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At the start of each week, I like to look at ASIC’s short position report to find out which shares are being targeted by short sellers.

This is because I believe it is well worth keeping a close eye on short interest levels as high levels can sometimes be a sign that something isn’t quite right with a company.

With that in mind, here are the 10 most shorted shares on the ASX this week according to ASIC:

• Pilbara Minerals Ltd (ASX: PLS) continues its long run as the most shorted ASX shares after its short interest rose to 20.4%. Short sellers appear to believe that lithium prices will stay lower for longer and weigh heavily on profitability.
• Syrah Resources Ltd (ASX: SYR) has short interest of 13.6%, which is down sharply week on week. It isn’t just lithium that is under pressure. Graphite prices are also very weak, which is weighing on Syrah’s performance.
• IDP Education Ltd (ASX: IEL) has 13.4% of its shares held short, which is up week on week again. Short sellers have been targeting this language testing and student placement company due partly to regulatory changes to student visas.
• Liontown Resources Ltd (ASX: LTR) has seen its short interest rise to 10.1%. Short sellers aren’t holding back despite the lithium developer recently announcing debt funding for the Kathleen Valley Lithium Project in Western Australia.
• Flight Centre Travel Group Ltd (ASX: FLT) has seen its short interest ease to 9.3%. Short sellers may believe that Flight Centre will have a tough second half to FY 2024 due to consumer spending pressures.
• Core Lithium Ltd (ASX: CXO) has short interest of 8.3%, which is up week on week. This lithium miner’s shares have crashed 80% over the last 12 months. Short sellers appear to believe they can keep falling.
• Genesis Minerals Ltd (ASX: GMD) has seen its short interest ease again to 7.8%. Much to the dismay of short sellers, this gold miner’s shares are nearing a new decade-high on Tuesday.
• Sayona Mining Ltd (ASX: SYA) has short interest of 7.8%, which is up week on week. This is yet another lithium miner that short sellers are targeting due to weak lithium prices.
• Deep Yellow Limited (ASX: DYL) has seen its short interest ease again to 7.2%. Short sellers seem to have been closing their position amid optimism over rising uranium prices.
• Australian Clinical Labs Ltd (ASX: ACL) has short interest of 7.2%, which is down week on week. This pathology company has been battling difficult trading conditions. Short sellers don’t seem to believe that things will improve any time soon.

The post These are the 10 most shorted ASX shares appeared first on The Motley Fool Australia.

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More reading

• Buy Pilbara Minerals and these ASX lithium shares for big returns
• Why Mesoblast, Newmont, Pilbara Minerals, and Platinum shares are jumping
• ASX mining in April 2024: The best stock to buy right now
• The Core Lithium share is down 27% in March: What’s next?
• Top brokers name 3 ASX shares to buy today

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Idp Education. The Motley Fool Australia has recommended Flight Centre Travel Group and Idp Education. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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After releasing positive news this morning, the Novonix Ltd (ASX: NVX) share price is making headway on a three-month green streak.

Shares in the battery technology and materials company are 5% higher to 90 cents. For context, the S&P/ASX All Ordinaries Index (ASX: XJO) is broadly flat this morning. An earlier rally in the Novonix share price made it the fifth best-performing stock among index members.

Government gives $159 million

Novonix has landed a major tax credit from the United States Government. Following a recommendation by the US Department of Energy, the battery company has been selected to receive US$103 million (A$159 million) in tax credits.

The award is part of the government’s ‘qualifying advanced energy project tax credit’ program in the United States.

It was announced on 29 March that US$4 billion in tax credits would be provided to more than 100 projects to jumpstart domestic clean energy manufacturing and curb greenhouse gas emissions. Novonix is among the lucky few to nab a slice of the US$4 billion available.

According to Novonix’s announcement, the tax credit can offset income tax liability. In addition, a qualifying project can be monetized by way of sale for cash. However, the company must meet the requirements set out by the US tax code.

The company will have two years to fulfil the conditions and claim all A$159 million in tax credits.

Novonix CEO Dr Chris Burns commented on the company’s selection, stating:

In a period already filled with company milestones, the approval of our 48C application strengthens our financing strategy and demonstrates another significant landmark for Novonix. We are excited by Novonix’s participation in this program in furtherance of our commitment to innovation, sustainability, and the localisation of a battery materials supply chain in North America.

Reportedly, Novonix is one of the first to receive this tax credit allocation.

