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The Sydney Airport Holdings Pty Ltd (ASX: SYD) share price is edging lower this morning after the release of an update.

At the time of writing the airport operator’s shares are down 0.5% to $6.60.

What did Sydney Airport announce?

This morning Sydney Airport provided the market with an update on its distribution plans and current passenger numbers.

In respect to its distribution for FY 2020, the company revealed there will be no final distribution this year.

Management explained that it made the decision “given the continued significant impact of COVID-19 on the business performance of Sydney Airport over the second half of the calendar year.”

Traffic update.

As the company alluded to in its distribution update, Sydney Airport is still experiencing a sharp downturn in passenger numbers.

During the month of November, Sydney Airport welcomed 308,000 domestic travellers through its terminals. This was an 87.1% reduction on the prior corresponding period when almost 2.4 million domestic passengers used its airport.

Though, it is worth noting that unrestricted travel between New South Wales and Victoria only started on 23 November. This should give passenger numbers a boost in December.

For obvious reasons, it was much worse for international travellers. Just 42,000 came through its terminals in November, down 96.9% on the same period last year.

This led to total passenger numbers of 350,000 for the month, down 90.6% from just over 3.7 million a year earlier.

Management commented: “Domestic passengers totalled 308,000 for November 2020, down 87.1% on the pcp. The modest recovery in domestic traffic in the month was driven by demand for NSW and Victoria interstate travel. Unrestricted travel between NSW and Victoria was permitted from 23 November.”

“42,000 international passengers passed through Sydney Airport in November, down 96.9% on the pcp. The downturn in international passenger traffic is expected to persist until government travel restrictions are eased,” it added.

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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.

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There are a few different reasons why the shares of Australian Ethical Investment Limited (ASX: AEF) may be interesting to growth investors.

A quick overview of what Australian Ethical does

According to the ASX, Australian Ethical has a market capitalisation of $553 million.

Australian Ethical is a fund manager that aims to invest ethically on behalf of its investors. Its funds try to avoid businesses that are doing harm to the environment, people and animals. Australian Ethical invests in companies that are creating new technologies, building a clean future, finding medical solutions, create more sustainable products and so on.

It has been operating since 1986 and tries to provide investors with investment management products that align with their values and provide competitive returns. Investments are guided by the ‘Australian Ethical Charter’ which shapes its ethical approach and underpins both its culture and its vision.

Here are three reasons why Australian Ethical could interest some investors:

Aligned to the growth of superannuation

As a superannuation fund provider, Australian Ethical is exposed to the growth theme of superannuation. Most employees have 9.5% of their wage contributed into their superannuation account. There are also tax benefits with super that can attract non-employees to contribute, as well incentivise employees to add more than the mandatory minimum amount.

This attractive form of retirement saving leads to regular fund inflows to superannuation funds. The Association of Superannuation Funds of Australia said that Australia’s total superannuation assets totalled $2.9 trillion at 30 June 2020.

Funds under management (FUM) growth

Australian Ethical generates its revenue from the funds that it manages. Most revenue comes from the base management fee, though performance fees can also be generated if an Australian Ethical fund outperforms its respective benchmark.

In FY20 its group FUM rose by 19% to $4.05 billion, with net inflows of $660 million (which was an increase of 100%). The growth was helped by a 20% increase in customer numbers. One of the things that Australian Ethical was most proud of in the result was a net promoter score of +63 for its super funds and +58 for managed funds, which was among the best in the industry. The company also has a top quartile staff engagement score of 86%.

In the latest quarterly update, for the three months to 30 September 2020, Australian Ethical’s FUM grew by 6.5% to $4.32 billion. It saw $0.10 billion of net inflows for superannuation and $0.06 billion net inflows for its managed funds.

Financials

The FUM growth translated into financial growth during FY20. Australian Ethical’s revenue grew 22% to $49.9 million, with a $3.6 million performance fee generated from the outperformance of its emerging companies fund.

Underlying net profit after tax grew by 42% to $9.3 million and net profit after tax (NPAT) grew 46% to $9.5 million. Excluding the impact of the performance fee, revenue and underlying net profit both rose by 15%.

This profit growth funded a total FY20 dividend of 6 cents per share, which was an increase of 20%. The company said it has a strong balance sheet with no gearing.

