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If you’re wanting to boost your portfolio with a couple of growth shares, then you may want to consider the ones listed below.

Here’s why these ASX growth shares have been rated as buys:

Nearmap Ltd (ASX: NEA)

The first ASX growth share to look at is Nearmap. It is a leading aerial imagery technology and location data company with operations in the ANZ and North American markets.

Nearmap gives businesses instant access to high resolution aerial imagery, city-scale 3D datasets, and integrated geospatial tools. This means that users can inspect, measure, or analyse locations from anywhere, which turns high-definition aerial map data into a powerful project management tool.

Management believes it has a large addressable market to grow into and is targeting annualised contract value (ACV) growth of 20% to 40% per annum over the long term.

One broker that appears confident in its growth trajectory is Goldman Sachs. It currently has a buy rating and $2.95 price target on Nearmap’s shares. This compares to the latest Nearmap share price of $2.18.

Zip Co Ltd (ASX: Z1P)

Although 2021 has been an amazing year for the Zip share price, the last seven weeks have been anything but that. After peaking at $14.53 in the middle of February, the Zip share price is now trading 42% lower at $8.42. And that’s even after a stunning 9% gain on Tuesday following a rebound in the tech sector.

One broker that appears to see this as a buying opportunity for investors is Morgans. Its analysts currently have an add rating and $12.10 price target on the company’s shares. Based on the latest Zip share price, this implies potential upside of almost 44% over the next 12 months.

It appears to have been pleased with its first half performance, which saw Zip report a 141% increase in total transaction volume to $2.32 billion and a 130% jump in revenue to $160 million. This was driven by a 217% increase in global active customers to 5.7 million, thanks largely to its rapidly growing US-based QuadPay business.

More reading

• Insiders have been buying Nearmap (ASX:NEA) and this ASX share
• ASX 200 up 0.9%: Cleanaway jumps, tech shares rise, Incitec Pivot sinks
• Why the IOUpay (ASX: IOU) share price tumbled 40% in March 
• Afterpay (ASX:APT) leads Zip by 40% on one critical measure
• These were the best performing ASX 200 shares in the Q1 of 2021

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 Nearmap Ltd. and ZIPCOLTD FPO. The Motley Fool Australia has recommended Nearmap Ltd. 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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March marked the third consecutive month-on-month decline for the Kogan.com Ltd (ASX: KGN) share price. With its shares bouncing 8% higher so far in April, is it time for Kogan shares to make a comeback? 

What’s driving the Kogan share price lower? 

Diverging performance between retail and ecommerce shares 

Classic ASX retail shares such as JB Hi-fi Ltd (ASX: JBH), Harvey Norman Holdings Limited (ASX: HVN) and Adairs Ltd (ASX: ADH) are within an arms reach of all-time record highs. This comes off the back of a significant rebound in 2020 and a relatively stable performance so far in 2021. 

Conversely, ecommerce enabled businesses such as Kogan, Temple & Webster Group Ltd (ASX: TPW), Mydeal.com.au Pty Ltd (ASX: MYD) and Redbubble Ltd (ASX: RBL) have logged negative returns across the board this year. 

Why are ASX ecommerce shares underperforming? 

Ecommerce businesses might be able to grow faster than traditional retail, but these companies typically fetch a much higher valuation. 

This leads to the issue in March, which witnessed a significant underperformance in growth and tech-related sectors, largely driven by a surge in bond yields. The S&P/ASX200 Info Tech (ASXINDEX: XIJ) fell 5.80% in March compared to the flat performance of the ASX 200 and outperformance in sectors such as financials. 

Many ecommerce shares fetch a tech like valuation, which is the case for Mydeal, a loss-making business. As well as Redbubble and Temple & Webster, which both recently started to turn a small profit. 

While the Kogan business might be kicking goals, it’s likely swimming against the tide as tech-related shares came under pressure. 

What’s the outlook for the Kogan share price? 

The outlook from Kogan’s half-year results was positive, noting that unaudited management accounts show that gross sales, gross profit, and adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) was up 45%, 102% and 90% respectively. The company plans to further expand its exclusive brands, develop its Kogan Marketplace and complete the integration of Mighty Ape. 

The most recent broker updates for the Kogan share price date back to 1 March from UBS and Credit Suisse. 

