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The Altium Limited (ASX: ALU) share price was an extraordinarily strong performer on Monday.

The electronic design software company’s shares started the week with a 39% gain to $37.83.

However, despite this impressive gain, the Altium share price is still only trading in line with the market in 2021 with a gain of 9.6%.

Why did the Altium share price rocket higher?

Investors were bidding the Altium share price higher on Monday after it revealed that it had received a formal, non-binding, indicative and unsolicited proposal from Autodesk, Inc. (NASDAQ: ADSK).

Autodesk is a US$62 billion US-based multinational software company. It makes software products and services for the architecture, engineering, construction, manufacturing, media, education, and entertainment industries.

According to the release, Autodesk has tabled a $38.50 per share takeover proposal. This represents a 41.5% premium to its last close price at the time, but also a 4.2% discount to its 52-week high.

How did Altium respond?

The latter discount is something that didn’t go unnoticed by the Altium board, which promptly rejected the proposal on the belief that it undervalues the company.

It commented: “The Altium Board appreciates the interest expressed by Autodesk, which has evolved from a dialogue about a strategic partnership. However, it considers that the Proposal significantly undervalues Altium’s prospects and therefore rejects the Proposal at the current price.”

Though, the board has explained that it would be willing to engage with interested parties if the offer were compelling.

“Altium has a unique position in the electronics ecosystem and in the past unsolicited acquisition interest has developed from partnership dialogues with others in the ecosystem. As consistent with past unsolicited acquisition interest, the Altium Board will engage with interested parties in the context of an appropriate valuation of Altium and it will continue to review all potential strategic alternatives for the Company,” it added.

Will Autodesk return with a better offer?

According to a note out of RBC Capital Markets, its analysts aren’t expecting Autodesk to make a materially improved offer. The broker suspects a small increase could occur in the near future in order to secure further board engagement.

But time will tell if that’s what happens.

The post Why the Altium (ASX:ALU) share price rocketed 39% higher appeared first on The Motley Fool Australia.

More reading

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• ASX 200 down 0.1%: Altium rockets, NAB hit with AUSTRAC investigation
• Altium (ASX:ALU) share price shoots 40% higher on takeover approach

James Mickleboro does not own any shares mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended Altium. The Motley Fool Australia owns shares of and has recommended Altium. 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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On Monday the National Australia Bank Ltd (ASX: NAB) share price was among the worst performers on the S&P/ASX 200 Index (ASX: XJO).

The banking giant’s shares ended the day 3% lower at $26.64.

Why did the NAB share price tumble lower?

The NAB share price came under pressure on Monday after it revealed that AUSTRAC has identified serious concerns with its compliance with the Anti-Money Laundering (AML) and Counter-Terrorism Financing (CTF) Act.

According to the announcement, the regulator believes there is “potential serious and ongoing non-compliance” regarding NAB business group’s customer identification procedures and ongoing customer due diligence.

Given the penalties that AUSTRAC has previously dished out to big four rivals Commonwealth Bank of Australia (ASX: CBA) and Westpac Banking Corp (ASX: WBC), this sparked concerns that NAB will be given a hefty fine in the future.

Is this a buying opportunity?

One leading broker that sees the weakness in the NAB share price as a buying opportunity is Goldman Sachs.

This morning the broker retained its conviction buy rating and $29.97 price target on the bank’s shares.

Based on the latest NAB share price, this price target implies potential upside of 12.5% excluding dividends. Including dividends, this stretches to over 17%.

What did Goldman say?

The broker appears optimistic that things will be different compared to AUSTRAC’s dealings with CBA and Westpac.

Goldman commented: “While the risk of civil proceedings against NAB for contraventions of its AML/CTF requirements remains, and today’s announcement needs to be read in the context of CBA’s A$0.7 bn civil penalty and WBC’s A$1.3 bn civil penalty for their own specific AML/CTF breaches, we would highlight a number points.”

“The issues highlighted today by AUSTRAC in relation to customer identification procedures and ongoing customer due diligence are relatively consistent with the details disclosed by NAB in its 1H21 result contingent liabilities disclosure.”

“In relation to NAB, AUSTRAC has stated that, at this stage, it is not considering civil penalty proceedings and this is reflective of work undertaken by NAB to date. This language is quite different from the language used by AUSTRAC in its original notice of filing of civil proceedings against Westpac Banking Corporation, which cited, for example, systemic failures in its control environment and inadequate Board oversight,” it added.

