Tag: Motley Fool

The Synlait Milk Ltd (ASX: SM1) share price is having a tough start to the week.

In afternoon trade, the ASX All Ords dairy processor’s shares are down 6% to $2.10.

Why is the Synlait share price falling?

Investors have been selling this ASX All Ords stock on Monday after the company’s half-year results disappointed the market. Here’s a summary of its performance:

• Revenue down 3% to NZ$769.8 million
• Earnings before interest, tax, depreciation and amortisation (EBITDA) down 25% to NZ$51.5 million
• Net profit after tax down 83% to NZ$4.8 million
• Net debt up 32% to NZ$518.6 million

What happened during the half?

For the six months ended 31 January, Synlait reported a 3% decline in revenue to NZ$769.8 million and an 83% decline in net profit after tax to NZ$4.8 million.

Management advised that this reflects operational stability and cost challenges, which have impacted its performance. In addition, delayed shipments of ingredients resulted in lower sales volumes in the first four months of FY 2023, significantly impacting first half profitability.

The ASX All Ords stock’s CEO, Grant Watson, explained:

A range of challenges, several driven by COVID-19, have created impacts across Synlait, including a reduction in milk processed, raw material supply challenges, CO2 shortages, a tight labour market and extreme weather events. This is on top of high inflationary cost pressures across every part of our business.

Unfortunately, these challenges are expected to continue in the second half. He adds:

There are no signs of these challenges abating, and we are constantly reviewing how this impacts our broader set of Synlait stakeholders, particularly at the farm gate. Since our last result, we have revised our farm gate milk price forecast twice due to subdued global economic activity and a slower-than-expected recovery of Chinese demand following COVID-19.

Outlook

In light of the above, the ASX All Ords stock is expecting its full-year profits to be down year over year.

It is guiding to a full-year profit in the range of NZ$15 million to NZ$25 million. This compares to FY 2022’s net profit after tax of NZ$38.5 million.

The post Guess which ASX All Ords stock is plummeting following an 80% profit dive appeared first on The Motley Fool Australia.

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More reading

• Why Adairs, Liontown, Qantas, and Synlait shares are dropping today
• Why Carsales, Evolution, Kelsian, and Synlait shares are dropping

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

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Recent weakness in the Allkem Ltd (ASX: AKE) share price could have created an extremely attractive buying opportunity for investors.

That’s the view of analysts at Bell Potter, which are predicting material gains ahead for the lithium miner’s shares.

What is the broker saying about Allkem shares?

According to the note, Bell Potter currently has a buy rating and $18.61 price target on the company’s shares.

This implies potential upside of approximately 84% for Allkem shares over the next 12 months from current levels.

And while Bell Potter isn’t expecting a dividend to be paid this year, it won’t be long until its maiden dividend makes an appearance.

Its analysts expect a 40 cents per share dividend in FY 2024, which represents an attractive 3.9% yield.

Why is it bullish?

Bell Potter is bullish on Allkem shares due to its strong production growth plans, balance sheet strength, and the diverse nature of its operations geographically, operationally, and end-product. It commented:

We expect AKE’s cash generation to lift substantially from 2023 with ongoing strength in lithium demand, commodity prices and production growth. AKE is aiming to maintain 10% share of supply in a global lithium market experiencing unprecedented growth; it has a portfolio of growth projects, balance sheet strength and cash flow from existing projects to achieve this target. AKE’s portfolio is also diversified across lithium commodity type, mode of production, asset location and end-user country.

Bell Potter also spoke about lithium prices, noting that Allkem expects another strong quarter ahead despite recent spot price weakness. It said:

AKE expect March 2023 quarter pricing to be consistent with the December 2022 quarter (US$53,000/t), and this was reiterated in the result today. The company also noted that stocks within the lithium supply chain remain low and should be supportive of prices, despite recent weakness in spot indices.

All in all, the broker appears to believe Allkem shares could offer a compelling risk/reward at current levels.

The post Bell Potter says buy Allkem shares now for 80% upside appeared first on The Motley Fool Australia.

