Tag: Motley Fool

The Novonix Ltd (ASX: NVX) share price is slightly in the red today. The battery materials and technology company today released a quarterly report.

Novonix shares are currently down 0.8% and fetching 92.75 cents. For perspective, the S&P/ASX All Technology Index (ASX: XTX) is sliding 0.32% today. The S&P/ASX 200 Materials Index (ASX: XMJ) is also down 1.32%.

Let’s take a look at what Novonix reported to the market today.

What did Novonix report?

Highlights of the unaudited quarterly report ending 31 March 2023 include:

• Battery Technology Solution revenue of US$2.57 million (A$($3.877), up 93% on previous quarter
• US $6.95 million capital expenditures on Riverside facility
• Total cash balance of US$78.7 million

Novonix makes graphite anode materials used in lithium-ion batteries for electric vehicles (EV).

During the quarter, Novonix entered a joint venture with TAQAT development company (TAQAT).

This will enable the company to produce battery materials for EV and energy storage in the Middle East North Africa Region.

Another notable highlight was being selected to receive a $150 million grant from the Biden Administration.

At this stage, the Department of Energy has issued terms of conditions to grant awardees including Novonix.

Novonix also progressed site selection process for a new facility to produce up to 75,000 tpa of high-performance battery grade synthetic graphite.

The Battery Technology Solutions (BTS) division recorded strong revenue growth amid the expansion of hardware sales and research and development service offerings.

This division, along with Emera Technologies, advanced the development of a battery storage technology project.

Management commentary

Commenting on today’s report, Novonix CEO Dr Chris Burns said:

This quarter has seen extremely promising progress on all fronts of our business. We have demonstrated our Generation 3 furnace technology performance in meeting all specification targets for our GX-23 grade of synthetic graphite product while continuing to sample different volumes of materials to various customers.

Our cathode development team has also produced cathode material from our proprietary dry process that matches the performance of a leading commercial reference material in full cell testing.

Lastly, we continue to see that the U.S. IRA legislation has focused OEMs and cell manufacturers on localized supply in North America, which is benefiting us in our discussions with potential customers.

Novonix share price snapshot

The Novonix share price has lost nearly 83% in the last year. In the last month, Novonix shares have risen nearly 3%.

Novonix has a market capitalisation of about 448 million based on the latest share price.

The post Novonix share price slips despite “extremely promising progress” appeared first on The Motley Fool Australia.

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More reading

• The Novonix share price has crashed 23% this year! Should I buy?
• Here’s why the Novonix share price crashed 19% in March
• Why is the Novonix share price diving 7% on Thursday?
• Why Deep Yellow, Frontier Digital, Magellan, and Novonix shares are dropping today
• Chair says Novonix share price ‘will respond appropriately over time’

Motley Fool contributor Monica O’Shea 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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Exchange-traded funds (ETFs) have significantly grown in popularity over the last two decades. I think there’s a very important reason why ETFs are so good.

There are many different ETFs to choose from, such as the Vanguard Australian Shares Index ETF (ASX: VAS) which is invested in the S&P/ASX 300 Index (ASX: XKO), being 300 of the largest businesses on the ASX.

Investors can also choose ones like the iShares S&P 500 ETF (ASX: IVV), Betashares Nasdaq 100 ETF (ASX: NDQ) or the Vanguard MSCI Index International Shares ETF (ASX: VGS) which help investors gain exposure to the global share market.

There are several reasons to like the ETFs that I’ve already mentioned including the diversification of the portfolios and the low management fees. But, there’s a particular reason why I think they’re effective.

Portfolio evolution

When we look at the returns of the ASX share market or the US share market, the ultra-long-term returns have been impressive – the average return per annum over the decades has been around 10%. That’s a good rate for wealth compounding.

ETFs have a very useful model where they let go of the businesses that are suffering and getting smaller, while investing more in the ones that are growing and thriving. It’s not a perfect system, but it means that they don’t hold onto duds forever until they go bust.

But, If we individually bought shares of the 50 biggest businesses in the US or Australia today and held them for thirty years, I don’t think the overall returns would be very good because many of them could decline over time.

