Tag: Motley Fool

I have been looking at IPOs recently to see how you would have fared if you had invested in them.

On this occasion, I have turned my attention to CSL Limited (ASX: CSL).

The Commonwealth Serum Laboratories was established in Melbourne in 1916 to service the health needs of a nation isolated by war.

Since then, it has gone on to become one of the world’s leading biotherapeutics companies and is saving millions of lives through the development of important therapies and vaccines.

The CSL IPO.

CSL was listed on the Australian share market in 1994 for a stock-split-adjusted price of $0.76 per share.

This means that if you invested $10,000 into the CSL IPO, you would have received 13,157 shares.

At the time of its listing, CSL was generating revenue of A$193 million a year. Whereas in FY 2020, CSL reported a 7.2% increase in sales revenue to US$8,797 million.

Unsurprisingly, this remarkable sales growth over the last quarter of a century has resulted in significant share price appreciation for shareholders.

In February, prior to the pandemic, the CSL share price hit a record high of $342.75. Today, the company’s shares are changing hands for $296.67.

This means that even though CSL’s shares are down 13.5% from their high, they are still up a remarkable 390x from their IPO price.

What does this mean for your original investment?

With the CSL share price at $296.67, the 13,157 shares you received when investing $10,000 into its IPO would have a market value of approximately $3.9 million today.

But it doesn’t stop there. Each year CSL shares a portion of its profits with shareholders in the form of dividends.

In FY 2021 the company is forecast to pay shareholders a dividend of $3.04 per share. If this proves accurate, those 13,157 shares will generate dividends of just under $40,000.

Foolish Takeaway.

It is worth remembering that CSLs are a rare breed and very few IPOs will be anywhere near as successful.

However, overall, I believe this demonstrates why buying and holding high quality companies can be a fantastic way to generate wealth over the long term.

More reading

• Ignore EBITDA and P/E ratios? This fundie does
• Leading brokers name 3 ASX shares to buy today
• ASX 200 Weekly Wrap: Budget, US election sparks 5% surge in ASX shares
• How anyone can become rich by investing in ASX shares
• ASX 200 down 0.2%: Big four banks drop, CIMIC jumps, CSL slides lower

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of CSL Ltd. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. 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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I think there are some S&P/ASX 200 Index (ASX: XJO) shares that are robust and defensive, yet still offer good growth prospects.

Most ASX 200 shares are big enough that they offer good reliability. But I think they also need growth. The growth depends on the sector(s) they operate in. That’s why I like these options:

Goodman Group (ASX: GMG)

Goodman is the biggest ASX property business. It builds and owns industrial properties across the world in places including Australia, New Zealand, Europe, the UK and North America.

Industrial properties are growing increasingly important in this COVID-19 world. E-commerce is rapidly growing in demand compared to a year ago. Businesses want to improve their logistics and efficiency with the supply chain being impacted by COVID-19.

Despite everything that went on with COVID-19 during FY20, it managed to grow operating profit by 12.5% to $1.06 billion and operating earnings per share (EPS) rose by 11.4% to 57.5 cents – compared to initial guidance of growth of 9%.

The ASX 200 share has a really strong balance sheet for a real estate investment trust (REIT). Its gearing dropped to 7.5%, down from 9.7% in FY19. I think that makes it a much safer option compared to other REITs.

The business is one of the few REITs to deliver growth in its operating earnings and net tangible assets (NTA). The FY20 NTA per share increased 9.4% to $5.84.

Its property portfolio looks strong with an occupancy rate of 97.5% as well as like for like net property growth of 3%.

The ASX 200 share still has a lot of growth planned with $6.5 billion of work in progress across 46 projects.

The Goodman share price may seem expensive on traditional valuation metrics, but these really low interest rates may stay low for many years.

Washington H. Soul Pattinson and Co. Ltd (ASX: SOL)

Investment house Soul Patts is one of the most robust ASX 200 shares in my opinion.

It has been listed since 1903, so it’s actually one of the oldest businesses in Australia. It has already survived through the first world war, the Spanish Flu, the Great Depression, the second world war, the GFC and various other historical events.

Soul Patts has a diversified portfolio of shares. It has large positions in defensive businesses like TPG Telecom Ltd (ASX: TPG), Brickworks Limited (ASX: BKW), Clover Corporation Limited (ASX: CLV), Milton Corporation Limited (ASX: MLT) and Bki Investment Co Ltd (ASX: BKI). It also has defensive unlisted positions like Ampcontrol, agriculture and swimming schools.

