Tag: Motley Fool

The S&P/ASX 200 Index (ASX: XJO) rose 0.08% to 7,061 points.

Here are some of the highlights from the ASX:

Kogan.com Ltd (ASX: KGN)

The Kogan share price fell around 14% today after giving a business update.

For the three months to 31 March 2021, gross sales went up 47% and revenue rose by more than 65%. Gross profit grew by more than 54% and adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) fell by 24%. Kogan active customers went up by 77% to 3.22 million.

The ASX 200 share said that it has continued its long-term strategy of investing in technology, brand awareness, logistics capability, platform improvements and Kogan First membership benefits to lay the foundation for future growth and provide ongoing improvements in the customer experience.

However, in the period to March 2021, customer demand fluctuated below the levels seen in the prior nine months to December 2020. As a result, the company was required to store larger amount of inventory, after ordering a high level of product in reaction to the demand seen in the first half of the financial year. This resulted in high storage expenses and demurrage fees.

The company has been increasing its promotional activity in response to the above inventory problem.

At the same time, the company is observing price inflation of many products currently being planned for reorder in advance of the peak Christmas trading period, together with inflation in international shipping costs.

Accent Group Ltd (ASX: AX1)

The Accent share price rose by around 11% after the shoe retailer announced an acquisition.

Accent announced that Brett Blundy is going to re-join the board. The business also announced the acquisition of the Glue Store retail business and the whole sale and distribution brands business of Next Athleisure.

The acquisition is going to cost a total of $13 million. Glue Store is an Australian youth apparel, shoe and accessory retailer offering an aspirational range spanning global street, fashion and sport cultures.

Glue Store’s product range includes leading domestic and global brands and a portfolio of strong and growing owned vertical brands.

The retail business has a network of 21 stores and an integrated online site. It’s generating $90 million of annual sales as well as $16.6 million of online sales.

Telstra Corporation Ltd (ASX: TLS)

The Telstra share price went up 0.3% today after the ASX 200 shared its success after investing $277 million to secure 1000 MHz nationally in a 26 GHz spectrum auction.

Telstra CEO Andrew Penn said that the new mmWave spectrum would dramatically increase capacity and speeds for Telstra’s customers.

Mr Penn said:

High speed connectivity is critical to Australia’s future prosperity and our aspirations to be a world leading digital economy. It has become central to all our lives – the way we live, work, keep ourselves entertained and stay connected, and more and more 5G will be at the heart of that.

mmWave spectrum is especially good at providing high-speed mobile broadband in high-density areas, such as built up cities and towns, train stations, sport stadiums and other locations with a high concentration of people using their mobile devices.

Telstra’s 5G technology now covers almost two-thirds of the Australian population and is on track to reach 75% by the end of June 2021.

More reading

• What’s with the Telstra (ASX:TLS) share price and other telcos today?
• History is on the side of the battered AMP (ASX:AMP) share price as it plans its demerger
• Why a2 Milk, Centaurus Metals, Kogan, & Youfoodz are sinking today
• The Youfoodz (ASX:YFZ) share price is down 15% today. Here’s why
• AMP (ASX:AMP) is the most traded ASX 200 share today

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Kogan.com ltd and Telstra Limited. The Motley Fool Australia has recommended Accent Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post ASX 200 finishes flat, Kogan drops, Accent jumps appeared first on The Motley Fool Australia.

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Fortunately, in this low interest rate environment, there are countless dividend shares for investors to choose from on the Australian share market.

But with so many to choose from, it can be hard to decide which ones to buy. To narrow things down, I have picked out three ASX dividend shares that brokers think investors should buy:

BHP Group Ltd (ASX: BHP)

According to a note out of Macquarie, its analysts have retained their outperform rating and $57.00 price target on this mining giant’s shares. This follows the release of a third quarter update that the broker thought was solid. Overall, it believes BHP is well-positioned to deliver on its guidance and benefit from sky high iron ore prices. This is expected to result in strong earnings and bumper dividends. Macquarie is forecasting fully franked dividends of $3.51 per share in FY 2021 and $2.97 per share in FY 2022. Based on the latest BHP share price of $47.56, this represents yields of 7.4% and 6.2%, respectively.