Think about names like Blackberry, Kodak and Yahoo that have significantly fallen from their peak powers. The ETF’s portfolio (and overall share market) is regularly updated to own the current crop of winning businesses.

While index-tracking ETFs may not shoot the lights out, they do enable investors to move on from any disappointing businesses.

In 20 or 30 years, I expect the Vanguard MSCI Index International Shares ETF will still be invested in many leading global businesses, even if the portfolio’s names are very different compared to the current crop of companies.

Foolish takeaway

I believe that passive investing is a very effective way to ride the share market’s returns. Having diversification and low fees is a major selling point, but I do believe that it’s an ETF’s ability to regularly shift its portfolio that can help it continue to perform over the long term.

The post I think this underrated reason is key for why ETFs can be great investments appeared first on The Motley Fool Australia.

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More reading

• I’m a dividend investor. Should I buy the iShares S&P 500 ETF (IVV)?
• 3 reasons why the Vanguard MSCI Index International Shares ETF (VGS) could be an excellent investment for beginners
• 3 quality ASX ETFs for investors to buy for the long term
• Buy and hold these 3 ASX ETFs for a decade
• The Vanguard Australian Shares Index ETF dividend is being paid today. Here’s the lowdown

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 positions in and has recommended BetaShares Nasdaq 100 ETF and Vanguard Msci Index International Shares ETF. The Motley Fool Australia has positions in and has recommended BetaShares Nasdaq 100 ETF. The Motley Fool Australia has recommended Vanguard Msci Index International Shares ETF and iShares S&p 500 ETF. 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) bank stocks are holding their own in late morning trade on Wednesday.

Investors in the big four ASX bank shares will be keeping a close eye on the charts today following a 49.4% plunge in the First Republic Bank (NYSE: FRC) share price yesterday (overnight Aussie time).

We’ll look at the latest ructions to hit the United States’ banking sector in a tick.

First, here’s how the big four ASX 200 bank stocks are tracking at the time of writing:

• Australia and New Zealand Banking Group Ltd (ASX: ANZ) shares are up 0.04%
• National Australia Bank Ltd (ASX: NAB) shares are down 0.49%
• Westpac Banking Corp (ASX: WBC) shares are down 0.34%
• Commonwealth Bank of Australia (ASX: CBA) shares are down 0.41%

For some context, the benchmark index is down 0.09% at this same time.

The ASX 200 bank stocks look to be getting plenty of support from their very strong common equity tier 1 (CET1) ratios. This is a measurement of the core equity capital of a bank compared to its risk-weighted assets.

As The Motley Fool reported earlier in April, Australia’s big four banks are the most capitalised in the world. That should offer Aussie investors some peace of mind amid the banking turmoil hitting the US and Europe.

Now, here’s why investors were hitting the sell button on First Republic Bank.

ASX 200 bank stocks resilient amid new US bank meltdown

The First Republic Bank share price crashed overnight following the release of the bank’s first-quarter results.

As you can imagine by the sell-off, those results fell well short of expectations.

Among the big negatives, the bank reported its deposits decreased by US$105 billion over the three months.

Investors are already on edge following the collapse of Silicon Valley Bank and Signature Bank in March. That financial contagion quickly spread to Europe, resulting in the takeover of beleaguered Credit Suisse by Swiss rival UBS.

While ASX 200 bank stocks escaped the worst of that fallout, shares in the big banks did slide during March. Today, however, they’re showing resilience.

Commenting on the deposit outflows that helped send the First Republic share price into a nosedive, chief financial officer of First Republic Neal Holland said:

With the closure of several banks in March, we experienced unprecedented deposit outflows. We moved swiftly and leveraged our high-quality loan and securities portfolios to secure additional liquidity. We are working to restructure our balance sheet and reduce our expenses and short-term borrowings.

With First Republic already having received US$30 billion in emergency funding from larger banks last month, it remains to be seen how this plays out.

The post <strong>First Republic Bank shares just crashed 50%. Here’s how ASX 200 bank stocks are responding</strong> appeared first on The Motley Fool Australia.

