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ASX 200 lithium shares have rallied for a third-consecutive session this week, scoring fresh all-time highs across the board on Wednesday

The largest ASX 200 lithium player, Pilbara Minerals Ltd (ASX: PLS) has rallied almost 15% this week, adding another 3% today to $2.40.

The soon-to-be merged Galaxy Resources Limited (ASX: GXY) and Orocobre Limited (ASX: ORE) have also rallied a respective 6.23% and 5.90%.

JPMorgan upgrades its ASX 200 lithium shares

The lithium sector rallied strongly on Tuesday, many of which posted double digit percentage gains following bullish commentary from JPMorgan.

As covered by the Motley Fool, JPMorgan upgraded the five ASX 200 lithium shares under its coverage including Pilbara Minerals, Galaxy Resources, Orocobre, IGO Ltd (ASX: IGO) and Mineral Resources Limited (ASX: MIN).

All five shares were either upgraded or currently overweight rated.

The broker believes that there isn’t enough lithium product to meet demand in the medium-term.

As such, the broker upgraded its long-term lithium hydroxide price by 12% to US$14,000 a tonne.

The bullish sentiment and buying activity might have carried over into Wednesday’s session, driving further gains across the board.

More good news for the lithium industry

There seems to be no shortage of good news for ASX 200 lithium shares.

Last week, President Joe Biden signed an executive order with a non-binding target of at least half of all new vehicles sold in 2023 to be electric.

Reuters reported a positive joint statement from General Motors, Ford and Chrysler saying they aspired “to achieve sales of 40-50% of annual U.S. volumes of electric vehicles … by 2030”.

There have been some electric vehicle talks back at home, with the New South Wales transport minister, urging the Morrison government to accelerate the move to electric vehicles by using them as federal government fleets, according to The Guardian.

The post Why ASX 200 lithium shares are surging to new highs appeared first on The Motley Fool Australia.

More reading

• Which shares are the biggest movers on the ASX 300 this Wednesday?
• Mineral Resources (ASX:MIN) share price slips on FY21 earnings
• How does the Mineral Resources (ASX: MIN) share price perform during lockdowns?
• The ASX reporting wrap-up: Challenger, Megaport, James Hardie
• Here are the top 10 ASX shares 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 AMP Ltd (ASX: AMP) share price has opened quite strongly today, up 1.13% at the time of writing to $1.077 a share. That’s a little better than what the S&P/ASX 200 Index (ASX: XJO) is doing today so far. The ASX 200 is currently up 0.42% to 7,594 points.

This move comes as AMP prepares to unveil its interim FY2021 earnings report tomorrow. And since the AMP share price is today just a touch off of its all-time low of $1.04 a share, many investors will be watching with bated breath.

So with AMP’s interim results imminent, it might be a good idea to look back and see what AMP delivered in its last earnings report that we saw back in February.

What did AMP deliver back in February?

Well, in its full-year results back in February (yes, AMP’s calendar is a little backwards), AMP didn’t exactly excite investors with what it had to show. As we reported at the time, the AMP share price dived roughly 9% after these numbers came out. Here’s a summary of what the company presented ~6 months ago:

• Net cash outflows of $8.3 billion in FY20 (including $1.8 billion of early release superannuation payments)
• a 6% drop in assets under management to $255 billion
• Net profit after tax (NPAT) of $295 million, a 33% fall from the previous year’s $439 million
• No FY20 final dividend declared

The two bright spots were arguably the company’s AMP Capital and AMP Bank divisions. AMP reported that AMP Capital delivered an NPAT of $139 million for FY20. That was down from the $204 million from the previous year, but still a strong metric considering the period included the coronavirus-induced 2020 share market crash.

The company also reported that AMP Bank’s total deposits increased by $1.7 billion over the period to $16.1 billion. The Banking division brought in $119 million of NPAT, only a $22 million drop from the previous year in the face of the market crash.

