Tag: Motley Fool

Could the Coles Group Ltd (ASX: COL) share price decline mean that the supermarket business is now a good value ASX dividend share idea?

In just over two months the Coles share price has actually fallen by 13%. When a share price falls, it has the benefit not only being cheaper but it also increases the company’s trailing dividend yield.

What is the Coles dividend yield now?

Using the last twelve months of dividends, Coles currently has a grossed-up dividend yield of 5.4%.

The broker Morgans expects Coles to pay a FY21 dividend of $0.62 per share, which would equate to a grossed-up dividend yield of 5.5%, which would be a decent increase on the FY20 dividend.

In the FY21 half-year result, Coles’ board decided to implement a 10% increase to the interim dividend to $0.33 per share after a 14.5% improvement of the earnings per share (EPS) to $0.42.

The half-year dividend represented a dividend payout ratio of just under 80%, leaving a sizeable amount to re-invest back into the business.

Promising signs from the HY21 result

Whilst the big supermarkets continue to see strong levels of short-term growth – Coles comparable sales growth in supermarkets was 7.2% in HY21 – there are promising signs for longer-term success.

The supermarkets customer satisfaction increased by 3.9 percentage points to 89.8%, compared to the second half of FY20.

Coles has been investing in its online capabilities so that it can fulfil all of the orders. Its business to consumer sales grew 61% with strategic investments made in user experience and capacity leading to significant improvements in its perfect order rate and customer satisfaction.

The company has also been trying to improve its own brand offering – which often comes with higher margins. In the FY21 half-year result it generated own brand revenue growth of 10% with 11 own brand products winning product of the year awards.

Coles is also on track to deliver cost savings of more than $250 million in FY21, with optimised markdowns, better data and technology enhancements and a more efficient supply chain to improve shelf life for customers.

The company is also working on its new Ocado and Witron automation projects. Structural work at the Witron automated distribution centre in Queensland is continuing and approvals received on the NSW distribution centre.

There has been strong growth at its liquor business which includes Liquorland, that division experienced 15.1% sales growth and 36.8% growth of earnings before interest and tax (EBIT). However, it’s the supermarkets business that generates a large majority of the revenue and profit.

The Coles CEO Steven Cain said:

Whilst COVID-19 will continue to present challenges it will also continue to present opportunities for change. With a strong balance sheet and team, Coles is well placed to continue delivering on our vision of becoming the most trusted retailer in Australia and grow long-term shareholder value.

What is the Coles share price valuation?

According to Morgans, Coles shares are valued at 21x FY21’s estimated earnings. The broker rates Coles as a buy.

More reading

• Over 1 in 4 Australians are investing in the ASX: report
• Why an AGL Energy (ASX:AGL) demerger might be a problem
• ASX 200 Weekly Wrap: ASX 200 gets its mojo back
• Top broker names 2 ASX dividend shares to buy
• 3 ASX dividend shares with yields over 4% right now

Motley Fool contributor Tristan Harrison 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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Although the NEXTDC Ltd (ASX: NXT) share price is pushing higher today, it won’t be anywhere near enough to cancel out its year to date decline.

Since the start of the year, the data centre operator’s shares are down 15% to $10.52.

This is despite the company smashing expectations in the first half of FY 2021 and upgrading its guidance for the full year.

Is the weakness in the NEXTDC share price a buying opportunity?

One broker that believes this share price weakness is a buying opportunity for investors is Goldman Sachs.

The broker currently has a buy rating and $13.50 price target on the company’s shares.

Based on the latest NEXTDC share price, this implies potential upside of 28% over the next 12 months.

Why does Goldman Sachs like NEXTDC?

Goldman Sachs appears to have been very pleased with the company’s performance during the first half.

It commented: “We view this as a solid 1H21 update with accelerating revenue and EBITDA growth. pricing that was in-line with expectations (A$4.31mn/MW vs. GSe prior A$4.32mn/MW), and pleasing updates for its S3 and M3 developments which we now expect to commence billing in FY23.”

And while the broker noted that NEXTDC’s contracted MW was lower than it was expecting, it notes that management spoke positively about its outlook.

Goldman said: “Although 1H21 contracted MW was lower than GSe, it was in-line with the c.2MW p.a. of Enterprise contracts we typically expect, and commentary (release & call) remained upbeat on the outlook. This was supported by a strong start to 2H21, with NXT having signed a c.2-3MW Hyperscale contract in Jan-Feb.”

What about the future?

The broker believes there is strong growth ahead, which could bode well for the NEXTDC share price.