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More reading

• Analysts say 2 of these ASX lithium shares can double in value
• Buy these ASX 200 shares for 50%+ returns: Goldman Sachs
• Investing in ASX 200 lithium shares? You’ll want to read this
• Why are ASX lithium shares sinking today?
• What was with ASX lithium shares today?

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

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The Treasury Wine Estates Ltd (ASX: TWE) share price is up 0.4% in late morning trade on Monday.

Shares in the S&P/ASX 200 Index (ASX: XJO) global wine company closed on Friday trading for $12.94. Shares are currently changing hands for $12.99 apiece.

This comes despite an unexpected increase in taxes on wine in the United Kingdom.

What new taxes is the UK imposing?

The Treasury Wine share price is shaking off concerns that the latest tax to hit the company’s UK wine exports could materially impact its second-largest international export market after the United States.

Treasury Wine is still recovering from Chinese tariffs of more than 200% slapped on Aussie wine imports in 2020. That came amid diplomatic disputes with the Australian government.

The new 10% tax increase in the UK applies to all wines. But it still could impact British demand for Australian vintages. And it comes atop a UK tax charged in accordance with alcohol content that comes into effect in August.

Britain’s Wine and Spirit Trade Association (WSTA) chief Miles Beale said the combined taxes would negate any price benefits delivered by the free-trade agreement (FTA) between Australia and the UK.

According to Beale (quoted by The Australian Financial Review), “The duty rise will completely overshadow any benefits of removing import tariffs, of between 6 and 9 pence a bottle, when the FTA takes effect later this year.”

Beale added that the latest tax “makes a mockery of the Department of International Trade’s promised big savings on Australian wine imports”.

Beale continued:

It is the largest increase in wine duty since 1975. These crippling inflationary tax hikes will be lumped on top of stealth tax rises for some alcoholic products, which the government has built into the move to taxing alcohol by strength.

Commenting on the potential impact on Aussie wine exporters, and by extension, the Treasury Wine share price, Australian Grape & Wine CEO Lee McLean said it would “make things much more difficult for Australian wine exporters to the UK, just as they are trying to diversify their exports”.

He said (quoted by the AFR), “the market will become less attractive” for many wine exporters, “although the UK will remain a significant market for the foreseeable future”.

Treasury Wine share price snapshot

As you can see in the chart below, the Treasury Wine share price has been a strong performer over the past 12 months, up 11%.

The ASX 200 is down 6% over that same period.

The post Treasury Wine share price lifts even as new UK tax ‘makes a mockery’ of free trade deal appeared first on The Motley Fool Australia.

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More reading

• 3 ‘defensive growth’ ASX shares perfect for the current climate: expert
• Here are 2 high quality blue chip ASX 200 shares named as buys by analysts
• Morgans names the best ASX 200 growth shares to buy in March
• Brokers name 3 ASX shares to buy now
• Morgans names 3 more of the best ASX shares to buy in March

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

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Magellan Financial Group Ltd (ASX: MFG) shares have gone down a long way over the past year, but the dividend yield could still be very high, leading to impressive passive income.

It’s not so good for long-term holders which have seen significant destruction of the value of their shares. Magellan has cut its dividend significantly compared to a couple of years ago. But, for new investors, they can get the yield at this lower starting point.

But, keep in mind that the dividend isn’t everything. Investors should think about what the share price might do as well – there’s not much point getting a 5% dividend yield if the share price permanently falls over 10%.

We’ll consider the outlook after looking at the Magellan dividend forecast.

Magellan passive dividend income expectations

Magellan says that strong cash flows allow the business to have a dividend payout ratio of 90% to 95% of the fund’s management profit. In the FY23 half-year result, it generated $90.1 million of operating cash flow during the half-year. It also has no debt.

The fund manager generated adjusted earnings per share (EPS) of 53.6 cents per share and decided to declare an interim dividend of 46.9 cents per share. That payment represents a dividend yield of 5.7%, excluding the effect of franking credits.

