Tag: Motley Fool

This afternoon the Reserve Bank of Australia is scheduled to hold its March Board meeting and make its Official Cash Rate announcement.

This will be its second meeting of the year. The first meeting in February saw the central bank keep rates on hold.

Will the RBA cut rates in March?

A rate cut to zero is certainly in play judging by the ASX 30 Day Interbank Cash Rate Futures.

On Monday, the March 2021 contract was trading at 99.965, which indicates a 69% probability of an interest rate decrease to zero at today’s meeting.

However, not everyone believes a cut is in play at today’s meeting.

According to the latest weekly economic report out of Westpac Banking Corp (ASX: WBC), its economics team are ruling out any action today.

What did Westpac say?

Westpac’s Chief Economist commented: “While we have seen extraordinary developments in bond markets over the last week, I do not think they will impact the Bank’s key messages. We expect there will be no change in the policy settings and that the conclusion from the February Statement by the Governor will be confirmed.”

The statement that Mr Evans is alluding to is as follows:

“The Board will not increase the cash rate until actual inflation is sustainably within the 2 to 3 per cent target range. For this to occur, wages growth will have to be materially higher than it is currently. This will require significant gains in employment and a return to a tight labour market. The Board does not expect these conditions to be met until 2024 at the earliest.”

What is the bank expecting in the future?

In the economic note, Bill Evans concluded:

“The sharp increase in bond rates is reflecting an improving growth outlook rather than any expectation of an overshoot in inflation. Central banks are committed to patience and do not see significant risks of overshoot – the traditional pre-emptive approach to policy has been scaled back.

Markets are convinced that the RBA cannot extend its three year guidance on a stable cash rate beyond the middle of 2021.

Justifying that market expectation will require a significant lift in inflation and wages growth forecasts.

At present Westpac does not expect to see conditions sufficiently buoyant to support the necessary lift in the official forecasts. QE has been accepted by the Bank as a success; a more flexible approach to QE on an ongoing basis might be adopted when the current program expires in October.”

In light of this, Westpac continues to forecast the cash rate remaining on hold at 0.1% for as far out as its forecasts go – December 2022. But it could be even longer than that.

More reading

• 5 things to watch on the ASX 200 on Tuesday
• ASX 200 Weekly Wrap: Friday carnage ruins last week of ASX earnings
• Smash term deposits with these high yield ASX dividend shares
• ASX 200 Weekly Wrap: ASX lower despite bumper dividends
• Top brokers name 3 ASX shares to buy next week

Motley Fool contributor James Mickleboro owns shares of Westpac Banking. 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 A2 Milk Company Ltd (ASX: A2M) share price was well and truly out of form in February.

The infant formula and fresh milk company’s shares lost 16% of their value. This compares to a 1% gain by the benchmark S&P/ASX 200 Index (ASX: XJO).

This latest decline means the a2 Milk share price is now down by almost 50% over the last six months.

Why is the a2 Milk share price sinking?

The a2 Milk share price has come under significant pressure in recent months due to a sudden and shocking deterioration in its performance.

This has been driven largely by COVID-19 pressures, though there are concerns that structural issues could now be impacting its performance.

In respect to COVID-19, after initially benefiting from stock piling at the height of the pandemic, a2 Milk has now seen demand fall off a cliff. This is particularly the case in the daigou channel.

With no international travel, Chinese daigou sellers are not coming to Australia and sending products back to the mainland for profit. This was a lucrative channel for a2 Milk and their absence is being felt.

Management isn’t doing itself any favours either. Not only did a whole range of executives sell down their holdings before these impacts were understood by the market, but they have twice failed to accurately ascertain just how long the daigou recovery will take.

Both have weighed heavily on the a2 Milk share price.

Downgrading the downgraded guidance

Last month when a2 Milk released its half year results, it was forced to downgrade the (downgraded) guidance it provided just two months earlier. It commented:

“The pace of recovery in the daigou/reseller channel and in the CBEC channel has been slower than previously anticipated and the Company now expects revenue to be at the lower end of the previous guidance range.”