In terms of FY21, Australian Ethical said the revenue growth will be partly supressed by the full year impact of the super fee reductions to benefit existing and future members. The FY20 performance fee is also not guaranteed to be generated again in FY21.

More reading

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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 Australian Ethical Investment Ltd. The Motley Fool Australia has recommended Australian Ethical Investment Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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A finance broker has been arrested in Sydney, charged with attempting to steal $21.6 million from National Australia Bank Ltd (ASX: NAB).

The 64-year-old man was arrested at Blacktown Police Station on Tuesday morning, facing 4 charges relating to fraudulent bank deposit guarantees used to buy real estate for inflated commissions.

The same investigation resulted in the arrest earlier this year of a 38-year-old former NAB employee and a 47-year-old man. They both remain before the courts.

New South Wales police started its enquiries in February after the bank’s systems detected suspicious activities.

NAB executive group investigations and fraud head Chris Sheehan said no financial losses were actualised from the alleged fraud.

“NAB referred the matter to the authorities as soon as our systems detected unusual activity. We have continued to work closely with police throughout the investigation.”

He added that the former employee accused of the crimes was fired.

“NAB has zero tolerance for any criminal activity and any employee who knowingly engages in such conduct will be dismissed. Where we identify apparent criminal conduct, we immediately refer matters to the police.”

The man arrested this week is due to appear at Blacktown Local Court on Thursday.

The police investigation, dubbed Strike Force Exton, is continuing.

More reading

• Why the NAB (ASX:NAB) share price climbed higher today
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Motley Fool contributor Tony Yoo 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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Nine Entertainment Co Holdings Ltd (ASX: NEC) shares are on the move this morning after the company released a revised trading update. At the time of writing, the Nine share price has surged 4.26% higher to $2.45 on news the company now expects its first-half earnings to come in at 40% growth, compared to the previous guidance of 30%.

What’s moving the Nine share price?

Investors are driving up the Nine share price after the company reported its trading outlook has improved since holding its annual general meeting (AGM) in mid November. 

Nine reported that, during the AGM, it advised expected first half earnings before interest, tax, depreciation, and ammortisation (EBITDA), before specific items, to be up by around 30%.

Since that time, Nine says trading conditions have continued to improve, with EBITDA before specific items for the six months to 31 December, now expected to be up by more than 40%, on the same basis. 

Of particular note, Nine’s December quarter is now expected to show growth in metropolitan free-to-air advertising revenue of almost 20% (previously around 15%). This means the company‘s metropolitan TV advertising revenues in the December half are now expected to be up by around 1% on the prior corresponding period. 

Nine also advised that, given limited visibility of the second half advertising market, it is not in a position to provide guidance on earnings for the full year. The company does, however, expect to be in a better position to address this at the half year results release in February. 

More about Nine Entertainment

Nine owns some of Australia’s well-known media brands including The Australian Financial Review, the Nine Network, and the Domain platform.

According to its financial report, Nine generates 90% of its earnings from its Nine Network channel – one of only three metropolitan television channels licensed to broadcast free-to-air in Australia. The total market for free-to-air advertising is $2.7 billion, of which Nine commands the number one position at 39%.

Analysts have said that this market is gradually dwindling as advertisers move to digital platforms. However, management said Nine’s investments in digital platforms such as 9Now, Stan, and Domain had gradually increased its market share in the fragmented digital market. This is where the company expects to derive its future growth.

The Nine share price performance in 2020

The Nine share price has been on the rise in 2020, gaining around 35%, after having fallen as low as 84 cents during the March crash. Nine shares reached a 52-week high of $2.59 in November. 

The company commands a market capitalisation of $4 billion.

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Motley Fool contributor Eddy Sunarto 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 Bapcor Ltd (ASX: BAP) share price is soaring higher, up 9.5% to $8.01 this morning, after the company released a favourable trading update to the ASX.

What’s driving the Bapcor share price higher?

Today, Bapcor provided a first quarter 2021 trading update revealing a sharp increase in group revenue.

For the 5 months to the end of November, the company reported a rise in group revenue of approximately 26%. It indicated that a combination of lower interest rates, the contribution of Truckline (not included in the prior corresponding period) and less spending on discretionary expenses, like travel, saw net profit after tax (NPAT) achieve operating leverage.