Commsec estimates suggest that Magellan is going to pay an annual dividend per share of 81.3 cents. That represents a dividend yield of 9.9%, excluding franking credits. However, that does suggest that the final dividend is going to be smaller than the interim dividend.

In FY24 Magellan’s dividend could be 59.9 cents per share, according to Commsec, suggesting that a big dividend cut is expected in the next financial year. That would translate into a dividend yield of 7.3% before franking credits.

In FY25, the Magellan dividend is estimated to be 55.1 cents per share, which would be another reduction. This would translate into a dividend yield of 6.7% excluding franking credits. That’s still a fair amount of passive income.

Can the Magellan share price rebound?

Magellan has gone down a long way. Since 2 July 2021, it’s down over 80%. It would have to be an incredible turnaround to recover all that lost ground.

Just getting back to $10 would be a start. It’s certainly priced on a cheap price/earnings (P/E) ratio. Commsec numbers show it’s valued at around 10 times FY24’s estimated earnings.

But, if earnings keep going down, then Magellan’s share price is unlikely to rebound noticeably, in my opinion.

Magellan’s funds under management (FUM) keep falling as its investment funds haven’t yet delivered much outperformance to stop the outflows. Unless the earnings stop falling, the dividend may keep falling.

The company has a few points of how to regain momentum: stabilise and improve its core funds management performance, launch new products, add new and complementary capabilities with acquisitions, disciplined capital and cost management, and its people. But, it may be easier said than done.

Magellan also noted that it had $882.4 million in cash, financial assets and investments in associates at 31 December 2022.

Whilst it could turn things around, it wouldn’t be at the top of the list of low P/E ASX shares that I’d want to buy because of the headwinds that high-fee active managers are facing.

The post Here’s how much passive income Magellan shares could pay to 2025 appeared first on The Motley Fool Australia.

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More reading

• Here are the top 10 ASX 200 shares today
• Here are the top 10 ASX 200 shares today
• Is it a trap? 3 ASX shares with ultra-high dividend yields
• Magellan share price slumps 5% to 10-year low
• Bought $1,000 of Magellan shares in 2013? Here’s how much passive income you’ve received

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

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Shares in S&P/ASX 200 Index (ASX: XJO) banking giant Commonwealth Bank of Australia (ASX: CBA) have caught the attention of one insider in recent weeks.

Independent director Julie Galbo bolstered her stake in the national institution last Tuesday, indirectly snapping up 130 shares for $96.90 apiece. That equals a total investment of nearly $12,600.

Does that mean the CBA share price – currently trading at $96.01 – is cheap? Well, that depends on who you ask.

Are CBA shares a buy right now?

The CBA share price has tumbled 5% over the last 30 days to trade near its lowest point since October right now. And some brokers appear to think the banking major is trading at a decent price.

Morgans, for one, tipped the stock as one of its best ideas earlier this month. It has a hold rating and a $96.11 price target on the bank share, my Fool colleague James reports.

However, as the broker pointed out, CBA’s valuation is notably steep compared to its peers right now.

The biggest of the big four currently offers a price-to-earnings (P/E) ratio of 16.75 and a price-to-book (P/B) ratio of 2.24, according to CommSec data.

Not to mention, CBA’s dividend yield – 4.4% at the time of writing – is lower than nearly all its ASX 200 bank peers.

But that hasn’t deterred either Morgans or Fairmont Equities founder and managing director Michael Gable. The expert also has a hold rating on CBA shares, saying as per The Bull:

Although CBA is the most expensive bank, we believe the price premium is justified because of its quality. Over the longer term, it outperforms the other major banks.

Not everyone is so bullish, however. Goldman Sachs has a sell rating and a $90.39 price target on CBA shares, representing a potential 5.8% downside.

The broker said the bank’s latest earnings, released last month, signalled its net interest margin (NIM) has peaked, making its valuation hard to support.

The post A director is buying up CBA shares. Should you? appeared first on The Motley Fool Australia.