At 31 July 2020, its total shareholder returns (TSR) showed strong outperformance over the medium-term and the long-term. Its TSR outperformed the All Ordinaries Accumulation Index by 5.1% per annum over the previous five years and 5.2% per annum over the previous 20 years.

The ASX 200 share’s FY20 report was a mixed result because of COVID-19, but there were two highlights from the year for me. The TPG merger with Vodafone has finally happened, which should make a big difference for the longer-term profit outlook for TPG, and therefore it should help the value of those shares for Soul Patts. The investment house also reported that its net cash from its investments in FY20 rose by 48.8% to $252.3 million – this is an important profit measure because the net cash flow is what funds the dividend.

The investment house has increased its dividend every year since 2000. That’s a fantastic record, the best on the ASX. At the current Soul Patts share price it offers a grossed-up dividend yield of 3.3%.

More reading

• How to replace your entire wage with ASX dividend shares
• This is where I’d invest $1,000 right now into ASX shares
• 4 high quality ASX blue chip shares to buy right now
• Insiders have been buying these ASX shares this week
• Up 22% in a month, is the Soul Patts (ASX:SOL) share price a buy?

Tristan Harrison owns shares of Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Clover Limited. The Motley Fool Australia owns shares of and has recommended Brickworks and Washington H. Soul Pattinson and Company Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. 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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On Monday the S&P/ASX 200 Index (ASX: XJO) continued its impressive run with yet another solid gain. The benchmark index rose 0.5% to 6,132 points.

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

ASX 200 expected to storm higher.

It looks set to be another very positive day of trade for the Australian share market on Tuesday. According to the latest SPI futures, the ASX 200 is poised to open the day 44 points or 0.7% higher this morning. This follows a strong start to the week on Wall Street, which in late trade sees the Dow Jones up 0.9%, the S&P 500 1.6% higher, and the Nasdaq index a sizeable 2.5% higher.

Tech shares to rise?

A strong rise in the technology-focused Nasdaq index could be great news for the local tech sector on Tuesday. This is because the likes of Appen Ltd (ASX: APX) and Xero Limited (ASX: XRO) have a tendency to follow the lead of their U.S. counterparts. In late trade on Wall Street the Nasdaq index is up a sizeable 2.5%. A very strong gain by Apple is helping drive markets higher in the United States.

Gold price rises.

Gold miners including Evolution Mining Ltd (ASX: EVN) and Northern Star Resources Ltd (ASX: NST) could be on the rise today after the gold price pushed higher. According to CNBC, the spot gold price is up 0.1% to US$1,928.40 an ounce. Overnight the price of the precious metal managed to reach a three-week high before giving back some of its gains.

Oil prices tumble lower.

It could be a difficult day for energy shares such as Santos Ltd (ASX: STO) and Woodside Petroleum Limited (ASX: WPL) after oil prices tumbled lower. According to Bloomberg, the WTI crude oil price is down 2.55% to US$39.56 a barrel and the Brent crude oil price is down 2.4% to US$41.81 a barrel. Traders were selling oil after production came back online in Libya, Norway, and the United States following recent stoppages.

Commonwealth Bank AGM.

The Commonwealth Bank of Australia (ASX: CBA) share price will be one to watch on Tuesday when it holds its annual general meeting. The banking giant could potentially release a trading update along with its meeting presentation. Shareholders will also have the opportunity to vote on items such as the bank’s renumeration report.

More reading

• Why NEXTDC (ASX:NXT) and these ASX 200 shares just hit record highs
• The Zip (ASX:Z1P) share price soars as Citigroup says 1Q update to surprise
• ASX 200 ends higher, Link (ASX:LNK) share price shoots 24% higher
• Why ASX oil stock laggards are well placed to bounce in the COVID recovery trade
• The Cann Group share price getting smoked after a strategic shareholder exits

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Xero. The Motley Fool Australia owns shares of Appen Ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. 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 S&P/ASX 200 Index (ASX: XJO) has been in fine form this month and has surged notably higher.

And while the benchmark index is still trading well short of its 52-week high, that hasn’t stopped a number of ASX 200 shares from reaching new highs of their own.