It explained: “Stay Buy on NextDC, which we believe is continuing to successfully execute in a high-growth industry. As a scenario to demonstrate this growth, we highlight that as NXT converts its contracted (but not yet billing) MW and previously disclosed options into revenue, this would drive a +22% 5Y revenue CAGR, and an EV/Sales of 9.6X.”

It is important to note that this doesn’t include its potential expansion into Asia after recently opening offices in Singapore and Tokyo.

Overall, this could make it worth taking a closer look at NEXTDC after its recent share price weakness.

More reading

• 2 rapidly growing ASX shares that could be strong buys in April
• 2 of the best ASX shares to buy this month
• How this exponential growth could send ASX 200 data centre shares soaring
• 5 of the best ASX shares to buy next week
• 3 stellar ASX tech shares to buy for the long term

Motley Fool contributor James Mickleboro owns shares of NEXTDC 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.

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The Gascoyne Resources Ltd (ASX: GCY) share price has risen 1% to 51 cents today after the company voluntarily repaid 45% of its bank debt due to ongoing free cash flow generation.

The Dalgaranga Project gold miner from Western Australia entered into a $40 million loan facility with Investec in August 2020 as part of a recapitalisation process. It completed a repayment of $14.5 million today.

Gascoyne performance “strengthened balance sheet”

Commenting on the payment: Gascoyne Resources CEO Richard Hay said:

The voluntary prepayment of close to half of Gascoyne’s bank debt really highlights how far the business has come after more than 12 months of consistent performance of the Dalgaranga operation.

This prudent approach to capital management has further strengthened our balance sheet and is a credit to the support we have received from a range of stakeholders.

December quarter results

For the December quarter period, Gascoyne produced 20,381 ounces of gold, totalling 40,695 ounces for the first-half of the 2021 financial year.

In 2020, Dalgaranga produced in excess of 80,000 ounces of gold with targeted production over the next 4 years of between 70,000 and 80,000 ounces of gold per annum. All-in sustaining costs are expected to come between $1,200 to $1,300 per ounce.

Gascoyne had engaged gold hedges to finance its debt, but its voluntary prepayment removes the requirement for any further mandatory hedging at current spot prices, beyond its current position.

At the current spot gold price, Gascoyne’s existing hedge book has an in-the-money position of $15.7 million and will result in Gascoyne achieving an average realised price in excess of A$2,400/oz for the remainder of the 2021 calendar year.

About the Gascoyne share price

The Gascoyne share price has been one of the ASX’s biggest movers over the past two years, rising from 0.03 cents per share in May 2019 to 56 cents per share in October 2020. It has remained steady since then, never dropping below 43 cents throughout the coronavirus pandemic.

The Gascoyne share price is up 1,602% over the past 12 months and 17% this year to date, although it dropped more than 8% this week. It doesn’t pay a dividend and has current earnings per share (EPS) of 59 cents.

More reading

• Is the future vegan? The Pure Foods (ASX:PFT) share price might say so
• Qantas (ASX:QAN) share price takes off after latest COVID updates
• Afterpay (ASX:APT) also signs deal with JB Hi-Fi & The Good Guys
• The A2 Milk (ASX:A2M) share price was down almost every day in March
• Vanguard Australian Property ETF (ASX:VAP) announces dividend

Motley Fool contributor Lucas Radbourne-Pugh 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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There aren’t many companies catering to vegans on the ASX, but Pure Foods Tasmania Ltd (ASX: PFT) may be giving it a go. Its share price is up today after it shared news it has acquired another plant-based food brand. The company announced its acquisition of Cashew Creamery, which follows its acquisition of Lauds Plant Based Foods last month. It also holds ownership of plant-based cheese brand New Pastures.

The company stated in this morning’s announcement its strategy is to grow into the plant-based market through acquisitions.

The Pure Foods share price is up after today’s news. At the time of writing, shares are trading for 83 cents, up 4.4% marking an intraday high.

Let’s look further into Pure Foods’ plant-based approach.

Growing through acquisitions

Pure Foods announced it has acquired Cashew Creamery this morning.

The latest acquisition is another step for the company’s growth into the plant-based food market, which it states is set to be worth $3.9 billion by 2024.

According to Pure Foods, the cashew-based ice cream brand has grown its year to date sales by more than 50% over the year ending on 8 March 2021.

The acquisition is estimated to cost Pure Foods around $420,000, with approximately 52% to be paid in cash and 48% in shares.

On 2 February, Pure Foods announced it had acquired Lauds Plant-Based Foods.