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More reading

• ASX 200 bank shares lift despite Deutsche Bank stock tumble
• Should ASX 200 banks pay more for this implicit government backstop?
• How to make $500 of monthly income from CBA shares
• ASX big four bank shares close the day ahead as financial fears linger
• Goldman ‘remains confident in the health’ of ASX 200 bank shares and names its top pick

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

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

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

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

• Flight Centre Travel Group Ltd (ASX: FLT) continues to be the most shorted ASX share despite its short interest easing again to 11.1%. Short sellers appear to believe the company could fall short of expectations due to weaker revenue margins.
• Core Lithium Ltd (ASX: CXO) has short interest of 10%, which is up slightly week on week. This seems to have been driven by a bearish outlook for lithium prices.
• Zip Co Ltd (ASX: ZIP) has short interest of 10%, which is up marginally week on week. This may be down to concerns that the buy now pay later provider won’t be able to achieve its profit goals. Though, recent updates appear to demonstrate that Zip remains on course to do so.
• Megaport Ltd (ASX: MP1) has seen its short interest ease to 9.2%. The shock departure of its CEO and weaker operating trends may be behind this.
• Liontown Resources Ltd (ASX: LTR) has short interest of 8.7%, which is up week on week. Project cost blow outs and lithium price weakness appear to be behind this.
• Sayona Mining Ltd (ASX: SYA) has 8.7% of its shares held short, which is down week on week. Sayona Mining is yet another lithium share on the list amid falling prices.
• JB Hi-Fi Limited (ASX: JBH) has seen its short interest rise to 7.6%. This may be due to concerns over how consumer spending will fare in the coming quarters.
• Brainchip Holdings Ltd (ASX: BRN) has 7.3% of its shares held short. Short sellers will have been celebrating after this meme stock dropped to a 52-week low last week. It faces a near impossible task of competing against companies that spend billions on R&D each year.
• Betmakers Technology Group Ltd (ASX: BET) has seen its short interest ease to 7.3%. This betting technology company may have been targeted due to competition and cash burn concerns.
• Pointsbet Holdings Ltd (ASX: PBH) is back in the top ten with short interest of 7%. As with Betmakers, competition and cash burn concerns appear to be why short sellers are targeting this sport betting company.

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

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More reading

• Here are the top 10 ASX 200 shares today
• Why Core Lithium, Estia Health, Kingsgate, and St Barbara shares are charging higher
• Here are the 3 most heavily traded ASX 200 shares on Thursday
• Investing in ASX 200 lithium shares? You’ll want to read this
• Why are ASX lithium shares sinking today?

Motley Fool contributor James Mickleboro has positions in Nextdc. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Betmakers Technology Group, Megaport, and Zip Co. The Motley Fool Australia has recommended Betmakers Technology Group, Flight Centre Travel Group, Jb Hi-Fi, and Megaport. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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Let’s talk about the large-cap portfolio of Washington H. Soul Pattinson and Co. Ltd (ASX: SOL) and the three S&P/ASX 200 Index (ASX: XJO) shares that make up its largest positions.

For readers unfamiliar with Soul Pattinson, the company is an investment business that owns other shares and assets as well as being an ASX 200 share itself.

It has a number of different investment portfolios, including the large-cap mentioned above. Others focus on small-cap and property investments; it has structured debt and private equity portfolios; and a strategic portfolio where it owns large stakes in businesses.

Soul Pattinson says it makes active asset allocation decisions, meaning it doesn’t invest to meet a benchmark or replicate an index.

The idea of the large-cap portfolio is that it’s actively managed to deliver capital growth, dividends and portfolio liquidity.

Soul Pattinson has deliberately reduced its portfolio size and focused on defensive stocks. It is ‘underweight’ on bank and mining shares while being ‘overweight’ on diversified financial, healthcare and consumer staple shares.

Having said that, here are the largest three holdings, which comprised more than 28% of the portfolio at the end of the company’s FY23 first half.

Macquarie Group Ltd (ASX: MQG)

Macquarie is the largest position in the portfolio with a 12.6% weighting.