In a forward-looking statement, the company forecasts revenue growth of at least 25% for the first half of FY21 compared to the first half of FY20. And it expects NPAT to increase by at least 50% over the $45.6 million achieved in FY20.

The company concurred with market consensus for full year NPAT in the range of $110-115 million. But it stressed that “uncertain economic conditions” remain in play.

Addressing the updated results, Bapcor CEO Darryl Abotomey said:

We are very pleased with the strong performance of Bapcor’s businesses. Trade and wholesale represent over 80 per cent of Bapcor’s business, with retail 20 per cent. Historically, trade focussed businesses perform solidly in difficult economic conditions – which is again borne out by Bapcor’s current performance.

In addition the changes that have been implemented in our retail business continue to gain momentum with revenue up 40 per cent over the pcp [prior corresponding period]. Initiatives include the recently launched new Autobarn store format that is delivering a significant uplift in sales…

The construction of our new Victorian Distribution Centre is progressing well with the building expected to be handed over in February 221 and the automated picking system operational in the following 6 months.

Bapcor share price and company snapshot

Bapcor Ltd (formerly Burson Group Limited) provides vehicle parts, accessories, equipment and services throughout the Asia Pacific region. The company listed on the ASX in 2014. Today it makes up part of the S&P/ASX 200 Index (ASX: XJO). Bapcor pays a 2.5% annualised dividend yield, fully franked.

With this morning’s gains, Bapcor’s share price is now up 25% year-to-date. And shares have gained 152% since the 25 March lows.

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Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Bapcor. 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 Pro Medicus Limited (ASX: PME) share price has been a strong performer on Thursday.

In morning trade the leading health imaging company’s shares are up 5% to $32.75.

Why is the Pro Medicus share price racing higher?

Investors have been buying the company’s shares this morning following the release of an announcement.

According to the release, Pro Medicus has signed a five-year contract with MedStar Health worth a total of A$18 million.

MedStar Health is the largest health system in the Maryland and Washington, D.C. metropolitan region, comprising 10 hospitals.

The contract is based on a transactional licensing model and will see Pro Medicus’ complete enterprise imaging solution implemented across all of MedStar’s radiology and subspecialty imaging departments. This includes the MedStar Georgetown University Hospital.

Management believes this implementation is notable as it will provide MedStar with a fully cloud deployed environment on the Google Cloud Platform (GCP), leveraging its Visage platform’s native, cloud-engineered enterprise imaging technology.

Planning for the rollout is to commence in the second quarter of FY 2021, with the first sites scheduled to go-live in the third quarter.

A shift in thinking.

Pro Medicus CEO, Dr Sam Hupert, appeared to be very pleased with the agreement and what it could signify for the future.

He commented: “MedStar went through an extensive evaluation process including a pilot that not only benchmarked Visage 7 compared to on-premise systems from other vendors, it served to verify the speed of Visage 7 in the public-cloud.”

“Unlike systems from other vendors, Visage has been developed from the ground up for cloud deployment. Traditionally, our clients have deployed Visage in their own “private-cloud” where all images are sent to a single, central server and streamed on demand from there. This deal signifies a shift in the way U.S. healthcare providers are now starting to think about public-cloud platforms,” he added.

More reading

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

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The Uniti Group Ltd (ASX: UWL) share price has returned from its trading halt and is zooming higher.

At the time of writing, the telco’s shares are up a sizeable 13% to $1.67.

Why was the Uniti share price in a trading halt?

Uniti requested a trading halt on Wednesday so that it could undertake an equity raising to fund the acquisition of the Telstra Velocity and South Brisbane Exchange assets from telco giant Telstra Corporation Ltd (ASX: TLS).

According to the release, the two parties have agreed a fee of $140 million for the assets, with $85 million payable upon completion.

The remaining $55 million is deferred, with $20 million payable over 3 years and $35 million due following the completion of the migration of the assets and services. Though, the deal includes the ability to adjust the total purchase price subject to the size of the customer base at the time of migration.

Equity raising.

This morning Uniti announced the successful completion of its fully underwritten institutional placement.

The company raised $50 million through the issue of approximately 33.3 million shares at a price of $1.50 per new share. This represents a 1.4% premium to Uniti’s last close share price.