Wesfarmers Ltd (ASX: WES)

Another note out of Macquarie reveals that its analysts have retained their outperform rating and $56.60 price target on this conglomerate’s shares. The broker appears to have been pleased with the company’s Kmart update. It believes that the focus on private label expansion and online sales will drive growth in the coming years. Particularly given its modest share of an enormous addressable market. Macquarie expects fully franked dividends of $1.63 per share and $1.51 per share for the next two years. Based on the current Wesfarmers share price of $55.70, this will mean yields of 2.9% and 2.7%.

Westpac Banking Corp (ASX: WBC)

Analysts at Morgans have retained their add rating and lifted the price target on this banking giant’s shares to $28.50. According to the note, the broker believes Westpac and the rest of the big banks could surprise to the upside when they release their next updates in the coming weeks. In addition, Morgans has upgraded its earnings forecasts for the coming years to reflect lower credit impairment assumptions. As for dividends, the broker is forecasting $1.37 per share in FY 2021 and $1.49 per share in FY 2022. Based on the latest Westpac share price of $25.12, this equates to fully franked yields of 5.5% and 5.9%, respectively.

More reading

• 3 ASX dividend shares with fully franked yields over 5% today
• History is on the side of the battered AMP (ASX:AMP) share price as it plans its demerger
• 2 strong ASX 200 shares offering good income
• 5 things to watch on the ASX 200 on Friday
• 2 high quality ASX shares for your retirement portfolio

Motley Fool contributor James Mickleboro owns shares of Westpac Banking. The Motley Fool Australia owns shares of Wesfarmers Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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Finding an investment that offers a yield on your cash of 5% or more today is a hard task. If you don’t look at the ASX share market that is. In this era of near-zero interest rates, ASX dividend shares are one of the last bastions of yield today. Luckily for all of the yield-hungry investors out there, there are still plenty of ASX shares that have a trailing yield of 5% or more on offer today. Here are 3 of them:

3 ASX dividend shares with fully franked yields of 5% or greater today

BHP Group Ltd (ASX: BHP)

The ‘Big Australian’ BHP is one ASX dividend share that offers a yield of 5% or greater today. BHP has had a stellar year, climbing almost 60% over the past 12 months, and reaching a new all-time high of $50.93 last month. Investors can thank the surging commodities markets, especially a stubbornly high iron ore price, for these highs. At the time of writing, BHP shares are going for $47.48 a share. At this level, BHP shares offer a trailing dividend yield of 4.36%. That grosses up to a 6.23% yield if you include BHP’s full franking credits.

Coles Group Ltd (ASX: COL)

The Coles share price has been out of favour for a few months now. The country’s second-largest supermarket chain remains more than 15% down year to date, and down almost 20% from the all-time highs we were seeing back in August last year. Intriguingly for ASX dividend investors, this share price slump has pushed Coles’ trailing dividend yield to a pretty hefty level.

On the recent pricing of $15.68 a share, Coles offers a trailing dividend yield of 3.96%. Like BHP, Coles’ dividends tend to come with full franking credits. That means that this yield grosses up to 5.51% with the inclusion of those credits.

Medibank Private Ltd (ASX: MPL)

Medibank is the largest private health insurer on the ASX. Medibank has been on a bit of a rollercoaster share price wise over the past year. Its 52-week low of $2.45 a share was seen back in September, which was incidentally lower than the lowest price Medibank hit during the March 2020 coronavirus-induced market crash.

Medibank shares have obviously rebounded since then, but are still down more than 3% year to date. Luckily for ASX dividend investors, Medibank’s dividend payments have been far steadier. The interim dividend of 5.8 cents per share that investors received last month was actually higher than 2020’s interim payment of 5.7 cents. On current pricing, Medibank has a trailing dividend yield of 4.12%, which grosses up to 5.89% with the company’s full franking.

More reading

• Top brokers name 3 ASX dividend shares to buy today
• History is on the side of the battered AMP (ASX:AMP) share price as it plans its demerger
• 2 growing ASX dividend shares for income investors
• 5 things to watch on the ASX 200 on Friday
• Wesfarmers’ (ASX:WES) Bunnings open to hosting COVID vaccine hubs

Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of COLESGROUP DEF SET. 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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After flying 5% higher this morning, it was downhill all the way for the Proteomics International Laboratories Ltd (ASX: PIQ) share price today.

At the market close today, shares in the medical technology company were right back where they started, trading at $1.18. By comparison, the S&P/ASX All Ordinaries Index (ASX: XAO) is 0.02% higher.

Today’s price movement comes as the company announced one of its products received ISO certification.