What happened next?

Of course, this last earnings report from AMP ended up being a little less than well-received. As we mentioned above, the AMP share price cratered upon the release of this February report, dropping 9%. And it continued to go from bad to worse.

As of today, AMP has never reclaimed the share price levels we saw before the release of this report. Indeed, AMP shares today are down more than 30% from where they were when investors got their hands on these earnings.

This probably hasn’t been helped by AMP’s ‘white knight’ CEO Francesco de Ferrari leaving the company a month or two after this report was released.

Needless to say, AMP’s shareholders will be hoping for a very different reaction tomorrow when the company gives us another look at its books. At the current AMP share price of $1.08, the company has a market capitalisation of $3.52 billion and a price-to-earnings (P/E) ratio of 71.

The post How did the AMP share price respond last earnings season? appeared first on The Motley Fool Australia.

More reading

• ASX 200 midday update: CBA results and $6bn buyback, IAG falls
• 5 things to watch on the ASX 200 on Wednesday
• ASX 200 rises, Challenger and James Hardie up on results
• Here are the top 10 ASX shares today
• These 3 ASX 200 shares were the most traded this Tuesday

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 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 Commonwealth Bank of Australia (ASX: CBA) share price is currently up more than 1% after the bank’s FY21 result release.

There were a number of statistics that showed an improvement compared to FY20, as well as a large share buyback.

Christmas in August for CBA shareholders

The big four ASX bank announced an off-market share buyback of $6 billion. CBA said its strong capital position and progress on executing its strategy mean it’s well placed to support its customers and manage ongoing uncertainties, whilst also returning a portion of excess capital to shareholders.

CBA’s board considered a number of reasons for this buyback, such as the resilience of the domestic economy, the capacity of the bank to adequately absorb potential stress events and the strength of its balance sheet. The buyback will benefit shareholders with a lower share count, which supports return on equity, earnings per share (EPS) and the dividend per share.

On the dividend side of things, CBA also announced a bigger payout. The board decided on an annual dividend per share of $3.50 per share, representing an increase of 17% on FY20.

Regarding the dividend, the bank said that its strong capital position and disciplined execution continues to support “strong and sustainable returns” to shareholders.

It’s going to target a full year payout ratio of 70% to 80% of cash net profit. But it’s going to take into account a number of factors, including the long-term average loss rates.

Profit growth

One of the main things investors like to look at when considering the CBA share price is the profit.

CBA reported a 19.7% rise of statutory net profit after tax to $8.84 billion. Cash net profit grew 19.8% to $8.65 billion.

The bank said that net profit increased due to improved economic conditions and outlook resulting in a lower loan impairment expense (of $554 million, down 78%) and a “strong operational performance.”

However, whilst CBA’s net profit increase, the net interest margin (NIM) declined 4 basis points to 2.03%.

The bank explained that decline was due to higher liquid assets, with the impact of the low interest rate environment largely offset by actions the bank has taken, lower wholesale funding costs and a favourable funding mix.

CBA warned the NIM could fall further

The NIM is an important profitability metric for banks, which is why ASX banks tell investors what has happened with the NIM in each reporting period.

A higher NIM means the bank is making more profit on its loan book. A lower NIM means its profitability is falling.

In CBA’s result release, it said:

Looking ahead, we expect a number of headwinds to impact group NIM in the next financial year. These headwinds include: the continuing low-rate environment, price competition across both lending and deposit products, unfavourable mix impacts of customers switching to fixed rate home loans and higher rate deposits, and higher liquids.

However, CBA did say that those headwinds will be partly offset by the benefit of lower funding costs from the RBA’s term funding facility.

Time will tell how CBA and investors react to the prospect of a lower NIM in FY22.

CBA share price keeps rising

Whilst it’s up around 1% today, it has actually risen by almost 9% in the last month.

The CBA share price has risen by 24% over the last six months and in the past year it has gone up 44.6%.