Management notes that the compelling strategic rationale for the acquisition of the Telstra Velocity assets has meant that the placement achieved an exceptional result of being priced at a premium.

In fact, the placement was several times oversubscribed at the placement price, with applications for placement shares received from more than 40 institutional funds.

It’s not hard to see why it was so popular. Management is forecasting the new assets to contribute $21 million in annual earnings before interest, tax, depreciation and amortisation (EBITDA), starting early January 2021.

Uniti will now push ahead with its share purchase plan, which is aiming to raise a further $10 million. This is being undertaken at the lesser of the placement price or a 2% discount to its five-day volume weight average price on 20 January.

Uniti Chairman, Graeme Barclay, commented: “We are again delighted by the strong support from our institutional shareholders. The high level of demand for placement shares priced at a premium is an endorsement of the transaction’s economics and compelling strategic rationale to expand Uniti’s core fibre infrastructure network through the acquisition of the Telstra Velocity assets.”

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

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The Transurban Group (ASX: TCL) share price is climbing higher following the release of an announcement.

In morning trade the toll road operator’s shares are up 1% to $14.24.

What did Transurban announce?

This morning Transurban provided the market with a trading update and announced an agreement to sell a 50% interest in its Transurban Chesapeake assets.

In respect to the latter, the company has agreed to sell the 50% stake to AustralianSuper, Canada Pension Plan Investment Board, and UniSuper for gross sale proceeds of A2.8 billion (US$2.1 billion).

The deal also includes a potential earn-out between FY 2024 and FY 2026 of up to A$93 million (US$70 million).

In addition to this, its Chesapeake partners have exclusive development rights to invest alongside Transurban on future brownfield and greenfield growth opportunities in the Commonwealth of Virginia, State of Maryland and Washington D.C., as well as enhancements to existing concessions.

What are the Chesapeake assets?

Transurban’s Chesapeake assets comprise its Greater Washington Area (GWA) operational assets, which include the 495 Express Lanes, 95 Express Lanes, and 395 Express Lanes.

There are also three projects in delivery and development. These are the Fredericksburg Extension, 495 Express Lanes Northern Extension, and the Capital Beltway Accord.

Transurban’s Chief Executive Officer, Scott Charlton, believes the realisation of the long-held capital strategy will position its North American business for the next stage of its growth.

He commented: “This transaction realises significant value for security holders while enabling accelerated growth in North America and Australia, where we see a number of opportunities starting to materialise. The Transurban Chesapeake partners are committed to growing alongside Transurban in North America and we look forward to pursuing new opportunities with their financial and strategic support.”

Trading update.

The release also reveals that despite the ongoing impacts of COVID-19, as a whole, traffic on its toll roads increased through October and November.

On CityLink in Melbourne, traffic has shown progressive improvement as government restrictions have been gradually eased over the period.

Things aren’t quite as positive in North America. Traffic on its North American roads remains subdued given the continued impacts of COVID-19. This is particularly the case on its Express Lanes assets.

Also of note, in Sydney, the NorthConnex tunnels opened to traffic on 31 October.

More reading

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of Transurban Group. 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 morning trade the Adbri Ltd (ASX: ABC) share price is pushing higher following the release of an announcement.

At the time of writing, the building materials company’s shares are up 2% to $3.50.

What did Adbri announce?

This morning Adbri announced that its Kwinana Upgrade Project has been given the go ahead after a final investment decision by its board.

The Kwinana Upgrade Project will see the company make a $199 million investment in a modern state-of-the-art facility that will consolidate Adbri’s two existing cement production sites into a single operation.

This operation will serve the Western Australia market and increase annual production capacity to 1.5 million tonnes per annum from 1.1 million tonnes.

Management believes this investment demonstrates the company’s commitment to and confidence in Western Australia’s mining and construction sectors, which are projected to grow over the coming years.

What are the benefits of the project?

As well as increasing its production capacity, the investment will strengthen Adbri’s long-standing position as one of Western Australia’s leading low-cost suppliers of cementitious materials well into the future.

It is projected to deliver cash cost savings of approximately $19 million for the first year post commissioning. This will be generated through lower energy, maintenance, and transport, which will lower unit production costs to enhance competitiveness.