It stated that doing so would grow the brand significantly in the short term due to Pure Foods’ extensive distribution channels. Additionally, it also said that it hoped its ownership of Lauds gives it access to its niche market network.

Pure Foods’ CEO Michael Cooper commented on the company’s plant-based focus when announcing its acquisition of Lauds:

We believe we can build an amazing business that can bring more and more plant-based food and beverages to Australia and distributed to our core export customers, principally in Hong Kong and Singapore.

While it’s only early days for Pure Food’s vegan approach, its future may be interesting.

Pure Food’s share price snapshot  

The Pure Foods share price hasn’t necessarily shown the same optimism in the plant-based food sector as the company. It is currently down by 20% year to date. Though, it is up 220% over the last 12 months.

The company has a market capitalisation of around $38 million, with approximately 53 million shares outstanding.

More reading

• Gascoygne (ASX:GCY) share price rises after huge debt clearance
• Qantas (ASX:QAN) share price takes off after latest COVID updates
• Afterpay (ASX:APT) also signs deal with JB Hi-Fi & The Good Guys
• The A2 Milk (ASX:A2M) share price was down almost every day in March
• Vanguard Australian Property ETF (ASX:VAP) announces dividend

Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned.

The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Qantas Airways Limited (ASX: QAN) share price is flying high today. At the time of writing, shares in the national carrier are trading at $5.15 – up 3%.

And Qantas is not alone in its trip to the skies. Other ASX travel shares are all moving in the right direction today. Currently, Flight Centre Travel Group Ltd (ASX: FLT) shares are up 2.67% ($18.10), the Webjet Limited (ASX: WEB) share price is 2.75% higher ($5.61), Sydney Airport Holdings Pty Ltd (ASX: SYD) shares have jumped 4.19% ($6.21), and Helloworld Travel Ltd (ASX: HLO) is 2.37% higher ($2.16).

For comparative purposes, the S&P/ASX 200 Index (ASX: XJO) is up 1.59%. So, ASX travel shares, including Qantas shares, are booming. While the market in general is also having a rip-roaring day, each of these companies is rising over and above the index. One likely factor is the positive COVID-19 update out of Queensland this morning.

Let’s take a closer look at that announcement.

Qantas share price turbulence

On Tuesday, Queensland Premier Annastacia Palaszczuk announced that the Greater Brisbane Area would go into a 3-day lockdown from 5pm that day. This news sent ASX travel shares, including the Qantas share price, tumbling.

Speculation was rife overnight that the lockdown could be extended by length and regions included, according to 9 News. But at 9 am local time (10 am Sydney time, i.e. at market open) today, Premier Palaszczuk and Queensland Chief Health Officer Dr Jeannette Young announced only two new cases, both linked to existing clusters. 

No extended restrictions were announced during the press conference. In addition, Queensland Health advised it had conducted 33,000 tests over the previous 24 hours, which provides some reassurance that no new COVID cases have been missed.

Investors seemingly enjoyed the news. The Qantas share price enjoyed its single biggest gain since the federal government announced it would be subsidising airfares to certain domestic locations.

NSW puts COVID restrictions on Byron Bay region

In related news, a hen’s party attended by two positive coronavirus cases from the Brisbane cluster has led to a new outbreak on the New South Wales North Coast. While only one case has been identified in the region so far, it has sparked some concern from the NSW Government.

From 5 pm today, face masks will again be mandatory in certain settings in the Tweed Shire, Ballina Shire, Byron Shire, and Lismore City council areas. In addition, hospitality venues will revert back to the one person per four square metre rule.

PUBLIC HEALTH ALERT – please view media release for full details. pic.twitter.com/lD4BrcIupB

— NSW Health (@NSWHealth) March 31, 2021

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

While the NSW Premier has not locked down the region, she is strongly recommending tourists postpone plans to travel there over the long weekend. The Byron Bay Bluesfest is due to start tomorrow.

If the situation in the region deteriorates, investors will be keeping a close eye on the Qantas share price and other ASX travel stocks.

More reading

• What’s driving the Sydney Airport (ASX:SYD) share price today?
• The Flight Centre (ASX:FLT) share price is a “top pick” in the travel sector
• ASX 200 dips lower, Webjet drops, REA bids for Mortgage Choice
• Flight Centre, Qantas, & Webjet shares fall on Brisbane COVID lockdown news
• These are the 10 most shorted shares on the ASX

Marc Sidarous has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Helloworld Limited. The Motley Fool Australia owns shares of and has recommended Webjet Ltd. The Motley Fool Australia has recommended Flight Centre Travel Group Limited and Helloworld 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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This morning Zip Co Ltd (ASX: Z1P) announced a partnership with JB Hi-Fi Limited (ASX: JBH) that will see it provide a fully integrated payments solution for both JB HI-FI and The Good Guys.

