Tag: Motley Fool

On Wednesday the S&P/ASX 200 Index (ASX: XJO) was out of form again and recorded a sizeable decline. The benchmark index fell 0.7% to 7,044.9 points.

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

ASX 200 expected to fall

The Australian share market looks set to tumble lower again on Thursday following a selloff on Wall Street. According to the latest SPI futures, the ASX 200 is expected to open the day 33 points or 0.5% lower. In the United States, the Dow Jones fell 2%, the S&P 500 dropped 2.15%, and the Nasdaq sank 2.7%. A strong inflation reading spooked investors.

Xero full year results

All eyes will be on the Xero Limited (ASX: XRO) share price today. This morning the cloud-based business and accounting software platform provider will be releasing its full year results. According to a note out of Goldman Sachs, it is forecasting sales growth of 16% to NZ$836 million for the 12 months. Goldman expects this to be driven by a 16% increase in ANZ sales and a 17% lift in International sales. This compares to the market consensus estimate of NZ$854 million.

Oil prices rise

It could be a good day of trade for energy producers such as Oil Search Ltd (ASX: OSH) and Woodside Petroleum Limited (ASX: WPL) after oil prices strengthened. According to Bloomberg, the WTI crude oil price is up 0.85% to US$65.84 a barrel and the Brent crude oil price has risen 0.8% to US$69.09 a barrel. Oil prices rose on demand hopes.

Gold price sinks

Gold miners Evolution Mining Ltd (ASX: EVN) and Resolute Mining Limited (ASX: RSG) could come under pressure after the gold price sank lower overnight. According to CNBC, the spot gold price is down 1% to US$1,817.30 an ounce. The gold price tumbled after the US inflation rose quicker than expected.

CBA rated as a sell

The Commonwealth Bank of Australia (ASX: CBA) share price is overvalued according to analysts at Goldman Sachs. In response to its third quarter update, the broker has retained its sell rating but lifted its price target by 9% to $80.26. While Goldman acknowledges that its operating performance was strong, it doesn’t believe it justifies the valuation premium.

More reading

• ASX 200 drops again, Pushpay rises, CSR climbs
• Goldman says sell Commonwealth Bank (ASX:CBA) shares
• What do the CEOs of the Big Four banks think of the Federal Budget?
• Which ASX bank share is the cheapest after earnings?
• The ASX miners with the biggest valuation upside to record iron ore prices

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

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The S&P/ASX 200 Index (ASX: XJO) fell by another 0.7% to 7,045 points.

Here are some of the highlights from the ASX today:

CSR Limited (ASX: CSR)

The CSR share price rose by another 4% today after releasing its FY21 full year result.

It said its strong result reflected improved performance in building products and increased property contribution.

Statutory net profit after tax (NPAT) was up 17% to $146.1 million.

The building products division saw earnings before interest and tax (EBIT) grow 8% to $184.3 million. The EBIT margin grew from 10.7% to 12%. CSR reported strong cost control and operational efficiency offset the impact of a slowdown in residential construction activity which declined 4% during the year.

CSR’s property division generated $54.2 million of EBIT following the completion of the next stage of the Horsley Park industrial development.

The aluminium EBIT was $23.4 million, which was consistent with previous guidance, down from $59.6 million. This reflected a large decline in aluminium prices at the start of the financial year due to COVID-19 volatility, which was partly offset by hedging and lower input costs.

CSR declared a final dividend of 14.5 cents, compared to no dividend in the previous year. That brought the full year ordinary dividend to 23 cents, up from 10 cents in the prior year.

It also declared a special dividend of 9.5 cents per share after the settlement of the property sale at Horsley Park.

Pushpay Holdings Ltd (ASX: PPH)

The Pushpay share price went up 3% after reporting its FY21 full year result.

The electronic donation business reported a 40% increase of revenue to US$179.1 million, driven by a 39% increase in total processing volume.

