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It has been a mixed day of trade for the travel sector on Thursday. In one corner you have the Qantas Airways Limited (ASX: QAN) share price ascending.

Whereas in the other, you have Corporate Travel Management Ltd (ASX: CTD), Flight Centre Travel Group Ltd (ASX: FLT) and Webjet Limited (ASX: WEB) shares tumbling lower.

What is happening?

Today’s movements all appear to relate to a market update out of Qantas this morning.

Positively, that update reveals that a sustained rebound in domestic travel demand is continuing to drive the airline operator’s recovery from the COVID-19 pandemic.

So much so, Qantas expects to be statutory free cash flow positive for the second half of FY 2021. Though, it is worth noting that this guidance assumes no further lockdowns or significant domestic travel restrictions.

So why are travel agents tumbling?

Given the above, you would expect all travel shares to be pushing higher today. However, a comment by Qantas in relation to its cost reductions has spooked shareholders of travel agents.

Qantas advised that it is aiming to reduce its costs of sale by lowering front-end commissions paid to travel agents on international tickets from 5% to 1%.

And while the change won’t take effect until July 2022, in order allow the industry to adapt, it will eat significantly into the margins of Flight Centre and Webjet when it does. There may also be concerns in the market that other airlines will follow Qantas’ lead and cut their own commissions to travel agents as well in the future.

At the time of writing, the Flight Centre share price is down 5.5% to $14.48 and the Webjet share price is 5% lower at $4.47. Elsewhere, the Corporate Travel Management is down 3% and the Helloworld Travel Ltd (ASX: HLO) share price has lost 6% of its value.

More reading

• ASX 200 up 0.95%: Qantas update, Nufarm’s profits surge
• Brokers name 3 ASX shares to buy now
• Is the Webjet (ASX:WEB) share price in the buy zone after its results?
• Qantas (ASX:QAN) share price takes off following market update
• 5 things to watch on the ASX 200 on Thursday

The post Why Flight Centre (ASX:FLT) and Webjet (ASX:WEB) shares are being hammered today appeared first on The Motley Fool Australia.

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Some S&P/ASX 200 Index (ASX: XJO) blue chip shares are excellent and might be worth thinking about for your portfolio.

When you can find a business that’s quite defensive during recessions, and demonstrating good growth during normal times, then that could be a really attractive long-term investment.

These two ASX 200 blue chip shares could be excellent ideas:

Xero Limited (ASX: XRO)

Xero is building a reputation as a world leader in the cloud accounting space. It has close to 3 million subscribers spread across numerous countries including New Zealand, Australia, the UK, the USA, South Africa and Singapore.

The business is heavily focused on long-term growth, rather than short-term profitability. Management believe this will drive the most value for shareholders. After a period of cautious spending during COVID-19, Xero is getting back to expectations for total operating expenses to be 80% to 85% of operating revenue in FY22.

That spending is on things like product development and marketing. The Xero product is why it has subscribers, so it should try to ensure it has the best product that keeps getting better. Marketing is what brings new subscribers. Those new subscribers are coming with a long lifetime expectation, so it adds value to the business and gives the ASX 200 share further operating leverage.

Xero has been finding bolt-on acquisitions that it expects to add value, faster, for subscribers and improve the Xero offering. Those acquisitions were Planday, Tickstar and Waddle.

Management believe that small businesses will be a major driver of economic recovery in a post-pandemic world. This is Xero’s main client base. But even during downturns, businesses need to keep doing their bookkeeping and tax returns so that the ATO knows about their profit (or less) position, wages and so on.

Bapcor Ltd (ASX: BAP)

Bapcor is Australasia’s biggest auto parts business. Not only is it the market leader in Australia and New Zealand, but it also now owns 25% of a leader in Asia. Tye Soon is a Singapore-listed auto parts business that has operations in several Asian countries.