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More reading

• Mineral Resources share price tumbles 9% despite record quarterly lithium shipments
• Own Westpac shares? What to expect from its half-year results
• 5 things to watch on the ASX 200 on Wednesday
• Analysts say income investors should buy ANZ and these ASX dividend shares
• Goldman Sachs says buy these ASX 200 shares for passive income

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 recommended Westpac Banking. 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 rose by 4.1% in early trading after the lithium miner released its Q3 FY23 activities and cash flow report this morning.

The Core Lithium share price hit a high of $1.015. It’s now settled at 99.5 cents a share, up 2.05%, at the time of writing.

Meantime the S&P/ASX All Ordinaries Index (ASX: XAO) is down 0.34%.

Let’s take a look at today’s news regarding this ASX lithium share.

Core Lithium share price gains on positive quarter

Pit and processing operations are in full swing today at Core Lithium’s flagship Finniss Lithium Operation on the Cox Peninsula in the Northern Territory.

Wet weather hampered some operations at Finniss during the quarter, including inundation at the Grants Open Pit.

The company drained the pit ahead of schedule and full mining activities have resumed. However, a portion of the previously estimated production had to be deferred to H1 FY24.

During the quarter, Core Lithium completed the construction of its Dense Media Separation (DMS) plant. It produced its first concentrate in February.

The lithium miner expects to provide formal production guidance to investors in 1Q FY24.

Core Lithium achieved its first revenue and first DSO shipment during the quarter, with a $20.1 million sale of 15,000 tonnes of spodumene concentrate to a Chinese client, Sichuan Yahua.

Last month, Core Lithium announced additional sales agreements with Yahua to supply 18,500 tonnes of spodumene concentrate.

The first parcel of 3,500 tonnes has already been delivered to the Port of Darwin.

Core Lithium has commenced production of the second parcel and expects to deliver it by the end of July.

The company finished the quarter with cash and cash equivalents of $97.8 million as of 31 March. This does not include the additional sales receipts from Yahua.

2023 drilling program twice the size of 2022

The 2022 drilling campaign was the largest in the company’s history. Core Lithium says the results “show significant potential for mine life extension at Finniss”.

To that end, the company is now working to produce an updated Ore Reserve Estimate.

On 18 April, the company announced a 62% increase to the total Finniss Mineral Resource inventory.

Core Lithium has now commenced a $25 million drilling program for 2023 — nearly double what it spent in 2022. The miner is targeting life of mine extensions and testing expansion potential.

What did management say?

CEO Gareth Manderson said:

Core is rapidly moving to lithium concentrate producer status.

Commercial agreements for first concentrate production with long term customer Sichuan Yahua assist our cash flow management.

The Core team is now focused on ramp up and establishing integrated mining and processing operations.

Core Lithium share price snapshot

The Core Lithium share price is up 27% over the past month while it is down 2% in the year to date.

It reached a 52-week high of $1.88 in November 2022.

The post Core Lithium share price pops on Q3 report appeared first on The Motley Fool Australia.

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More reading

• Why are ASX lithium shares powering higher today as the resource sector bleeds?
• These are the 10 most shorted ASX shares this week
• Should I buy the 30% dip on Core Lithium shares or have they got further to fall?
• Why did Pilbara Minerals shares charge higher today?
• Here are the top 10 ASX 200 shares today

Motley Fool contributor Bronwyn Allen has positions in Core Lithium. 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 Kogan.com Ltd (ASX: KGN) share price is racing higher following the company’s latest business update.

Shares in the online retailer are up 10% to $3.98 in Wednesday morning trade. The positive move comes amid the company’s plans to conduct a share buyback as its balance sheet returns to a healthy state.

Putting spare cash to work

The market is looking upon Kogan fondly this morning as the ship veers closer to its originally charted course. After fiercely focusing on right-sizing inventory levels and returning to underlying profitability, shareholders who have stuck it out are being rewarded.

Announced in its third-quarter update, management has made the decision to return capital via a share buyback. The decision comes as inventory levels further decrease to $78.3 million at the end of March, while net cash settled at $49.1 million.

Furthermore, the update revealed that all debt within Kogan had been repaid, with only a small advance on the books of its Mighty Ape operations.

The strong financial positioning has enabled the board to initiate an on-market share buyback program. As part of the program, up to a maximum of 10% of Kogan-issued ordinary shares can be purchased by the company.