“A lower EBITDA margin range is now expected due to lower revenue, higher brand investment, longer daigou/reseller support, movements in foreign currency and adverse channel mix relative to what was anticipated in December.”

The company’s new guidance implies an EBITDA range of NZ$336 million to NZ$364 million for FY 2021. This will be down 34% to 39% from FY 2020’s EBITDA of NZ$549.7 million.

Where next for the a2 Milk share price?

Brokers appear largely divided on where the a2 Milk share price is going from here.

Analysts at Citi have a sell rating and expect it to fall a further 19% to $7.15. Whereas analysts at Morgans have an add rating and have tipped it to rise 17% to $10.40.

Macquarie is sitting on the fence with a neutral rating and $9.75 price target.

More reading

• ASX shares on watch: Chinese investment in Australia has dropped 61%
• Where to next for the A2 Milk (ASX:A2M) share price?
• Top brokers name 3 ASX shares to sell next week
• Do brokers think the A2 Milk (ASX:A2M) share price is a buy or sell?
• 3 ways A2 Milk (ASX:A2M) is planning a share price recovery

Motley Fool contributor James Mickleboro 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.

The post The a2 Milk (ASX:A2M) share price is down 50% in 6 months: Time to buy? appeared first on The Motley Fool Australia.

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+It has been reported by the Australian National University (ANU) that Chinese investment in Australia dropped by 61% in 2020. Does this mean that some ASX shares are on watch?

The investment decline is the lowest number in six years. The ANU database covering Chinese investments in Australia showed there had been a total of A$1 billion invested over the year, split between 20 different investments. To put that into perspective, there were 111 Chinese investments made in 2016.

But the 2020 decline was also after a 47% fall in 2019.

According to the reporting, the three sectors where China still spent big was real estate, mining and manufacturing.

What’s happening?

There are a number of different factors that could be at play.

For starters, there has been a number of tariffs and restrictions put Australian goods over the last year as part of troubling diplomatic issues between the two countries.

Those goods include an 80% tariff on Australian barley. There have been beef and lamb restrictions. Australian wine producers face tariffs of up to 200%. Australian cotton customers have been told to stop buying Australian cotton, with the potential for tariffs as high as 40%. Australian lobsters have been banned from China. Australian timber is another sector that’s suffering. Australian coal is also being targeted.

But, it’s not as though every Aussie export to China is suffering. Just look at how much iron ore that BHP Group Ltd (ASX: BHP), Rio Tinto Limited (ASX: RIO) and Fortescue Metals Group Ltd (ASX: FMG) is selling, at a high iron ore price as well.

Another factor that may be affecting things is that Australia currently has a much stricter foreign investment policy at the moment.

Every potential foreign investment is meant to be looked at by Australia’s Foreign Investment Review Board (FIRB) so that Australian assets aren’t sold at heavily discounted prices during a period of heavy economic disruption. There are also rules that allow the treasurer to stop deals after they’ve been signed. They also have to pass a national security test.

Which ASX shares does this affect?

It’s hard to say precisely which ASX shares would be affected when it relates to deals that potentially haven’t happened.

It is true that Bega Cheese Ltd (ASX: BGA) benefited when the Chinese Mengniu deal to try to buy Lion Dairy and Drinks didn’t go through, leaving the acquisition of that business to Bega Cheese instead. Bega can now focus on more of the value-add parts of the dairy chain.

Other ASX shares are certainly suffering in this environment of lacklustre Chinese demand. Treasury Wine Estates Ltd (ASX: TWE) has taken a big hit to its earnings and share price.

Whilst not an Australian company, ASX business A2 Milk Company Ltd (ASX: A2M) is suffering from lower levels of demand for products. Synlait Milk Ltd (ASX: SM1) is indirectly suffering from that too.

Time will tell whether the investment decline, tariffs and restrictions will be lifted later this year or whether the disruption and frosty relations are here to stay between China and Australia.