Three shares that have just hit new highs are listed below. Here’s why they are on fire right now:

Bapcor Ltd (ASX: BAP)

The Bapcor share price hit a record high of $8.08 on Monday after the automotive aftermarket parts distributor released its first quarter update. Bapcor’s update revealed that trading has been very strong so far in FY 2021, with revenue up 27% compared to the first quarter of FY 2021. The key drivers of this growth have been its Retail and Specialist Wholesale businesses, which have recorded exceptionally strong sales. Management advised that this was driven partly by an increase in sales of second-hand cars, reduction in use of public and shared transport modes, and government stimulus.

NEXTDC Ltd (ASX: NXT)

The NEXTDC share price continued its remarkable run and hit a new record high of $13.25 yesterday. Investors have been fighting to get hold of the data centre operator’s shares this year after it experienced a surge in demand following the accelerating shift to the cloud caused by the pandemic. In addition to this, on Monday its shares were given a boost after it announced a new $1.5 billion debt facility. This debt facility has lowered the company’s cost of debt notably and positioned it for growth. NEXTDC also revealed that some of the facility is multi-currency. This could be a sign that it has its eyes on expanding internationally in the near future.

Northern Star Resources Ltd (ASX: NST)

The Northern Star share price rose to a new record high of $16.80 on Monday. This gold miner’s shares have been strong performers since announcing a merger with Saracen Mineral Holdings Limited (ASX: SAR). This merger will create a top 10 global gold company targeting production of 2 million ounces of gold per annum exclusively in tier-1 locations. Management also expects the merger to result in unique pre-tax synergies of $1.5 billion to $2 billion.

More reading

• ASX 200 ends higher, Link (ASX:LNK) share price shoots 24% higher
• Ignore EBITDA and P/E ratios? This fundie does
• Why Evolution, Link, Newcrest, & NEXTDC shares are charging higher
• NEXTDC (ASX:NXT) share price hits record high on debt update
• Why the Bapcor (ASX:BAP) share price just zoomed to a record high

Motley Fool contributor James Mickleboro owns shares of NEXTDC Limited. The Motley Fool Australia owns shares of and has recommended Bapcor. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post Why NEXTDC (ASX:NXT) and these ASX 200 shares just hit record highs appeared first on Motley Fool Australia.

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Are you looking for a way to beat low interest rates in 2020? Then you might want to take a look at the ASX dividend shares listed below.

They both offer attractive yields and appear well-positioned for growth over the coming years. Here’s why I would buy them:

Dicker Data Ltd (ASX: DDR)

The first ASX dividend share to consider buying this week is Dicker Data. It is a wholesale distributor of computer hardware, software, and cloud solutions to a growing partner base of over 5,500 resellers. Dicker Data distributes a portfolio of products from the world’s leading technology vendors, including Cisco, Citrix, Dell Technologies, Hewlett Packard Enterprise, HP, Lenovo, Microsoft, and other Tier 1 global brands.

The company has been experiencing robust and growing demand for its offering in recent years. This was particularly the case in the first half of FY 2020, when Dicker Data delivered record sales and profits. Pleasingly, management appears confident that this form will continue in the second half and expects to increase its full year dividend materially. It is guiding to a 31% increase in its dividend to 35.5 cents per share. Based on the latest Dicker Data share price, this equates to a fully franked 4.1% yield.

Vitalharvest Freehold Trust (ASX: VTH)

Another ASX dividend share I would buy is agricultural property company Vitalharvest. It provides investors with access to quality agricultural property assets with exposure to the nutritious and healthy food trend. Its assets comprise four berry properties and three citrus properties, and count horticulture giant Costa Group Holdings Ltd (ASX: CGC) as a tenant.

I believe the company’s exposure to healthy eating trends means that these properties are well-placed for rental growth in the coming years. I expect this to underpin solid earnings and distribution growth over the next decade. For now, based on the current Vitalharvest share price, I estimate that it offers investors a forward ~6% distribution yield.

More reading

• Is the Domino’s (ASX:DMP) share price a buy?
• Forget term deposits and buy these ASX dividend shares instead
• My 3 favourite ASX dividend shares to buy this year
• 2 quality ASX dividend shares to buy before the RBA meeting
• 3 alternative ASX shares to buy for defensive income

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended COSTA GRP FPO and Dicker Data Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. 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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One area of the market which I think is filled with a number of quality options for growth investors is the mid cap space.

But with so many to choose from, which ones should you consider buying?