It notes that this will allow customers with the ability to shop, both in-store and online, and pay with Zip’s interest free buy now pay later (BNPL) payment solutions. The retailer has not previously offered BNPL options.

Zip’s Co-founder and Chief Operations Officer, Peter Gray, commented: “We are delighted to partner with the JB HI-FI Group. We look forward to providing customers with choice at checkout, empowering them to own the way they pay at JB HIFI and The Good Guys. This strategic partnership provides Zip customers with access to even more of Australia’s favourite brands, further delivering on Zip’s mission to be the first payment choice everywhere and every day.”

Is this good news for Zip?

Initially, this news went down well with the market, sending the Zip share price almost 3% higher. Since then, the BNPL provider’s shares have given back these gains and more.

This may be due to the fact that Zip isn’t the only BNPL solution that JB Hi-Fi is taking on board.

On Tuesday, rival Afterpay Ltd (ASX: APT) also announced a partnership with the retail giant for both JB HI-FI and The Good Guys brands.

It commented: “Customers will soon be able to shop in-store and online and spend up to $1,000 at all JB HIFI and Good Guys stores nationwide. By using Afterpay at checkout customers can spread their payment over four fortnightly instalments without ever incurring interest or fees if they pay on time.”

Afterpay’s EVP of Sales ANZ and Global Instore, Rachel Kelly, stated: “We are delighted to welcome the JB Hi-Fi group, with two of Australia’s most iconic retail brands, to Afterpay. Afterpay customers will be thrilled to be able to buy big ticket items such as electronics, whitegoods, appliances and home entertainment in a responsible manner, without incurring interest or fees.”

This appears to have taken the shine off Zip’s announcement. Furthermore, it highlights the fact that it remains unclear whether JB Hi-Fi has also taken on other BNPL providers such as Openpay Group Ltd (ASX: OPY) or Klarna.

More reading

• The A2 Milk (ASX:A2M) share price was down almost every day in March
• The Zip (ASX:Z1P) share price is seesawing today on partnership news
• ASX 200 jumps 1.35%: Zip inks deal with JB Hi-Fi, Suncorp’s flood update
• 4 ASX shares with director buys this month
• Airtasker and Zip were among the most traded ASX shares last week

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 ZIPCOLTD FPO. The Motley Fool Australia owns shares of AFTERPAY T FPO. 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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Investors might want to look away from the A2 Milk Company Ltd (ASX: A2M) share price. Shares in the dairy company have been red for almost every single day since March 4. At the time of writing, the A2 Milk share price is trading at $7.88, up 0.9%.  

How A2 Milk went sour 

After multiple earnings downgrades and rising geopolitical tensions between Australia and China, the A2 Milk share price looks like it has slumped to the point of no return. Its shares are down ~10.6% in March. Additionally, the share price is down ~32% year-to-date. 

Gone are the days where A2 Milk held an Afterpay Ltd (ASX: APT) or CSL Ltd (ASX: CSL) like status. 

Are brokers still positive on A2 Milk? 

Big brokers are still divided on the growth trajectory and recovery path for A2 Milk. There have been two broker notes in March with a diverging buy and sell rating. 

First came the UBS note on 4 March. This retained a buy rating and a NZ$16.00 target price for the dual-listed company. The broker expects a meaningful recovery in indirect infant formula sales in the next two years. In addition, the broker expects substantial market share gains for its China label infant nutrition. The note also highlighted that online brand strength remains strong in China with high WeChat engagement.

The A2 Milk share price is currently fetching NZ$8.61 on the NZX. This represents an upside of 85.8% from the broker’s target price. 

The Citi note on 23 March seems to be giving the optimistic UBS a run for its money. The broker retained a sell rating and a $7.15 target price.  

Citi has paid close attention to Feihe – the largest and most highly recognised Chinese infant milk formula company with a reported 17.20% market share in Q3 2020. The broker believes that competition is likely to intensify for foreign infant formula players like A2. It believes the expansion of the market share of Chinese brands is likely to drag A2’s growth. The A2 Milk share price would need to fall another 9.50% to reach Citi’s target price. 