Outlook

CBA CEO Matt Comyn shared his thoughts on the outlook:

Looking ahead, we anticipate ongoing economic impacts and earnings pressure from lower interest rates. We will continue to invest in the business to reinforce our product offering to our retail and business customers and extend our digital leadership. Through disciplined execution and our people’s care and commitment, we will continue to deliver for our customers, community and our shareholders as we build tomorrow’s bank today.

The post Will the CBA (ASX:CBA) share price be pressured by lower loan profitability in FY22? appeared first on The Motley Fool Australia.

More reading

• ASX 200 midday update: CBA results and $6bn buyback, IAG falls
• Commonwealth Bank (ASX:CBA) share price record high after dividend boost
• CBA (ASX:CBA) sued by whistleblowing governance manager
• CBA (ASX:CBA) share price on watch after FY21 results & $6bn buyback
• 5 things to watch on the ASX 200 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 Bruce Jackson.

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The S&P/ASX 300 Index (ASX: XKO) is surging during afternoon trade as we continue to progress through the earnings season.

At the time of writing, the ASX 300 is again moving into uncharted territory, hitting a record high of 7,600 points, up 0.58%.

Here are some of the top movers on the ASX 300 today.

Who are the biggest winners today?

Novonix Ltd (ASX: NVX)

The battery materials company’s shares are picking up where they left off yesterday, soaring another 17.77% to $4.11. This means that its shares are now up almost 50% since this time last week.

It appears investors are buoyant on the company’s prospects after yesterday’s important market announcement. Phillips 66 made a strategic investment to acquire 16% of Novonix.

Galaxy Resources Limited (ASX: GXY)

Next up is Galaxy shares, which has risen 6.23% to $5.63. The company appeared on the top movers list yesterday following renewed interest in the lithium space by investors. In addition, the spot price for the battery making ingredient has accelerated since, as a result of recent consumer restocking in China.

Orocobre Limited (ASX: ORE)

Whilst no surprise here, following suit is lithium peer, Orocobre. The company’s shares are pushing 6% higher to $9.89. It’s worth noting that JPMorgan upgraded its rating on Orocobre yesterday, lifting its 12-month price target by 30% to $10.90. Based on the current share price, this implies an upside of around 10.2%.

And the biggest losers?

Accent Group Ltd (ASX: AX1)

On the other side of the spectrum, Accent shares are tumbling 6.07% lower to $2.63 following a broker downgrade by Citigroup.

According to the update, the investment bank cut its rating to sell from a neutral stance. Furthermore, Citi reduced its price target on Accent shares by 19% to $2.50.

Megaport Ltd (ASX: MP1)

Also in decline, Megaport shares. The network as a service (NaaS) solutions company reported its full-year results yesterday, sending its shares higher.

However, investors appear to have turned the other way after JPMorgan relegated the Megaport share price to an underweight rating. The broker cut its view on the company’s shares by 3.2% to $15.

At current, Megaport shares are trading down 5.75% to $16.87.

The post Which shares are the biggest movers on the ASX 300 this Wednesday? appeared first on The Motley Fool Australia.

More reading

• The Megaport (ASX:MP1) share price slides 5% on Wednesday
• ASX 200 midday update: CBA results and $6bn buyback, IAG falls
• 2 top ASX dividend shares tipped to grow at a solid rate
• The ASX reporting wrap-up: Challenger, Megaport, James Hardie
• ASX 200 rises, Challenger and James Hardie up on results

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. owns shares of and has recommended MEGAPORT FPO. The Motley Fool Australia has recommended Accent Group and MEGAPORT FPO. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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Aussie tech-preneurs from Afterpay Ltd (ASX: APT) and Atlassian have united to lead the push for Australia to become an irresistible hub for tech startups.

And the Australian-founded companies are not alone in their ambitious goal. Joining them is an all-star alliance comprising 24 iconic technology leaders, forming the Tech Council of Australia (TCA) on Wednesday.