Three top mid cap ASX shares I believe could be long term market beaters are listed below. Here’s why I rate them:

Bravura Solutions Ltd (ASX: BVS)

Bravura Solutions is the financial technology company behind the Sonata wealth management platform. This platform allows financial advisers to connect and engage with clients via computers, tablets, or smartphones. It counts a number of large financial institutions as customers, which I believe is a testament to its quality. In addition to this, Bravura has been on a bit of an acquisition spree over the last 18 months and has bolstered its portfolio significantly. In fact, just this morning it announced another earnings accretive acquisition in the UK. Combined, I believe the company’s portfolio has positioned it perfectly for growth over the 2020s.

Collins Foods Ltd (ASX: CKF)

Collins Foods is a leading operator of KFC restaurants. It has a growing network across Australia and also in the under-penetrated European market. In addition to this, the company has been rolling out the Taco Bell brand across Australia. If this rollout and its KFC expansion at home and abroad continues successfully, it should underpin solid earnings and dividend growth in the coming years. I think this makes it a great buy and hold option for growth investors.

Jumbo Interactive (ASX: JIN)

Jumbo is the online lottery ticket seller behind the Oz Lotteries website and the Powered by Jumbo software as a service platform. It is the latter business which I expect to be the main driver of its growth in the future. Management certainly appears to believe this will be the case, noting that it is expecting this business to play a key role in the company achieving its target of $1 billion in ticket sales through the Jumbo platform by FY 2022. This will be a significant lift on what it achieved in FY 2020. The good news is that this target is still only a fraction of its assessable opportunity. Earlier this year management estimated that just 7% of the US$303 billion global total addressable market was currently online. And considering how much more efficient it is to sell lottery tickets online instead of in physical locations, I expect more and more lotteries will make the shift over the next decade. This puts its Powered by Jumbo platform in a great position to profit.

More reading

• ASX 200 ends higher, Link (ASX:LNK) share price shoots 24% higher
• ASX 200 Weekly Wrap: Budget, US election sparks 5% surge in ASX shares
• Why the Bravura Solutions (ASX:BVS) share price is one to watch today
• Is the Domino’s (ASX:DMP) share price a buy?
• These were the worst performing shares on the ASX 200 last week

James Mickleboro owns shares of Collins Foods Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends Jumbo Interactive Limited. The Motley Fool Australia owns shares of and has recommended Bravura Solutions Ltd and Jumbo Interactive Limited. The Motley Fool Australia has recommended Collins Foods Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. 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 Azure Minerals Limited (ASX: AZS) share price went ballistic today, gaining more than 70% in intraday trading before some profit taking appears to have taken place.

In late afternoon trading, Azure’s share price is up 61.7% to close for the day at 38 cents. This comes after the company emerged from Friday’s trading halt, requested by Azure pending today’s release of the drill results at its Andover project in Western Australia.

Although the Azure Minerals share price fell 64% from mid-February through to mid-March, patient investors have had nothing to complain about this year. Since 26 March, the share price is up 660%, for a year-to-date gain of 171%.

In comparison, the All Ordinaries Index (ASX: XAO) is down 7.0% since 2 January.

What does Azure Minerals do?

Azure Minerals is a minerals explorer primarily focused on its portfolio of projects in Mexico. The company’s flagship project is the Oposura project, containing zinc, lead and silver resources. It’s situated in the northern Mexican state of Sonora.

The company also undertakes early-stage exploration for new greenfield’s prospects. And it partners with major resource companies to develop projects with the potential for large-scale, long-life mining operations.

Azure Minerals has a market cap of $627 million.

What’s driving the Azure Minerals share price up today?

Friday’s trading halt preceded Azure’s announcement today on the results of its first drill hole at the Andover project in the West Pilbara region of Western Australia. Azure owns 60% of the project and Creasy Group owns the other 40%.

The company reported significant nickel and copper sulphide mineralisation, with the drill hole intersecting 4.0 metres of massive nickel-copper mineralisation at 94.5 metres. Azure’s onsite geologist verified the results, which were confirmed by portable x-ray fluorescence.

The company reported that the “massive, semi-massive and matrix sulphides coincide with the interpreted position of a strong electromagnetic conductor identified by surface and downhole surveying”.

Azure is currently drilling a second hole to test the down-dip extension of the newly reported mineralised interval and the electromagnetic conductor.