Novonix share price storming back

Both 2022 and 2023 were brutal years for the Novonix share price.

Shares in the battery tech company fetched $9.35 on the first trading day of 2022. Fast forward to the end of 2023, and suddenly investors are staring down a share price below 80 cents apiece.

Increasing interest rates and continued losses on the bottom line came down on Novonix shares like a 12-tonne hammer. However, sentiment appears to be turning around again this year.

The Novonix share price is up 22% this year (as shown above), buoyed by positive developments. In February, the company revealed it had entered into a binding off-take agreement with Panasonic Energy to supply synthetic graphite anode.

The post Novonix share price booming 5% on cracking tax credit appeared first on The Motley Fool Australia.

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More reading

• 4 ASX All Ords shares going gangbusters on Tuesday

Motley Fool contributor Mitchell Lawler has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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Genmin Ltd (ASX: GEN) shares have returned to trade on Tuesday after a seven-month suspension.

Unfortunately for its long-suffering shareholders, the return has not been a good one for this ASX mining stock.

In morning trade, the Africa-focused iron ore exploration and development company’s shares are down 47% to a record low of 9.8 cents.

Why is this ASX mining stock crashing?

This morning, the company’s shares returned to trade after it completed a $23.4 million capital raising.

This comprises a placement, which raised approximately $13.2 million, and an entitlement offer, which raised approximately $10.2 million.

The ASX mining stock advised that both its placement and entitlement offer were strongly supported by Genmin’s board, major shareholder Tembo Capital, and other sophisticated and institutional shareholders.

The company notes that it is now debt free and has received cash of approximately $13.2 million. This is after brokerage costs, repayment of the Tembo Capital loans, and other creditor offsets.

As a reminder, Genmin’s original suspension was requested pending further clarification of political circumstances in Gabon.

The good news is that businesses are now operating normally in Gabon with ongoing stability and a proactive new government actively promoting and streamlining timeframes for new economic development.

What now?

Its full focus now shifts to finalising project build financing and then develop the Baniaka operation in Gabon, with commencement of commercial production targeted for mid-2025.

The ASX mining stock plans to develop Baniaka at an initial production rate of 5 million iron ore tonnes per annum (Mtpa). Procurement of project build financing is the next major milestone that needs to be achieved. Genmin is engaged in discussions with several potential financing partners, including two of its Chinese offtake counterparties.

‘Delighted’

Genmin’s managing director and CEO, Joe Ariti, was very pleased that the company’s shares were finally returning to trade. He commented:

We are delighted our shares resumed trading on ASX today after a seven-month hiatus and also to have completed a $23.4 million fundraising. Today, we have the mining approvals needed to build and operate Baniaka, we have cleared all loan debt, and we have cash to support our operations whilst we concentrate on delivering the next major milestone of project financing to build Baniaka.

We deeply appreciate the patience of our existing shareholders whilst our shares were not trading, and welcome the new investors to Genmin and thank them, and our existing shareholders alike for their strong support in the fundraising. I also extend my thanks to Tembo Capital for providing working capital support when needed and my fellow board members and our team, who worked tirelessly to carefully navigate the external challenges we encountered during 2023.

The post Why is this ASX mining stock sinking 47% to a record low? appeared first on The Motley Fool Australia.

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More reading

• How ASX shares vs. property performed in March
• Why I’d buy VanEck Morningstar Wide Moat ETF (MOAT) for anyone in my family
• Why is this ASX 200 stock crashing 16% to a 52-week low on Tuesday?
• Here is the profit forecast to 2026 for Fortescue shares
• CSL share price lower despite US FDA boost

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

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The Orora Ltd (ASX: ORA) share price is having a very tough start to the week.

In morning trade, the ASX 200 stock is down 16% to a 52-week low of $2.28.

Why is this ASX 200 stock crashing?

Investors have been rushing to the exits in a hurry on Tuesday after the packaging giant released a trading update.

As you might have guessed from the share price reaction, that update revealed that trading conditions have been tough for Orora.

Following a review of business unit forecasts for the second half, Orora has now updated its FY 2024 earnings forecast.

At a group level, excluding the earnings contribution from the Saverglass acquisition for the seven months in FY 2024, the ASX 200 stock expects earnings before interest and tax (EBIT) to now be slightly lower versus FY 2023.

This compares to its previous expectation for EBIT to be higher year on year in FY 2024.