Commonwealth Bank of Australia (ASX: CBA) reduces its stake 

While brokers might still be divided on where the A2 Milk share price will go next. CBA announced on 23 March that it had reduced its stake in A2 Milk from 46.9 million shares or 6.34% of the company to 39.5 million shares or 5.32%. Luckily for CBA, the A2 Milk share price has slumped another 6% since. 

 

More reading

• Afterpay (ASX:APT) also signs deal with JB Hi-Fi & The Good Guys
• Here’s why the Spirit (ASX: ST1) share price is up 5% this morning
• Here are the US shares ASX investors have been buying
• Over 1 in 4 Australians are investing in the ASX: report
• Are red-hot house prices good for ASX 200 shares?

Motley Fool contributor Kerry Sun 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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The Vanguard Australian Property Securities Index ETF (ASX: VAP) is on the move today. At the time of writing, this exchange-traded fund (ETF) has gained a healthy 1.48% and is currently (at the time of writing) trading for $82.24 per unit.

Investors have something of interest to ponder over the Vanguard Property ETF today as well. The ETF provider has just released the details of this ETF’s upcoming dividend distribution. This ETF, unlike most ASX shares, pays a dividend distribution every quarter, rather than every six months.

How much will VAP units pay in distributions?

Vanguard has announced that the Vanguard Australian Property Securities Index ETF will pay a distribution of 52.7758 cents per unit for the quarter ending 31 March 2021. The ex-distribution date will be 1 April, while the distribution itself will be paid out on 20 April.

That amount comes in right in the middle of the company’s last few distributions. Over the corresponding quarter last year, the distribution was 66.24 cents. For the past three distributions (for the quarters ending 30 June, 30 September and 31 December respectively), Vanguard’s ETF had paid out 75.45 cents, 13.26 cents and 75.29 cents per unit respectively.

If we annualise this most recent distribution of 57.78 cents per share, we get to a yield of 2.82% on the current ETF unit price. If we add this most recent distribution amount to the previous 3 payments, we get a trailing yield of 2.7%.

About the Vanguard Australian Property Securities Index ETF

As its name implies, this ETF tracks a basket of ASX shares that operate as real estate investment trusts (REITs). It currently holds 30 of these REITs. These are spread over the categories of retail, industrial, office, residential and health care.

Goodman Group (ASX: GMG) is by far the largest holding in this ETF, with a weighting of 23.4%. Scentre Group (ASX: SCG), Stockland Corporation Ltd (ASX: SGP), Dexus Property Group (ASX: DXS) and Mirvac Group (ASX: MGR) are also amongst the largest holdings.

The Vanguard Australian Property Securities Index ETF has had a rough year as a result of the pandemic. VAP units have returned -11.32% over the past year. But they have also averaged 5.66% over the past 3 years, and 9.75% per annum over the past 10. It charges a management fee of 0.23%.

More reading

• Retail shares: buy what you know, but who owns what you buy?
• 2 of the best ASX 50 shares to buy in April
• Where to reinvest your Telstra (ASX:TLS) dividends
• 2 ASX retail shares delivering strong growth
• 2 ASX REITs to grab (and 2 to avoid): fundie

Motley Fool contributor Sebastian Bowen 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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There are some ASX dividend shares with really big forecast yields for FY21 right now.

Trying to find high-yield businesses comes with its own set of risks and opportunities. Dividends can be less volatile than share prices, but they are certainly not guaranteed.

These two businesses are expected to pay very big dividends in FY21:

Fortescue Metals Group Limited (ASX: FMG)

Fortescue is one of Australia’s, and the world’s, biggest iron ore miners. It is generating high levels of profit right now thanks to the demand from China and the high iron ore price.

The broker Credit Suisse rates the Fortescue share price as a buy and has a price target of $23.50 on Fortescue. For income investors, Credit Suisse is expecting Fortescue to pay a dividend of $3.63 per share in FY21, which translates to a grossed-up dividend yield of 25%.

One of the main changes about the ASX dividend share recently has been its announced plan that it wants to be carbon neutral by 2030. A key part of this is Fortescue Future Industries, which is looking to develop green electricity, green hydrogen and green ammonia projects in Australia.

Fortescue Chair Dr Andrew Forrest explained:

We are trialling and demonstrating green hydrogen technologies in global-scale commercial environments, while also rapidly evolving into a green hydrogen and electricity producer of similar scale.

Our commitment to demonstrate green hydrogen’s economic value in world-scale operations, and become a major energy exporter, while implementing the considerable facilities to support both, means that Fortescue has emerged not simply as a thought-leader and investor, but uniquely as an executor of major green hydrogen projects.