UBS reaffirmed a more cautious view on the 12-month outlook as trading might have slowed. It points to key risks being the accelerated investment in online channels by traditional bricks and mortar retailers. As a result, the broker retained a neutral rating and a $15.10 target price. 

Credit Suisse was more bullish and positive on the company’s medium to long term growth prospects. It was pleased with the growth in Kogan’s private label revenue and sees it as an important component of the business’ value proposition. The broker retained an outperform rating with a $20.85 target price. 

The Kogan share price is currently hanging around 10-month lows of $13.03. 

More reading

• 2 major ASX retail shares trading near record highs
• These ASX retail shares continue to surge higher
• These are the 10 most shorted shares on the ASX
• 2 fast-growth ASX tech shares that have been sold off
• 2 quick-growing ASX dividend shares to buy

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 Temple & Webster Group Ltd. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends ADAIRS FPO. The Motley Fool Australia owns shares of and has recommended Kogan.com ltd. The Motley Fool Australia has recommended ADAIRS FPO and Temple & Webster Group Ltd. 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 party may not be over for the Woolworths Group Ltd (ASX: WOW) share price as JPMorgan upgraded the supermarket giant.

The upgrade means that the Woolworths share price could soon be re-testing last February’s record high of $43.45.

The ASX share has outperformed its archrival. The Coles Group Ltd (ASX: COL) share price has been virtually flat over the past year when the Woolworths share price jumped nearly 14%.

The gain isn’t as impressive as the Metcash Limited (ASX: MTS) share price, which rallied 31% over the period.

Woolworths share price could reach new highs

But the Woolies share price may not have peaked, according to JPMorgan. The broker lifted its recommendation on Woolworths to “overweight” with a 12-month price target of $45 a share.

“Woolworths is likely to sustain market share gains at the expense of Coles due to the tailwinds of local, which could last longer than expected, and online, a structural growth opportunity,” said JPMorgan.

“Coles could accelerate online investment at the expense of dividends but this is unlikely.”

Technology provides sustainable edge

This personally reminds me of how the Commonwealth Bank of Australia (ASX: CBA) share price outruns the other ASX big banks over the long-term.

CBA has a technology edge as it invests more in IT, and that is one of the key reasons why it can keep ahead of the pact over the many years.

But there are three other reasons why JPMorgan is bullish on the Woolworths share price.

Three other reasons to buy the Woolworths share price

First is Woolworths ability to leverage on the Food and Everyday Needs ecosystem. The supermarket giant enjoys superior economies of scale in its food business and can generate incremental revenue streams with not much investment.

Then there is the potential turnaround of its Big W department store business. There are early signs that the struggling business has turned a corner after years of lacklustre performance.

Finally, JPMorgan points to the expected sale of its drinks and hotels division, Endeavour Group.

Not only will the divestment mean a potential capital return for investors who are eagerly eyeing the $2 billion plus of franking credits on Woolies’ balance sheet, but cutting Endeavour Group is likely to drive increased demand in the Woolworths share price from ESG-focused investors.

Talk about a double win!

More reading

• Beat low rates with these quality ASX dividend shares
• Lynch Group (ASX:LGL) share price falls after completing $206 million IPO
• These are the 10 most shorted shares on the ASX
• 2 ASX dividend shares to buy this April
• Commonwealth Bank (ASX:CBA) share price and weekly news wrap

Motley Fool contributor Brendon Lau owns shares of Commonwealth Bank of Australia and Woolworths Limited. Connect with me on Twitter @brenlau.

The Motley Fool Australia owns shares of COLESGROUP DEF SET and Woolworths Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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Little-known New Zealand-based tech company Eroad Ltd (ASX:ERD) has had an interesting first few months on the ASX. The company’s shares only began trading on the ASX in September. At the time, the Eroad share price was trading around $4 before it surged as high as $5.19. However, by January it has fallen off again. They have now shed almost 15% of their value. Currently, they are trading back at $4.40, giving the company a modest market cap of $360 million.

Company Background

The company develops tracking technology for the freight and logistics industries. Eroad’s telematics systems help companies oversee and manage their vehicle fleets. In addition, the systems also provide individual drivers with feedback and coaching to improve safety and performance. Eroad’s technology can even help companies manage their fringe benefit tax and fuel tax credit obligations.

