Tag: Motley Fool

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.

Johnson & Johnson (NYSE: JNJ) has moved into phase 3 development of its coronavirus vaccine candidate, which goes by the code name JNJ-78436735. The study, called Ensemble, will enroll up to 60,000 volunteers across three continents.

The company trails Moderna Inc (NASDAQ: MRNA), AstraZeneca plc (NYSE: AZN), and the duo of Pfizer inc. (NYSE: PFE) and BioNTech SE (NASDAQ: BNTX), which are all in the process of finishing up enrollment in phase 3 clinical trials for their own COVID-19 vaccine candidates. It may also take Johnson & Johnson longer to reach full enrollment in its study given its larger size. Moderna plans to enroll 30,000 people in its trial, while AstraZeneca is shooting for 50,000 across multiple phase 3 studies, and Pfizer and BioNtech recently announced that they had increased their enrollment target from 30,000 to 44,000.

While Johnson & Johnson may lagging behind the pace-setters in this race, its one-dose format would give it a huge advantage over the leading vaccine candidates, all of which require a booster shot three to four weeks after the initial vaccination. The company is planning on running a separate phase 3 study to see whether two doses of JNJ-78436735 provide stronger protection than one, but the immune responses in participants receiving just one dose in the phase 1/2a study looked solid enough to continue testing under that dosing regimen.

The one-shot format will also mean that Johnson & Johnson will be able to get initial efficacy data more quickly — measured from the start of enrollment to readout — because it won’t have to wait until trial participants get booster shots before starting to count cases of COVID-19 among them.

Johnson & Johnson says it hopes to have enough data from the study to allow it to gain FDA emergency use authorization for the vaccine in early 2021. Investors should keep in mind that the healthcare conglomerate has committed to selling JNJ-78436735 on a not-for-profit basis, so regardless of how it might ultimately fare in the COVID-19 vaccine market, it won’t affect the company’s earnings.

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

More reading

• Coronavirus vaccine trial adverse event was probably unrelated to treatment
• AstraZeneca resumes UK clinical trials of its coronavirus vaccine after a safety pause
• Pfizer says it could know if its COVID-19 vaccine candidate works in October
• The surefire vaccine winner following AstraZeneca’s COVID-19 trial pause
• What if more than one company wins the coronavirus vaccine race?

Brian Orelli, PhD has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends Johnson & Johnson. 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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This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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In morning trade the Washington H. Soul Pattinson and Co. Ltd (ASX: SOL) share price is edging higher following the release of its full year results.

At the time of writing the investment house’s shares are up almost 1% to $23.69.

How did Washington H. Soul Pattinson (WHSP) perform in FY 2020?

For the 12 months ended 31 July 2020, WHSP reported a regular profit after tax of $169.8 million, down 44.7% on the prior corresponding period.

Things were a lot better on a statutory basis, with its statutory profit after tax growing 284.3% to $953 million. Though, this was largely the result of the merger of TPG Telecom Ltd (ASX: TPG) and Vodafone Australia which triggered a significant one-off profit due to the revaluation of its investment to market value.

WHSP’s net cash flows from investments were strong in FY 2020. They came in 48.8% higher year on year at $252.3 million. Once again, this was due to the TPG Telecom-Vodafone Australia merger, which resulted in a special dividend of $121 million.

This allowed the WHSP board to increase its dividend for the 20th year in a row. It lifted its full year dividend by 3.4% to 60 cents per share.

A difficult year.

WHSP’s Chairman, Robert Millner, acknowledged that FY 2020 was a difficult year for the company but was pleased with its result.

He said: “FY20 was a difficult year with significant volatility across the market but I am delighted once again that WHSP’s diversified portfolio delivered another good year where the assets performed better than the market and generated a strong increase in cash flows from dividends and interest income.”

“During the year, TPG was finally able to merge with Vodafone to create a very attractive telecommunications company. That merger resulted in an uplift to the value of our shareholding and facilitated a special dividend of $121 million to WHSP and a demerger of Tuas in which WHSP remains a 25% shareholder,” Mr Millner added.

Outlook.

The company’s Managing Director, Todd Barlow, notes that COVID-19 has resulted in a highly uncertain economic environment.