According to the release, its revised FY 2024 group EBIT forecast excluding Saverglass is between $307 million and $317 million. This compares unfavourably to the $320.5 million that it achieved in FY 2023.

What’s going on?

Management advised that its North America business is largely to blame for its poor performance.

During the March quarter, the Orora Packaging Solutions (OPS) business has continued to experience volume softness, principally within Distribution, and the flow through impacts of price deflation to customers.

Furthermore, a decline in average daily sales during the February to March trading period means that the ASX 200 stock does not expect to see the normal seasonal uplift in June quarter daily sales.

As a result, second half revenue is forecast to be down ~3% versus the first half, with FY 2024 EBIT forecast to be in a range of US$102 million to US$107 million. This compares to US$112.6 million in FY 2023.

Another disappointment that could be weighing on the Orora share price today is the performance of the Saverglass business. Management notes that a weaker February and March trading result has confirmed that there is no noticeable improvement in forward customer demand as destocking is continuing. This is leading to a reduction in forecast sales tonnage in the second half, down ~11% versus the prior corresponding period.

Forecast Saverglass EBITDA for FY 2024 has been reduced to 88 million euros from the range of ~98 million euros to 84 million euros.

This ASX 200 stock is now down over 25% on a 12-month basis following today’s selloff.

The post Why is this ASX 200 stock crashing 16% to a 52-week low on Tuesday? appeared first on The Motley Fool Australia.

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More reading

• These ASX 200 shares could rise 20% to 40%
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Motley Fool contributor James Mickleboro 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 Orora. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The ASX mining share Fortescue Ltd (ASX: FMG) could make a lot of profit in the next few years if it’s anything like the last few years. In this article, we’re going to look at what the business is projected to make each financial year to FY26.

As an iron ore miner, the price of iron ore will have a key impact on how much profit it’s able to make. If the iron ore price is significantly better, or significantly worse than what is expected, then the profit could significantly delight or disappoint.

With that in mind, let’s look at some of the forecasts from the broker UBS.

Projection for FY24

We’re three-quarters of the way through FY24, so there’s not much time left in this financial year.

The company itself has guided that it’s expecting iron ore shipments of between 192mt to 197mt, including 2mt to 4mt for Iron Bridge.

UBS suggests Fortescue could generate US$19.7 billion of revenue, make US$6.87 billion of net profit after tax (NPAT) and pay an annual dividend per share of $1.89.

Estimates for FY25

UBS is expecting the iron ore price to be lower in 2025, which could lead to lower financial results and hurt Fortescue shares.

FY25 revenue could amount to US$18.6 billion and NPAT could drop to $6.06 billion. The annual dividend per share is predicted to fall to A$1.47.

The broker notes that Iron Bridge is moving to replace its water pipeline, with installation scheduled by mid-2025 and it’s not expected to impact the run-up.

Forecast for FY26

UBS is currently expecting another step down in revenue and profitability in FY26 for Fortescue.

The ASX mining share is projected to make US$16.7 billion in revenue in FY26, with a lot of that lost revenue coming straight off the net profit. The FY26 profit is predicted to be US$4.6 billion, which would be a fall of around 24% if the forecasts end up being correct.

The potential fall in profit could lead to another large drop in the annual dividend per Fortescue share to $1.08.

Foolish takeaway

It’s quite possible that UBS’ estimates of falling profit may be correct – the Chinese construction sector is not as strong as it used to be and iron ore supply is growing, which could impact the iron ore price.

However, the iron ore price has regularly positively surprised investors over the last few years and it’s possible it could happen again. The green hydrogen efforts are interesting, but not expected to add much in the next few financial years for the company.

The post Here is the profit forecast to 2026 for Fortescue shares appeared first on The Motley Fool Australia.

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• I’d spend $8k on these ASX 200 shares today to target a $6,102 annual passive income
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Motley Fool contributor Tristan Harrison has positions in Fortescue. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The CSL Ltd (ASX: CSL) share price is starting the week in a subdued fashion.

In early trade, the biotechnology company’s shares are down 0.25% to $287.37

Why is the CSL share price falling?

Investors have been selling CSL shares on Tuesday following a soft start to the week for the stock market. This appears to have offset the announcement of some good news.

In respect to the latter, the United States Food and Drug Administration (FDA) has approved Vafseo (vadadustat) tablets for the treatment of anaemia due to chronic kidney disease (CKD) in adults who have been receiving dialysis for at least three months.