More reading

• The a2 Milk (ASX:A2M) share price is down 50% in 6 months: Time to buy?
• ASX 200 recovers strongly, Austal floats higher, Fortescue drops
• Where to next for the A2 Milk (ASX:A2M) share price?
• Why Fortescue, Genworth, Limeade, & Northern Star shares are sinking
• ASX 200 up 1.5%: Afterpay & Zip jump, Fortescue tumbles

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 and Treasury Wine Estates 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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On Monday the S&P/ASX 200 Index (ASX: XJO) was back on form and charged notably higher. The benchmark index jumped 1.75% to 6,789.6 points.

Will the market be able to build on this on Tuesday? Here are five things to watch:

ASX 200 expected to rise again

It looks set to be another positive day for the Australian share market on Tuesday. According to the latest SPI futures, the ASX 200 is poised to open the day 53 points or 0.8% higher this morning. This follows a fantastic start to the week on Wall Street, which in late trade sees the Dow Jones up 2.15%, the S&P 500 up 2.4%, and the Nasdaq index trading 2.6% higher.

Reserve Bank meeting

The Reserve Bank of Australia is meeting this afternoon to discuss the cash rate. According to the latest cash rate futures, the market is current pricing in a 69% probability of a rate cut to zero. However, according to the most recent Westpac Banking Corp (ASX: WBC) weekly economic report, its team doesn’t expect the central bank to make a move despite the recent developments in the bond market.

Oil prices weaken further

Energy producers such as Beach Energy Ltd (ASX: BPT) and Woodside Petroleum Limited (ASX: WPL) could come under pressure today after oil prices weakened. According to Bloomberg, the WTI crude oil price is down 1.9% to US$60.32 a barrel and the Brent crude oil price has fallen 1.45% to US$63.50 a barrel.

Gold price edges lower

Gold miners Evolution Mining Ltd (ASX: EVN) and Northern Star Resources Ltd (ASX: NST) will be on watch after the gold price edged lower. According to CNBC, the spot gold price is down a further 0.3% to US$1,723.70 an ounce. This appears to have been driven by increasing risk appetite.

Mesoblast shares to return

The Mesoblast limited (ASX: MSB) share price is due to return from its trading halt this morning. The biotech company requested the halt last Friday so that it could raise funds to keep its operations going. No details have been released, other than that the company “has commenced a proposed equity-based private placement to a targeted industry investor to fund operations.”

More reading

• ASX 200 recovers strongly, Austal floats higher, Fortescue drops
• These are the latest ASX shares to be hit by broker downgrades
• Why Fortescue, Genworth, Limeade, & Northern Star shares are sinking
• ASX 200 up 1.5%: Afterpay & Zip jump, Fortescue tumbles
• These are the 10 most shorted shares on the ASX

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

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The S&P/ASX 200 Index (ASX: XJO) rose by 1.75% today to 6,790 points.

Australian blue chip shares recovered a lot of the ground lost on Friday after the selloff.

Here are some of the highlights from today:

Austal Ltd (ASX: ASB)

After taking a bit of a pounding last week, the Austal share price roared higher today by 8.4% after announcing a contract win.

It announced that Austal USA has been awarded a US$235 million contract by the US Navy for the detailed design and construction of the 15^th expeditionary fast transport (EPF) vessel.

Austal USA has delivered twelve EPFs to the US Navy since 2012 on schedule and under budget, from the company’s Alabama shipyard.

Austal CEO Paddy Gregg said the new contract was a clear demonstration of confidence by the US Navy in the versatile EPF platform, designed by Austal Australia and manufactured by Austal USA. Mr Gregg said:

The EPF has become a real success story, delivering a fast, flexible and versatile capability to the US Navy. The EPF has made a real difference to military operations and other humanitarian and disaster relief missions over many years now, and this additional vessel contract reflects the continuing confidence in the unique high-speed platform.

This latest EPF will expand the medical facilities on-board, further enhancing the proven operational capabilities of the ship, which has been used for various medical missions in the Pacific, South East Asia and Western Africa.

Austal also announced that Austal Philippines has delivered Hull 419, a 109 metre high-speed catamaran ferry to Fjord Line of Norway.

It was the best performer in the ASX 200.