In a normal recession, Bapcor might be able to expect elevated levels of demand due to people trying to extend the life of their vehicle if a part breaks by replacing that part, rather than buying a new vehicle.

COVID-19 has been a particularly strange recession because there has been elevated levels of second hand car sales as well as very strong retail sales at Autobarn.

Burson is really driving profit higher. It’s demonstrating all the growth you could want – same store sales increasing, more Bursons opened and profit margins increasing.

A promising area of future growth for Bapcor is that Burson is starting a network in Thailand. After that, there may be more Asian countries on the horizon for Burson to grow into.

Asia is a huge region with a very large population. Bapcor is well-placed to grow its profit domestically with an ever-expanding network as well as growing earnings from Asia. According to Commsec, the Bapcor share price is valued at 20x FY22’s estimated earnings.

More reading

• ASX 200 up 0.95%: Qantas update, Nufarm’s profits surge
• Morgans picks ASX stocks with upcoming “buy” catalysts
• 5 things to watch on the ASX 200 on Thursday
• ASX 200 sinks, EML plunges, Appen soars
• What does zero wage growth mean for the ASX 200?

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At lunch on Thursday, the S&P/ASX 200 Index (ASX: XJO) is rebounding from yesterday’s selloff. The benchmark index is currently up 0.95% to 6,998.5 points.

Here’s what is happening on the market today:

Nufarm half year results

The Nufarm Ltd (ASX: NUF) share price is pushing higher on Thursday after the release of the agricultural chemicals company’s half year results. For the six months ended 31 March, Nufarm reported revenue of $1.65 million and underlying EBITDA of $233.6 million. This represents an increase of 20% and 118%, respectively, over the prior corresponding period. However, management warned that its full year earnings would be significantly weighted to the first half.

Qantas update

The Qantas Airways Limited (ASX: QAN) share price is ascending today following the release of a market update. That update reveals that a sustained rebound in domestic travel demand, and the performance of its Freight and Loyalty divisions, is continuing to drive the company’s recovery from the COVID-19 pandemic. As a result, it expects to be statutory free cash flow positive for the second half of FY 2021.

Travel agents tumble

Also included in Qantas’ market update was the revelation that it plans to cut travel agent commissions from 5% to 1% for international flights in 2022. This hasn’t gone down well with shareholders of travel agents including Flight Centre Travel Group Ltd (ASX: FLT) and Webjet Limited (ASX: WEB). The shares of both travel companies are tumbling on the news.

Best and worst ASX 200 performers

The best performer on the ASX 200 on Thursday has been the EML Payments Ltd (ASX: EML) share price with a 13% gain. The payments company’s shares are rebounding after crashing 45% lower on Wednesday. The worst performer has been the Iluka Resources Limited (ASX: ILU) share price with a 6% decline following a bleak update on its Sierre Rutile operation.

More reading

• Brokers name 3 ASX shares to buy now
• Is the Webjet (ASX:WEB) share price in the buy zone after its results?
• The Iluka Resources (ASX:ILU) share price is falling today. Here’s why.
• Qantas (ASX:QAN) share price takes off following market update
• Nufarm (ASX:NUF) share price up 5% after doubling half year earnings

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Arguably, markets around the world are beginning to price in a higher-interest-rate environment. Unfortunately for ASX-listed growth shares, that makes high price-to-earnings (P/E) ratios a whole lot less attractive.

But many investors are still seeking alternative investments when cash is producing such dismal returns. In such times, value stocks tend to regain favourability. These are companies able to produce earnings that are also trading on reasonable multiples.

Below are 3 ASX shares that are profitable and are currently trading at below-industry-average P/E ratios.

How do these ASX shares compare to their peers?

Tribune Resources Ltd (ASX: TBR)

Tribune Resources is a small gold mining company with projects in East and West Kundana in Western Australia. It’s been a bumpy ride for shareholders over the years, and the last 12 months have been rather fruitless. Disappointingly, this ASX gold mining share has fallen by around 27% in the past year.