Vafseo is an oral hypoxia-inducible factor prolyl hydroxylase inhibitor (HIF-PHI) developed by Akebia Therapeutics in partnership with the CSL Vifor business.

Anaemia is a condition in which a person lacks enough healthy red blood cells to carry adequate oxygen to the body’s tissues. CSL notes that it commonly occurs in people with CKD because their kidneys do not produce enough erythropoietin. It is a hormone that helps regulate production of red blood cells.

In light of this, anaemia due to CKD can have a profound impact on a person’s quality of life. It can cause fatigue, dizziness, shortness of breath and cognitive dysfunction. Left untreated, it leads to deterioration in health and is associated with increased morbidity and mortality in people with CKD.

The company notes that approval of Vafseo is based on efficacy and safety data from the INNO2VATE program and an assessment of post marketing safety data from Japan where Vafseo was launched in August 2020.

The CSL Vifor business has been granted an exclusive license to sell Vafseo to Fresenius Kidney Care dialysis centers and specific other third-party dialysis organisations in the United States. This allow CSL to potentially reach approximately 60% of the dialysis patients in the country.

‘An important moment’

The General Manager of CSL Vifor, Hervé Gisserot, was pleased with the US FDA approval. He said:

We congratulate our partner Akebia on the FDA approval, which represents an important moment in our shared efforts toward improving the lives of dialysis patients with anemia due to CKD in the U.S.

As we continue to deliver on our promise for patients and public health, we are eager to closely collaborate with our partners to make this new oral treatment option available to patients.

This sentiment was echoed by the co-chair of the independent Executive Steering Committee for the PRO2TECT and INNO2VATE clinical trials, Glenn M. Chertow. He adds:

Patients receiving maintenance dialysis would benefit from additional therapeutic options that can effectively increase and maintain hemoglobin concentrations within guideline-recommended target ranges.

The CSL share price is down 2% over the past 12 months.

The post CSL share price lower despite US FDA boost appeared first on The Motley Fool Australia.

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More reading

• Buy these fantastic blue chip ASX 200 shares in April
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Motley Fool contributor James Mickleboro has positions in CSL. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended CSL. The Motley Fool Australia has recommended CSL. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Paladin Energy Ltd (ASX: PDN) share price is catching the eye on Tuesday with a particularly strong start to the shortened week.

In morning trade, the uranium producer’s shares are up a sizeable 6% to $1.45.

This compares favourably to a relatively flat start from the benchmark ASX 200 index today.

Why is the Paladin Energy share price storming higher?

Investors have been buying the company’s shares on Tuesday after the company announced that it has commenced production at the Langer Heinrich Mine (LHM) in central western Namibia.

According to the release, both uranium concentrate production and drumming were achieved at LHM on 30 March 2024. This means that LHM will soon be able to capitalise on the sky high prices that uranium is commanding.

Management’s focus will now shift to production ramp-up and building a finished product inventory, ahead of shipments to customers.

As part of the transition to production, Paladin’s Chief Operating Officer, Paul Hemburrow will assume responsibility for all LHM activities.

‘An important milestone’

Paladin Energy’s CEO, Ian Purdy, described the news as an important milestone for the company. He commented:

Achieving first production at the Langer Heinrich Mine is an important milestone for Paladin. I would like to thank all our staff and contractors for their hard work and dedication in returning this globally significant uranium mine to production. I would also like to thank the Namibian Government and our local communities in the Erongo region for their continued support.

Purdy appears confident on the company’s outlook given its strong balance sheet and the growing demand for uranium. He adds:

With a return to production, a strong balance sheet and supportive uranium fundamentals, Paladin is exceptionally well positioned to generate sustainable returns for all our stakeholders.

What’s next?

LHM has already produced over 43 million pounds of U3O8 over a successful 10-year operational period.

Looking to the future, management is targeting even greater production. It previously advised that it is ultimately targeting peak production of 6 million pounds of U3O8 per annum.

But it will take time to ramp up to those levels. Nevertheless, over the long term, LHM is expected to be 4% of annual global uranium production. And over its estimated 17-year mine life, it is forecast to produce a total of 77Mlb of U3O8. Though, further upside is available through operational optimisation.

In the meantime, Paladin plans to provide guidance for key FY 2025 LHM operational parameters in the second half of the year.