Fortescue Metals Group Ltd (ASX: FMG)

The Fortescue share price ended the day lower after going ex-dividend to pay its large interim dividend to shareholders.

According to the ASX, it ended the day lower by almost 6%.

Fortescue decided to pay a dividend of $1.47 per share to investors, which wasn’t too far off twice the size of last year’s interim dividend for investors.

Freedom Foods Group Ltd (ASX: FNP)

Although it’s still in a trading halt, Freedom Foods announced its FY21 half-year result today.

It said that continuing operations revenue was up 15% to $291.4 million. Continuing operations adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) jumped 182% to $21.7 million.

Continuing operations net profit after tax (NPAT) grew by 70% to a loss of $15.2 million.

The company also reported that it generated positive cash flow from operations before financing costs and non-recurring adjustments of $4.4 million, which was $30.5 million higher than the prior corresponding period.

The divestment of the cereals and snacks business is on target for completion in March 2021. Progress continues to be made on its recapitalisation plan, with lenders and the majority shareholder so far giving their preliminary support.

Shares will remain in voluntary suspension until release of the full details, which is anticipated to be in the middle of March.

Genworth Mortgage Insurance Australi Ltd (ASX: GMA)

Genworth announced that Genworth Financial has entered into an underwriting agreement (sale agreement) in relation to the sale of all of GFI’s shares in the company (around 52% of the issued shares).

After the sale is completed, GFI will no longer own any shares of the company.

The Genworth share price fell 6.2% today. 

More reading

• These are the latest ASX shares to be hit by broker downgrades
• Why Fortescue, Genworth, Limeade, & Northern Star shares are sinking
• Why Afterpay, Austal, Reece, & Service Stream shares are racing higher
• ASX 200 up 1.5%: Afterpay & Zip jump, Fortescue tumbles
• Why the Fortescue (ASX:FMG) share price is sinking 6% today

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 Austal Limited. The Motley Fool Australia has recommended Freedom Foods Group Limited. 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 recovers strongly, Austal floats higher, Fortescue drops appeared first on The Motley Fool Australia.

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It’s not popular – or a great strategy to get followers on social media – to be non-partisan.

Still, that’s what we choose to be at The Motley Fool. We’ll give credit where it’s due, but also criticism where it’s warranted.

Frank and fearless.

We did it in 2013 when we campaigned hard against the then-Liberal/National government’s plan to water down investor protections (the so-called Future of Financial Advice rollbacks).

Oh, and the sky didn’t fall in, as was predicted by those who desperately wanted those investor protections removed. They couldn’t have had an ulterior motive, could they?

We did it again, three years ago this month, when we called out Labor’s greatly flawed policy on franking credits, suggesting it was a poorly thought through, unfair and distorting policy. I’m not sure if it was poorly designed, cynical, or both… but it was poor policy, and we said so.

And we’re doing it again, today.

This time, we’re putting the blowtorch back on the Liberal/National Party government, and their equally flawed proposition of encouraging people to torch their retirement to buy a house.

The proposal, being put forward most forcefully by Liberal Party MP, Tim Wilson, is a slogan-heavy “Home First, Super Second”.

It seems to be a fig leaf to stop the planned increase in Super from 9.5% to 12% of wages/salary over the next few years. And a stalking horse to weaken the greatest part of Super – its compulsory nature and its inaccessibility until retirement.

The slogan is, in the way of things these days, something that sounds plausible, even desirable – which, I assume, is exactly what Mr Wilson wants.

Of course, in my opinion, it doesn’t even get to first base as a policy.

Housing, and for many, owning rather than renting, is a deeply human desire, and a worthy goal. On that, Tim Wilson and I agree.

A comfortable retirement, without worrying about food, heating, housing or transport, is – and I presume Tim would agree with me – also a deeply worthy goal.

So, I guess we have to choose, right????

I hope you’re scratching your head, right now.

I mean, should we really have to choose?

I wouldn’t have thought so.

Actually, let me be clearer: In a country like Australia, of course not.

The fiction of a ‘choice’ is political spin. And, as spin goes, it’s good. Tim Wilson has a knack for it.