The ASX bank has four different segments. Two of them are called ‘annuity style’ businesses – Macquarie Asset Management (MAM) and banking financial services (BFS). MAM had assets under management of A$797.8 billion, while the banking segment is rapidly growing.

The ASX 200 share also has two ‘market-facing’ businesses of commodities and global markets (CGM) and Macquarie Capital. Higher energy prices have helped boost profitability for the overall Macquarie business.

While downturns may not be helpful for Macquarie’s earnings, its long-term expansion plans have helped the business grow. In five years, the Macquarie share price is up more than 60%. Between FY18 and FY22, the company’s dividend grew by more than 20%.

CSL Limited (ASX: CSL)

CSL is the biggest ASX healthcare share in Australia. It is developing a number of treatments for patients. It provides protein-based treatments and is a leading provider of in-licensed vaccines. CSL recently acquired a business with expertise in iron deficiency and related anemia.

In the recent FY23 half-year result, the ASX 200 share showed ongoing progress, with its underlying net profit after tax (NPATA) growing by 10% to $1.82 billion in constant currency terms.

Over the past five years, CSL shares have surged by around 80%. Between FY18 and FY22, the CSL dividend has grown by around 40%.

BHP Group Ltd (ASX: BHP)

BHP is one of the world’s largest commodity businesses, with iron, copper and coal being three of its largest exposures.

The ASX 200 mining share is exposed to volatile resource prices, so investors can’t expect year-over-year growth every time. But, improvements in its efficiencies and operations can help it lower costs, and it’s expanding in some areas like copper and potash.

Despite the volatility, and the divestment of its petroleum business, the BHP share price is up around 50% over the past five years. The FY22 annual dividend per share was almost 40% bigger than the FY19 dividend.

The post Why these 3 ASX 200 shares could be leading picks for dividends and growth appeared first on The Motley Fool Australia.

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More reading

• Top brokers name 3 ASX shares to buy next week
• Want to boost your portfolio with ASX blue chips? Analysts say buy these shares
• Passive income beasts: 3 ASX dividend shares I’d buy for retirement
• Want $10,000 of passive income? Check out these ASX shares
• Own BHP shares? Here’s how the iron ore giant is cleaning up steelmaking’s act

Motley Fool contributor Tristan Harrison has positions in Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended CSL and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia has positions in and has recommended Macquarie Group and Washington H. Soul Pattinson and Company Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The banking sector has been under significant pressure this month amid a number of high profile global bank collapses.

This means that all ASX 200 bank shares are now trading meaningfully lower than their recent highs. That’s despite having some of the strongest balance sheets and risk settings in the world.

All in all, this could have created a buying opportunity for investors that are looking for exposure to the sector.

Two options that are popular with investors are ANZ Group Holdings Ltd (ASX: ANZ) and Westpac Banking Corp (ASX: WBC) shares. But which of these is the better buy?

Should you buy ANZ or Westpac shares?

The good news is that most brokers are positive on both of these ASX 200 bank shares. So, either of the two could arguably make for a great portfolio addition right now. Furthermore, as I covered here recently, both banks have strong capital positions and significantly higher than required liquidity. These are great qualities to have in the current environment.

But if you were to ask the team at Goldman Sachs, its analysts would say that Westpac shares are the ones you should be buying right now.

This is due to the broker’s belief that it stands to benefit from rising interest rates more than peers. It also highlights that its cost cutting plans should be supportive of earnings growth in the current inflationary environment.

In addition, it highlights that Westpac shares trade at a sharp discount to peers. And who doesn’t love buying things on sale? Goldman explained:

We reiterate our Buy (on CL) recommendation on WBC given: i) while NIM pressures are accelerating across the sector, WBC’s shorter-duration replicating portfolio, and current balance sheet performance, should see its NIM outperform peers, ii) despite WBC recently revising its FY24E cost target to A$8.6 bn (from A$8.0 bn), the bank’s performance on cost management remains strong in this inflationary environment with a 9% step down in underlying costs expected over the next two years, iii) the stock is trading at a 25% 12-month forward PER discount to peers (historically a 3% discount), and iv) our TP of A$27.74 offers 36% TSR.

