracted cash interest that sets FY22 up for another successful year.

What’s next for Moneyme and its share price?

Moneyme reported future contracted cash interest of $50 million for FY22, above FY20 recognised income of $48 million.

Despite bumper headline growth figures, the Moneyme share price has slid lower today. However, shares in the Aussie lender are up 39.5% year to date despite this morning’s slip, with a $346 million market capitalisation.

The post Moneyme (ASX:MME) share price sinks despite record result appeared first on The Motley Fool Australia.

More reading

• Leading brokers name 3 ASX shares to buy today
• Is the CBA (ASX:CBA) share buyback a sign of limited growth potential?
• Why ASX lithium shares are having a bumper start to the week
• Why is the Future Fund bailing out of China shares?
• Electro Optic Systems (ASX:EOS) share price falls despite revenue growth

Motley Fool contributor Ken Hall 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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With so many shares to choose from on the ASX, it can be hard to decide which ones to buy. The good news is that brokers across the country are doing a lot of the hard work for you.

Three top ASX shares leading brokers have named as buys this week are listed below. Here’s why they are bullish on them:

Jumbo Interactive Ltd (ASX: JIN)

According to a note out of Morgans, its analysts have retained their add rating and lifted their price target on this online lottery ticket seller’s shares to $17.10. This follows the release of a full year result that was in line with the broker’s expectations. Looking ahead, Morgans believes the Powered by Jumbo SaaS business is well placed for growth thanks to its significant global addressable market. The Jumbo share price is trading at $15.10 this afternoon.

NEXTDC Ltd (ASX: NXT)

A note out of Goldman Sachs reveals that its analysts have retained their conviction buy rating but trimmed their price target slightly on this data centre operator’s shares to $14.40. Although NEXTDC fell a touch short of Goldman’s revenue expectations, its earnings were slightly stronger than expected. It also notes that the company’s guidance for FY 2022 was in line with its estimates when adjusted for higher power prices. All in all, Goldman remains positive and sees strong growth ahead for NEXTDC thanks to the migration to the cloud. The NEXTDC share price is fetching $12.76 on Monday.

Qantas Airways Limited (ASX: QAN)

Analysts at Citi have retained their buy rating and lifted their price target on this airline operator’s shares to $5.93. This follows the release of the company’s full year results last week. The broker notes that Qantas’ guidance for FY 2022 implies market share gains. And while it acknowledges that there is a high level of COVID uncertainty, it highlights that Qantas is well-placed to meet pent-up demand when travel markets recover. The Qantas share price is trading at $5.02 this afternoon.

The post Leading brokers name 3 ASX shares to buy today appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro owns shares of NEXTDC 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 owns shares of and 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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Commonwealth Bank of Australia (ASX: CBA), Australia’s biggest bank, recently announced a huge share buy-back.

The big four ASX bank is going to conduct an off-market buy-back of up to $6 billion of CBA shares.

Is this decision a sign that the bank doesn’t have much growth potential right now?

What was the justification for the buy-back?

CBA Chair Catherine Livingstone said:

CBA’s strong capital position and our progress on executing our strategy mean that we are well placed to continue to support our customers and manage ongoing uncertainties, while also returning a portion of surplus capital to shareholders. After careful consideration, your board has determined that the buy-back is the most efficient and value-enhancing strategy to distribute CBA’s surplus capital and franking credits.

The CBA CEO Matt Comyn said:

The buy-back follows CBA’s continued strong operating performance and the completion of various divestments. After the buy-back, CBA will continue to have a strong surplus capital position to support our customers.

In terms of the CBA share price for the buy-back, there will be a tender process

The bank also noted the resilience of the domestic economy, its capacity to absorb potential stress events after completing the buy-back and the capital generated from strategic divestment as reasons for the buy-back.

Since the first half of FY19, CBA has generated $6.2 billion of excess capital from divestments.

This came after the bank generated $8.65 billion of cash net profit after tax (NPAT) – up 19.8% in FY21. It finished FY21 with a CET1 capital ratio of 13.1% (an increase of 150 basis points). The board grew its dividend by 52 cents to $3.50 per share.