See, here’s what happens. By seizing the initiative, you get to (try to) frame the question:

“Well, what is it? Do you want Super or Housing?”

I mean, you can’t shelter from the rain under Super, right? It can’t keep the wind out.

And just like that, you’ve fallen for the political spin.

Because here’s my question for Tim Wilson:

“Your question seems to presume that without using Super, housing is out of reach for some/many Australians. And your question seems to assert that such an outcome is a bad thing. So, Tim… given those presumptions, what else is your government doing to help people into housing?”

Because if Tim Wilson and the government are so deeply concerned about access to housing, I’m sure there must be a multi-agency, multi-pronged approach to solving the problem, right?

Task forces. Programs. Industry working groups. Investment in affordable housing. 

There must be some modelling, somewhere, that says Super is the best (only?) way to fix housing affordability.

There must be some modelling, somewhere, that says the significant cost to those people’s retirement is the only way we can make housing accessible.

There must be some modelling, somewhere, that says the previously bipartisan support for utilising Super to fund retirement and reduce the pressure on future budgets was dead wrong.

Right?

I mean, you wouldn’t propose it otherwise, would you?

Would you???

Especially right on the back of having encouraged tens of thousands of us to raid Super for (all too often) jetskis and flat-screen tellies during the COVID recession…

I’m desperately trying not to be cynical.

But I’m seeing a pattern here, and it’s scary.

See, here’s the thing about Super: it’s designed to save us from ourselves. Yes, you read that right.

The Treasurer continues to run the line that opponents “… don’t trust you to make your own financial decisions with your own money…”

So, it’s tough love time: Treasurer, we, as a society, suck at exactly that. And I think you know that.

To my readers; I’m sorry if you’re the exception. I’m sorry if you have an ideological objection.

But. It’s. True.

Compare Australia against any country with a voluntary retirement savings approach.

Or Australia, post-Super, with Australia before the scheme was introduced.

It’s chalk and cheese.

Behavioural psychologists have known for years that we are terrible at making long term decisions.

It’s just not in our evolutionary DNA.

I mean, God, credit cards wouldn’t exist if we were actually good at this stuff!

Nor, other than for emergencies, would personal loans.

And the whole buy now, pay later sector is Australia going to the shops and yelling “YOLO!” as we rush the counters with the apps open on our phones.

And then there’s lotto, pokies… the list goes on. 

So, we need ‘pre-commitment devices’.

Like, oh, I don’t know… Superannuation.

Makes sense, right? 

I’ve been asked, “But why would the government want to gut Super and have us retire poorer?”.

Frankly, I don’t know, for sure. I know some have an ideological obsession with non-profit Industry Funds, often heavily influenced by trade unions. Others are ideologically libertarian and hate Super’s compulsory nature. And yet others are probably being opportunistic, hoping that raiding Super would unleash a short-term bump in economic activity and property price gains… and know they won’t be around in 20 or 30 years when it’s time to pay the piper.)

Frankly, though, I don’t really care why.

And I have no interest in getting caught up in political games, other than to point out the spin that is diverting attention from the real issues.

And here they are, again:

First, Super is one of the greatest parts of our financial system, providing most Australians with a more comfortable retirement than would be provided by the pension.

Second, Super relieves a lot of pressure on the Federal budget, especially in the coming years as the population continues to age and healthcare costs continue to soar.

Third, Super allows a relatively small investment, now, to compound cost-free to provide a lot more, later.

It’s not perfect, but it’s pretty bloody good.

We should want only the prospect of a fundamentally unavoidable disaster to push us off that path to a well-funded, responsible retirement.

And housing ain’t it.

Not because it’s not important. Far from it.

But because it’s too important to let pollies tell us that we have a false choice: between Super and housing.

We should be holding our politicians to account. We should demand more. And demand better.

I agree with Tim Wilson that access to housing is one of the most important issues for young (and not-so-young) people, today.

But if he’s serious, I want to see why Super is the only (and/or the best) solution available.

Don’t hold your breath.