The post Is the NAB (ASX:NAB) share price still a buy after its AUTRAC update? appeared first on The Motley Fool Australia.

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James Mickleboro owns Westpac shares. 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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Share investors love talking about their successes: ‘Here’s one where we multiplied our money 7 times over!’

You will always hear that wise uncle talk to you about the hot stock he made lots of money on, without mentioning the other one that crashed and burned.

But the reality is no one, even professionals, has a portfolio of 100% winners.

Either there will be some businesses that have lost them money, or there are those stocks they hesitated to buy that annoyingly shot up later.

This is why it’s interesting to see fund managers open up to talk about their regrets. 

Here are 5 ASX shares that humbled the best of the pros:

CSL Limited (ASX: CSL)

Perennial portfolio management director Stephen Bruce wonders what might have been if he bought CSL during a small window in 2002.

“It was just after they’d merged with ZLB or acquired ZLB,” he told Ask A Fund Manager. 

“It was quite a difficult period in the industry, you had [the] currency going the wrong way and a few other factors, but it was the one time that you could have bought CSL really cheaply.”

CSL shares were trading for around $10 in the middle of 2002. They closed Monday at $292.57.

“Obviously, CSL has gone on to be probably one of the best, if not the best, amongst the absolute best companies that Australia has produced,” said Bruce.

Altium Limited (ASX: ALU)

Monash Investors co-founder and director Simon Shields actually gave software maker Altium some advice back in the day… but he didn’t invest in it at the time.

He told Ask A Fund Manager that he first encountered Altium during the 1990s dot-com boom, and saw it drift sideways during the 2000s.

“I did a company visit with them and they were asking me what I thought of their business strategy. And I said, ‘Well, I think you should go to a subscription rather than just sell upfront‘,” said Shields.

“And unbeknownst to me, they did that, and then the next thing I know, the stock’s taken off and I felt like I’d missed it.”

But of course, history now shows that even investing in the 2000s still would have rewarded Shields handsomely.

“I hadn’t missed it and it kept going. So that was my big regret… I regret not making a lot of money from Altium.”

Afterpay Ltd (ASX: APT)

Medallion Financial managing director Michael Wayne actually got some clients to buy into the buy now, pay later giant on its first day on the ASX. For $1.30 per share.

So why would this be a regret?

“We got a little bit too trigger-happy and sold out too early,” he told Ask A Fund Manager.

“Ended up selling [some] at $4.50 and then at $8 the rest – so that’s obviously got on to a lot bigger and better things, but we did okay out of it.”

The Afterpay share price sat at $96.38 after Monday’s close. It has been as high as $160.05 this year.

“I think that’s par for the course [in] investing, unfortunately,” he said.

“I’m sure there are numerous names for the people that missed out on over the years, but that’s probably our biggest one that we’ve sold early.”

Spotless Group Holdings Ltd (ASX: SPO)

The facilities services provider “caught out” the Pengana Capital team, led by Rhett Kessler.

“We paid the price and ended up losing a bit of money,” he told Ask A Fund Manager.

“When I went back and did a forensic on how we did, it was all in the provisions that we should have picked up.”

Fortunately, Kessler’s team clawed back some of the losses when another ASX company showed interest in a buyout.

“They were actually bought out by Downer EDI Limited (ASX: DOW), I think… That actually gave us a great opportunity to at least lick our wounds a little bit where there was a lot of talk from M&A, and the share price ran up quite strongly on the back of that.”

Speedcast International Limited (ASX: SDA)

Speedcast was a business that had everything going for it, according to Wayne.

“This is a telecommunications company that was providing telecommunications services to those companies and those interested parties that operate in remote locations,” he said.

“So if you think about the military or you think about the cruising industry, they’re two sectors that use those services heavily. That’s a business that looked very good for a long period of time.”

But its fortunes turned when it took on debt to go on an acquisition spree.

“Those acquisitions weren’t successfully integrated. And when that occurs and you’ve run up your debt, you get yourself into a lot of trouble,” said Wayne.

“Fortunately, we managed to get the vast majority of clients out before it delisted or went belly up – but it wasn’t our proudest moment, that’s for sure.”

The post 5 ASX shares that haunt fund managers appeared first on The Motley Fool Australia.