As shown above, the planned reduction in share count follows a notable expansion during the pandemic. If the full 10% allocation were used, the company’s total shares outstanding would be roughly in line with pre-pandemic levels.

According to the release, the commencement of the buyback is set to be on 12 May and will come to an end on 10 May 2024.

What else is moving the Kogan share price?

In addition to the buyback news, the third-quarter update painted a reassuring picture for shareholders based on recent business performance.

Notably, inventories are now far below their abnormally high levels from a year ago. In stark contrast to the $193.9 million in the prior corresponding period, Kogan finished the quarter with $78.3 million worth of inventory on hand.

Another positive indicator noted in the release is continued growth in Kogan First subscribers, increasing 24.3% to 407,000.

On the flip side, gross sales declined 28% year on year to $188.7 million. The inflationary environment and rising interest rates were cited as reasons for the subdued market conditions.

Despite this, adjusted earnings before interest, taxes, depreciation, and amortisation (EBITDA) came in at $4.4 million. Though, Kogan’s statutory EBITDA remained in the negative, coming in at a $4 million loss.

The Kogan share price is still approximately 20% lower than where it was perched a year ago.

The post Kogan share price jumps 10% amid plans for share buyback cash splash appeared first on The Motley Fool Australia.

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More reading

• Kogan shares: Bull vs. bear
• Down 15% in 4 weeks: Is now the time to buy Kogan shares?
• Why Atlas Arteria, Kingsgate, Kogan, and Synlait Milk shares are dropping today

Motley Fool contributor Mitchell Lawler has positions in Kogan.com. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Kogan.com. The Motley Fool Australia has positions in and has recommended Kogan.com. 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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I think ASX-listed exchange-traded funds (ETFs) are a great vehicle for creating wealth. So, ASX ETFs could be a great way for me to invest for my child and then gift it to them in 15 years.

The wonderful thing about investing in ASX ETFs is the ability to just buy one and then not need to track, or worry about, what each individual company is doing.

But, I wouldn’t want to just invest in any ETF for my child. I’d want to choose ones that can do well and hopefully have a positive impact on the world.

These are two I’d buy.

Betashares Climate Change Innovation ETF (ASX: ERTH)

The concept of this ETF is that it invests in a portfolio of up to 100 “leading global companies that derive at least 50% of their revenues from products and services that help to address climate change and other environmental problems through the reduction or avoidance of CO2 emissions”.

It is invested in a number of areas including clean energy providers, green transportation, waste management, sustainable product development, sustainable food, water efficiency, and improved energy efficiency and storage.

BetaShares says that “demand for products and services to tackle the world’s growing climate and environment-related problems is anticipated to rise strongly over the long term”.

This investment has been certified by the Responsible Investment Association Australasia.

Some of the largest positions in the portfolio as of April 2023 include Tesla, BYD, Ecolab, Samsung, Trane Technologies, and Vestas Wind Systems.

Over the past five years, the index that this ASX ETF tracks has returned an average of 15.6% per annum. Past performance isn’t a guarantee of future results, but it shows the progress the underlying businesses are making.

BetaShares Global Sustainability Leaders ETF (ASX: ETHI)

I think this could be one of the most effective, feel-good ETFs to invest in for global diversification.

It invests in a portfolio of large global shares that have been identified as ‘climate leaders’ while excluding businesses involved in a variety of activities including fossil fuels, manufacturing weapons, gambling, habitat destruction, predatory lending, tobacco, and so on.

The ASX ETF owns a portfolio of around 200 names including Visa, Nvidia, Apple, Home Depot, Mastercard, Toyota, ASML, and Adobe.

I like that there’s more diversification across products and services offered within this ETF, and there are more holdings as well.

The portfolio has performed admirably over the longer term. In the past five years, it has delivered an average return per annum of 16.3%. Though past performance is not a reliable indicator of future returns.

Foolish takeaway

I like the global diversification offered by these two ASX ETFs, as well as the exposure to businesses trying to do the right thing. I think the two ETFs can perform well while also being positive for the world.

The post 2 ASX ETFs I’d buy for my child and gift again in 15 years appeared first on The Motley Fool Australia.