However, the company is profitable and generated $47.35 million in net profits after tax for the full year ending 31 December 2020. Based on Tribune’s current market capitalisation of $275 million, that puts it on a 6.1 P/E ratio.

It’s worth noting that earnings are highly dependent on the price of gold. Though, comparing Tribune’s earnings multiple to the industry average of 13.6, it appears to be trading at a discount.

Aurelia Metals Ltd (ASX: AMI)

Upping the size of the company, Aurelia Metals is a $493 million gold and base metals miner. Holding three operational gold mines across New South Wales, Aurelia has had a good run. The past year has seen the company’s share price surge by around 32%.

Despite the rally, Aurelia is still trading at a discount compared to the industry average. Delivering earnings per share (EPS) of 3.7 cents ending 31 December 2021, Aurelia is trading on an earnings multiple of 10.7.

Brickworks Limited (ASX: BKW)

Now we’re talking large caps. Brickworks is a $3.11 billion company specialising in property, investments, and building products. This company has certainly stood the test of time, dating back to 1930.

Holding a 39.4% interest in Washington H. Soul Pattinson and Co. Ltd (ASX: SOL), Brickworks extends beyond a simplistic ASX-listed brickmaker share. The diversified business pulled in $71 million in statutory profits for 1HFY21.

Based on company filings, Brickworks delivered earnings per share of $2.15 for the period ending 31 January 2021. That puts the company on an earnings multiple of 9.4 times. This represents a significant discount to the materials industry average of 22.5 times.

More reading

• Motley Fool CIO Scott Phillips looks to the week ahead on Nine News (and a stock for the bottom drawer)
• 3 reasons why the Brickworks (ASX:BKW) share price is a buy
• Forget Dogecoin! Here are 2 ASX dividend shares to buy for income today
• These ASX dividend shares keep giving investors a payrise
• Why these 5 ASX construction shares went strong today

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The Auckland International Airport Ltd (ASX: AIA) share price is on the rise today. This is despite the company announcing the departure of its chief executive.

At the time of writing, the airport operator’s shares are swapping hands for $6.91, up 1.4%.

What did AIA announce this morning?

Investors are pushing AIA shares higher today after investors appear unfazed by the news.

Mr Littlewood stated that he remained as chief executive longer than planned due to the unexpected emergence of COVID-19. In that time, he focused his efforts in seeing the company through the COVID-19 response and safe re-opening of borders.

AIA chair, Patrick Strange touched Mr Littlewood’s tenure, saying:

From his appointment as Chief Executive in 2012 up to the emergence of COVID-19 early last year, Adrian has led the organisation through a period of significant growth and development across all areas of the business while delivering strong shareholder returns.

Over the past year, Adrian has shown his considerable leadership skills through some of the most challenging times the business has ever faced. With the sudden and highly disruptive impact of COVID-19 on the company’s core business, Adrian has led a business response that has not only ensured the health, safety and wellbeing of Auckland Airport staff and travellers, but has also ensured the business is well placed for the future.

The resumption of travel to Australia and the Cook Islands has marked a progressive recovery for AIA. Future re-opening of selected international borders is being discussed with the New Zealand government.

Mr Littlewood noted that he hopes the company’s airport infrastructure development plan will continue during his time. He said:

While COVID- 19 up-ended our multi-billion-dollar airport infrastructure development, the reset of our 30-year master plan and the start on its eight anchor projects and the hundreds of enabling projects is an ambitious but important programme that has set the path for restarting as the recovery builds.

AIA will now begin a search to replace Mr Littlewood, with both internal and external candidates being considered.

About the AIA share price

Over the last 12 months, AIA shares have performed relatively well in spite of the current global economic conditions. The company’s share price has travelled north of 25% in that time frame.

On valuation grounds, AIA has a market capitalisation of roughly $10 billion, with more than 1.4 billion shares outstanding.