The news arrives a week after ASX-listed Afterpay revealed its receipt of a $39 billion takeover offer from Square.

Putting Australian tech on the map

The formation of the TCA is a big step for the Australian technology sector.

Specifically, the Council is made up of 24 tech companies, including Google, Canva, Microsoft, Afterpay, and Atlassian. Its focus is to boost the growth of Australia’s tech sector, support talent attraction and development, and work with regulators for a “tech-enabled economy”.

Among other goals, the Council is emboldened to drive the sector above one million jobs by 2025. To do this, the team of tech titans aims to make Australia an irresistible location for tech startups to find their feet and flourish.

When it comes to the board of the TCA, it is certainly an impressive lineup. The Chair overseeing it is none other than Robyn Denholm. In addition to her newfound role with the TCA, Denholm is at the helm of illustrious electric vehicle maker Tesla.

Joining Denholm is Afterpay CEO Anthony Eisen, Atlassian co-CEO Scott Farquhar, :Different co-Founder Mina Radhakrishnan, and Canva co-Founder Cliff Obrecht, among others.

Technology is integral to Australian economy

The announcement of the newly formed tech body arrives with a fresh report into the industry from Accenture.

In a tweet this morning, Atlassian co-Founder Mike Cannon-Brookes outlined a few notable findings. These included:

• Technology is currently the third highest contributor to Australia’s gross domestic product (GDP), amounting to $167 billion.
• One in 16 Aussies work in the tech sector, making it Australia’s seventh largest employer.
• Australia is third among OECD countries for businesses employing ICT specialists.

Furthermore, the report suggested that Australia is undergoing an economic shift not too dissimilar to globalisation. Putting that into context, software and app programmers are now more common than plumbers, hairdressers, or secondary school teachers.

Denholm explained that Australia is already showing signs of its potential tech prosperity, stating:

We now have many ambitious founders in Australia too, who have been very successful and, for me, that’s a really important part of creating that multiple generational industry, that you can start small and take on big audacious goals.

Afterpay as an example on the ASX

The Aussie buy now, pay later player is an iconic example of the booming technology space arising on home shores. Starting out in 2014 as an idea of co-Founders Nick Molnar and Anthony Eisen, Afterpay has gone from a small-cap to a $39 billion valuation in the space of 5 years.

In an interview with The Australian, Eisen relayed his take on the Aussie mission, stating:

It would be fair to say that a lot of people on the committee have seen first-hand what it’s like to just have exceptionally talented ­people in Australia just work their guts out to have a place in the global scale. And it’s really reflective of what Australian culture is all about. So being able to give that impetus and direction and ­momentum is entirely where everybody’s coming from. ­Because the opportunities are very significant if you can capture it and everyone can get behind it.

Finally, at the time of writing, the Afterpay share price is fetching $133.39 on the ASX, down 0.66%.

The post Afterpay (ASX: APT) and Atlassian team up in Aussie tech push appeared first on The Motley Fool Australia.

More reading

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• Afterpay and Zip were among the most traded ASX shares last week
• Why is this fund holding onto its Afterpay (ASX:APT) shares?
• Bank dividends to rise, and Climate Change in focus. Scott Phillips on Sky News First Edition
• Why we just sold all our Afterpay (ASX:APT) shares

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Teresa Kersten, an employee of LinkedIn, a Microsoft subsidiary, is a member of The Motley Fool’s board of directors. Motley Fool contributor Mitchell Lawler owns shares of AFTERPAY T FPO. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended AFTERPAY T FPO, Alphabet (A shares), Alphabet (C shares), Atlassian, Microsoft, and Tesla. The Motley Fool Australia owns shares of and has recommended AFTERPAY T FPO. The Motley Fool Australia has recommended Alphabet (A shares) and Alphabet (C shares). 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 Regional Express Holdings Ltd (ASX: REX) share price is facing turbulence following yesterday’s announcement of lower earnings and staff stand downs.