Commenting on the first drill hole, Azure’s managing director Tony Rovira called it “an outstanding result and a great start to our maiden drilling program at Andover”.

Rovira added:

Importantly, this mineralised intersection coincides with the interpreted position of the downhole EM (DHTEM) conductor, providing support that the conductors represent significant accumulations of sulphide mineralisation. The Andover project area does not appear to host sulphide-rich sediments, graphitic shales, conductive overburden or other characteristics that may generate false signatures for the EM surveys, and their absence is exciting given the size, depth and intensity of the conductors we have identified and are targeting.

With drilling continuing through the end of the year, Azure’s share price is one to keep an eye on.

More reading

• Why the Mount Gibson (ASX:MGX) share price is moving higher today
• ASX 200 Weekly Wrap: Budget, US election sparks 5% surge in ASX shares
• Optiscan (ASX:OIL) share price flat on FDA update
• What’s driving the PayGroup (ASX:PYG) share price higher today
• Why the PYC Therapeutics (ASX:PYC) share price is up 9% today

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. 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 Zip Co Ltd (ASX: Z1P) share price outperformed after a top broker predicted a better than expected quarterly update from management.

The Z1P share price jumped 5.7% to $7.99 on Monday when the S&P/ASX 200 Index (Index:^AXJO) recorded a 0.5% gain.

Zip’s strong showing also left its rivals in the dust. The Afterpay Ltd (ASX: APT) share price gained 2.8% to $92 while the Splitit Ltd (ASX: SPT) share price added 4.6% to $1.59.

Near-term catalyst for the Zip share price

Investors got excited about the Zip share price after Citigroup tipped further upside for the stock at the company’s upcoming September quarter update as its US subsidiary Quadpay could add to the sizzle.

“Zip’s website visits accelerated +11% mom [month-on-month] in September, while app downloads (Android only) in Australia increased +33% mom,” said the broker.

“Our analysis of Similar web data points to a record month for Quadpay on the back of adding GameStop, which should also be positive for [average] order values.”

Z1P share price getting boost from US

The Quadpay website visits increased by 55% in September compared to the same month last year.  Its Android app downloads also jumped by increased 54% to 166,000.

The addition of Gamestop and the launch of new Xbox and PS consoles is a key drive, according to Citi.

“Further, the game console orders should also increase average order value given the higher ticket price but note that there will be a lagged impact on GMV given customers need to only pay 25% upfront, with the balance paid post shipping (in November),” added Citi.

Afterpay website visits decline

Investors have a habit of comparing the Zip share price with Afterpay. The latter could hit a soft patch. While Citi estimated that Afterpay’s website visits from Australia and New Zealand increased 32% over the year, website visits dropped 11% mom.

However, this doesn’t bother Citi much. The softness in September is due to Afterpay’s major sales event in August.

In fact, the broker thinks Afterpay could also beat expectations thanks to improving momentum in its US operations last month. Its US website visits improved 7% mom – taking its first quarter website hits to 246% yoy – while Android app downloads jumped 25% to 438,000.

If there’s one area investors should pay attention to, it’s merchant switching. Citi noted that Afterpay stole Deckers Brands from Quadpay, while another rival, Klarna, won Haus Labs from Afterpay.

If the Zip share price doesn’t excite you, the experts at the Motley Fool is recommending this other group of ASX stocks for 2021.

Follow the link below to find out more.

More reading

• ASX 200 ends higher, Link (ASX:LNK) share price shoots 24% higher
• Why ASX oil stock laggards are well placed to bounce in the COVID recovery trade
• Ignore EBITDA and P/E ratios? This fundie does
• The Cann Group share price getting smoked after a strategic shareholder exits
• The valuable lesson Dr Takao Inui has for every ASX investor

Brendon Lau has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of ZIPCOLTD FPO. The Motley Fool Australia owns shares of AFTERPAY T FPO. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. 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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Investors looking for value best stay away from Woolworths Group Ltd (ASX: WOW), according to one fund manager.

Pengana Capital Group Ltd (ASX: PCG) portfolio manager Chris Tan told The Motley Fool that the share price for the supermarket giant was expensive.

“If you look at it from a historical price-to-earnings point of view, it does look expensive,” he said.

Woolworths closed at $37.94 today, up more than 4% since the start of the year. The price to earnings (P/E) ratio is 41.

The Woolworths share price was trading as low as $20.56 in 2016.