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More reading

• 2 ASX dividend shares offering exciting yields over 7%
• I think the market is wrong about this beaten-up ASX 200 share
• Mineral Resources share price tumbles 9% despite record quarterly lithium shipments
• Investing in ASX 200 mining stocks? Here’s Citi’s latest iron ore price forecast
• Want to buy ASX 200 mining shares? Goldman Sachs says these are top buys

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 positions in and has recommended ASML, Adobe, Apple, Home Depot, Mastercard, Nvidia, Tesla, and Visa. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended the following options: long January 2024 $420 calls on Adobe, long January 2025 $370 calls on Mastercard, short January 2024 $430 calls on Adobe, and short January 2025 $380 calls on Mastercard. The Motley Fool Australia has recommended ASML, Adobe, Apple, Mastercard, and Nvidia. 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 share market is a great place to find ASX dividend shares that can pay large dividend yields.

Dividends are not guaranteed. However, over a number of years, we can tell that some companies have a stronger commitment to paying dividends to shareholders than others.

I think ASX retail shares can be an effective way to get dividends because they typically have a fairly low price/earnings (P/E) ratio and can have a fairly high dividend payout ratio. This can result in a very good dividend yield.

With that in mind, I’m going to write about two ASX dividend shares that are expected to pay very large dividends over the next two dividends.

Adairs Ltd (ASX: ADH)

Adairs is a retailer of homewares and furniture through three different brands – Adairs, Mocka and Focus on Furniture.

Out of FY23 and FY24, the profit estimate for FY23 is lower, so I will use that projection from Commsec. Adairs shares are valued at just 8 times FY23’s estimated earnings and could pay an annual dividend per share of 16.8 cents. This would translate into a grossed-up dividend yield of 11%.

But, if the forecasts on Commsec turn out to be correct, the Adairs earnings and dividend could both grow by around 10% in FY24, which would mean the FY24 grossed-up dividend yield from the ASX dividend share would be 12.5%.

Assuming the Australian economy doesn’t go into a painful recession next financial year because of interest rates, Adairs could benefit from having more stores, upgrading a few locations to larger stores (which are more profitable), having more loyalty members and being more efficient with its recently-opened national distribution centre.

Nick Scali Limited (ASX: NCK)

Nick Scali is another furniture retailer with its Nick Scali and Plush-Think Sofas brands after recently acquiring it.

The business sold an elevated amount of furniture during the COVID-19 period, but it could keep paying good dividends over the next couple of years.

Commsec numbers suggest that Nick Scali could generate earnings per share (EPS) of 85.1 cents, which would put the ASX dividend share at under 12 times FY24’s estimated earnings.

The grossed-up dividend yield in FY24 would be 7.9%, while the FY23 grossed-up dividend yield is projected to be 10.5%.

Nick Scali may be able to grow its earnings in FY25 and beyond to a few different factors including a store rollout in New Zealand, growth of the Plush network in Australia, a range expansion and growth of online sales. Online sales can be very profitable for Nick Scali.

The post 2 ASX dividend shares offering exciting yields over 7% appeared first on The Motley Fool Australia.

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More reading

• 1 under-$10 ASX dividend stock to buy for monthly passive income
• I’m buying ASX 200 dividend stocks ahead of the next bull market
• I’m looking for once-in-a-decade opportunities in the stock market recovery
• 3 big dividend-paying ASX shares for 2023
• Top ASX dividend shares to buy in April 2023

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 positions in and has recommended Adairs. The Motley Fool Australia has positions in and has recommended Adairs. 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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In my opinion, the market is being harsh on the S&P/ASX 200 Index (ASX: XJO) share Metcash Ltd (ASX: MTS).

Metcash may not exactly be a household name, even though many of the businesses that it’s involved with are very recognisable.

There are three pillars to the business: food, drink and hardware.

Metcash’s food division supplies IGA and Foodland stores around the country. The liquor segment supplies a number of brands including Cellarbrations, The Bottle-O, IGA Liquor, Thirsty Camel, Big Bargain Bottleshop, Duncans and Porters Liquor.

The hardware division owns a few different brands including Home Timber & Hardware, Mitre 10, Hardings and Total Tools. It also supports independent operators under the small format convenience banners Thrifty-Link Hardware and True Value Hardware.