Spoiler: It’s not. Adding Super-fuel to the house price fire is only going to push prices higher. Housing policy is a topic for another day, but it’s important to address the fallacy that putting more demand into the market will make housing more affordable.

It won’t.

Oh, and up to 500,000 of us completely wiped out our Super last year when the ‘Early Access’ scheme was in place. So that’s half a million of us who can’t use it for housing.

Gee, it looks like a policy designed to wreck Super, doesn’t it?

I don’t want to cast aspersions on Mr Wilson or his supporters. I don’t want to assign motives or make allegations.

(And he and I were on the same side on the franking thing, so I certainly have nothing against him, personally.)

Instead, let me go back to the issues.

And let me be very clear:  It is a mistake of monumental proportions for him or his government to further undermine Superannuation, particularly almost 30 years into the scheme where the full benefits are only now beginning to show.

I’m glad he’s worried about housing affordability. My young blokes will absolutely benefit from any improvement on that score

But there is no ‘death or glory’ choice to make, here. It is not a question of “Houses or Super”, any more than it’s “Houses or Healthcare” or “Houses or Law & Order”. 

There are a dozen different things Tim Wilson and the Federal Government can do to improve access to affordable housing. None of them needs to be a mortgage on our retirements.

Please, join me in asking Mr Wilson to find a better way.

#HandsOffSuper

Fool on!

More reading

• Coles’ (ASX:COL) dividend is hitting Woolworths (ASX:WOW) out of the park
• CBA (ASX:CBA) share price on watch after being hit with civil proceedings by ASIC
• ASX aged care shares in focus after final results of Royal Commission released
• Why the Pointerra (ASX:3DP) share price surged 65% in February
• Why is the Seafarms (ASX:SFG) share price sinking 5% today?

Motley Fool contributor Scott Phillips 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 Coles Group Ltd (ASX: COL) share price has not been a good show for investors of late. Although Coles shares were up 1.11% at the close of trading today, the company is still down more than 15% since mid-February.

That’s a hefty drop for an ASX blue chip in just 2 weeks. Coles shares are now down around 20% since making a new all-time high back in August.

So why are investors selling out of Coles of late?

Coles earnings disappoint

Well, the company’s half-year earnings report seems to be the reason. Coles did happen to deliver its earnings on 17 February, around the time investors started hitting the sell button on masse. On the surface, there really wasn’t a lot to dislike in this earnings report. Revenues were up 8%, earnings rose by 12.1% and net profits were up 14.5%.

But investors weren’t thrilled when Coles warned that, “sales in the supermarket sector may moderate significantly or even decline in the second half of FY21 and into FY22”.

Having said that, a bright spot for investors was Coles’ dividend. Management decided to bump up Coles’ interim shareholder payout by another 10% to 33 cents per share, fully franked.

That came on top of the grocer’s last final dividend of 27.5 cents per share (also fully franked). If we put those two dividends together, we get an annual payout of 60.5 cents per share. On the current Coles share price, that would give us a yield of 3.92%, or 5.6% grossed-up with the full franking.

That’s not a bad yield by current ASX blue-chip standards. But it looks especially good against Coles’ arch-rival Woolworths Group Ltd (ASX: WOW).

Grocery dividend wars

When Woolies reported its own earnings results on 24 February, it also announced a dividend increase for its interim payout. Shareholders will get a 53 cents per share interim dividend (full franked), up a nice 15% from last year’s 47 cents per share interim payout. If we take Woolworths’ new interim dividend with its last final dividend, we get an annual figure of $1.01 per share. On the current Woolworths share price, that would result in a yield of 2.51%, or 3.59% grossed-up.

Of course, you can probably blame the market itself here. On the current share prices, the market is pricing Woolworths at a more expensive level than Coles. Woolworths is right now boasting a price-to-earnings (P/E) ratio of 35.87. Coles, in contrast, is being priced with a P/E of just 19.69.

If Coles and Woolworths were being priced equally for the same dollar of earnings, the result would be dramatically different. But if its and buts were candy and nuts, we’d all have a merry Christmas, as the saying goes.

The fact is that right now, Coles is offering a grossed-up yield of 5.6%, whilst Woolies is putting forward 3.59%. And that’s the tea.