Eroad’s Financial Performance

In the company’s most recent financial results for the six months ending 30 September 2020 it reported a 19% jump in revenues versus the prior comparative period (to NZ$45.8 million). Earnings before interest, tax, depreciation and amortisation expenses (EBITDA) increased 29% to NZ$15.3 million, but was flat against the prior half due to accelerating investment in research and development.

The company was impacted by COVID-19 lockdowns during the period, with sluggish growth across both Australia and North America. However, in Eroad’s home market of New Zealand, the effects from coronavirus were less severe. New Zealand revenues jumped by 13% half-on-half to $27.4 million.

Recent News

Eroad recently released an operational update for the December quarter. In it, the company reported that it had sold an additional 1,284 contracted units during the period. This reflects growth in New Zealand and Australia. Total Australian units increased by 10% quarter-on-quarter, outpacing growth in New Zealand (albeit off a much smaller base) with most sales made to small to medium-sized businesses. Eroad has stated that it is now targeting larger enterprises in Australia. In addition, the company hopes to land at least one major contract in the fourth quarter.

However, there continue to be significant headwinds in the North American market, with contracted unit numbers there declining slightly during the quarter.

Outlook for Eroad

Despite continuing challenging conditions in North America, Eroad anticipates a slight increase in revenues for the second half. EBITDA should come in roughly equal to the first half, reflecting the company’s continued investment in product development and marketing.

Eroad does forecast a strengthening growth runway over the next few years. It believes the rate of revenue growth will start to increase during FY22, but continued R&D investment (at a rate of around 24% to 27% of FY22 revenues) should accelerate growth even faster in FY23 and FY24. That could mean Eroad will be an ASX tech company to watch over the next few years.

More reading

• Leading brokers name 3 ASX shares to buy today

Motley Fool contributor Rhys Brock 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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DroneShield Ltd (ASX: DRO) shares could be on the move today following the company’s latest announcement regarding a new government contract. At yesterday’s market wrap, the DroneShield share price finished the day flat at 16 cents.

Let’s take a closer look and see what the drone security company updated the ASX with.

New government contract

According to this morning’s release, DroneShield received a follow-up order from a high-profile government customer from a Five Eyes country. The term ‘Five Eyes’ relates to a signals alliance between the United States, Canada, Australia, the United Kingdom, and New Zealand.

The deal, valued at $1.1 million, represents ongoing commitments from government agencies, which have sought DroneShield products in the past. Just yesterday, the company announced that a US law enforcement agency purchased a mobile system of two passive/non-emitting UAS detection sensors.

The new contract is an addition to previous orders made by the high-profile government customer earlier last month. Both parties are holding discussions for future orders.

Droneshield expects to receive the customer receipts for this contract during the current quarter (Q2 FY21).

Word from management

DroneShield CEO Oleg Vornik commented:

This rapid sequence of increasing repeat orders is precisely the right position to be in our industry, following initial lengthy periods of educating the end users on the merits of our offering and undergoing military and Government procurement processes.

This is a testament to the world class performance of the DroneShield products, and strongly positions us as these end users are commencing larger deployments of counter-UAS systems.

DroneShield share price review

DroneShield shares have catapulted in the last 12 months, flying close to 50% higher. However, the Droneshield share price has dropped around 5% year-to-date, with volatility over the past 6 months driving a price range from 21 cents to 15 cents.

Based on valuation grounds, DroneShield commands a market capitalisation of roughly $62.3 million, with 389.8 million shares outstanding.

More reading

• DroneShield (ASX:DRO) share price rises on new customer order
• Droneshield (ASX:DRO) share price moving on multiple product orders
• Here’s why the DroneShield (ASX:DRO) share price is flying 8%

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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The VGI Partners Ltd (ASX: VGI) share price is one to watch in early trade today after the Aussie equities manager unveiled the group’s new CEO pick.

Why is the VGI Partners share price on watch?

The VGI Partners share price will be one to watch following this morning’s announcement.

The board has appointed Jonathan Howie as the new VGI Partners CEO. In today’s release, the company said it followed a “comprehensive selection process undertaken with the assistance of a search firm”.