Is the market being harsh on the ASX 200 share?

I think we can compare the Metcash business somewhat to names like Coles Group Ltd (ASX: COL), Wesfarmers Ltd (ASX: WES) and Woolworths Group Ltd (ASX: WOW).

Over the past year, Wesfarmers shares are up 7%, Woolworths shares are up 0.33% and Coles shares are down 2%.

Yet, the Metcash share price is down 15%.

Looking at the Metcash share price, it could be considered the cheapest one. According to Commsec numbers, it’s valued at under 13 times FY23’s estimated earnings.

Let’s compare that to the valuations of its peers. Wesfarmers is priced at over 24 times FY23’s estimated earnings, Woolworths is priced at 28 times FY23’s estimated earnings and Coles is priced at under 23 times FY23’s estimated earnings.

On these numbers alone, the ASX 200 share looks significantly undervalued.

But I think there are a few key reasons why investors should back the business as an investment option.

Why Metcash shares look undervalued

The low price/earnings (P/E) ratio that I just noted also means that it has a relatively high dividend yield, helped by its dividend payout ratio of 70% of underlying net profit after tax (NPAT).

In FY23, the ASX 200 share could pay a grossed-up dividend yield of 7.9%. That’s a stronger dividend yield than what its peers may pay.

On top of that, the business reported ongoing growth in the first four weeks of FY23, which I think is impressive. Food sales had grown by 4%, hardware sales had grown by 8% and liquor sales had grown by 8.9%.

Sales growth is a very useful boost for growing earnings, plus increased scale gives it a good chance of benefiting from scale benefits.

The business is investing in a number of areas including “loyalty, digital, e-commerce, data, network optimisation and development” according to Metcash CEO Doug Jones.

Metcash has also commented that there is an increased preference by customers for local neighbourhood shopping. Jones said that shoppers are recognising “the increased competitiveness, differentiated offer and relevance” of its network of independent stores.

I think Metcash shares are significantly underrated by the market and trade at a much cheaper valuation than the supermarket giants.

The post I think the market is wrong about this beaten-up ASX 200 share appeared first on The Motley Fool Australia.

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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 positions in and has recommended Coles Group and Wesfarmers. The Motley Fool Australia has recommended Metcash. 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 Mineral Resources Ltd (ASX: MIN) share price is in the red after the iron ore and lithium producer released a seemingly positive quarterly activities report.

Stock in the S&P/ASX 200 Index (ASX: XJO) mining giant is down 9.17% at $72.99 a share in early trade on Wednesday.

Mineral Resources share price falls amid record lithium shipments

Here are the key takeaways from Mineral Resources’ report on the three months to 31 March:

• Iron ore shipments came to 4.5 wet metric tonnes last quarter – up 10% quarter-on-quarter (QoQ)
• Average realised iron ore price lifted 12% to US$109 per dry metric tonne
• Spodumene concentrate shipments reached a quarterly record of 111,000 dry metric tonnes – up 15% QoQ
• Converted 7,666 tonnes of lithium battery chemicals – flat on the prior quarter – with 5,925 tonnes sold — down 14% QoQ
• Average realised lithium battery chemicals revenue (exclusive of China VAT) was US$56,996 a tonne – down 14%  
• Production volumes at the company’s mining services leg slumped to 52 million tonnes

The company’s mining services business saw production volumes fall on the back of the completion of two external mining contracts. Equipment and people were then moved to joint venture projects, where delays in approvals dinted volumes.

But it wasn’t all bad. The company secured a new external crushing contract and two new mining contracts, and the extension of an existing hauling contract last quarter.

What else happened last quarter?

Mineral Resources also worked to restructure its MARBL joint venture and investment in lithium conversion assets in China with lithium giant Albemarle last quarter. The Australian part of the restructure is expected to complete this quarter.

The ASX 200 company also continued the expansion of the Mt Marion lithium project. The expansion is currently within budget, with completion expected to begin next month.

Finally, Mineral Resources’ off-market all-scrip takeover bid for Norwest Energy NL (ASX: NWE) gained traction last quarter. The mining giant had a 76% hold on the acquisition target as of 30 March. That’s since increased to 88%.