ISO Certification

In today’s release, Proteomics International advised it has received ISO 13485 certification. ISO certification is an independent process that gives assurance a product or service “meets specific requirements”.

The company said achieving certification would aid it in commercial discussions going forward with global diagnostic companies. It also believes the certification will “widen” the market for its PromarkerD test and make it easier to achieve regulatory approval around the world.

The PromarkerD test is used for the early detection of chronic kidney disease (CKD) in patients with type-2 diabetes. According to Proteomics, clinical studies showed 86% of patients with type-2 diabetes went on to develop CKD within 4 years.

PromarkerD tests are manufactured in Australia under licence. The company is anticipating demand for the product to boom worldwide. Recognising this, Proteomics says it is in discussions with several manufacturers in the northern hemisphere “with the objective of streamlining the future production”. 

Proteomics managing director Dr Richard Lipscombe welcomed the progress, saying:

The ISO 13485 manufacturing standard provides the foundation to regulatory requirements for medical diagnostics and has been adopted by markets including the European Union, Australia, Japan, Canada and, most recently, the United States.

Proteomics share price snapshot

The Proteomics share price has increased 280% over the past 12 months and is up 51% year-to-date. At the same time, it has fallen 13% since achieving its all-time high on Monday.

Proteomics International has a market capitalisation of $129.7 million.

More reading

• Top brokers name 3 ASX dividend shares to buy today
• 3 ASX dividend shares with fully franked yields over 5% today
• What’s with the Telstra (ASX:TLS) share price and other telcos today?
• History is on the side of the battered AMP (ASX:AMP) share price as it plans its demerger
• Broker weighs in on the Redbubble (ASX:RBL) share price after its 20% dive

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.

The post Why the Proteomics (ASX:PIQ) share price is flying 5% appeared first on The Motley Fool Australia.

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Shares in ASX-listed telco companies barely moved today following the outcome of the 26 GHz band spectrum auction.

The share prices of Telstra Corporation Ltd (ASX: TLS), TPG Telecom Ltd (ASX: TPG), and Pentanet Ltd (ASX:5GG) have all remained fairly flat as the end of trading closes in.  

Telstra pays a hefty price for its share

The Australian Communications and Media Authority announced the results of its 26 GHz auction on Friday. Australian telcos placed their bids over the last month in an attempt to secure licenses of the 5G optimised spectrum.

With the spectrum split into 360 available lots, 358 were sold for a combined total of $647.6 million. These 358 lots were snagged by just 5 competing bidders, listed below:

• Pentanet Ltd won 4 lots – paying $7.986 million
• Dense Air Australia won 2 lots – paying $28.690 million
• Mobile JV (TPG’s bidding vehicle) won 86 lots – paying $108.187 million
• Optus Mobile won 116 lots – paying $226.203 million
• Telstra won 150 lots – paying $276.576 million

The millimetre wave, or mmWave, spectrum band sold is a short-range, high-frequency, and high-capacity band that unlocks the massive potential of 5G. Clearly, Telstra wants to be the frontrunner of 5G’s future in Australia, with the company making up nearly 43% of the total money spent by winning bids.

Telstra commentary

Commenting on the auction results, Telstra CEO Andy Penn said:

High-speed connectivity is critical to Australia’s future prosperity and our aspirations to be a world-leading digital economy.

It has become central to all of our lives – the way we live, work, keep ourselves entertained and stay connected, and more and more 5G will be at the heart of that.

In its update, Telstra also revealed it’s on track to reach 75% of Australia’s population with its 5G network by the end of June. At the time of writing, the Telstra share price is 0.2% higher trading at $3.40 per share.

What about competitors?

Singtel-owned Optus purchased 800MHz in mainland capital cities, along with 600MHz in Hobart and the Margaret River region of Western Australia.

Furthermore, TPG snatched up the 600MHz spectrum licenses across Brisbane, Adelaide, Canberra, and regional areas. In addition to licenses for the 400MHz spectrum across Sydney, Melbourne, and Perth.

There have been competition concerns among players due to the 5G allocations. Optus has nudged the Australian Competition and Consumer Commission for a 70MHz cap on all low-band allocations.

More reading

• History is on the side of the battered AMP (ASX:AMP) share price as it plans its demerger
• ASX 200 down 0.1%: Kogan crashes, AMP’s demerger plans, Telstra strengthens 5G network
• Pentanet (ASX:5GG) share price jumps after news of 5G deal
• Telstra (ASX:TLS) share price on watch after 5G update
• Why this ASX share bull market could run for longer

Motley Fool contributor Mitchell Lawler has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Telstra Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post What’s with the Telstra (ASX:TLS) share price and other telcos today? appeared first on The Motley Fool Australia.