More reading

• ASX 200 Weekly Wrap: Friday carnage ruins last week of ASX earnings
• How Aldi plans to disrupt many ASX retail shares
• 2 reliable ASX dividend shares to buy in March
• The Bubs (ASX:BUB) share price is rising today on solid results
• Is the Woolworths (ASX:WOW) share price in the buy zone after its results?

Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. 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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The Commonwealth Bank of Australia (ASX: CBA) share price will be on watch on Tuesday.

This follows the release of an announcement after the market close on Monday.

What did CBA announce?

This afternoon Australia’s largest bank announced that the Australian Securities and Investments Commission (ASIC) has commenced civil proceedings in the Federal Court against Commonwealth Securities Limited (CommSec) and Australian Investment Exchange Limited (AUSIEX). Both businesses are subsidiaries of CBA.

According to the release, the proceedings relate to errors that were reported to ASIC by CommSec and AUSIEX.

CommSec and AUSIEX have engaged extensively and co-operatively with ASIC. The bank notes that the regulator has also filed with the Federal Court and published on its website a Statement of Agreed Facts and Contraventions. This recognises their co-operation and that CommSec and AUSIEX do not intend to defend the proceedings.

What are the proceedings?

The proceedings relate to issues in respect of regulatory data requirements, trade confirmation requirements, best execution requirements, and reconciliations of client monies.

In addition to this, for the CommSec business only, the proceedings relate to issues in respect to brokerage payments, warrant agreement forms, and automated order processing filters.

Commonwealth Bank advised that the issues arose from errors such as information technology system coding or systems issues, human error, and/or data entry errors. The only issue where there was any direct financial loss to some customers was in relation to instances of brokerage overcharging.

In response to this, CommSec has paid total remediation of $6.5 million (including interest). This comprises refunds and other compensation payments to customers affected by the issues.

CommSec’s Managing Director, Richard Burns, commented: “We apologise to our customers who were impacted by our mistakes. These errors never should have happened. We acknowledge the importance of meeting our compliance obligations and we are committed to continuing to invest in strengthening our systems and procedures.”

What now?

CommSec and AUSIEX have agreed with ASIC to enter into a court ordered compliance program.

This compliance program will include a review by an independent expert, and is aimed at ensuring that all the remedial work has been adequately completed and ongoing systems and controls are effective.

On Monday, the CBA share price was in fine form. It rose 3.1% to $84.11. This leaves the bank’s shares trading within sight of their 52-week high.

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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.

The post CBA (ASX:CBA) share price on watch after being hit with civil proceedings by ASIC appeared first on The Motley Fool Australia.

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The Estia Health Ltd (ASX: EHE), Japara Healthcare Ltd (ASX: JHC), and Regis Healthcare Ltd (ASX: REG) share prices are mixed today after the Australian government’s Royal Commission into Aged Care Quality and Safety delivered its final report.

Estia shares closed 7 cents lower to finish a $2.07. Japara closed the day 4.77% higher to finish at 81 cents per share. Regis shares closed 0.25% higher to end the day at $1.98.

All 3 ASX shares experienced a fall in the half-hour before closing – while the Prime Minister was speaking on the report.

Key points and recommendations 

The two commissioners have come up with separate recommendations in some instances. 

• The Aged Care Act 1997 should be repealed and replaced with a new Act to come into force by no later than 1 July 2023.
• Both Commissioners Pagone and Briggs agree the Aged Care Quality and Safety Commission (ACQSC) should be abolished and replaced. As well, both agree a new pricing authority should be established to oversee aged care.
• New minimum requirements to be implemented for staffing – including a Certificate III qualification and English requirements.
• The award wage for aged care employees should be increased, and 60% of the yearly percentage increase to the award wage should be subsidised by the government.
• One registered nurse (RN) should be on-site at all times by 1 July 2024 and all residents should be able to see the RN for a minimum of 44 minutes each day on average. 30% of the yearly percentage increase for the RN’s minimum wage should be subsidised by the government.
• The Basic Daily Fee should immediately increase by $10 per day per provider.
• Aged care providers finances should come under the oversight of the Australian Prudential Regulatory Authority.
• Commissioner Briggs recommends refundable deposits be abolished by 2025 and replaced with user-fee, means tested system subject to the pricing authority.