What’s next?

Notable guidance downgrades are likely weighing on the Mineral Resources share price today.

The company dropped its full-year outlook for its mining services production volume by as much as 12.5% to between 245 million tonnes and 255 million tonnes on the back of last quarter’s struggles.

Over at its iron ore business, full-year production is tipped to be in line with prior estimates. However, iron ore free on board (FOB) costs are now forecast to be at the upper end of previous guidance – $65 to $75 a tonne for Utah Point and $85 to $95 a tonne for Yilgarn.  

Looking to lithium, volumes at Mt Marion are expected to come in at the lower end of spodumene concentrate guidance – 160,000 to 180,000 dry metric tonnes – and lithium battery chemicals sold guidance – 19 kilotons to 21.3 kilotons. The project’s FOB cost guidance has been lifted to between $1,200 and $1,250 per tonne – up from $850 to $900 per tonne.

Mineral Resources share price snapshot

Today’s fall included, the Mineral Resources share price has fallen 0.6% so far this year. Though, it’s trading 36% higher than it was this time last year.

For comparison, the ASX 200 has risen 5% year to date and is flat year-on-year.

The post Mineral Resources share price tumbles 9% despite record quarterly lithium shipments appeared first on The Motley Fool Australia.

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Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. 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) mining stocks have enjoyed a big run higher since iron ore hit recent lows of around US$78 per tonne in early November.

The industrial metal reached 2023 highs of US$132 per tonne on 15 March as traders remained confident of an uptick in demand amid China’s ongoing pandemic reopening.

Despite a big retrace over the past month, with iron ore falling to US$120 per tonne last Wednesday and sliding to just US$102 per tonne as of this morning, big-name mining shares remain well up since early November.

Here’s how the big three iron ore giants have performed since 1 November as at Monday’s close:

• Rio Tinto Ltd (ASX: RIO) shares have gained 28%
• BHP Group Ltd (ASX: BHP) shares have gained 18%
• Fortescue Metals Group Ltd (ASX: FMG) shares have gained 41%

With that said, all three of these ASX 200 mining stocks are well into the red over the past week’s trading.

That’s because they all derive more than half of their annual revenue from iron ore.

And traders are getting more pessimistic about the outlook for demand out of China.

As for what to expect next in 2023, here’s what the analysts at Citi are forecasting.

What can ASX 200 mining stocks expect from the iron ore price in 2023?

According to Citi analyst Wenyu Yao, investors in ASX 200 mining stocks should be prepared to see the iron ore price potentially fall to US$90 per tonne in 2023 before finding support.

That’s due to lower steel production out of China’s steel mills amid narrow profit margins.

According to Yao (courtesy of The Australian):

We have been cautious on China’s steel demand and iron ore amid an uneven economic recovery and heightened policy risk, though things have unravelled sooner than our base case. We see potential risk for further downside below $100 a tonne if steel demand fails to show meaningful improvement.

Of course, the Chinese government might step in with some incentives to re-energise the markets.

Lacking that, however, Yao said, “Without meaningful stimulus, any major turnaround in steel demand from major end use sectors would likely be delayed.”

Yao added:

The shoe seemed to be finally dropped for iron ore as operating rate at blast furnaces has rolled over as well as hot metal productions.

Open interest remains elevated in iron ore, suggesting further room to go from current level.

And the lower production out of China’s steel mills is likely to take some time to have an impact. Yao expects the reduced production to offer “cost support” for iron ore at US$90 per tonne.

That further 11% slide from today’s iron ore prices could throw up some more headwinds for the ASX 200 mining stocks in 2023.

“The weak steel demand and steelmaking margins have started to negatively feed through into the iron ore market as hot metal production growth started to roll over and port inventory started to build,” Yao concluded.

“Liquidation of speculative positions may have expedited the downside move.”

How have BHP, Fortescue and Rio Tinto shares been tracking longer term?

All three of the ASX 200 mining stocks are well up over the past six months, with iron ore trading above its late October levels.

Over the past full year, BHP shares are down 3%, Rio shares have gained 4% and the Fortescue share price is up 5%.

The post Investing in ASX 200 mining stocks? Here’s Citi’s latest iron ore price forecast 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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