Limited growth options for CBA?

Businesses have three main options when it comes to capital. They can use it to re-invest for growth (organic or acquisitions), improve the strength of the balance sheet (such as paying off debt) or pay shareholder returns (dividends and buybacks).

Boards need to assess what the best option to do is on behalf of shareholders.

CBA is already so large that there isn’t much that can significantly move the dial. It is already the biggest bank in Australia. In FY21 its operating income was $24.16 billion, an increase of just 1.7% on FY20. That was despite “strong” volume growth – both its home lending and household deposits increased by $31 billion, which were both 1.2x the system. Business lending growth was $11 billion, more than 3x the system.

CBA said it will continue to invest in its business to reinforce its product offering to retail and business customers, and extend its digital leadership.

The bank will continue to target a full year dividend payout ratio of 70% to 80% of cash net profit.

The Age reported that Omkar Joshi, a portfolio manager from Opal Capital Management, said the round of buy-backs from banks reflects a lack of compelling growth opportunities. He said:

It’s very much a reflection of the fact there is not much growth outside of mortgages.

But Mr Joshi went on to say that it wasn’t really a problem because institutional investors don’t expect large growth plans from the big four banks. It would be better for banks to focus on their core strengths in mortgages and business banking rather than try to pursue something like offshore banking.

The post Is the CBA (ASX:CBA) share buyback a sign of limited growth potential? appeared first on The Motley Fool Australia.

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• Australia’s rising delta recession risk could hit these ASX 200 shares badly
• ASX 200 Weekly Wrap: A mixed bag of earnings dominates ASX
• How has the Westpac (ASX:WBC) share price performed against the banking sector in August?
• Commonwealth (ASX:CBA) share price lifts despite Apple crying foul
• What’s moving the CBA (ASX:CBA) share price this week?

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 Bruce Jackson.

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ASX lithium shares are surging across the board on Monday following a sharp drawdown in recent weeks.

ASX 200 lithium heavyweights Orocobre Limited (ASX: ORE), Pilbara Minerals Ltd (ASX: PLS) and Mineral Resources Ltd (ASX: MIN) are up 4.45%, 6.28% and 3.28% respectively.

Emerging players such as Piedmont Lithium Inc (ASX: PLL) and Core Lithium Ltd (ASX: CXO) are trading a respective 7.76% and 1.56% higher.

Explorers such as Liontown Resources Ltd (ASX: LTR), Lake Resources NL (ASX: LKE) and Charger Metals NL (ASX: CHR) are also catching bids, up 4.71%, 7.27% and 5.35% respectively.

What’s driving ASX lithium shares higher?

Elevated lithium demand and spot prices

Higher lithium prices continue to support the bullish performance of ASX lithium shares.

In Orocobre’s FY21 full-year results, the company highlighted an average realised price of US$8,476/tonne for its lithium carbonate, up 45% quarter-on-quarter and 117% on the prior corresponding period (pcp).

Within the results’ presentation, Orocobre pointed to growth drivers such as the electric vehicle industry which is forecast to have a compound annual growth rate (CAGR) of 20-30% for the next decade.

Orocobre reported global electric vehicle sales of 2.65 million units in June year-to-date, up 168% on the pcp, with Europe and China leading the growth.

The company also pointed at broader themes at play such as global carbon emission targets and penalties, accommodative government regulations and subsidies, and increasing electric vehicle models by vehicle manufacturers.

A return to profitability

Higher lithium prices are helping large established producers return to profitability, with China’s Tianqi Lithium Corp, one of the world’s largest lithium producers, posting its first net profit in two years.

The lithium giant reported net income of 85.8 million yuan (~A$18.2 million) for the first half of 2021 compared to a loss of 696.6 million yuan (~A$147 million) a year earlier.

The post Why ASX lithium shares are having a bumper start to the week appeared first on The Motley Fool Australia.