Pushpay’s gross profit margin went up from 65% to 68%, whilst the earnings before interest, tax, depreciation, amortisation and foreign currency (EBITDAF) margin increased from 22% to 34%. The EBITDAF rose 133% to US$58.9 million.

Operating cashflow jumped 145% to US$57.6 million. Net profit after tax rose by 95% to US$31.2 million.

Pushpay explained that as churches begin to gradually re-open with restrictions, it has become evident across the sector that the market has undergone a transformative shift, where digital solutions play a crucial role in the future of the church.

Carsales.Com Ltd (ASX: CAR)

Carsales has entered into an agreement to buy 49% of Trader Interactive for US$624 million.

The car e-commerce business said that the acquisition represents a strategically compelling opportunity for the business to further build out its international sale and industry diversification with exposure to attractive verticals in the US.

It’s expected to be positive for earnings per share (EPS), with mid-single digit EPS accretion from year one which is expected to grow from there.

Management believe the ASX 200 share is well placed to support Trader Interactive’s growth, leveraging its technology and experience in other international markets.

Carsales has a call option to acquire the remaining interest of Trader Interactive.

The acquisition will be funded by a combination of equity and debt, with a roughly $600 million capital raising.

More reading

• Why Afterpay, CSR, Electro Optic Systems, & Estia Health are storming higher
• The ASX miners with the biggest valuation upside to record iron ore prices
• ASX 200 down 1%: CBA Q3 update, tech shares rise, Qantas update
• CSR (ASX:CSR) share price lifts to all-time high on full-year results
• Carsales (ASX:CAR) share price halted to raise funds for major US acquisition

Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of PUSHPAY FPO NZX. The Motley Fool Australia has recommended carsales.com Limited and PUSHPAY FPO NZX. 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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Are you wanting to build your wealth over the long term? Then you’ll no doubt be on the lookout for some quality buy and hold options.

If that is the case, then you might want to look at the ASX shares listed below. Here’s why they could be excellent buy and hold investments:

Domino’s Pizza Enterprises Ltd (ASX: DMP)

The first buy and hold option to look at is Domino’s.

It has been a very strong performer in FY 2021 thanks to insatiable demand for its pizzas in the ANZ, European, and Japanese markets. For example, during the first half, Domino’s reported a 16.5% increase in total global food sales to $1.84 billion and a 32.8% jump in net profit to $96.2 million.

The good news is that management is expecting more of the same in the second half, which is likely to underpin a bumper full year result in August.

But if you thought that’s where its growth will stop, you would be wrong. Despite the size of its network increasing to 2,800 stores at the end of December, management still believes it can double it over the next decade. And that’s just from its existing markets, it could expand into new territories in the future to give it an even larger growth runway.

Analysts at Morgans are very positive on the company’s future. As a result, the broker recently put an add rating and $119.00 price target on its shares.

Nanosonics Ltd (ASX: NAN)

Another buy and hold option to consider is Nanosonics. It could be a top option due to the strength of the infection control specialist’s core business and its future plans.

Nanosonics currently derives all of its revenue from the sale of its industry-leading trophon EPR disinfection system for ultrasound probes and the consumable products the system requires.

Management is now aiming to add to its portfolio with several new products that are targeting unmet needs. These are believed to have similar addressable markets to the trophon product.

If these launches prove successful, they could underpin strong revenue growth for the next decade and beyond. Especially given the increasing importance of infection control following the pandemic.

UBS is positive on the company. It has a buy rating and $7.00 price target on its shares. The broker believes Nanosonics is a high-quality structural growth story in a post-COVID world.

More reading

• 2 top ASX growth shares rated as buys
• Wrong… but still right!
• Why Afterpay, ANZ, Domino’s, & Flight Centre shares are tumbling lower
• How to invest like Warren Buffett with ASX shares
• Why Zip (ASX:Z1P) and this ASX growth share are rated highly

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Nanosonics Limited. The Motley Fool Australia has recommended Dominos Pizza Enterprises Limited and Nanosonics 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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Having an instated retirement safety net is about as Australian as meat pies and footy. And, arguably, this year’s Federal Budget has given the sacred nest egg a boost towards modernity. When the budget dropped last night, the government touted that its superannuation changes will make the system fairer for all Australians.