What about ANZ?

Interestingly, while Citi is bullish on Westpac and has a buy rating and $30.00 price target on its shares, it has a preference for ANZ. This is due to its institutional business, which is expects to support solid earnings growth in FY 2023 and FY 2024. Citi has a buy rating and $29.25 price target on its shares. It commented:

ANZ remains our top pick in the sector, and we expect the lending momentum, particularly in institutional, to continue to differentiate vs peers.

Overall, there’s not much to split the two. But Westpac shares are arguably slightly ahead given the discount they trade at compared to historical averages and their stronger potential returns.

The post Best ASX 200 bank share to buy now: ANZ vs Westpac appeared first on The Motley Fool Australia.

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More reading

• ASX 200 bank shares lift despite Deutsche Bank stock tumble
• How I’d aim for $250 in monthly passive income from ANZ shares
• Want $10,000 of passive income? Check out these ASX shares
• The Westpac share price is down 6% this month, should you buy the dip?
• Want passive income? Analysts say you can get 6%+ yields with these ASX dividend shares

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

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The TPG Telecom Ltd (ASX: TPG) share price is down around 30% since August 2022. That’s a hefty decline considering telecommunications is meant to be a defensive sector. But, at this lower level, could the S&P/ASX 200 Index (ASX: XJO) share be a good passive income play?

There has been significant change in the telecommunication sector in the last few years. The shift to the NBN has hurt margins. However, there have also been some acquisitions and mergers in the sector, such as TPG merging with Vodafone Australia.

I think the change in the telco market has meant that competition is less intense, which has enabled both Telstra Group Ltd (ASX: TLS) and TPG to increase their mobile prices.

While the TPG share price has dropped, its dividend has continued to grow. But can it keep growing?

Dividend expectations

Using the estimates on Commsec, TPG is expected to maintain its dividend at 18 cents per share in FY23. That would translate into a grossed-up dividend yield of 5.3%.

Earnings and the dividend are expected to rise in FY24. TPG is expected, according to Commsec numbers, to pay an annual dividend per share of 20 cents. That would be an increase of 11%. With that possible passive income payment from the ASX 200 share, it’d be a grossed-up dividend yield of around 6%.

TPG could then increase its 2025 financial year dividend by another 5% to 21 cents per share. If the Commsec number is right, then it would translate into a grossed-up dividend yield of 6.25%.

Can earnings improve?

Analysts are certainly expecting profit to rise in FY24 and FY25.

The business could make earnings per share (EPS) of 13.7 cents, which could then rise to 17.4 cents in FY24 and 26.3 cents in FY25.

The ASX 200 share is expecting that FY23 underlying earnings before interest, tax, depreciation and amortisation (EBITDA) will be between $1.85 billion to $1.95 billion, which excludes “material one-offs and transformation costs”.

TPG noted that in 2022, the ASX 200 share recorded a net increase in mobile subscribers of 300,000, with a 6% increase in mobile customers. Average revenue per user (ARPU) for mobile was up 1.9% in the period to $32.4 per month, primarily reflecting “higher international roaming levels”. The postpaid mobile ARPU was $42.7 per month, up 3.1%.

In terms of 5G, TPG says its rollout is on schedule, with more than 2,000 mobile sites completed at the time of the FY22 result. It’s expecting to upgrade 1,000 new 5G mobile sites in 2023, with a similar number planned each year to 2025.

TPG and Telstra were blocked by the Australian Competition and Consumer Commission (ACCC) for their proposed network-sharing agreement, which would have boosted TPG’s network coverage in regional Australia. TPG and Telstra are challenging this decision through the Australian Competition Tribunal.

The business is working on synergies between the TPG businesses and Vodafone. It reports it has achieved $140 million of cost synergies.

If TPG is to keep increasing its ARPU, that would be a natural boost for the company’s earnings — if it outstrips cost increases. Such an outcome could be conducive to generating returns for investors looking for passive income.