Nevertheless, the managing director appears optimistic that the company can both ride out the storm and take advantage of this uncertainty.

He commented: “The outlook for the domestic and global economy remains uncertain and volatile. One of WHSP’s key advantages is a flexible mandate to make long-term investment decisions and adjust the portfolio by changing the mix of investment classes over time.”

“While the economic outlook is uncertain, we can be certain there will be some dislocation in a number of asset classes. With dislocation comes opportunity and WHSP is well positioned with adequate liquidity to take advantage of the right investment opportunities,” Mr Barlow added.

More reading

• 5 things to watch on the ASX 200 on Thursday
• 3 great ASX blue chip shares I’d buy
• 4 ASX shares rated as strong buys by brokers
• Why everyone should have Brickworks (ASX:BKW) and 1 other ASX share
• ASX 200 Weekly Wrap: ASX 200 snaps 4 week losing streak… just

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended 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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If you’re a growth investor, then you’re in luck. The Australian share market is home to a large number of quality shares that have the potential to grow their earnings very strongly in the coming years.

And thanks to recent pullbacks in their respective share prices, they are now trading at a discount to what you would have paid just a month ago. 

Four top growth shares I would buy right now are listed below:

Afterpay Ltd (ASX: APT)

The first growth share to consider buying is Afterpay. Due to the increasing popularity of the buy now pay later payment method with consumers and merchants and its international expansion plans, I believe Afterpay is well-placed for growth over the next decade. In respect to its expansion, the company is launching into Canada and Europe in FY 2021 and appears to have its eyes on the Asia market as well.

Altium Limited (ASX: ALU)

The next growth share to look at is Altium. Thanks to its key Altium Designer product and its exposure to the rapidly growing Internet of Things and AI markets, I believe Altium can grow its revenue and earnings at a very strong rate over the next few years. Management is aiming to more than double its revenue to US$500 million by FY 2025/26. I believe it is well-placed to achieve this.

Bravura Solutions Ltd (ASX: BVS)

The next growth share to consider is Bravura Solutions. It is a fintech company providing software and services to the wealth management and funds administration industries. Bravura has a growing number of solutions in its portfolio, but the key one for me continues to be the Sonata wealth management platform. It is used by many large financial institutions to connect and engage with their clients anytime, anywhere, via computers, tablets or smartphones. This is especially relevant given the work from home trend.

ResMed Inc. (ASX: RMD)

A final option for investors to consider buying is ResMed. It is a medical device company focused on the growing sleep treatment market. Thanks to its industry-leading mask products, world-class software solutions, and massive addressable market due to the proliferation of sleep apnoea, I expect ResMed to continue its strong growth for many years to come.

More reading

• 3 mid cap ASX shares to buy for strong potential returns
• Why have ASX tech founders been unloading shares?
• Why Afterpay, Nufarm, PolyNovo, & Sezzle shares are racing higher today
• ASX 200 up 1.9%: Afterpay storms higher, Nufarm jumps, big four banks rise
• Where next for the Zip (ASX:Z1P) share price?

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 and recommends Altium. The Motley Fool Australia owns shares of and has recommended Bravura Solutions Ltd. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool Australia has recommended ResMed Inc. 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 market is set to crash this morning. But those wanting to hunt for bargains may want to take a look at ASX stocks leveraged to the Victorian economy.

The S&P/ASX 200 Index (Index:^AXJO) is tipped to fall by 1% due to the overnight slump in US stocks and weak commodity prices.

The pull-back in the ASX is only likely to be temporary and may represent a bargain hunting opportunity.

Cheap ASX stocks cast into the Victorian bargain bin

One discount bin that is worth taking a look at is for ASX stocks hammered by the second Victorian shutdown.

The state is the worst performer in the country as strict COVID-19 lockdowns brought the Victorian economy to its knees.

Turnaround in Victoria is neigh

But the tide may be turning with Victoria recording 12 new cases in the last 24 hours, reported the Australian Broadcasting Corporation.

This takes the 14-day rolling average to 26.7 for greater Melbourne, while the average for regional Victoria falls to just 1.1.