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The AMP Ltd (ASX: AMP) share price reacted positively to its demerger plans, but investors are left confused as to whether this is a buying or selling opportunity.

It looks like the pessimists are winning out with the AMP share price initially surging over 7% before losing momentum to trade 0.9% higher at $1.14 in the last hour of trade.

But history is on the side of AMP supporters as several research reports have noted that most demergers create value for shareholders.

Demerger history gives embattled AMP share price hope

One of these reports was released by Wilsons earlier this month. The broker believes that returns generated from such transactions can be meaningful.

“The empirical evidence on demerger event studies, both in Australia and overseas, validates that break-ups generally create shareholder value, for both the parent and the spin-off,” said Wilsons.

“We have looked at 16 demergers since 2010, and in the majority of examples demergers create value during both the demerger period as well as post-demerger over the following 12 and 24 months.”

Ugly duckings can turn into swans

What’s surprising is that the entity that is being spun out usually performs better than the parent. Wilson found that these abandoned children have outperformed their parents by almost two times on average over a 12- to 24-month period.

Some of the divested entities that have outshone their parents two years post demerger include Dulux Group, which split from the Orica Ltd (ASX: ORI) share price; South32 Ltd (ASX: S32) share price after leaving BHP Group Ltd (ASX: BHP) and Virgin Money UK CDI (ASX: VUK) share price after being cut from National Australia Bank Ltd. (ASX: NAB).

Short-term pain for longer-term gain

Another research paper from Macquarie Group Ltd (ASX: MQG) also found that demergers can create buying opportunities for longer-term investors.

The broker found that ASX shares normally fall on the demerger announcement until the transaction is implemented.

It also noted that the performance of the child entity usually underperforms the broader market for the first six months. But this trend reverses and the child entity outruns the market.

“For the parent entity there is typically a short-term run-up into the demerger implementation followed by market performance post,” said Macquarie.

“The parent entity has tended to outperform over the longer term (1yr plus).”

Other ASX shares with demerger ambitions

Given the number of other potential demergers on the ASX, these findings are reassuring. The Suncorp Group Ltd (ASX: SUN) share price, AGL Energy Limited (ASX: AGL) share price and Telstra Corporation Ltd (ASX: TLS) share price are a few examples.

There is one other implication from demergers that are relevant to ASX investors. The outperformance of demerger candidates is uncorrelated to the S&P/ASX 200 Index (Index:^AXJO).

Hidden benefit from demergers and spin-offs

“In many cases, the value creation, or shareholder return, is almost entirely controllable by the company, and is distinct from a strategy that relies on improving sales or operating margins,” explained Wilsons.

“Corporate break-ups can provide investors with attractive returns, while also diversifying their sources of portfolio returns.”

Given the volatility on the market, this point shouldn’t be lost in the details.

More reading

• Why the NAB (ASX:NAB) share price is up 70% in 12 months
• AMP (ASX:AMP) is the most traded ASX 200 share today
• Why Accent, AMP, De Grey, & Nuix shares are charging higher
• What’s happening with the ANZ Bank (ASX:ANZ) share price?
• ASX 200 down 0.1%: Kogan crashes, AMP’s demerger plans, Telstra strengthens 5G network

Motley Fool contributor Brendon Lau owns shares of AMP Limited, BHP Billiton Limited, Macquarie Group Limited, National Australia Bank Limited, South32 Ltd, and Telstra Limited. Connect with me on Twitter @brenlau.

The Motley Fool Australia owns shares of and has recommended Macquarie Group Limited and Telstra Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post History is on the side of the battered AMP (ASX:AMP) share price as it plans its demerger appeared first on The Motley Fool Australia.

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The market has been merciless in punishing the Redbubble Ltd (ASX: RBL) share price after the company yesterday released a seemingly positive third-quarter update.

Slumping 17% by close of trade yesterday, the Redbubble share price is continuing to slide today and is trading at $4.11 at the time of writing, a further drop of 3%.

Despite a well-rounded update as far as key financial metrics are concerned, the market honed in on its weaker earnings before interest, tax, depreciation, and amortisation (EBITDA) margins and increased marketing spend. 