More reading

• The tech shares to buy now (and the ones to avoid): analyst
• ASX 200 drops, Altium soars, Skycity drops, NAB falls
• Why the Afterpay (ASX:APT) share price is starting the week on a high
• Why Afterpay, Altium, Hansen, & MNF shares are racing higher
• ASX 200 down 0.1%: Altium rockets, NAB hit with AUSTRAC investigation

Tony Yoo owns shares of  AFTERPAY T FPO, Altium, and CSL Ltd. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended AFTERPAY T FPO, Altium, and CSL Ltd. The Motley Fool Australia owns shares of and has recommended AFTERPAY T FPO and Altium. 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 Carsales.Com Ltd (ASX: CAR) share price will be one to watch on Tuesday morning. This comes after the online auto listings company announced it has completed its retail entitlement offer.

At Monday’s market close, Carsales shares finished the day at $18.90.

Equity raising efforts

The Carsales share price will be in focus today after the company advised it has raised approximately $115 million (before costs) through a retail entitlement offer. The retail component, following the company’s Institutional offer, will see 1 share issued for every 6.99 existing shares owned.

Over 8,300 eligible retail shareholders participated either partially or fully in the retail entitlement offer. This represents an aggerate take-up of roughly 67% by value of applicants. As a result, about 6.8 million Carsales shares will be created and allotted to shareholder accounts this Friday 11 June.

For the remaining 3.4 million retail entitlements not taken up, the company will offer the shares in a retail shortfall bookbuild. This allows investors who missed out on the opportunity, along with ineligible retail shareholders, to participate in the offer to buy Carsales shares. The company noted that the retail shortfall bookbuild will be a variable price beginning with a floor price of $17.00 per new share.

Together with the institutional offer (raising $428 million), Carsales is expected to successfully raise a total of $600 million. The retail shortfall bookbuild will fill the remaining $57 million, bringing the entire retail entitlement offer to $172 million.

The proceeds of the equity raising will be put towards acquiring a 49% interest in Trader Interactive for $800 million.

Carsales share price summary

Established in 1997, Carsales is Australia’s largest online automotive, motorcycle and marine classifieds business. The group also operates in South Korea, and has interests in Mexico, Argentina, Chile, and Brazil.

Since this time last year, Carsales shares have lifted by more than 16%, but have fallen by about 4% in 2021. The company’s shares reached a 52-week high of $22.62 in October, before moving in peaks and troughs along the way to their current value.

On valuation grounds, Carsales ranks 99th on the ASX with a market capitalisation of roughly $5.1 billion. The company has over 271 million shares currently on its registry.

The post Why the Carsales (ASX:CAR) share price will be in the spotlight today appeared first on The Motley Fool Australia.

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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 has recommended carsales.com 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 S&P/ASX 200 Index (ASX: XJO) could be a good option to consider for dividend income over the coming years.

Businesses in the ASX 200 have the potential to be consistent dividend payers whilst also generating operating earnings growth over time.

These two ideas might be considerations:

Rural Funds Group (ASX: RFF)

This real estate investment trust (REIT) owns a portfolio of farming properties. However, it doesn’t operate the properties, it leases them to high-quality tenants like Treasury Wine Estates Ltd (ASX: TWE), Select Harvests Limited (ASX: SHV), Olam, JBS and Australian Agricultural Company Ltd (ASX: AAC).

As the tenants may suggest, its portfolio is spread across cattle, vineyards, almonds, macadamias and cropping (sugar and cotton).

One of the main aims of the REIT is to grow the distribution for shareholders by 4% each year. It achieves this with contracted rental growth as well as productivity improvements at those farms. Examples of those improvements include better water access for cattle and improved irrigation.

The ASX 200 REIT has been steadily growing its distribution for investors for a number of years.

It has provided guidance for the FY22 distribution of 11.73 cents per unit. That translates to a forward distribution yield of 4.6%.

Centuria Industrial Reit (ASX: CIP)

This REIT is the largest one that purely focuses on industrial properties on the ASX. It’s currently rated as a buy by the broker Morgan Stanley with a price target of $3.90.

The ASX 200 share says it has a portfolio of high-quality industrial assets that are situated in key metropolitan locations throughout Australia and is underpinned by a quality and diverse tenant base.

Centuria Industrial REIT is benefiting from a steady increase in the valuation of its portfolio. In the latest external valuations for its portfolio for June 2021, it said that its portfolio had increased in value to $2.9 billion. On a like for like basis, that was an increase of $285 million, up 11% from prior book values.

The two biggest changes in dollar terms were the Telstra Corporation Ltd (ASX: TLS) data centre in Clayton and the large Woolworths Group Ltd (ASX: WOW) facility in Warnervale, which went up $60 million and $38 million respectively.

This led to a pro forma net tangible asset (NTA) increase from $3.33 to $3.85 per unit.