According to this morning’s release, AIA advised that its chief executive, Adrian Littlewood has decided to step down. This comes after spending almost 9 years in the role, which will see him retire towards the end of 2021.

More reading

• Brokers name 3 ASX shares to buy now
• Is the Webjet (ASX:WEB) share price in the buy zone after its results?
• Evolution (ASX:EVN) share price slides despite takeover update
• Brokers back these ASX tech shares amid market selloff
• Why the Core Lithium (ASX:CXO) share price is jumping 6% today

The post Why the Auckland International Airport (ASX:AIA) share price is climbing appeared first on The Motley Fool Australia.

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Australia’s top brokers have been busy adjusting their estimates and recommendations once again. This has led to the release of a number of broker notes.

Three broker buy ratings that have caught my eye are summarised below. Here’s why brokers think these ASX shares are in the buy zone:

CSL Limited (ASX: CSL)

According to a note out of Macquarie, its analysts have retained their outperform rating and lifted their price target on this biotherapeutics company’s shares to $312.00. The broker believes that CSL’s new plasma collection platform could increase yields by 10% per donation in the future. It feels this could give its gross profit a big boost if regulatory approval is granted later this year or early in 2022. The CSL share price is trading at $278.51 on Thursday.

EML Payments Ltd (ASX: EML)

Another note out of Macquarie reveals that its analysts have retained their outperform rating but slashed the price target on this payments company’s shares to $4.00. This follows news that the Central Bank of Ireland has concerns over its Prepaid Financial Services business, which could see its licence revoked. Macquarie has adjusted its valuation to account for the worst-case scenario. However, it is optimistic this will not happen. The EML Payments share price is recovering today but is still well below this price target at $3.18.

Webjet Limited (ASX: WEB)

Analysts at Credit Suisse have retained their outperform rating but trimmed their price target on this online travel agent’s shares to $5.20. This follows the release of its full year results on Wednesday. According to the note, the broker has reduced its FY 2022 estimates to reflect a delay in international travel. However, it remains positive on the future and expects Webjet’s earnings to grow strongly once the crisis passes. Particularly given pent-up demand and its stronger margins. The Webjet share price is fetching $4.51 this morning.

More reading

• Is the Webjet (ASX:WEB) share price in the buy zone after its results?
• 2 fast-growth ASX shares that are being sold off
• The 6-bagger ASX share that I now regret selling: fundie
• 5 things to watch on the ASX 200 on Thursday
• ASX 200 sinks, EML plunges, Appen soars

The post Brokers name 3 ASX shares to buy now appeared first on The Motley Fool Australia.

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The Webjet Limited (ASX: WEB) share price is trading lower on Thursday. At the time of writing, the online travel agent’s shares are down 4% to $4.52.

This means the Webjet share price is now down 29% from its 52-week high.

Is the Webjet share price in the buy zone?

According to a note out of Goldman Sachs this morning, its analysts believe the Webjet share price is in the buy zone.

Goldman has reiterated its buy rating but trimmed its price target on Webjet’s shares to $6.40 following the release of its full year results on Wednesday.

Based on the current Webjet share price, this implies potential upside of 44% over the next 12 months.

What did Goldman say?

The note reveals that Webjet fell 9.7% short of the broker’s revenue expectations during FY 2021. This was due to a weaker than expected performance from its Webbeds business.

However, thanks to lower than forecast costs, Webjet outperformed its EBITDA forecasts by 5.5% over the period.

Commenting on the result, the broker said: “We observe no key concerns in regard to the longer term strength of the business which remains a key driver of our positive thesis on Webjet. WEB reported improved revenue margins in the B2B segment vs. 1H21, alleviating concerns around structural shifts in industry margins. However, in the near term recovery has been slower than expected. We expect shorter dated travel bookings to also be a contributor to this factor. However, we make negative revisions in our short term earnings, especially in the Europe B2B business.”

Earnings estimates

Looking ahead, Goldman has revised its earnings estimates lower to reflect the slower recovery.