Mr Howie was most recently Asia Pacific head of index equity at BlackRock Investment Management in Hong Kong. He previously worked as head of iShares Australia from 2011 to 2018 and brings extensive leadership experience across the Asia Pacific region.

VGI Partners’ executive chair Robert Luciano said VGI was “delighted” with the appointment. “Jonathan’s appointment is part of our focus to further build out VGI’s investor relations, operational and risk management capabilities”, he said.

Mr Luciano will remain as executive chair following Mr Howie’s appointment.

Mr Howie is set to join VGI Partners on 12 April 2021 with the new CEO saying he was “excited” to join the team and “drive the next phase of growth”.

The VGI Partners share price fell 1.2% lower in yesterday’s trade to close at $7.51 per share. Shares in the Aussie investment group have fallen 12.7% in 2021 and 21.5% in the last 12 months.

Foolish takeaway

The VGI Partners share price will be one to watch this morning following Mr Howie’s appointment as the new CEO. Mr Howie is an ex-BlackRock executive who brings extensive Asia Pacific experience to help drive key strategies for VGI.

Prior to Wednesday’s open, VGI was trading at a 20.6 price to earnings (P/E) ratio with a $524.0 million market capitalisation.

More reading

• Broker tips Sydney Airport (ASX:SYD) share price to push even higher
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• 2 high yield ASX dividend shares to buy today

Motley Fool contributor Ken Hall 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 Sydney Airport Holdings Pty Ltd (ASX: SYD) share price was on form yesterday following the announcement of a travel bubble between Australia and New Zealand.

The airport operator’s shares pushed almost 3% higher to finish the day at $6.24.

Where next for the Sydney Airport share price?

One broker that believes the travel bubble between Australia and New Zealand will be a big boost to Sydney Airport is Goldman Sachs.

In response to the news, this morning the broker reiterated its buy rating and $6.73 price target on the company’s shares.

Based on the latest Sydney Airport share price, this implies potential upside of almost 8% over the next 12 months.

What did Goldman say?

Goldman Sachs believes that the travel bubble, which is due to open on 18 April, will deliver a much-needed return in international passengers through Sydney Airport’s gates, which will ultimately reduce retail lease abatement.

The broker commented: “Trans-Tasman volumes accounted for 14% of SYD’s total international in CY19 and the proposed move allows for international capacity to return. More importantly, it allows for international retail and duty-free business to recommence.”

“We are Buy-rated on SYD.AX. We maintain that SYD remains in an effective hibernation and expect SYD to be a major beneficiary of the Australian domestic inoculation strategy, if it facilitates relaxation of border restrictions.”

What about other airports?

The broker is less positive on Auckland International Airport Limited (ASX: AIA). It currently has a neutral rating and NZ$7.08 price target on its NZ shares. This compares to the current Auckland International Airport share price of NZ$7.75.

Goldman said: “Trans-Tasman volumes accounted for 31% of AIA’s total international in CY19. The AIA management indicated the business would be break even under a trans-Tasman bubble scenario.”

“We are Neutral-rated on AIA.NZ. AIA’s profitability remains tied to a recovery in international passenger movements, which is 97% below pre-Covid-19 levels and remains tied to the NZ government’s conservative border closure policies. That said, the company has limited cash burn (GSe NZ$10mn/mth) and solid available liquidity (NZ$1.6bn),” it concluded.

More reading

• Trans-Tasman Bubble: Does this mean take off for ASX listed airports?
• Top broker picks the best ASX shares to buy for the new quarter
• Are ASX 200 value shares still good value? Why these experts are at loggerheads
• Qantas (ASX:QAN) share price takes off after latest COVID updates
• What’s driving the Sydney Airport (ASX:SYD) share price today?

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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Brokers are always keeping their eyes on what ASX shares look like they could be good value and worth pouncing on.

Share prices change every day and the value on offer is steadily shifting. Hopefully investors can jump on opportunities that look good.

The below businesses are ideas that appear to have good long-term potential whilst also looking like they’re trading at attractive value today:

Australian Finance Group Ltd (ASX: AFG)

Australian Finance Group is the biggest mortgage broking business in Australia. It’s currently rated as a buy by at least three brokers.