Following today’s gain, the Paladin Energy share price is now up 120% over the last 12 months.

The post Paladin Energy share price storms higher on big uranium production news appeared first on The Motley Fool Australia.

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• Here are the top 10 ASX 200 shares today

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

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S&P/ASX 200 Index (ASX: XJO) investors were treated to a series of record-breaking highs in March.

The month just past saw the Aussie benchmark index set a series of new intraday highs as well as a number of fresh record-closing highs.

March started in good form, with the ASX 200 setting a new intraday high of 7745.6 points on Friday, 1 March.

And after breaking records throughout the month, March ended on another bang with the index hitting a new intraday high of 7901.2 and finishing at a new closing high of 7896.9 points.

That sees the index of the top 200 listed Aussie stocks up 2.6% for the past month and up a whopping 16.5% since 31 October.

Investors looking to mirror this performance could consider buying into all 200 companies.

Or they may wish to consider investing in a single stock that has been successful at closely tracking the returns of the ASX 200.

What’s been driving the ASX 200 to new record highs?

Investors have been piling back into the Aussie stock market in line with bullish animal spirits in the United States’ markets. That enthusiasm also saw the S&P 500 Index (SP: .INX) notch a series of new record highs in March.

The ASX 200 has been getting its own lift as inflation begins to fall back towards the RBA’s target range, bolstering the odds for interest rate cuts in 2024.

Company earnings have also held up strongly despite some macroeconomic headwinds.

And there are signs that China’s economy may be set for a rebound following a year of tepid growth. That could offer a big boost for Aussie companies focused on exports.

One stock to track the top 200

The stock in question is the BetaShares Australia 200 ETF (ASX: A200).

The exchange-traded fund (ETF) aims to track the performance of the ASX 200. And it’s been doing just that.

Since 31 October the ASX 200 has gained 17.9%, slightly outpacing the gains of the benchmark index.

A200 also pay quarterly dividends, partly franked. The ETF currently trades on a trailing yield of 3.6%.

Its top three holdings are BHP Group Ltd (ASX: BHP), Commonwealth Bank of Australia (ASX: CBA) and CSL Ltd (ASX: CSL). As you’d expect these also count among the biggest listed companies in Australia.

Importantly, as fees can take a sizable bite out of your returns, the ASX ETF also comes with a very low annual fee of 0.04%.

As always, if you’d rather buy individual stocks that could outperform the benchmark, make sure to do your own thorough research first.

If you’re not comfortable with that or are short on time, then simply reach out for some expert advice.

The post How to tap into the record-breaking ASX 200 performance with just one stock appeared first on The Motley Fool Australia.

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More reading

• 5 things to watch on the ASX 200 on Tuesday
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Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended CSL. The Motley Fool Australia has recommended CSL. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Treasury Wine Estates Ltd (ASX: TWE) share price is pushing higher on Tuesday.

In morning trade, the wine giant’s shares are up 1% to $12.59.

Why is the Treasury Wine share price rising?

Investors have been buying the company’s shares today after the Chinese Ministry of Commerce (MOFCOM) announced that tariffs on Australian wine imports into China will be reduced to nil, effective 29 March 2024.

This looks set to be a major boost to the Penfolds owner’s sales in the coming years and the company is responding quickly to the news.

Effective immediately, the company will commence partnering with its customers in China to implement the detailed plan outlined with its half-year results in February. This includes re-establishing distribution for Penfolds entry-level Australian COO portfolio, including Penfold’s Max’s, Koonunga Hill and One by Penfolds.

In addition, it will be re-allocating a portion of Penfolds Bin and Icon tiers from other global markets in order to progressively re-build distribution to China, while maintaining the strong momentum in those other markets where Penfolds has successfully grown in recent years.

Finally, it will be re-establishing distribution for the Treasury Premium Brands Australian sourced priority portfolio in China, including Rawson’s Retreat, as well as expanding sales and marketing resources and brand investment in China.

Treasury Wine’s CEO, Tim Ford, commented:

Today’s announcement is a significant positive not only for Treasury Wine Estates, but also for the Australian wine industry and wine consumers in China. Since the tariffs were introduced three and a half years ago, our commitment to China has been resolute, and we now look forward to partnering with our local customers to re-establish our Australian COO portfolio in the market while continuing to be a meaningful contributor to the development and growth of the Chinese wine industry.