More reading

• These are the 10 most shorted ASX shares
• The materials sector is leading ASX 200 shares today
• Why the Piedmont Lithium (ASX:PLL) share price is zooming 8% higher today
• When was the best ever day on the Pilbara Minerals (ASX:PLS) share price chart?
• These 3 ASX 200 shares were flying around the share market this Friday

Motley Fool contributor Kerry Sun 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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One of the ancillary trends we have seen on global share markets over 2021 so far has been a surprising exodus from China shares. China was once touted as a high growth market. A market diversified away from both ASX and US shares no less. But recent developments have not done investors any favours.

China’s all-powerful Communist Party government has spent 2021 cracking down on several industries that it feels threaten the long-term welfare of the country. Just last month, we saw billions wiped from the valuations of several Chinese companies operating in the education space.

As we reported at the time, this was due to regulatory changes that are forcing these companies to reorganise as not-for-profit entities.

China shares face government crackdowns

We also saw a recent crackdown on the Chinese ride-sharing company DiDi Global Inc (NYSE: DIDI). This may have been the primary catalyst behind the company losing around 42% of its value since its June IPO.

This follows the clamps being put on one of China’s largest companies – Alibaba Group Holding Ltd (NYSE: BABA) – last year. Alibaba was planning on spinning off its Ant Financial division at the time. But it was forced to pull the plug at the last minute after intervention from Chinese authorities.

All of these heavy-handed moves by the Chinese Communist Party have seen a plethora of investors lose faith in China shares. Not just the ones directly affected by the actions of the Chinese government either.

The BetaShares Asian Technology Tigers ETF (ASX: ASIA) is an exchange-traded fund (ETF) that holds a basket of mostly Chinese tech shares. These not only include Alibaba and DiDi. It also includes other famous China shares like Tencent Holdings Ltd (HKG: 0700), Baidu Inc (NASDAQ: BIDU) and JD.com Inc (NASDAQ: JD).

The ASIA ETF was one of the best performing ASX ETFs of 2020. But, in 2021 so far, it’s down a nasty 12.8%. It’s also down close to 30% from its February all-time high.

Future Fund pulls the plug on China

Well, now we have some confirmation that it’s not just retail investors with paper hands. According to a report in the Australian Financial Review (AFR) last week, a larger investor has taken note.

That investor is none other than Australia’s sovereign wealth fund – the Future Fund. The result? The Future Fund is bailing out of China shares.

Future Fund chair Peter Costello told the AFR that the Future Fund needs to be careful with “sovereign money” in light of “recent circumstances” with China. Here’s some of what the former Treasurer said:

China is a big part of the emerging world and ordinarily we would be taking a big position in relation to that… But given the difficulty in the relationship between Australia and China we have pulled back on allocation in China… We think it’s wise to be cautious as Australia’s sovereign [fund], when we’re making the allocations in this difficult political climate.

The AFR reports that the Future Fund had China shares Alibaba and Tencent as its sixth and seventh largest positions as of 30 June. Both positions were reportedly worth more than $1 billion together. But in light of Mr Costello’s comments, we can probably assume these positions have been at least pruned.

Mr Costello’s comments seem to put the blame for this shift in preference for China shares to the recent well-publicised diplomatic spats between Australia and China. Even so, it’s possible that the recent tectonic shifts in China’s regulatory environment may have helped to grease the wheels.

Whatever the reason, Australia’s sovereign wealth fund is a lot less invested in China shares than it was just a few months ago. Food for thought!

The post Why is the Future Fund bailing out of China shares? appeared first on The Motley Fool Australia.

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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. owns shares of and has recommended Alibaba Group Holding Ltd., Baidu, and JD.com. The Motley Fool Australia owns shares of and has recommended BetaShares Asia Technology Tigers ETF. The Motley Fool Australia has recommended JD.com. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Electro Optic Systems Holdings Ltd (ASX: EOS) share price is falling lower on Monday despite the Aussie technology company reporting a jump in half-year revenue.