The 14-day average is now below Premier Daniel Andrews’ target band of 30 to 50 cases. This is a condition for loosening stage four restrictions.

ASX stocks to buy for the Victorian recovery

Case numbers are falling faster than what the state government was forecasting. This is igniting hopes that the state will reopen its economy sooner rather than later.

Investor sentiment towards Victoria is set for a rebound! This might be a good time to look at stocks that can benefit the most from the recovery.

I am not necessarily talking about retailers with a large presence in the state. Stocks like the Wesfarmers Ltd (ASX: WES) share price and Nick Scali Limited (ASX: NCK) share price are already doing well as they have benefited from the COVID fallout.

Two ASX stocks on UBS’ buy list

It’s the laggards that are likely to jump the most as the Victorian economy reopens. One stock that fits into this category is the Crown Resorts Ltd (ASX: CWN) share price, according to UBS which rates it a “buy”.

The COVID-19 shutdown hit the casino operator’s Melbourne venue hard and there’s little good news priced into the stock.

However, the latest revelation that Crown was giving financial performance briefings to James Packer ahead of other shareholders could rattle the stock.

Another underachiever UBS thinks will see its fortunes turn with the Victorian economy is the Insurance Australia Group Ltd (ASX: IAG) share price.

Shares in the insurer are hovering around an eight-year low. Any good news could see the stock bounce like a coiled-up spring.

UBS is also recommending IAG as a “buy”.

More reading

• 5 things to watch on the ASX 200 on Thursday
• ASX 200 jumps 2.4% higher, numerous shares rise
• Here’s why the Elders (ASX:ELD) share price is at a new high today
• Why the Flight Centre (ASX:FLT) share price and Webjet (ASX:WEB) share price are taking off
• Plenti (ASX:PLT) share price crashes lower after its IPO

Motley Fool contributor Brendon Lau has no position in any of the stocks mentioned. Connect with me on Twitter @brenlau.

The Motley Fool Australia owns shares of Wesfarmers Limited. The Motley Fool Australia has recommended Crown Resorts 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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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.

Followers of Tesla Inc (NASDAQ: TSLA) were eagerly anticipating the company’s much-hyped ‘Battery Day’ on Tuesday, expecting news of major developments in the electric-car maker’s signature technology. What they got was a list of upcoming improvements and promises that may pay off one to three years down the road.

Disappointed shareholders began to question the company’s lofty valuation and sold off the stock. By 11.53 am EDT Wednesday morning, Tesla’s shares were down more than 9%, dropping below $400 for the second time this month.

What was announced…

Tesla CEO Elon Musk, who loves to talk at length about vehicle technology, outlined a number of upcoming improvements to the company’s battery tech, including:

• Eventual in-house manufacture of battery cells, currently sourced from Panasonic, resulting in reduced battery costs and fewer supply issues.
• “Tabless” batteries, which will increase cars’ range by 16% and boost cars’ power by an estimated 600%, while reducing cost per kilowatt-hour.
• Construction of a new North American cathode plant, which will reduce supply chain costs.
• Reductions in scarce metal nickel and removal altogether of conflict mineral cobalt from Tesla’s battery cathodes.

But the two biggest announcements were only tangentially related to batteries: the 2021 release of the $139,900 Model S “Plaid,” featuring the souped-up Plaid powertrain, and a goal of introducing a $25,000 Tesla model in three years. 

…and what wasn’t

There was no mention of the much-anticipated “million mile” battery technology, which would represent a significant upgrade to Tesla vehicles’ expected battery lifespans. There were also no major surprises, since gradual technical improvements and cost reductions were already widely expected and, arguably, priced into the automaker’s stock. 

In other words, the main reason “Battery Day” fell flat was that it didn’t really improve the thesis for buying the stock.

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

More reading

• Ecograf (ASX:EGR) share price moves after Tesla’s Battery Day presentation
• ASX investors were buying Tesla (NASDAQ:TSLA) and Snowflake (NYSE:SNOW) shares last week
• Should ASX investors follow Buffett and bet on oil shares?
• Tesla Weighs on Nasdaq — Will Investors Believe Musk This Time?
• ASX shares Tesla (NASDAQ:TSLA) needs to survive

John Bromels owns shares of Tesla. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Tesla. 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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This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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The Brickworks Limited (ASX: BKW) share price will be on watch this morning following the release of its full year results.