In the first half of FY21, the company saw high levels of growth. Residential settlements went up 24% to $20.9 billion, the securities loan book increased 18% to $2.96 billion and the residential trail loan book went up 5% to $160 billion.

This translated into strong financial numbers, with revenue rising 11% to $371 million, gross profit growing 16% to $50 million, statutory net profit going up 36% to $25 million, underlying profit going up 41% to $24.9 million and operating cashflow rising 53% to $25.8 million.

AFG said that government stimulus supported increases in first home buyers as well as upgraders and refinance activity.

The broker Macquarie Group Ltd (ASX: MQG) has a positive outlook on AFG, with a price target of $3.06.

The ASX share’s management are also positive about the future, saying that the business is well capitalised with a strong balance sheet, no debt and strong brand. The business model includes annuity style trail revenue from the existing trail book.

On Macquarie’s estimates, the AFG share price is valued at 16x FY21’s estimated earnings.

Idp Education Ltd (ASX: IEL)

IDP Education is currently rated as a buy by at least five brokers.

The business helps international students study overseas and it’s also heavily involved in English language testing.

IDP has been impacted by the COVID-19 pandemic with the closure of international borders and changes to learning. The company has managed to somewhat compensate with online learning and testing for students.

Morgan Stanley is one of the brokers that rates IDP Education as a buy, with a price target of $30. That suggests potential upside over the next 12 months of more than 20%.

IDP Education said in its half-year result that its English language testing had rebounded to pre-pandemic levels. It also had $293 million of cash to see it through the crisis.

However, despite those positive signs, total revenue still declined 26% to $269.1 million, earnings before interest and tax (EBIT) fell 43% to $47.3 million and net profit after tax (NPAT) dropped 45% to $29.7 million.

Management said that it was encouraging to see a recovery was already underway when comparing the FY20 second half and FY21 first half results.

The ownership of the ASX share is changing, but this shouldn’t lead to any material change in the operations of the business.

Andrew Barkla, IDP CEO and managing director, said:

With our global teams in place, a supported pipeline of students, and increased digital capabilities, we are beginning to capture the demand as our customers reignite their global travel and study ambitions.

According to Morgan Stanley, the IDP share price is valued at 122x FY21’s estimated earnings and 59x FY22’s estimated earnings.

More reading

• 2 excellent ASX growth shares to buy
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• Here’s why the IDP Education (ASX:IEL) share price sank 6% today
• The worst performing ASX 200 shares last week

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

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Could the A2 Milk Company Ltd (ASX: A2M) share price be too cheap to ignore any more?

It has certainly had a really rough time. Over the last month it’s down 16%, in the year to date it’s down 34% and over the last six months it has fallen 46%.

Reporting season was an opportunity for the business to reassure investors that things are turning around. But it wasn’t able to do that.

Headline figures in A2 Milk’s HY21 report

Total revenue was down 16% to $677.4 million, earnings before interest, tax, depreciation and amortisation (EBITDA) declined 32.2% to $178.5 million and the net profit after tax (NPAT) declined 35% to $120 million.

A2 Milk attributed some of the decline to pantry destocking after strong FY20 third quarter sales, with reduced tourism from China and international student numbers. This is one of the main issues impacting the A2 Milk share price.

The company went on to say:

In September the company further advised that it had also started to observe additional disruption to the corporate daigou/reseller channel, particularly due to the prolonged stage 4 lockdown in Victoria, with a contraction beyond its previous expectations. These events, combined with subdued online pricing and channel inventory unwinding, have resulted in daigou/resellers being slower to re-enter the market to promote the brand. While there was some improvement in the channel towards the end of the period, the recovery was not as strong as had previously been expected.

How is management trying to fix this?

A2 Milk continues to focus on re-activating the daigou/reseller channel and is confident that it remains attractive and an strategically important channel for distribution penetration and new user recruitment.

There are three key areas that A2 Milk is doing. It’s ‘rebalancing’ its inventory levels and improving traceability through the channel. A2 Milk is providing support to the daigou/resellers. It’s also working with corporate daigou to drive innovation in distribution.

Is the A2 Milk share price too cheap to ignore?

Speaking to Angus Kennedy from Livewire, Chris Tynan from DNR Capital said that A2 Milk’s greatest asset right now is not being Australian. But it’s tricky with regulators wanting local Chinese players to play a bigger part in the market.