Redbubble expects its EBITDA margins to decline from 9.5% to mid-single digits in the near term, while headcount and marketing expenses are expected to increase to drive customer acquisition. 

The company was rapidly honing in on profitability, with an FY20 net loss of $8.8 million and 1H21 profit of $41 million. However, lower margins and increased expenses could temper its profit expectations. 

Morgans weighs in on the Redbubble share price 

Morgans explains that there’s currently a cycle of tough comparisons to periods with COVID-19 tailwinds and “unlikely-to-be-repeated” supercharged sales. 

US streaming giant Netflix Inc (NASDAQ: NFLX) is a prime example of what’s happening. The US$225 billion giant tanked 7% on Tuesday after reporting only 4 million new subscribers had joined the platform compared to its expected 6 million. 

In light of the current cycle, Morgans has downgraded Redbubble shares from add to hold with a target price cut from $6.64 to $4.88. 

Despite the downgrade, Morgans believes its business model and long-term growth profile is still appealing. It commented that its investment into marketing plays into the large opportunity to increase customer loyalty and repeat purchase metrics. 

Redbubble’s update also cited aspirational goals by 2024, including more than doubling marketplace revenue and improving EBITDA margins to 10-15%. The targets imply a 20-30% compound annual growth rate (CAGR) for revenue, which was well above the broker’s estimates. 

Foolish takeaway

Increasing marketing investment and expenses at the cost of near-term earnings could be a necessary evil to drive long-term shareholder value. 

While the Redbubble share price is trying to find a bottom after yesterday’s steep 20% fall, Morgans remains positive on the company’s long term prospects. 

More reading

• The Youfoodz (ASX:YFZ) share price is down 15% today. Here’s why
• Why some of your favourite ASX growth shares are free-falling this week
• ASX 200 recovers, Redbubble sinks, Megaport jumps
• 2 exciting e-commerce ASX shares growing rapidly
• Redbubble (ASX:RBL) share price crashes 20% on increased investments

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

The post Broker weighs in on the Redbubble (ASX:RBL) share price after its 20% dive appeared first on The Motley Fool Australia.

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One investment option that is growing in popularity each month is exchange traded funds (ETFs). 

And it certainly isn’t hard to see why ETFs are so popular with investors.

Not only are they an easy way to invest your hard earned money, they provide you with options that were unthinkable a decade ago. If you can imagine it, there’s probably an ETF for it out there.

But given the many options, it can be difficult to decide which ones to buy above others.

To narrow things down, I have picked out two ETFs that are highly rated right now. Here’s what you need to know about them:

BetaShares Global Cybersecurity ETF (ASX: HACK)

With the world rapidly shifting online for everything from tax returns to banking, cyber security has become incredibly important.

In light of this, demand for cyber security services continues to increase and shows no sign of slowing.

The BetaShares Global Cybersecurity ETF could be a great way to gain exposure to this trend. It provides investors with exposure to the leading companies in the global cybersecurity sector.

This means you’ll be buying a slice of companies such as Accenture, Cisco, Cloudflare, Crowdstrike, and Okta.

VanEck Vectors Video Gaming and eSports ETF (ASX: ESPO)

Another technological trend that investors may want to gain exposure to is video gaming.

Investors can achieve this through the VanEck Vectors Video Gaming and eSports ETF. This ETF gives investors access to a portfolio of the largest companies involved in video game development, hardware, and esports.

Among the companies included in the fund are giants such as Nvidia, Take-Two, and Electronic Arts.

VanEck notes that these companies are in a position to benefit from the increasing popularity of video games and eSports. Furthermore, the fund manager points out that the fund gives investors the opportunity to diversify their portfolio by providing tech options outside FAANG stocks.

More reading

• Got money to invest? Here are 2 ASX shares to buy
• 2 outstanding tech ETFs for ASX investors to buy this month
• How this ASX ETF is battling the biggest threat to Australian business growth
• These ETFs have been making ASX investors rich
• 2 quality tech ETFs delivering strong returns

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of BETA CYBER ETF UNITS. The Motley Fool Australia has recommended VanEck Vectors ETF Trust – VanEck Vectors Video Gaming and eSports ETF. 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 De Grey Mining Limited (ASX: DEG) share price has been a very strong performer on Friday.

In afternoon trade the gold exploration company’s shares are up 16% to $1.55.

This leaves the De Grey Mining share price trading within touching distance of its record high of $1.60.