Treasurer Josh Frydenberg announced the new measures will give a fairer go to women, Australians aged over 60, and first home buyers.

Let’s take a look at the government’s changes to super and how they will affect Australians.

Super news

Women want super

It appears this year’s Federal Budget has at least made a decent attempt to address issues that predominantly face women. Perhaps this was a lesson learnt from the backlash following last year’s budget.

Many Australians will remember that when questioned about how women fit into the 2020/21 Budget – which was heavily focused on infrastructure, trades, and manufacturing ­– Prime Minister Scott Morrison said: “Women want to drive on safe roads”.

On average, women retire with less super than men. This is partly due to women being more likely to work part-time while raising children.

Prior to this budget, workers had to earn at least $450 per month to receive super, an income many part-time workers don’t earn. As 68% of part-time workers in Australia are women, the threshold was a significant disadvantage for some.

In this budget, the government has scrapped the minimum threshold for the superannuation guarantee.

When announcing the budget, Frydenberg said the measure will improve economic security in retirement for around 200,000 women.

Changes for Australians aged 60 and over

Australians’ superannuation is an important component of our retirement planning and, according to the government, the latest changes make the system far more flexible.

After this year’s Federal Budget, Australians aged 60 and over will have more flexibility to top up their super balance.

The maximum amount a person can deposit into their super accounts throughout their lifetime has increased from $1.6 million to $1.7 million, allowing Australians to enjoy their golden years with more cash in the bank.

The government has also loosened work test requirements for those aged between 67 and 74. Australians in that age bracket previously had to meet tight conditions in order to be able to make additional contributions to their super. The conditions, which included working at least 40 hours over the course of 30 days, have now been lifted.

Last night’s budget also included a key change to bulk super contributions. Previously, only Australians aged over 65 were able to make bulk contributions to their super upon the sale of their home. That age limit has now been dropped to 60. Bulk contributions are still limited to $300,000.

The government says this will not only help older Australians prepare for their retirement but also relax the housing market.

Benefits for first home buyers

Finally, Australians looking to enter the housing market for the first time can now deposit more tax-free savings into their super to help them do so.

The First Home Super Saver Scheme’s limit has been increased from $30,000 to $50,000. This intended to help first home buyers save more quickly for a larger deposit on their first home purchase. 

More reading

• 2 quality ASX shares that could be fantastic buy and hold options
• ASX aged care shares boosted after 2021 Federal Budget
• Could Dogecoin and Bitcoin be getting an extra push?
• These ASX childcare shares slumped despite Budget news
• The Sydney Airport (ASX:SYD) share price slumped 5% today. Here’s why

Motley Fool contributor Brooke Cooper 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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Shares in some of Australia’s biggest ASX aged care providers, such as Estia Health Ltd (ASX: EHE), Regis Healthcare Ltd (ASX: REG), and Japara Healthcare Ltd (ASX: JHC) received a boost today after the Australian Federal Budget for the next fiscal year was handed down.

Among several sectors poised to benefit from government spending outlined in last night’s Budget was the aged care industry. The Morrison Government has committed to spending $3.5 billion per year for the next five years to aid the sector.

Today, investors in the ASX aged care sector responded positively to the news. The Estia share price was up by 3.92% to $2.65, Regis shares surged by nearly 6% before closing the day even with yesterday’s closing price at $2.20, and Japara shares increased 3.47% to $1.045. For comparative purposes, the S&P/ASX 200 Index (ASX: XJO) closed the day 0.73% lower.

Furthermore, during intraday trading, both Estia and Japara shares hit new, 52-week highs of $2.75 and $1.08, respectively.