Mr Tynan pointed to escalating inventory problems, he said this was:

concerning because management has been quite dismissive of this problem in the past – they tied themselves in knots dancing around this problem on the earnings call. It’s probably going to be a bigger focus going forward just given the limited visibility they’ve got across these unique distribution platforms. If you lose control of this inventory, especially as expiration dates on products approach, there is risk of uncontrolled discounting which can result in brand damage and further margin impacts on other channels.

However, DNR Capital liked that A2 Milk is improving its market share locally in China, with the Chinese label brands growing sales and mother and baby store (MBS) penetration continuing to increase. The liquid milk business was also a good thing, but a bit of a sideshow.

Mr Tynan said that there are some things that the company can do to help things, but it won’t be cheap or easy. The new CEO may do well, but it’s a big job. Even so, the company has a very trusted brand and it has very strong market credentials.

He concluded:

So I do think the structures are there for performance to improve. But unfortunately, a lot of this relies on factors outside of their control. The one thing they can control is capital allocation to brand and channel. It is likely that they will have to bear more pain in the short to medium term as invest to fend off stiffer competition from domestic producers. This investment is key to driving future success, but it will likely take some time.

Both UBS and Morgans rate the A2 Milk share price as a buy. UBS thinks A2 Milk’s formula sales will recover over two years and it still has a good opportunity in China, with good online sales growth. Morgans has a price target of $10.40 on A2 Milk.

More reading

• These are the 10 most shorted shares on the ASX
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• The A2 Milk (ASX:A2M) share price was down almost every day in March
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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended A2 Milk. 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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March proved to be a volatile month for the Lynas Rare Earths Ltd (ASX: LYC) share price.

Its shares surged as much as 20% in the first week to an all-time record high of $6.82. This was followed by a sharp sell-off between 23 and 25 March where its shares shed ~15% to a 1-month low of $5.56. 

In the final stretch of March, the Lynas share price staged a 10% recovery to finish the month relatively flat. 

What’s next for the Lynas share price? 

Higher neodymium prices to lift earnings 

Neodymium (NdPr) is the primary material produced by Lynas, typically used in the production of magnets for automotive and energy industries. 

A global commitment for reducing emissions has put the critical material in the spotlight, propping both NdPr prices and the Lynas share price to 9-year highs. 

In Lynas’ half-year results, the company acknowledges that it is still premature to make a full assessment of global demand for rare earths, but preliminary data is positive nonetheless. It pointed to accelerating electric car penetration in Europe and Asia (primarily China) which more than compensates for the overall year-on-year decrease in global car sales.

Preliminary estimates highlight 40% growth in global sales of electric vehicles in 2020 compared to 2019, reaching a market share of approximately 4%. Other notable sectors include wind energy capacity which grew by 8% despite COVID-19 disruptions. 

Solid demand has seen the average Chinese domestic price of NdPr increase to US$55.5/kg in December 2020, compared to the US$35.9/kg in December 2019. This translated to a net profit of $40.6 million in 1H21 compared to the $3.9 million in 1H20.

Lynas 2025 growth plan 

The ‘Lynas 2025’ growth plan is focused on building a larger business to meet forecast demand growth. 

Lynas announced a $425 million capital raising back in August 2020 to fund its Kalgoorlie rare earths processing facility to produce mixed rare earth carbonate for shipment to the Lynas Malaysia plant.

In January 2021, the company signed an agreement with the United States government to build a commercial Light Rare Earths separation plant in the US, with the US government to provide up to approximately US$30 million. 

Once operational, the plant is expected to produce approximately 5,000 tonnes per annum of rare earths products, including approximately 1,250 tonnes per annum of NdPr. The plant will be designed to receive material directly from the new Kalgoorlie plant in Western Australia. 

More reading

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• ASX 200 Weekly Wrap: ASX 200 gets its mojo back
• These were the worst performers on the ASX 200 last week
• Why Lynas, Oil Search, Pushpay, & Webjet shares are tumbling lower

Motley Fool contributor Kerry Sun owns shares of Lynas Limited. 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 The Lynas (ASX:LYC) share price is bouncing back, what’s next? appeared first on The Motley Fool Australia.

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