This is a medium-term growth opportunity that we will pursue in a deliberate and sustainable manner, focused on growing our portfolio in China while continuing the strong momentum that we have delivered in several global markets over recent years.

What earnings impact will this have?

Treasury Wine doesn’t expect a huge impact to earnings in the immediate term as it will take time and money to re-establish its presence in the lucrative market.

Management advised that the incremental EBITS contribution will be minimal through the remainder of FY 2024, with increased shipments of Penfolds entry-level Luxury tier wines to be offset by the step up in overhead costs onshore.

Until expanded Bin and Icon availability from the 2024 Australian vintage is available for release, which is expected to be from FY 2027 onwards, incremental growth due to the removal of tariffs on Australian wine sold in China will be modest. This will be driven by the increased shipments of entry level tiers into China, any incremental price increases implemented as part of Penfolds multi-year pricing roadmap, but partially offset by incremental overheads and brand investment in China.

Importantly, based on early feedback from customers in China, Treasury Wine “believes the medium-term potential for Penfolds is strong, and that the removal of tariffs will be a significant positive for the business.”

Commenting on the news, analysts at Goldman Sachs said:

Whilst the tariff removal was widely anticipated amongst investors, its finalization still provides a positive catalyst for the stock, in our opinion. Our recent channel checks with multiple industry sources suggest there is strong reception by China distributors on the return of Australian Penfolds to the market and some have been “hoarding cash” in order to pay for the Bins and Icons allocations.

The Treasury Wine share price is down 2% over the last 12 months.

The post Treasury Wine share price climbs after China removes wine tariffs appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro has positions in Treasury Wine Estates. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Goldman Sachs Group. The Motley Fool Australia has recommended Treasury Wine Estates. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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Austal Ltd (ASX: ASB) shares are lifting off on Tuesday morning.

At the time of writing, the ASX 300 stock is up 9% to $2.40.

Why is this ASX 300 stock jumping?

Investors have been buying the shipbuilder’s shares this morning in response to news that the company has received and rejected a takeover offer from South Korean chaebol, Hanwha.

According to the release, the ASX 300 stock received an unsolicited, conditional, and non-binding indicative proposal from Hanwha to acquire it by way of a scheme of arrangement. Under the terms of the indicative proposal, Austal shareholders would receive $2.825 cash per Austal share.

This represents a 28.4% premium to where the Austal share price ended last week.

Management notes that Hanwha’s indicative proposal is subject to numerous conditions. These include due diligence, various regulatory approvals, final approval of the Hanwha Board, the unanimous recommendation of the Austal Board, and Austal shareholder approval.

While most acquisitions are subject to regulatory approvals, as a shipbuilder to the Australian and US governments, any deal for Austal faces significant scrutiny from regulators. For example, for a deal to get over the line, it would require approval from Australia’s Foreign Investment Review Board (FIRB), the Committee on Foreign Investment in the United States (CFIUS), and the US Defense Counterintelligence and Security Agency.

In addition, the ASX 300 highlights that it recently executed a memorandum of understanding (MoU) with the Department of Defence to negotiate a Strategic Shipbuilding Agreement (SSA). If all goes to plan, Austal will be appointed as the Commonwealth’s strategic partner for vessels to be constructed in Western Australia.

However, the Commonwealth Department of Defence noted that “a sovereign and enduring naval shipbuilding and sustainment industry at Henderson is central to the Government’s commitment to ensuring continuous naval shipbuilding in Australia and delivering the capabilities needed to keep Australians safe.” A takeover by a South Korean chaebol could potentially scupper this agreement.

Offer rejected

In light of the above, the ASX 300 stock has rejected the offer. Though, it will continue to engage with Hanwha. It explains:

The Austal Board, together with its advisers, has considered the Indicative Proposal in detail and engaged with Hanwha in relation to whether the transaction described in the Indicative Proposal would obtain the relevant regulatory approvals in Australia and the USA to enable it to proceed. At present Austal is not satisfied that these mandatory approvals would be secured, however the company is open to further engagement if Hanwha is able to provide certainty on whether a transaction would be approved.

Management also advised that Austal shareholders do not need to take any action in response to the proposal.

The post Guess which ASX 300 stock is jumping 9% after receiving a takeover offer appeared first on The Motley Fool Australia.

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• How to tap into the record-breaking ASX 200 performance with just one stock
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• The pros and cons of buying ANZ shares right now

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Austal. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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