Let’s take a closer look at what the government is proposing for the aged care sector.

Funding increase

While the government will boost funding to aged care by $17.7 billion over the next 5 years, the figure is still well below the Aged Care Royal Commission’s recommendation of $10 billion per year. Despite this, ASX aged care shares still responded positively to the news.

The government revealed that 80,000 new home care packages will be funded as part of the arrangement. As well, $3.9 billion will be spent over the next 4 years to ensure all aged care residents receive at least 3 hours and 20 minutes of care per day, including 40 minutes with a registered nurse. The Commonwealth will also pay an additional stipend of $10 per day, per resident to aged care providers – another recommendation of the Royal Commission.

As well, the budget states $216 million will be spent over 3 years to provide more specialised training and $91.8 million over 2 years for 13,000 additional home care workers.

Finally, the government will spend $200 million to set up a new rating system so families can more easily compare and contrast different aged care providers.

ASX aged care share price snapshots

Over the past 12 months, the Estia share price has increased by 82.8%, Regis shares are up by around 48%, and the Japara share price is 80% higher. Back in November 2020, ASX shares in the aged care sector rocketed on the news Regis could be taken over. Brokers subsequently upgraded their analysis of some companies, and the entire sector took off.

More reading

• Why Afterpay, CSR, Electro Optic Systems, & Estia Health are storming higher
• Estia Health (ASX:EHE) share price dips on class action settlement
• Estia Health (ASX:EHE) share price jumps 7% to new 52-week high
• Why the Japara (ASX:JHC) share price is rocketing 23% in morning trade

Motley Fool contributor Marc Sidarous 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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It’s no secret that the last 6 to 12 months has seen cryptocurrency experience a massive resurgence. Considered to be dead after the bubble burst in December 2017, Bitcoin (CRYPTO: BTC) and its ragtag group of lesser-known crypto siblings have been sailing to unimaginable new heights, particularly the light-hearted Dogecoin (CRYPTO: DOGE).

These speculative assets have been given lifesaving breathes of oxygen from a few different catalysts. But even more are rumoured yet to come.

Dogecoin’s extra puff

For Bitcoin, many attribute the meteoric rise in its price to institutional investments. Such an example is Grayscale and its Bitcoin Trust, which now holds over $36 billion of assets under management.

However, some momentum is undeniably from the endorsement received by high-net-worth individuals, and the companies they operate. Dogecoin is a prime example of this. The cryptocurrency originally derived from a “fork” in bitcoin was developed in jest.

Nevertheless, Tesla Inc (NASDAQ: TSLA) Technoking, Elon Musk has expressed a fondness for the furry-friend-branded currency. Musk has tweeted and commented on the potential for Dogecoin standard on numerous occasions. Which has since seen the currency skyrocket 660% in the last month alone.

Although, following Musk’s eccentric appearance on Saturday Night Live, Dogecoin sunk more than 30%. But the self-proclaimed “Dogefather” is not giving up on the digital currency that easily.

Musk is now planning to launch a Falcon 9 SpaceX rocket, known as “DOGE-1 Mission to the Moon”, in the first quarter of 2022. The space company will accept Dogecoin as full payment for the lunar payload.

SpaceX launching satellite Doge-1 to the moon next year

– Mission paid for in Doge
– 1st crypto in space
– 1st meme in space

To the mooooonnn!!https://t.co/xXfjGZVeUW

— Elon Musk (@elonmusk) May 9, 2021

https://platform.twitter.com/widgets.js

SpaceX Vice President of commercial sales, Tom Ochinero said, “DOGE-1 will demonstrate the application of cryptocurrency beyond Earth orbit and set the foundation for interplanetary commerce.”

Further Bitcoin rumours

Turning to the OG of cryptocurrencies. After gaining a spot on the balance sheet of several notable US-listed companies, Bitcoin might find itself being added to a couple more.