Why is the De Grey Mining share price rocketing higher?

Investors have been fighting to get hold of the company’s shares today following the release of drilling results from its very promising Hemi prospect in Western Australia.

According to the release, strong mineralisation has been intersected at its Aquila and Crow sites.

At Aquila the company reported impressive resource definition and extensional drilling, with significant new intercepts. Whereas at Crow, visible gold was intersected again in the McLeod lode.

Management commentary

De Grey’s General Manager of Exploration, Phil Tornatora, commented: “Aquila-Crow is one of the more structurally complex areas at Hemi and has significant gold endowment. The McCleod Lode at Crow has now produced a number of thick, very high grade intersections which add significantly to the resource potential.”

“Improved targeting of these high-grade zones is ongoing as we gain a better understanding of the geological controls. Aquila continues to produce consistent, wide gold intersections throughout the lode, particularly in shallower portions,” he added.

This latest drilling update reinforces the view that De Grey Mining is sitting atop a significant gold deposit.

Unsurprisingly, this has been reflected in the De Grey Mining share price. Today’s gain means it is now up a massive 318% since this time last year.

And if you stretch back a tiny bit further to the start of 2020, the return stretches to over 3,000%.

This has taken the company’s market capitalisation to approximately $2 billion, which demonstrates just how excited investors are about the Hemi prospect.

More reading

• Why Accent, AMP, De Grey, & Nuix shares are charging higher
• Why the De Grey Mining (ASX:DEG) share price is dropping today
• Why the De Grey Mining (ASX:DEG) share price is on watch today
• De Grey (ASX:DEG) share price falters despite new gold discovery

Motley Fool contributor James Mickleboro 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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The Lion Energy Ltd. (ASX: LIO) share price is one of the best performers on the ASX today, outpacing almost all shares. This comes after the company announced a capital raising to complete operations and pursue its green hydrogen strategy.

At the time of writing, the energy producer’s shares are fetching 6.3 cents apiece, up an incredible 65.79%.

Lion’s capital raising efforts

Investors are driving up the Lion shares as the company provided some positive developments in morning trade.

According to the release, Lion advised it is undertaking a capital raise to fund its operations and green hydrogen strategy.

So far, the company has received $0.93 million from professional and sophisticated investors. However, Lion is seeking shareholder approval for 2 other tranches, to receive a total of $2.8 million in the placement.

The first tranche consists of 31.1 million new shares, utilising the company’s 15% placement capacity under listing rule 7.1. This allows up to 15% of its shares to be issued without shareholder approval.

The 1:1 attached options to the placement are subject to shareholder approval at the annual general meeting scheduled in July.

The second tranche has been committed through convertible notes for the amount of $1.51 million from new and existing investors. The unsecured notes have a maturity date of 31 December 2021. Each share issued from the convertible notes will include a 1:1 option and earn an interest of 12% per annum. The entire second tranche is subject to shareholder approval.

The third and final tranche will be issued to the company directors for the value of up to $350,000. Again, this is subject to shareholder approval.

All three tranches are issued at a price of 3 cents per share and fall under the same terms set out by the company. The options contain a strike price of 4 cents per share, with a 2-year expiry from the date of issue.

Furthermore, the board revealed that it plans to issue a total of 18,050,000 performance rights to the directors and officers. This is part of the remuneration package, and each performance right can be converted to one ordinary share. A shareholder will have the right to vote for or against this proposal at the general meeting.

Management commentary

Lion executive chair, Tom Soulsby welcomed the partnership, saying:

We are pleased to work with the team at Peak to support Lion’s legacy business and related new hydrogen studies and our potential foray into the Australian clean energy space. Peak brings a wealth of experience in supporting companies with green hydrogen and renewable investment businesses in Australia.

The proceeds of the placement will be used towards advancing the onshore seismic operations in the East Seram PSC. In addition, remaining funds will be allocated to studying hydrogen production on Seram Island, working capital, and exploring business opportunities in green hydrogen.

Lion share price snapshot

In the past 12 months, the Lion share price has jumped more than 270% and is up over 150% year-to-date. The company’s shares reached a 52-week high of 9.2 cents just last week.

On valuation metrics, Lion presides a market capitalisation of roughly $13.2 million, with 207 million shares outstanding.

More reading

• Here’s why Lion Energy (ASX:LIO) shares rocketed 132% this morning

Motley Fool contributor Aaron Teboneras 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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