How did Brickworks perform in FY 2020?

For the 12 months ended 31 July 2020, Brickworks reported a 4% increase in revenue to $953 million and a 34% decline in earnings before interest and tax (EBIT) to $206 million.

On the bottom line Brickworks posted a 38% decline in underlying net profit after tax to $146 million. On a statutory basis, net profit after tax was up 93% to $299 million.

Brickworks’ statutory result includes a significant one-off profit in relation to its shareholding in Washington H. Soul Pattinson and Co. Ltd (ASX: SOL), triggered by the merger of its associate TPG Telecom Ltd (ASX: TPG) with Vodafone Australia.

Despite the decline in its underlying profits, the Brickworks board declared a final fully franked dividend of 39 cents per share. This was up 3% on the prior corresponding period and brought its full year dividend to 59 cents per share. This was a 4% increase on FY 2019’s dividend.

How did its businesses perform?

One of the main drags on the company’s performance in FY 2020 was the Australian Buildings Products business. It reported a 9% decline in revenue to $687 million and a 43% reduction in EBIT to $33 million. This was driven by challenges associated with the pandemic and headwinds due to declining market activity.

Things were better for its Building Products North America business. It delivered EBIT of $10 million, up 63% on the prior year. Though, this was largely the result of new acquisitions.

The company’s Property Trust business was a highlight in FY 2020. This was thanks almost entirely to its joint venture with Goodman Group (ASX: GMG), which helped the business report EBIT of $129 million for the year.  

Finally, also dragging on its results was its Investments business. It reported a sizeable 51% decline in EBIT to $51 million due largely to its stake in struggling coal miner New Hope Corporation Limited (ASX: NHC).

Outlook.

FY 2021 looks likely to be a better year for Brickworks.

Management notes that demand for its prime industrial property is strong thanks to the shift to online shopping.

It also advised that Building Products Australia has experienced an increase in orders and sales across most businesses in September. In addition, the company revealed that it has had feedback from homebuilders that activity is building across the country.

Over in North America, the company expects short term demand to be impacted due to COVID-19. However, thanks to cost cutting and efficiencies, it is expecting improved earnings once trading conditions normalise.

Management concluded: “The Company has a diversified portfolio of attractive assets and a robust balance sheet that provides resilience to any short-term challenges and economic uncertainty caused by the COVID-19 pandemic, whilst also providing strong growth prospects over the long term.”

More reading

• 3 ASX shares now trading at crazy cheap prices
• 5 things to watch on the ASX 200 on Thursday
• 4 ASX shares rated as strong buys by brokers
• 3 ASX dividend shares to buy for 2021
• Why everyone should have Brickworks (ASX:BKW) and 1 other ASX share

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. 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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Listed investment companies (LICs) are very similar to exchange-traded funds (ETFs), or real estate investment trusts (REITs).  In every case there is a standalone fund dedicated to a specific purpose. For example, the Charter Hall Retail REIT (ASX: CQR) is dedicated to convenience retail centres, including petrol stations. An example ETF would be the Magellan Global Equities Fund (ASX: MGE). This invests in 20 to 40 of the worlds largest companies. 

However, the difference between a REIT or ETF and an ASX LIC is the structure of the business. LICs are generally limited companies, while ETFs and REITs are explicitly trusts. There are a range of differences but for me the most important is that a LIC is like any other company. Therefore, you buy shares not units. Meaning, you buy a part of the company rather than a unit in the underlying assets. 

Hearts and Minds Investments Ltd (ASX: HM1)

Hearts and Minds is a great ASX LIC which listed during 2019. The fund managers forgo all fees, instead donating to leading Australian medical institutes.  It has a concentrated portfolio in 25-35 Australian and global securities. These are based on the highest conviction ideas from leading fund managers. 

In year to date trading, Hearts and Minds is up by 6.71% despite the coronavirus market crash in March. The company achieved a growth of 7.2%, compared to 3.4% in the MSCI World Net Total Return Index (AUD).