Facebook, Inc. Common Stock (NASDAQ: FB) is the latest company being speculated over. The Bitcoin community is speculating over whether Facebook may add Bitcoin to its balance sheet, after CEO and founder, Mark Zuckerberg posted a picture of his goats – named “Max” and “Bitcoin”. However, at this stage, it is purely speculative.

Additionally, big data analytics company Palantir Technologies Inc (NYSE: PLTR) has stated its open to adding the cryptocurrency to its balance sheet. The US$37 billion tech company now accepts Bitcoin for payments. But on its first-quarter earnings call last night, Chief Financial Officer David Glazer made the following comment after being asked whether it would hold it on the balance sheet:

The short answer is yes, we’re thinking about it, and we’ve even discussed it internally. Take a look at our balance sheet, $2.3 billion in cash at quarter-end, including $151 million in adjusted free cash flow in Q1. So, it’s definitely on the table from a treasury perspective, as well as other investments, as we look across our business and beyond.

More reading

• Ethereum climbs even higher… but why? Dogecoin might be the answer
• 3 unstoppable growth trends to invest in today
• 1 simple (and safer) way to invest in cryptocurrency
• Dogecoin price drops by a third after Elon Musk calls it a “hustle” on comedy show
• ASX 200 Weekly Wrap: Bank shares push ASX 200 towards all-time high

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. Mitchell Lawler owns shares of Bitcoin, Dogecoin, Facebook, Palantir Technologies Inc., and Tesla. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Bitcoin, Facebook, and Tesla. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Palantir Technologies Inc. The Motley Fool Australia has recommended Facebook. 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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Childcare ASX shares G8 Education Ltd (ASX: GEM) and Think Childcare Ltd (ASX: TNK) shares fell today after the federal government handed down its budget for the next financial year.

Despite the government committing an extra $1.7 billion to the sector over the next 3 years, investors sold off their ASX childcare shares during today’s trading session.

By the market’s close, G8 Education shares were selling at 99 cents each (down 1.98%) and the Think Childcare share price slumped 0.32% lower to $3.08.

Let’s take a closer look at what the government is planning for the sector.

Childcare funding up

From July 2022, childcare subsidies for Australian parents will be expanded so that those with two or more children in daycare will receive a 95% subsidy. Those with one child in daycare will receive a 65% subsidy. As well, the $10,000 payment cap for high-income families will be abolished, meaning more upper-income families will receive government childcare rebates.

Prime Minister Scott Morrison, however, told this morning’s Sunrise program the start date could be moved forward. The PM said the current start date is due to issues involved in setting up a new payment system.

“If that [setting up the new payment systems] can be done sooner…we will certainly move on that,” Mr Morrison said.

“This budget is all about securing our economic recovery from the pandemic”

Prime Minister @ScottMorrisonMP joined @Kochie_Online to discuss #Budget2021, respond to criticism and explain how the federal government will pay off the eye-watering mountain of debt. pic.twitter.com/EjonR8RGb5

— Sunrise (@sunriseon7) May 11, 2021

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Furthermore, news.com.au today reported Treasurer Josh Frydenberg told reporters during budget lock up the delayed date was due to IT concerns.

“…There are technical issues…with regard to changing IT and computer systems,” Mr Frydenberg was quoted as saying.

Certain caveats will still exist for parents wishing to access the scheme. Namely, only children under 5 will be eligible and the 95% rebate will drop for a second child in care once the older one enters primary school. After school programs are also not covered.

In his speech to parliament last night, the Treasurer said the average family would be “$2200 better off” under the new scheme.

Investors in ASX childcare shares, though, appeared unimpressed. This is in contrast to some ASX aged care shares, which surged following last night’s budget.

ASX childcare share price snapshots

Over the past 12 months, the G8 Education share price has increased by around 6% while Think Childcare shares have ballooned by 278%.