But Woolworths is still a high quality business

Even though he thought it’s not currently good value, Tan would never bet against Woolworths.

“The thing is, it has really an unrivaled position in Australia in terms of it’s network, it’s ability — it’s the leader,” Tan said in this week’s Foolish Q&A.

“For a long time there were price wars with Aldi coming in, Coles Group Ltd (ASX: COL), and Woolworths — and now we believe there’s equilibrium in that market. Everyone’s in their lane.”

Tan also believed Woolworths has already made the necessary investments into its operations, while its rivals have to play catch-up.

“Their competitors need to invest a lot more heavily than Woolworths do and this whole COVID-19 episode has really played into their strengths,” he said.

“We can see some food inflation coming back and just stronger demand for longer for groceries.”

Supermarkets will have a merry Christmas

Research firm IBISWorld this week forecast that Australian retailers would struggle in the coming Christmas season. 

But supermarkets would buck this trend.

“Families are expected to go all-out on their Christmas feasts this year, with many Australians celebrating their ability to reunite with family after states reopen borders and ease social distancing regulations,” said IBISWorld senior industry analyst Yin Yeoh.

The reasoning is that almost all Australians would stay in the country rather than head overseas for a holiday. 

Spending would hit $11.1 billion in December, according to IBSWorld, which is a 2.8% increase year-on-year.

Hotels business sell-off could be on again

Woolworths’ attempt to sell off its hospitality arm in the second quarter this year was scuttled. But Tan sees this as an eventuality, and a potential upside for investors.

“That will be back on track sometime next year, probably in calendar year ’21. (This) will leave Woolworths much better, more focused. And there could be a capital return to shareholders there,” he said.

“So it’s optically expensive, but it’s a very, very high quality franchise.”

Read The Motley Fool’s full exclusive interview with Chris Tan right here.

More reading

• Ignore EBITDA and P/E ratios? This fundie does
• ASX 200 Weekly Wrap: Budget, US election sparks 5% surge in ASX shares
• 5 things to watch on the ASX 200 on Monday
• 3 top ASX shares to buy and cash in on the Federal Budget
• Why I would buy these ASX dividend shares in October

Motley Fool contributor Tony Yoo has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of COLESGROUP DEF SET and Woolworths Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. 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 Event Hospitality and Entertainment Ltd (ASX: EVT) share price was down today, falling 3.45% to close the day’s trading at $9.24 per share. This came as the company released an update about the sale of its German cinemas business ‘Cinestar’.

What was in the announcement?

Event Hospitality previously entered into an agreement for the sale of its German Cinema operations, ‘Cinestar’, to Vue International Bidco. The transaction was subject to approval by the German Federal Cartel Office (FCO).

In order to obtain approval from the FCO, Vue was required to divest 6 sites, of which only 1 has been divested. According to Event Hospitality, the sale of a further 5 sites is in the late stages with 3 already approved by the FCO. However, according to the announcement, Vue has put a pause on the divestment process and is seeking to renegotiate the terms of the transaction. 

On 21 August 2020, Event Hospitality announced that Vue had been granted an extension by the FCO until 13 November 2020 to divest a further 5 of the 6 sites as required by the FCO. 

Event Hospitality sold its Cinestar business to Vue with an enterprise value of up to $358 million with an upfront payment of $210 million and the rest of the transaction value subject to ticket sales. The transaction was announced on 22 October 2018.

According to Event Hospitality,  it is currently in discussion with Vue in relation to the transaction.

About the Event Hospitality share price

Event Hospitality and Entertainment is an operator of hotels, resorts and cinemas. The company operates in Australia New Zealand and Germany with history dating back to 1910. Event Hospitality was previously known as Amalgamated Holdings and has been listed on the ASX since 1962.

In the year to 30 June 2020, Event Hospitality had revenue of $410.64 million, this was a decline of 24.1% compared to the prior year. In FY2020, Event Hospitality had earnings before interest, tax, depreciation and amortisation (EBITDA) of $26.32 million, down 74.9% compared to FY2019. In the year to 30 June 2020, the company reported a loss of $11.37 million.

The Event Hospitality share price is up around 68% since its 52-week low of $5.44, however, it has fallen more than 33% since the beginning of the year. The Event Hospitality share price is down 30.4% since this time last year.

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Motley Fool contributor Chris Chitty has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. 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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