The portfolio has an occupancy rate of 98.8% and a weighted average lease expiry (WALE) of 9.7 years and portfolio capitalisation rate of 4.53%.

Jesse Curtis, the fund manager, said:

Strong sector tailwinds continue to provide long-term benefits to industrial real estate with e-commerce and onshoring increasing demand for quality industrial accommodation. CIP is a beneficiary of the buoyant tenant market with a number of assets delivering valuation gains on the back of strategic leasing.

Morgan Stanley has projected a distribution of 17 cents per unit in FY21, equating to a yield of 4.5%.

The post 2 ASX 200 shares that could be buys for dividends 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 owns shares of and has recommended RURALFUNDS STAPLED, Telstra Corporation Limited, Treasury Wine Estates Limited, and Woolworths 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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With last year’s COVID-friendly technology shares taking an absolute beating in the last couple of months, some experts have marked this as an opportunity to buy in.

But with the dark shadow of inflation looming, which tech businesses are “safe” to return to and which ones should we avoid?

According to Montgomery Investments chief investment officer Roger Montgomery, now is the time to be very selective about where investors park their money.

“Investing in global stocks has been particularly rewarding during 2020 and the early part of 2021. The future, however, could be more challenging and more discernment will be required. This discernment will be no more necessary than required in the tech sector,” he said on the company blog.

“The next big rotation could see these over-valued – often profitless – firms dumped in favour of long-duration quality tech businesses.”

Short-term volatility is the forecast

Rising inflation changes the whole game, according to Montgomery.

While he believes the world will eventually return to the pre-COVID low inflation environment, the immediate future is not so rosy for tech.

“For the next few months there is every risk that both the leading tech companies and the profitless prosperity companies are put under some pressure,” he said.

“Any forthcoming volatility may be greater for the super long-duration tech set where price and sales multiples are off the Richter scale.”

Taking advantage of this volatility involves putting money into the right tech shares to reduce downside risk.

Tech giants’ numbers are far superior to the speculators

Montgomery thought the COVID winners still have nonsensically high valuations.

“EV [enterprise value]-to-EBITDA sits at about 2500 times for Roku Inc (NASDAQ: ROKU) and 147 times [for] Zoom Video Communications Inc (NASDAQ: ZM),” he said.

“Meanwhile Roku, Docusign Inc (NASDAQ: DOCU) and Slack Technologies Inc (NYSE: WORK) generate negative returns-on-equity.”

This is why the safe bet in a rising inflation world are the well-established giants.

“Contrast these multiples to the tech giants whose combination of growth and profitability could not have been imagined by capitalism even a decade ago,” said Montgomery.

“Facebook‘s ROE sits at 25 per cent, Apple‘s is 82 per cent and Microsoft 43 per cent.”

He added that the profitable mega-caps like that trio and Amazon.com Inc (NASDAQ: AMZN) and Alphabet Inc (NASDAQ: GOOGL) (NASDAQ: GOOG) have “incredible economics” and “scarcity” on their side.

The rotation away from momentum stocks has already well begun, even though these companies are merely seeing a slowdown in revenue growth.

“Witness, for example, the up-to-50% slides in Peloton Interactive Inc (NASDAQ: PTON) and Afterpay Ltd (ASX: APT), a decline of a third for Docusign and Zoom, along with slides in Appen Ltd (ASX: APX) (down 70%), WiseTech Global Ltd (ASC: WTC) and Xero Limited (ASX: XRO),” Montgomery said.

“We currently believe it is wise to tilt towards quality and away from momentum in the tech names.”

Montgomery’s worst fear is that inflation pokes up, and then the central banks allow it to go out of control.

“Recently, a well-connected friend told me Australia’s [Reserve] Bank believes there’s a 25% chance inflation could get away from them,” he said.

“The idea that central banks could be ‘behind-the-curve’ is one markets are most nervous about.”

The post The tech shares to buy now (and the ones to avoid): analyst appeared first on The Motley Fool Australia.