At the time of writing, shares in the regional carrier are trading for $1.18 – down 0.84%. By contrast, the S&P/ASX 200 Index (ASX: XJO) is 0.69% higher.

Let’s take a closer look at today’s news.

Rex lockdown disruption

In a statement to the ASX, Regional Express says its previously forecasted statutory loss of $15 million for the financial year will now be a larger $18 million. The company attributed the larger-than-expected loss to New South Wales’ ongoing lockdown to curb the spread of coronavirus. Rex says the impact of the lockdown and state border closures have “significantly impacted revenue”.

The company also admitted it did not take any measures to mitigate losses as it believed the Sydney lockdown would only be for a short duration. Losses in June, as the airline put it, “increased substantially”.

The Rex share price has dropped the last 2 days, more than likely due to this news.

Due to the losses, Rex will be implementing “temporary stand downs” of staff. The exact number of stand downs and in what departments will be announced either tomorrow or the day after.

Only last week Rex Deputy Chair John Sharp questioned the Qantas Airways Limited (ASX: QAN) decision to stand down its staff.

According to Sharp, it was premature of Qantas to stand down any staff before going through the details of the federal government’s scheme to retain airline staff. The Commonwealth will pay airlines that have a 30% downturn in revenue $750 per week per frontline staff member.

The details of the scheme have been announced, but Rex might not believe it is sufficient to retain its staff during this difficult period.

Rex share price snapshot

Over the past 12 months, the Rex share price has increased 13%. Over the same time, the ASX 200 has increased 23.8%.

Given its current valuation, the Regional Express market capitalisation is around $130 million.

The post Why the Regional Express (ASX:REX) share price is down appeared first on The Motley Fool Australia.

More reading

• Qantas (ASX:QAN) share price wobbles as rival questions staff layoffs
• Is this why the Qantas (ASX:QAN) share price is struggling today?

Motley Fool contributor Marc Sidarous 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 Huon Aquaculture Group Ltd (ASX: HUO) share price is struggling to take-off today.

Shares in the Tasmanian salmon producer are stuck in the red as uncertainty looms over its pending takeover.

It is understood that billionaire and chairman of Fortescue Metals Group Limited (ASX: FMG) Andrew ‘Twiggy’ Forrest has thrown his hat into the ring.  

Let’s take a look at what’s holding back the Huon share price.

Twiggy throws weight behind the Huon share price

The Huon share price saw tremendous interest on Monday.

One entity, in particular, drew the attention of pundits.

Approximately 10 million shares in Huon changed hands on Monday, with 7.8 million shares crossing at $3.85.

Many sources suggested that the buyer of Huon’s shares was Andrew Forrest’s private investment group Tattarang.

In an interview with the AFR, billionaire Andrew Forrest acknowledged that his private company was building a stake in Huon.

Prior to Monday, Tattarang was already Huon’s third biggest shareholder with a 7.33% interest.

By holding an 18.5% stake in the salmon producer, Tattarang could possibly form a blocking bid for JBS’ proposed takeover of Huon.

The iron-ore magnate cited agricultural interests behind the stake.

Mr Forrest has demanded a higher commitment to farming and environmental standards in the scheme implementation deed for the Huon deal.

The billionaire did not outwardly acknowledge whether Tattarang would block the deal if conditions were not met.

Huon has yet to release any commentary on the potential blocking bid.

More on the Huon share price

As noted previously, the Huon share price was in hot demand earlier this week.

Shares in the Tasmanian salmon producer stormed 40% higher after receiving a $546 million takeover offer from Brazilian company JBS.

The meat giant agreed to pay $3.85 per share, reflecting a 38% premium on Huon’s previous share price.

JBS also noted that it intends to include a special fully-franked dividend of 12.5 cents per share as part of the scheme implementation.