Electro Optic Systems share price falls despite revenue growth

Shares in the space and defence group are falling after the group released its half-year results this morning. Some of the key takeaways include:

• Revenue up 30% on the prior corresponding period (pcp) to $97.8 million
• Underlying earnings before interest and tax (EBIT) before SpaceLink Costs and foreign exchange moves up 85% to -$2.1 million
• Statutory EBIT up 58% on pcp to -$7.6 million
• Statutory diluted earnings per share up 31% on pcp to -8.5 cents
• Operating cash flow of $4.6 million, compared to -$62.6 million outflow in 1H 2020

The EOS share price has slumped lower following this morning’s update. That’s despite the company noting COVID-19 disruptions weighing on earnings.

What did the 1H 2021 look like for EOS?

The Aussie tech group reported defence segment revenue growth of 25% during the period to $83.2 million. A major overseas contract and Commonwealth of Australia deals continue to underpin group earnings.

Electro Optic Systems’ communications (ex. SpaceLink) revenue jumped 60% to $13 million, while space segment revenue surged 126% to $1.6 million.

The defence and space technology company focused on research and development investment during the period but said monetisation and commercialisation are still a “work in progress”.

The Electro Optic Systems share price fell 18.5% from 4 January to 30 June. COVID-19 restrictions slowed customer decision making during the year, with the company in “advanced negotiations” with existing customers for more than $1 billion worth of new contracts to be awarded in the next 6 months.

What’s next for Electro Optic Systems and its share price?

Electro Optic Systems reported a $2.6 billion risk-weighted sales pipeline for its EOS Defence Systems. The order book sits at $375 million, with 30% domestic and 70% offshore. EOS expects to recognise 30% of the order book as revenue in the current period, with half in 2022 and the remainder in 2023.

The group cited increasing geopolitical tensions and a manufacturing-heavy COVID-19 recovery plan as key positives looking ahead to FY22.

The Electro Optic Systems share price is falling lower on Monday, and is now down more than 32% year to date.

The post Electro Optic Systems (ASX:EOS) share price falls despite revenue growth appeared first on The Motley Fool Australia.

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• Here’s why the Electro Optic Systems (ASX:EOS) share price is 40% lower than its 52-week high
• These are the 10 most shorted ASX shares

Motley Fool contributor Ken Hall 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 Electro Optic Systems Holdings Limited. The Motley Fool Australia owns shares of and has recommended Electro Optic Systems Holdings Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The BWX Ltd (ASX: BWX) share price is backtracking after coming out of a trading halt today.

The personal care products company provided an update to investors in regards to its capital raising efforts early this morning.

When the market opened, BWX shares rose to an intraday high of $5.56, however, those gains were quickly erased. At the time of writing, the company’s share price has rebounded to $5.12, down 3.48% on the previous close.

What did BWX announce?

A possible catalyst for investors dragging down BWX shares is an impending share dilution by the company.

In a statement to the ASX, BWX revealed it has successfully completed an $85 million (before costs) institutional placement.

This will see approximately 17.5 million new ordinary shares issued at a price of $4.85 to each participating investor. The offer represents an 8.7% discount to the last closing price of BWX’s shares on 26 August 2021.

The placement received strong interest from the company’s existing institutional shareholders, as well as other institutional investors. Demand significantly exceeded expectations of what BWX was seeking to raise under the placement.

Proceeds raised will be allocated primarily towards funding BWX’s acquisition of a 50.1% controlling interest in Go-To-Skincare. The purchase price to own a majority stake in the company is worth around $89 million.

BWX group CEO and managing director Dave Fenlon commented:

We are incredibly excited to partner with Go-To Skincare, BWX’s entry into the masstige market and the growth opportunities ahead. We are pleased with the strong institutional demand and thank investors for their support.

The new shares are expected to settle on Wednesday and be available to commence trading the following day.

About the BWX share price

Since this time last year, BWX shares are flat. However, year-to-date, they have generated returns of above 20%. The company’s share price is sitting in the upper-mid of its 52-week range of $3.60 to $5.63.

On valuation grounds, BWX presides a market capitalisation of around $699.4 million, with 141 million shares on issue.

The post BWX (ASX:BWX) share price slips 6% on placement update appeared first on The Motley Fool Australia.

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• BWX (ASX:BWX) share price halted following FY21 results and Go-To acquisition

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 shares of and has recommended BWX 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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