Instead of earnings per share of 5 cents in FY 2022, it now expects a loss of 2 cents per share. After which, it is forecasting earnings per share of 18 cents in FY 2023 and then 28 cents in FY 2024.

Based on these forecasts, the Webjet share price is trading at 25x FY 2023 earnings and 16x FY 2024 earnings. While this isn’t cheap, the broker believes it is good value given its strong long term growth potential.

More reading

• 5 things to watch on the ASX 200 on Thursday
• ASX 200 down 1.7%: Appen jumps 12%, EML Payments crashed 37%
• Webjet (ASX:WEB) share price lower after FY 2021 results
• 5 things to watch on the ASX 200 on Wednesday
• These are the 10 most shorted shares on the ASX

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The Evolution Mining Ltd (ASX: EVN) share price has slid down 1.93% to $5.09 on Thursday morning. This follows the company’s announcement on an acquisition update.

At yesterday’s market close, the Evolution share price finished the day trading at $5.19.

Evolution is an Australian mining and exploration company that owns and operates five gold and silver mines in New South Wales, Queensland and Western Australia.

Battle North acquisition complete

Evolution shares are down today after investors have reacted to the company’s latest update.

In a statement to the ASX, Evolution advised it has formally completed the acquisition of Canadian-listed Battle North Gold Corp (TSE: BNAU).

Evolution tabled an offer in the middle of March to acquire all the issued share capital of Battle North. A definitive agreement valued the outstanding shares of Battle North at a price of $2.79 (C$2.65) apiece. At the time, this equated to a cash consideration of roughly $362 million (C$343 million). However, the Australian dollar currency was hedged shortly after entering the transaction, which resulted in a saving of $9.7 million.

Battle North assets include the Bateman Gold Project, which runs adjacent to Evolution’s Red Lake Operations in Ontario, Canada. In addition, Evolution will also acquire a large gold exploration land package on the Long Canyon gold trend near the Nevada-Utah border in the United States.

Evolution took out a 5-year term loan of $440 million to fund the transaction and any other associated costs. The agreed repayment schedule will comprise a $50 million payment each year from FY22 to FY25. The full balance is expected to be finalised in FY26. The first tranche to be paid will fall in October this year for $15 million.

Evolution executive chair, Jake Klein touched on the takeover, saying:

This acquisition provides Evolution with an opportunity to expand our footprint in the region and create value by leveraging the infrastructure of the two operations.

The additional processing capacity from the new Bateman mill will also accelerate our ability to achieve our objective of producing in excess of 300,000 ounces of gold per annum from Red Lake.

Evolution share price summary

On valuation metrics, Evolution commands a market capitalisation of around $8.8 billion, with approximately 1.7 billion shares outstanding.

The Evolution share price has recently risen higher since hitting a 52-week low in March of $3.79. Year-to-date performance now stands at a gain of almost 10% for shareholders.

More reading

• 5 things to watch on the ASX 200 on Thursday
• ASX gold shares on watch as gold soars to 3-month high
• 5 things to watch on the ASX 200 on Wednesday
• 5 things to watch on the ASX 200 on Tuesday
• 3 ASX 200 gold mining shares that shone today

The post Evolution (ASX:EVN) share price slides despite takeover update appeared first on The Motley Fool Australia.

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The S&P/ASX 200 Index (ASX: XJO) has suffered multiple sharp selloffs in the last two weeks, falling some ~3% since 11 May. ASX tech shares have taken the brunt of the selling, with the S&P/ASX200 Info Tech (INDEXASX: XIJ) down to an 8-month low.

Despite the recent underperformance in ASX tech shares, brokers are bullish on these stocks to outperform. 

Which ASX tech shares?

Hansen Technologies Ltd (ASX: HSN)

Hansen is a global provider of software and services with a focus on energy, water and telecommunications industries. Its technologies help streamline and drive efficiencies in areas such as billing, data management and customer care. 