Huon’s founders, Frances and Peter Bender hold a 53% stake in the company and are expected to be in favour of the transaction.  

At the time of writing, the Huon share price is trading more than 1.5% lower for the day at $3.83.

The post Huon (ASX:HUO) share price slides as Twiggy lays down law on takeover appeared first on The Motley Fool Australia.

More reading

• Why the Tassal (ASX:TGR) share price is surging higher today
• Why the Huon (ASX:HUO) share price is rocketing 40% higher on Monday

Motley Fool contributor Nikhil Gangaram 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 Qantas Airways Limited (ASX: QAN) share price started today’s session off well amid news of another extension for its most frequent flyers’ loyalty credits.

The airline is offering its high tier frequent flyers the opportunity to retain their status with the airline until June 2022. Qantas said the extension is in response to both domestic lockdowns and Australia’s international border being closed.

Right now, the Qantas share price is $4.52, 0.2% higher than its previous close.

However, earlier this morning the airline’s shares were trading for $4.55 – a gain of 0.8%.

Let’s take a closer look at today’s good news for Qantas’ frequent flyers.

Qantas’ lifeline for loyal customers

Qantas has thrown yet another “retention lifeline” to its high tier Australian and New Zealand-based frequent flyers.

The airline’s rewards program has five tiers, ranging from bronze to platinum one.

Frequent flyers earn status credits for each time they travel on Qantas flights. Collecting certain amounts of status credits will see a traveller elevated to a higher tier. Those on higher tiers have access to a range of benefits when travelling with Qantas, including access to airport lounges, extra checked baggage allowances, and priority privileges.

However, the airline has anticipated many travellers are struggling to keep the benefits of their frequent flyer tiers due to international and domestic border restrictions.

As a result, Qantas will allow customers with soon-to-expire frequent flyer status credits to retain their current tier by travelling with the airline between now and June 2022.

Customers who take up the offer will also have any status credits earned this year rolled over to next year.

The same offer was given to Qantas’ frequent flyers in November last year.

While the news likely hasn’t boosted the Qantas share price today, it’s likely excited fans of the airline.

Management’s comments

Qantas’ loyalty CEO Olivia Wirth commented on the loyalty shown by frequent flyers during the pandemic:

Our members have remained highly engaged with the program even in the midst of a global pandemic… In fact, our data shows that 96% of Qantas customers intend to travel domestically in the next 12 months.

Qantas share price snapshot

Today’s gains aren’t enough to boost Qantas back into the green on the ASX.

Right now, the Qantas share price is 7.9% lower than it was at the start of 2021. However, it is 27% higher than it was this time last year.

The post Qantas (ASX:QAN) share price lifts amid frequent flyer update appeared first on The Motley Fool Australia.

More reading

• All eyes on Qantas (ASX:QAN) shares this reporting season
• Why is the Flight Centre (ASX:FLT) share price slipping 2% today?
• Qantas (ASX:QAN) share price wobbles as rival questions staff layoffs
• The Qantas (ASX:QAN) share price is down 4% this last week. Here’s why
• The Flight Centre (ASX:FLT) share price has been struggling. Here’s why

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 Bruce Jackson.

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The Megaport Ltd (ASX: MP1) share price has tanked 4.86% to $17.03 after dipping to an intraday low of $16.65, despite no price-sensitive announcements on Wednesday.

Shares in the network as a service (NaaS) provider have taken a turn for worse after a positive full-year results announcement on Tuesday.

Let’s take a look.

How did Megaport perform in FY21?

Megaport delivered a well-rounded result with “consistent increases in all metrics across all regions in FY21”.

Revenue was up 35% to $78.28 million, monthly recurring revenue lifting 32% to $7.5 million and customers increased 24% to 2,285.

This growth was underpinned by the continued global expansion of its data centres, lifting 11% year-on-year to 405 locations.