The beginnings of the COVID pandemic saw ASX childcare shares collapse as many families pulled their little ones out of the centres. Shares rocketed back when the federal government temporarily made childcare free as one of its many economic responses to the crisis.

G8 Education has a market capitalisation of around $840 million and Think Childcare is valued at approximately $189 million.

More reading

• The Sydney Airport (ASX:SYD) share price slumped 5% today. Here’s why
• Goldman says sell Commonwealth Bank (ASX:CBA) shares
• ASX shares to take advantage of sky high iron ore prices
• 2 excellent ETFs for ASX investors to buy in May
• Why has the Telstra (ASX:TLS) share price retreated from its 52-week high?

Motley Fool contributor Marc Sidarous 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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Sydney Airport Holdings Pty Ltd (ASX: SYD) shares were diving today, in what seemed to be a reaction to news within the Federal Budget. By the market’s close, the Sydney Airport share price was trading 4.79% lower at $5.76.

In last night’s budget, the government revised the date by which it anticipates reopening Australia’s borders to non-essential travellers. It now doesn’t expect to see large numbers of international travellers coming or going from Australian airports until mid-2022.

This morning, Qantas Airways Limited (ASX: QAN) responded to the government’s projection by pushing back its plans to fly internationally from Australia.

Let’s take a closer look at the update to Australia’s projected international travel timeline.

International travel off the cards again 

Sydney Airport shares were in the red today after the government advised last night it doesn’t expect to see Australia’s borders substantially open to the rest of the world until the middle of 2022.

The government also extended its vaccination timeline, announcing the rollout will likely not be completed until the end of this year.

As mentioned, in response to the prediction that Australia’s international borders will largely stay shut for another year, Qantas was quick to push back its international flight schedule. Earlier this year, Qantas began selling tickets for international flights taking off as early as July 2021. But today, the airline advised the schedule will now be pushed out to late December 2021. This does, however, exclude trans-Tasman flights.

This also means the majority of usual international flights won’t be taking off from Sydney Airport any time soon.  

Sydney Airport share price snapshot

Last night’s news is yet another blow for the Sydney Airport share price, which has had a poor run on the ASX lately.

Currently, the airport’s shares are down by around 10% year to date. Although, they are still 4.75% higher than this time last year.

Sydney Airport has a market capitalisation of around $16.3 billion, with 2.7 billion shares outstanding.

More reading

• Why Ausnet, Qantas, Suncorp, & Sydney Airport shares are tumbling lower
• Here’s why the Qantas (ASX:QAN) share price is sinking today
• ASX 200 down 1%: CBA Q3 update, tech shares rise, Qantas update
• 2 excellent ASX dividend shares to buy
• Why the Regional Express (ASX:REX) share price is flying higher today

Motley Fool contributor Brooke Cooper 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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Goldman Sachs has run the ruler over Commonwealth Bank of Australia (ASX: CBA) shares after the bank released its third-quarter update this morning. By the market’s close, the CBA share price was trading 1.05% higher at $95.57.

Let’s take a look at what the broker had to say.

Goldman key takeaways 

Cash profit ahead of expectations

Commonwealth Bank delivered a cash profit from continuing operations of $2.4 billion in the third quarter, up 85% from a year ago. The run-rating of this result came in 22% ahead of what was implied by Goldman’s 2H21 forecasts. 

The broker noted that the better-than-expected cash earnings were driven by significantly lower-than-expected bad and doubtful debt (BDD) issues and stronger revenues. 

Despite the lower than expected BDD issues, Goldman observed that total provisions to credit risk-weighted assets (RWA) of 1.74% and pre-provision operating profits were still above its analysts’ forecasts. 

Net interest margins edge higher

The third-quarter update did not provide a figure regarding net interest margins (NIM) but noted that group NIM excluding markets and treasury divisions was higher.

Goldman highlights the drivers of NIM including “higher NZ earnings and favourable funding mix from at-call deposits growth and lower funding cost” which was partially offset by the “continued impact of lower rates, competitive pressures, and switching to lower margin fixed rate loans”. 