More reading

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• Why the Afterpay (ASX:APT) share price is starting the week on a high
• Why Afterpay, Altium, Hansen, & MNF shares are racing higher
• ASX 200 down 0.1%: Altium rockets, NAB hit with AUSTRAC investigation
• ASX 200 Weekly Wrap: ASX hits 7,300 points for the first time

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to its CEO, Mark Zuckerberg, 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. 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), Amazon, Appen Ltd, Apple, DocuSign, Facebook, Microsoft, Peloton Interactive, Roku, Slack Technologies, WiseTech Global, Xero, and Zoom Video Communications. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended the following options: long January 2022 $1,920 calls on Amazon, long March 2023 $120 calls on Apple, short January 2022 $1,940 calls on Amazon, and short March 2023 $130 calls on Apple. The Motley Fool Australia owns shares of and has recommended AFTERPAY T FPO, Appen Ltd, WiseTech Global, and Xero. The Motley Fool Australia has recommended Alphabet (A shares), Alphabet (C shares), Amazon, Apple, Facebook, Slack Technologies, and Zoom Video Communications. 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 post LIVE COVERAGE: ASX to open flat; NAB rated a buy appeared first on The Motley Fool Australia.

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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Kate O’Brien owns shares of Apple and Rio Tinto Ltd. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Alphabet (A shares), Alphabet (C shares), and Apple. The Motley Fool Australia has recommended Alphabet (A shares), Alphabet (C shares), and Apple. 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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Last week the Reserve Bank elected to keep rates on hold at a record low for yet another month. Unfortunately for income investors, this looks set to be the case for some time to come.

In light of this, dividend shares arguably remain the best way to generate a passive income in the current environment.

But which dividend shares should you consider buying? Two that are rated as buys are listed below, here’s what you need to know:

Jumbo Interactive (ASX: JIN)

The first ASX dividend share to look at is Jumbo Interactive. It is an online lottery ticket seller, best-known as the operator of the Oz Lotteries website.

In addition to this, the company has a software as a service (SaaS) business called Powered by Jumbo. This part of the business allows lottery operators to take their lotteries online without having to invest in a development team and build a website.

Given that management estimates that it has a US$303 billion global total addressable market, this gives this side of the business a huge runway for growth in the future.

In the meantime, analysts at Morgan Stanley expect Jumbo to pay shareholders fully franked dividends of 38.3 cents per share in FY 2021 and then 49 cents per share in FY 2022. Based on the latest Jumbo share price, this will mean yields of 2.6% and 3.4%, respectively.

Morgan Stanley has an overweight rating and $15.20 price target on its shares.

Wesfarmers Ltd (ASX: WES)

Another ASX dividend share to consider is Wesfarmers. It is the owner and operator of a diverse group of businesses across several sectors including Bunnings, Catch, Covalent Lithium, Kmart, and Officeworks.

Wesfarmers has been a positive performer this year, delivering a 16.6% increase in half year sales to $17.8 billion and a 25.5% jump in net profit to $1.4 billion. And while trading has been a bit up and down since March as the company cycles the heightened sales from a year earlier, it looks well-placed for growth once trading conditions return to normal.

In addition to this, the company has the balance sheet strength to make some sizeable earnings accretive acquisitions.

Goldman Sachs is expecting dividends of $1.88 per share in FY 2021 and $1.98 per share next year. Based on the current Wesfarmers share price, this will mean fully franked yields of 3.4% and 3.6%, respectively.

Goldman has a buy rating and $59.70 price target on the company’s shares.

The post 2 growing ASX dividend shares for income investors appeared first on The Motley Fool Australia.

More reading

• ASX 200 Weekly Wrap: ASX hits 7,300 points for the first time
• Top brokers name 3 ASX shares to sell next week
• 5 ASX shares tipped to pay higher dividends: fund manager
• Is the Wesfarmers (ASX:WES) share price in the buy zone after its update?
• 5 things to watch on the ASX 200 on Friday

James Mickleboro does not own any shares mentioned. 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 and Wesfarmers Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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On Monday the S&P/ASX 200 Index (ASX: XJO) started the week on a subdued note. The benchmark index fell 0.2% to 7,281.9 points.

Will the market be able to bounce back from this on Tuesday? Here are five things to watch:

ASX 200 futures flat

The Australian share market looks set to have another subdued day on Tuesday. According to the latest SPI futures, the ASX 200 is expected to open the day flat. This follows a mixed start to the week on Wall Street, which saw the Dow Jones fall 0.35%, the S&P 500 drop 0.1%, and the Nasdaq push 0.5% higher.

Oil prices drop

Energy producers such as Beach Energy Ltd (ASX: BPT) and Woodside Petroleum Limited (ASX: WPL) could come under pressure after oil prices dropped lower. According to Bloomberg, the WTI crude oil price is down 0.55% to US$69.23 a barrel and the Brent crude oil price has fallen 0.55% to US$71.49 a barrel. Oil prices came under pressure after Chinese data revealed weak import volumes during May.