Encouragingly, the company revealed breakeven earnings before interest, tax, depreciation and amortisation (EBITDA) in the month of June. However, it still reported a net loss of $55 million for FY21.

The company retained a solid cash position of $136.3 million to fund its growth and development.

Megaport acquires InnovoEdge

In addition to financial results, Megaport also yesterday announced its acquisition of InnovoEdge, an “AI-powered multi-cloud and edge application orchestration company”, for US$15 million in cash and script.

Management said the acquisition would “help the company drive greater functionality” across its NaaS platform.

About the Megaport share price

The Megaport share price experienced a similar scenario after the release of its half-year results on 10 February.

Its shares opened 7.33% higher to $14.20 on the day of the results but had tumbled 24.86% to $10.67 by 29 March.

Megaport shares have rallied 20.4% year-to-date and are up 28.65% in the last 12-months.

The post The Megaport (ASX:MP1) share price slides 5% on Wednesday appeared first on The Motley Fool Australia.

More reading

• ASX 200 midday update: CBA results and $6bn buyback, IAG falls
• The ASX reporting wrap-up: Challenger, Megaport, James Hardie
• ASX 200 rises, Challenger and James Hardie up on results
• Why BlueBet, James Hardie, Megaport, & Novonix shares are racing higher
• ASX 200 midday update: James Hardie hits record high, Pilbara Minerals rockets

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. owns shares of and has recommended MEGAPORT FPO. The Motley Fool Australia has recommended MEGAPORT FPO. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Santos Ltd (ASX: STO) share price has crept into the green in early trade, despite concerns from ratings agencies on its planned merger with Oil Search Ltd (ASX: OSH.

Santos shares are now exchanging hands at $6.41, a 1.58% step into the money from the open.

What did the ratings agencies say?

Credit ratings agencies Standard & Poors (S&P) and Fitch have weighed in on the transaction, citing various risks to Santos’ credit profile.

Specifically, both refer to the risks associated with doing business in Papua New Guinea (PNG), claiming geopolitical tensions remain a concern to the economic stability of the nation.

To illustrate, S&P was quoted as saying “in our opinion, the increased earnings concentration from PNG could put downward ratings pressure on Santos”, in yesterday’s Australian Financial Review.

Moreover, both Fitch and S&P note that around 40% of the “combined company’s production will be from Papua New Guinea” through PNG LNG.

Fitch explicitly noted that “Santos will face greater country-risk exposure because Papua New Guinea’s sovereign credit profile is weaker than that of Australia”.

It also anticipates that cash generated at PNG LNG will be “used to fund operating costs and debt repayments”.

S&P noted several systemic risks that pose a threat to the merged entity’s business operations in PNG.

In addition, the merged company will have a “number of expansion projects” on its books that are “likely to pressure free cash flow” if they go ahead.

Given these risks, among others, Santos’ BBB investment-grade credit rating on its corporate debt may be in jeopardy, according to the ratings agencies.

It’s not all painted with risk

Contrasting the view both agencies hold on PNG’s geopolitical stability, each agency also believes the transaction will bring its benefits.

Fitch believes the impact is “credit neutral” for Santos’ rating and that the merger will bring “greater scale”.

Moreover, it believes the merger will “result in synergies” that would “support cash flows while investments are made”.

S&P also highlighted Santos’ history in active portfolio management and its track record of successfully integrating acquisitions in the past.

“The merged entity’s enlarged scale and free cash flow generation should support its upcoming funding plans,” S&P was quoted saying in yesterday’s AFR.

Santos share price snapshot

The Santos share price has had a choppy year to date, posting a return of just 2% since January 1. Santos shares faced headwinds over the past year as well, climbing by 9.7%.

Both of these results have lagged the S&P/ASX 200 Index (ASX: XJO)’s gain of around 25% over the last 12 months.

The post Santos (ASX:STO) share price lifts despite ratings concerns appeared first on The Motley Fool Australia.

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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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