Above-system home loan growth

Goldman observed that Commonwealth Bank delivered above-system growth in home loans of 1.1x. This was driven by “strong funding volumes and continued focus on credit decisioning turnaround times”. Business lending was even stronger at more than 3 times system and diversified across all sectors. 

Better than expected capital adequacy requirements

Commonwealth Bank’s CET1 ratio of 12.7% was run-rating 28 basis points ahead of Goldman forecasts. The broker pointed to factors including organic capital generation and lower total RWA driving the better-than-expected result. 

As highlighted by Goldman, CBA “management also notes that the strong surplus capital position creates flexibility for the Board in its consideration of capital management initiatives with the timing of such to be dependent on a continued trend of domestic economic improvement, CBA’s ongoing assessment of portfolio credit quality and regulatory guidance”

Sell rating maintained for Commonwealth Bank shares

Despite saying that the “operational trends are broadly consistent with peers and the balance sheet looks very strong”, Goldman retained a sell rating for Commonwealth Bank shares and a 12-month target price of $73.64.

The broker said, “We struggle to justify the stock’s relative PER rating (45% premium to peers vs. 16% 15-yr average) in light of these trends”.

More reading

• What do the CEOs of the Big Four banks think of the Federal Budget?
• Which ASX bank share is the cheapest after earnings?
• ASX 200 down 1%: CBA Q3 update, tech shares rise, Qantas update
• Commonwealth Bank (ASX:CBA) share price in focus following Q3 results
• Here are the US shares ASX investors were buying last week

Motley Fool contributor Kerry Sun 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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Iron ore prices continue to defy expectations, surging to more than US$220 per tonne for the first time on record. While BHP Group Ltd (ASX: BHP), Fortescue Metals Group Limited (ASX: FMG) and Rio Tinto Limited (ASX: RIO) dominate the popularity contest for iron ore exposure. Here are 3 ASX shares that might fly under the radar for iron ore. 

Mineral Resources Limited (ASX: MIN) 

The Mineral Resources share price has retreated 4% to $46.25 at the time of writing. Despite the sharp move down, its shares are still sitting within record territory with year-to-date returns of around 20%.  

Mineral Resources could represent the best of both worlds, eyeing a significant ramp up in iron ore production while diversifying into lithium. 

Over the next five years, the company plans to double the revenue of its mining services, which currently account for approximately one-third of the company’s revenues, and ramp up its iron ore production from 20Mtpa to 90Mtpa. 

Mineral Resources has partnered with one of the world’s largest lithium producers, Jiangxi Ganfeng Lithium Co Ltd to operate the Mt Marion Spodumene project. 

Mount Gibson Iron Limited (ASX: MGX) 

Mount Gibson operates the Koolan mine, located in the Buccaneer Archipelago, Western Australia. The former BHP mine boasts one of Australia’s highest-grade hematite ore reserves which average 65.5% Fe.

The company is eyeing a FY21 guidance of 2.8 to 3.3 million wet metric tonnes (Mwmt). This comprises of 1.2 Mwmt of material sold from its now-completed low-grade sales program in its Mid-Western Australia projects and the remainder comprising of its Koolan Island fines products, which are expected to total approximately 1.8 Mwmt. 

BCI Minerals Ltd (ASX: BCI) 

BCI Minerals is another iron ore junior that has soared more than 25% in the last two weeks. The company’s main iron ore asset is its Iron Valley Mine which is mined under royalty payments from Mineral Resources. 

The company is targeting an earnings before interest, taxes, depreciation, and amortisation (EBITDA) of $37 million between Q1 to Q3 FY21 from its Iron Valley royalties. The company has used its cash proceeds from iron ore to help drive its Mardie salt and sulphate of potash fertilities project in Western Australia. 

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Motley Fool contributor Kerry Sun 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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