Our aim is to provide the two “missing links” in the climate change battle, to create both the demand and the supply of green hydrogen. Due to its high energy performance and environmental neutrality, green hydrogen and direct green electricity has the potential to eliminate fossil fuels from supply chains. Once established, these advances will also substantially reduce Fortescue’s operating costs.

Adairs Ltd (ASX: ADH)

Adairs is one of the leading home furnishings retailers in the country. The broker Morgans has a buy rating on Adairs, with a price target of $4.50. Morgans is expecting Adairs to pay a dividend of $0.31 per share, which translates to a grossed-up dividend yield of 11.6%.

The ASX share generated a lot of operating leverage in the first half of FY21 where it saw an improvement of the gross profit margin of 500 basis points, with the Adairs division seeing an improvement of 690 basis points, whilst the Mocka division improved the gross margin by 230 basis points to 53.4%.

It’s generating a lot of sales growth through its online channel at the moment. Online sales increased by 95.3% to $62.2 million.

The ASX dividend share’s management is particularly pleased with its ‘linen lover club’ membership, which now has more than 900,000 members. Adairs says these customers are the most engaged and the company can individually provide offers based on historic purchases and preferred shopping channel. The linen lovers continue to account for around 75% of all sales.

An area of future improvement is the national distribution centre in Melbourne, which is currently under construction and should be operational in the first quarter of FY22. It’s expected to deliver annual savings of around $3.5 million per annum once fully operational. This will improve stock flow and online fulfilment as well as stock availability.

According to Morgans, the Adairs share price is valued at 9x FY21’s estimated earnings.

More reading

• Is the Fortescue share price ring-fenced by Twiggy and its climate targets?
• Why Macquarie thinks the BHP (ASX:BHP) share price and 2 others will outperform
• ‘Remarkable resilience’ in Aussie farmland a tailwind for ASX agriculture shares
• Why the South32 (ASX:S32) share price is outperforming today
• ASX 200 Weekly Wrap: ASX 200 gets its mojo back

Tristan Harrison owns shares of Fortescue Metals Group Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends ADAIRS FPO. The Motley Fool Australia has recommended ADAIRS FPO. 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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In afternoon trade, the S&P/ASX 200 Index (ASX: XJO) is well and truly back on form and surging higher. The benchmark index is currently up 1.65% to 6,848.9 points.

Four ASX shares that have failed to follow the market higher today are listed below. Here’s why they are dropping:

AGL Energy Limited (ASX: AGL)

The AGL share price is down almost 1.5% to $9.68. Investors have been selling the energy company’s shares after analysts suggested its plan to split into two might not be a good move. Goldman Sachs named seven concerns it has with the proposal this morning. Elsewhere, Ord Minnett responded by downgrading its shares to a hold rating and slashing its price target by 22% to $11.00.

Bubs Australia Ltd (ASX: BUB)

The Bubs share price is down a further 2% to 48 cents. Investors have been selling the infant formula company’s shares this year due to its poor performance in the first half and concerns over its outlook. Although its shares hit a 52-week low today, one broker believes they can go even lower. Citi recently reaffirmed its sell rating and 35 cents price target.

Harvey Norman Holdings Limited (ASX: HVN)

The Harvey Norman share price has fallen almost 4% to $5.73. This decline is almost entirely attributable to the retail giant’s shares going ex-dividend this morning for its interim dividend. Eligible Harvey Norman shareholders can look forward to receiving its fully franked 20 cents per share dividend on 3 May.

Openpay Group Ltd (ASX: OPY)

The Openpay share price has returned from its trading halt and tumbled 5% to $2.29. This morning the buy now pay later provider announced a $67.5 million funding package. This comprises a $37.5 million institutional placement, a $25 million corporate debt facility, and a $5 million share purchase plan. The placement was undertaken at $2.03 per new share, which represents a 15.8% discount to its last close price. Management intends to use the funds to accelerate its international expansion following its partnership with Worldpay.

More reading

• ASX 200 jumps 1.35%: Zip inks deal with JB Hi-Fi, Suncorp’s flood update
• Why the Openpay (ASX:OPY) share price is sinking 8% lower today
• 7 reasons the AGL (ASX:AGL) demerger might be bad for its share price
• 5 things to watch on the ASX 200 on Wednesday
• Why an AGL Energy (ASX:AGL) demerger might be a problem

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 BUBS AUST FPO. The Motley Fool Australia has recommended BUBS AUST FPO. 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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