In addition to this, the operation is expected to have a 20% lower carbon footprint than existing operations. This will be through reduced road transport and a more efficient plant.

Overall, the company estimates the net present value of the benefits to be in excess of $125 million, with an internal rate of return (IRR) of more than 15%. This is well above Adbri’s cost of capital.

Adbri’s CEO, Nick Miller, commented: “Our Munster and Kwinana cement operations have helped build Western Australia for over half a century, supplying a vital material to the construction and mining sectors. The Kwinana Upgrade Project represents a $199 million investment that will modernise our cement production capabilities, create employment opportunities during the construction phase and support the long-term growth of the Western Australian mining and construction sectors.”

“The Kwinana Upgrade Project will enable us to continue providing high quality products to the local market. It will significantly enhance our business, both by lowering our operating costs and decreasing our carbon emissions, while at the same time providing an attractive return on the investment for our shareholders,” he concluded.

More reading

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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.

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This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The coronavirus pandemic is causing disruptions in Coca-Cola‘s (NYSE: KO) operations, without a doubt. Local governments have asked many restaurants and entertainment venues to either shut their doors completely or operate at significantly reduced capacity. That’s hurting sales because those are places where people consume many of Coca-Cola’s drinks. 

Still, when investing in a company, it is best to look at the long term. With positive developments on a coronavirus vaccine, it appears that there will be a return to normalcy sometime after the summer of 2021. Let’s look at the company’s prospects and determine if it’s a good time to buy the stock. 

Prospects

Sales for Coca-Cola are struggling to recover as people worldwide are facing a recent surge of coronavirus cases. Still, CEO James Quincey, in the company’s third-quarter earnings release, said: “While many challenges still lie ahead, our progress in the quarter gives me confidence we are on the right path.”

Indeed, there are challenges. Coca-Cola’s year-to-date cash flow from operations is down 20% from the year before.

Over the longer run, the company faces a headwind from people shifting away from sugary beverages. Moreover, the COVID-19 pandemic may leave some lingering long-term effects that will be negative for Coca-Cola. For instance, government stay-at-home orders may cause many restaurants to go out of business, which would hurt Coca-Cola consumption. 

That being said, Coca-Cola is a proven company with a decades-long history of quenching customers’ thirst for tasty beverages. When the pandemic fades away, and people are comfortable leaving their homes again, consumption of the company’s beverages will increase from current levels.

Coca-Cola is a leading player in the non-alcoholic drinks market, which is forecast to have a compounded annual growth rate of 6.8% over the next five years. 

Coca-Cola is not going to be growing revenue by double digits for any meaningful period of time. However, if it can grow sales in the middle to low single digits, that’s enough for shareholders to have confidence in the company’s recovery.

Valuations and profit margins 

PE = price-to-earnings, PS = price-to-sales, EV = enterprise value, EBITDA = earnings before interest, taxes, depreciation, and amortization. Data source: YCharts.

Coca-Cola is priced at a premium compared to its primary competitor PepsiCo (NASDAQ: PEP)(see chart above). However, that premium has narrowed since the start of the year, as PepsiCo’s snack segment has helped it fare better during the pandemic. Moreover, that premium may be justified if you account for Coca-Cola’s better operating performance. 

If you compare Coca-Cola to PepsiCo in terms of profit margins, Coca-Cola is clearly the winner (see chart below). This is especially true for operating profit margin. Admittedly, when both companies complete their fiscal year 2020, PepsiCo will likely narrow the differences. However, that might reverse when the pandemic has faded away. Coca-Cola generates more of its revenue from people consuming its products away from home than PepsiCo, and subsequently is more negatively affected by the pandemic.

The verdict

Coca-Cola is a long-running business success story, making shareholders richer while delighting consumers with tasty drinks for decades. The COVID-19 disease is creating difficulties that are slowing down sales in the near term. However, with vaccines against the virus rolling out in the US and other parts of the world, it could see operations return to normalcy by the end of 2022.

Meanwhile, the disruptions allow you to buy a superior consumer staples stock at a relatively small price-to-earnings (P/E) ratio premium over its competitor. Interested investors can feel good about starting a position in Coca Cola at these levels.  

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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Parkev Tatevosian 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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This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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