Ord Minnett believes the market underestimates the organic growth potential of Hansen Technologies. The broker believes there are a number of strong industry growth drivers, especially in the telecom sector including 5G and the Internet of Things.

The Hansen share price previously surged some 40% from $4.20 on 9 March to as high as $5.88 by 15 March. The driving catalyst behind the lift in valuation was its significant contract win with German-based Telefonica. Its shares have since drifted lower to the mid $5 level. 

Ord Minnett remains bullish on Hansen shares, retaining a buy rating and $6 target price on Wednesday. 

Elmo Software Ltd (ASX: ELO) 

Elmo’s trading update on Tuesday narrowed its annual recurring revenue guidance to $83 million – $85 million and earnings before interest, tax, depreciation and amortisation (EBITDA) to a loss between $2.5 million and $3.5 million. 

Morgan Stanley believes these figures imply a re-acceleration in organic revenue growth. The broker retained its overweight rating with a $9.70 target price on Wednesday. 

EarlyPay Ltd (ASX: EPY) 

EarlyPay is a $100 million market cap company that delivers financial management and payroll services. Its shares are up some 8% this week following a record trading update. The company reaffirmed its FY21 net profit guidance of $8.5 million and an anticipated “material increase” in FY22 earnings.

Morgans was impressed by the record invoice finance volumes delivered by the company in March, up 34% on the prior corresponding period to $199 million. The broker retained an add rating with a 54 cent target price. 

More reading

• Why Appen, ELMO, Nuix, & Paradigm shares are pushing higher
• Why the ELMO (ASX:ELO) share price will be on watch this morning
• Why the Earlypay (ASX:EPY) share price is flying 8% higher today
• What’s happening with the Bigtincan (ASX:BTH) share price?
• 3 buy rated mid cap ASX shares for the long term

The post Brokers back these ASX tech shares amid market selloff appeared first on The Motley Fool Australia.

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The Core Lithium Ltd (ASX: CXO) share price has been pushing higher on Thursday.

In morning trade, the lithium explorer’s shares jumped 6.5% to 24.5 cents.

Why is the Core Lithium share price jumping?

Investors have been buying Core Lithium’s shares on Thursday after the release of a positive announcement relating to the Finniss Lithium Project near Darwin in the Northern Territory.

According to the release, the company has defined an additional exploration target (ET) of 9.8 to 16.2 million tonnes at a grade of between 0.8 to 1.4% Li2O across seven different prospects. Management notes that the ET is supported by historical drilling, trenching, and exploration results.

However, it has warned that the potential quantity and grade of the ET is conceptual in nature. There has been insufficient exploration to estimate a mineral resource and it is uncertain if further exploration will result in the estimation of a mineral resource.

Nevertheless, Core is aiming to convert a high proportion of the ET at Finniss to mineral resources in 2021. Positively, it has received drilling approval from the state government for this area.

As a result, the company is preparing to start resource expansion drilling before the end of May. This will kick-off the most extensive exploration and resource drilling campaign in the company’s history.

Core’s Managing Director, Stephen Biggins, said: “Core has a clear pathway to achieve our goal of more than doubling resources and mine life at Finniss. Our recent acquisition deal is already bearing fruit, with wide and shallow pegmatites defined by historic drilling likely to add significant lithium tonnes to the Project in the near term.”

“Core’s exploration and resource drilling should provide a regular flow of news as we build the expansion potential and financeability of Finniss, and move into construction of Australia’s next lithium project later this year. It’s pretty simple maths to add the ET to our existing Mineral Resources to see where Core is headed, and our other well-funded exploration work ramping up at Finniss should add more tonnes on top of that,” he added.

More reading

• These could be the next up and coming ASX lithium shares
• The Core Lithium (ASX:CXO) share price jumped over 11% today
• Here’s why the Core Lithium (ASX:CXO) share price is shooting higher today

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