Carsales completes retail entitlement offer

The Carsales.Com Ltd (ASX: CAR) share price will be on watch after announcing the completion of its retail entitlement offer. The auto listings company has raised gross proceeds of approximately $172 million as part of a wider $600 million fully underwritten pro-rata accelerated renounceable entitlement offer. These funds will be used to acquire a 49% interest in US-based Trader Interactive.

Gold price rises

Gold miners Evolution Mining Ltd (ASX: EVN) and Northern Star Resources Ltd (ASX: NST) could have a positive day after the gold price pushed higher overnight. According to CNBC, the spot gold price is up 0.55% to US$1,902.60 an ounce. A softening US dollar gave the precious metal a boost.

NAB rated as a buy

The National Australia Bank Ltd (ASX: NAB) share price remains in the buy zone according to analysts at Goldman Sachs. It has retained its buy rating and $29.97 price target on the bank’s shares. This follows news that AUSTRAC is investigating the bank for “potential serious and ongoing non-compliance” with customer identification procedures and ongoing customer due diligence. Goldman notes that this was previously disclosed in the bank’s contingent liabilities disclosure.

The post 5 things to watch on the ASX 200 on Tuesday appeared first on The Motley Fool Australia.

More reading

• Westpac (ASX:WBC) gives its employees paid time off to get COVID jabs
• 2 highly rated ASX dividend shares with attractive yields
• ASX 200 drops, Altium soars, Skycity drops, NAB falls
• These ASX shares just got hit with a broker downgrade today
• These 3 ASX 200 shares are on the move today

James Mickleboro does not own any shares 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 carsales.com 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 Vonex Ltd (ASX: VN8) share price went flying today. At the close of trade, shares in the telecommunications company were selling for 16 cents each – up 10.35%.

The substantial price movement comes after the company announced a new acquisition.

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

The Vonex share price is rising

In a statement to the ASX, Vonex says it has agreed with MNF Group Ltd (ASX: MNF) to purchase part of its Direct Business for $31 million.

According to Vonex, the Direct Business “sells cloud phone, internet and mobile services directly to small and medium enterprises [SMEs] and residential customers in Australia, as well as [having] a dedicated audio and video conferencing business.”

In 2020, Direct’s revenue was $15.6 million – 89% of which came from its business customers. Direct’s earnings before interest, taxes, depreciation, and amortisation was $5 million in 2020.

Vonex says the transaction will “materially” expand its presence with Australia’s SMEs and retail customers. The company claims it will acquire just over 5,200 business customers through the transaction. It also says today’s purchase will allow it to expand its presence in Melbourne.

Vonex will pay $20 million upfront to MNF while the remaining $11 million will be deferred and payable in 12 monthly instalments after completion of the deal. Vonex expects the deal to be finalised at the end of next month.

The business will enter into a new debt facility to meet the upfront payment then expects future revenue, with some debt and/or capital raising, to pay the instalments.

As well as the jump in the Vonex share price, MNF Group shares have also been buoyed by today’s news. They’ve closed the day 7.58% higher at $5.33.

Management commentary

Vonex Managing Director Matt Fahey said:

We would be delighted to welcome MNF’s Direct Business and its customers to the Vonex group. As the new ‘work from home’ paradigm has become part of life for more Australians, we have increasingly focused on providing Australian SMEs with telco services that are reliable, affordable, flexible and scalable.

Migrating and integrating the Direct Business with our own will bring us a meaningful national footprint and help us to gain the scale through which we can continue to deliver strong value to customers and investors.

MNF Group CEO Rene Sugo added:

The divestment of these direct businesses is in line with our strategy to simplify MNF’s business and drive growth in Communications Platform as a Service (CPaas) and Unified Communications as a Service (UCaaS) services. Importantly, funds from the sale will be reinvested into our growing wholesale business and our expansion offshore. Assuming all conditions are met, we expect the sale to be completed by the end of July 2021.

Vonex has been a long-term partner to MNF Group, and we have been very impressed with their technical capability and detailed migration plan. This was a significant factor in our decision to select Vonex to acquire the Direct Business.

Vonex share price snapshot

Over the past 12 months, the Vonex share price has increased by 52.4%. Since reaching its all-time high of 32.5 cents a share in February, the company’s value has fallen 50%.

Vonex has a market capitalisation of $30.9 million.

The post Why the Vonex (ASX:VN8) share price surged 10% appeared first on The Motley Fool Australia.

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The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended MNF Group Limited. The Motley Fool Australia owns shares of and has recommended MNF Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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