Response from the government

In a statement released to the press today, Prime Minister Scott Morrison and Health Minister Greg Hunt stated:

I called this royal commission to ensure our oldest and most frail Australians could receive the respect and care that supports their dignity and recognises the contribution that they have made to society.

Today the Australian government is continuing to drive reforms with additional funding of $452.2m to address immediate priorities in the sector.

These immediate steps will drive improved quality of care by strengthening aged care provider governance, and improved oversight of home care which will ensure senior Australians and taxpayers are getting value for money.

It will provide additional financial assistance for residential care providers so they can improve care, whilst building the much-needed workforce of the future to support Australians who want to age in their own homes.

The government did not indicate how many and which of the recommendations it would follow.

How did Estia, Japara and Regis respond?

In Volume 2 of the report, Commissioners Casey and Briggs singled out an assault that occurred at Japara’s Mitcham facility. The Commissioners noted the Mitcham facility as “an organisation that was determined to avoid accountability for its actions.”

In a media statement released today, Estia Health CEO Ian Thorley responded to the report:

The Commission has been a thorough and valuable process and we believe, as a result, the entire sector will be better positioned to provide a sustainable aged care system that meets the needs of older Australians in the future.

As the report has just been released, we will take some time to review it in its entirety and we will respond more fully once we have completed our review.

Japara and Regis did not respond to Motley Fool Australia’s request for comment before publication.

ASX aged care share price snapshots

While today’s results are lukewarm at best for Estia, Japara, and Regis, the shares are still trending higher overall.

As the COVID-19 pandemic was in its early stages, the Estia, Japara, and Regis share prices took a battering. Since then, Estia and Regis shares have exceeded their pre-pandemic prices. The exception being Japara, which is currently 9 cents lower than this time last year.

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

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The Pointerra Ltd (ASX: 3DP) share price was on a tear through February as its share price rose an astounding 65.31%. Shares in the company pushed higher again today as the company released its half-yearly report.

The Pointerra share price was trading at 83 cents, up 2.47%, at the market’s close today.

The company is engaged in the development and commercialisation of its 3D geospatial data technology. The company’s technology offers real-time, dynamic web viewing tools for providing access to user’s data through the cloud.

How did Pointerra perform in the half?

For the period ending 31 December 2020, Pointerra reported impressive revenue growth, recording revenue of $1.56 million, up 218% on the prior half. Customer receipts also increased strongly, climbing by ~$650,000 to $1.14 million.

The company’s annual contract value (ACV) metric more than doubled. During the half-year, ACV grew to US$6.88 million, reflecting the impact of new customer acquisitions coupled with growth spend by existing customers. 

Evolving platform

Pointerra’s flagship cloud platform received notable enhancements in the half. The company delivered upgrades across the product portfolio of data processing, data and analytics as a service.

The 3D mapping company also announced the soft launch of its 3D data marketplace solution, 3Dinsight.ai. The platform is an artificial intelligence (AI) powered cloud marketplace conceived to help data acquisition companies monetise their 3D data sets. The solution will also facilitate market-driven demand for capture programs, useful for both infrastructure companies and governments.

Moreover, the company made a number of investments in people across the half. Pointerra hired in the development and sales teams to provide additional scale in meeting the demand for solution development. As such, the headcount increased from 12 to 20 full-time employees. Additional appointments will continue in the future as the business scales up its platform capability and customer acquisition.

About the Pointerra share price

Shares in the company exploded in July after notable tech investor Bevan Slattery took a stake in the company. The placement of $2.5 million has helped drive the Pointerra share price more than 1,560% higher.

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Daniel Ewing owns shares of Pointerra Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Pointerra Limited. The Motley Fool Australia has recommended Pointerra Limited. 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 Pointerra (ASX:3DP) share price surged 65% in February appeared first on The Motley Fool Australia.

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