TPG share price snapshot

As of Friday’s close, the ASX 200 share was down 0.6% in 2023 to date.

The post Is this beaten-up ASX 200 share an underrated passive income opportunity? appeared first on The Motley Fool Australia.

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

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Deutsche Bank AG (ETR : DBK) shareholders are the latest to take a haircut from the ongoing global banking crisis.

Shares in the German banking giant tumbled 8.5% in Europe on Friday. That puts the Deutsche Bank share price down a painful 26% over the past month.

While the banking crisis remains largely mired in the United States and Europe, S&P/ASX 200 Index (ASX: XJO) bank shares are again in focus as analysts assess their relative strength.

And judging by this morning’s performance, the big Aussie banks are stacking up well to their international peers.

Here’s how the big four ASX 200 banks are tracking in early trade on Monday:

• Australia and New Zealand Banking Group Ltd (ASX: ANZ) shares are up 0.58%
• National Australia Bank Ltd (ASX: NAB) shares are up 0.88%
• Westpac Banking Corp (ASX: WBC) shares are up 0.59%
• Commonwealth Bank of Australia (ASX: CBA) shares are up 0.31%

The ASX 200 is up 0.35% at this same time.

So, why is Deutsche Bank the latest to come under pressure?

What’s happening with Deutsche Bank?

Deutsche Bank is the latest institution to be hit by investor fears of a global banking meltdown.

Those fears were ignited only weeks ago with the implosion of United States-based Silicon Valley Bank – formerly the 18th largest in the US – as well as Signature Bank. Other smaller regional US banks remain under pressure.

The contagion quickly spread across the pond to hit Credit Suisse. That bank was said to be a day from collapse when the Swiss government engineered a takeover by rival bank, UBS.

Unlike Credit Suisse, which was running at a loss, Deutsche Bank reported a net profit of €5.7 billion (AU$9.2 billion) in 2022.

Instead, the woes at Deutsche Bank stem from a steep rise in the cost of insuring its bonds against the risk of defaulting.

The German bank has also drawn the interest of short sellers, who’ve reportedly made some $150 million bettering against its shares over the past two weeks.

In a sign that investors fear the contagion has some ways to run yet, the European bank shares index, STXE 600 BANKS PR.EUR (INDEXSTOXX: SX7P) ended Friday down 3.8%.

What the experts are saying

European officials were quick to try to calm the markets.

Addressing concerns around Deutsche Bank, German Chancellor Olaf Scholz said, “It’s a very profitable bank. There’s no reason to worry.”

Joseph Trevisani, senior analyst at FXstreet.com advised investors to have patience, saying the banking crisis would take some time to play out.

“The market is suspicious, or weary is maybe a better way to put it, that there are more problems out there that have come forth,” Trevisani said (quoted by Reuters).

“It takes time. It’s going to have to be weeks without any problems in the banking system before markets will be convinced that it’s not a systemic problem.”

Most analysts were positive about the outlook for Deutsche Bank, including the team at JPMorgan.

They said the bank’s fundamentals are “solid”, adding, “we are not concerned”.

Commenting on the banking turmoil before Friday’s big tumble for Deutsche Bank shares, ANZ Bank chief executive Shayne Elliott said (quoted by The Australian Financial Review):

The GFC was fundamentally a crisis around the quality of assets and the loans that banks make, and that’s not what the risk is here. This is a different issue.

This is really to do with the global war on inflation and how central banks are raising rates very quickly in order to combat that, and that has casualties.

With the big four ASX 200 banks all well into the green today, investors appear to believe they won’t be amongst those casualties.

The post ASX 200 bank shares lift despite Deutsche Bank stock tumble appeared first on The Motley Fool Australia.

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More reading

• How I’d aim for $250 in monthly passive income from ANZ shares
• Want $10,000 of passive income? Check out these ASX shares
• The Westpac share price is down 6% this month, should you buy the dip?
• Want passive income? Analysts say you can get 6%+ yields with these ASX dividend shares
• Should ASX 200 banks pay more for this implicit government backstop?

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

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