This LIC is currently trading at less than its net tangible assets (NTA) value per share of $3.71.

Ophir High Conviction Fund (ASX: OPH)

The Ophir High Conviction fund provides shareholders with a concentrated fund on companies outside of the S&P/ASX 50 Index (ASX: XFL). The company’s investment philosophy is very fundamental. That is, a bottom up approach to identify under-valued ASX shares. Particularly those with existing and proven business models and large, or growing, addressable markets. 

What originally attracted me to this ASX LIC is that both founders have all of their liquid investments here. In year to date trading, this ASX LIC’s share price is up by 21.69%. It is trading at a price to earnings ratio (P/E) of 11.08, and at a slight premium to its NTA per share of $2.98.

The Ophir LIC portfolio uses the S&P/ASX Mid Small Index (ASX: AXMSA) as a benchmark. In FY20 the LIC delivered a growth rate of 12.7% against a benchmark growth rate of -5.3%. 

WCM Global Growth Ltd (ASX: WQG)

WCM Global is a $200 million ASX LIC with an estimated NTA per share of $1.48 at the time of writing. This LIC also focuses on fundamental company analysis. However, it places a lot of value in the organisation’s moat, or competitive advantages. In FY20, the LIC delivered a return of 17.6% for the year. Outperforming its benchmark MCSI All-Country World ex Australia Index by 12.9%. 

This ASX LIC provides access to a range of giant global technology companies. For instance, it includes companies like Shopify Inc (NYSE:SHOP), Tencent Holdings Ltd (HKG: 0700), and Mercadolibre Inc (NYSE:MELI). At close of trading on Wednesday, this ASX LIC is selling for a P/E of 9.32.

More reading

• 2 top ASX shares I’d buy with $2,000 right now
• Charter Hall Long WALE REIT (ASX:CLW) secures BP funding

Daryl Mather has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Shopify. 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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Commonwealth Bank of Australia (ASX: CBA) chief executive Matt Comyn has dealt with many crises in his career.

He was promoted to CEO in the midst of the money laundering scandal in 2017. Then the next year he had to answer to the Royal Commission into the finance industry.

And this year he’s led Australia’s largest bank through the COVID-19 pandemic and a devastated economy.

But he never pretends that his troubles are anything close to what some ordinary Australians endure.

At a “Meet The CEO” event at the University of NSW, Comyn this week recalled his experience leading CBA’s response to the collapse of Storm Financial Limited.

Advice firm Storm Financial went under in 2009 with losses over $3 billion. The company had signed up vulnerable cash-poor clients to margin loans, which were issued by the CBA.

Storm customers, most of them elderly, together lost more than $800 million of their life savings.

Although it was Storm Financial that had provided inappropriate financial advice, CBA had to face angry clients after the collapse as they rightly sought answers.

Comyn, 9 years before he became chief executive, masochistically put his hand up to face the music on behalf of CBA.

After an intense creditors’ meeting ran 2 hours over in Brisbane, Comyn’s taxi had grown tired of waiting and was nowhere to be seen. It was 11.30pm on the outskirts of the city. 

Fortunately, one of the Storm Financial victims offered him a lift. 

“They’d lost their life savings. They were in their mid-60s – same age as my mum. They’d lost everything,” recalled Comyn.

“And he was [now] trying to do some work as a part-timer at a Subway store.” 

Never borrow to invest in volatile assets

The experience had a profound impact on Comyn.

He still rates the potential for personal devastation as the worst thing about his role as a bank CEO.

“Even when the bank hasn’t done anything wrong, just the sheer distress associated with people unable to pay back loans or being in a difficult situation – it’s tough to see that.”

Financially, Comyn can’t emphasise enough the risks of borrowing to invest.

“Actually seeing and meeting customers, you get a real appreciation of the dangers of debt and leverage,” he said.

“When things go wrong, unfortunately in banking the implications at a personal or a business level can be really severe.”

Margin loans, which fund stock purchases, can be especially lethal. 

Unlike home loans, when the value of the borrowed portfolio drops by a certain percentage the lender can call in the debt.

Incredibly, the Federal Court only fined Storm’s husband-and-wife directors Emmanuel and Julie Cassimatis $70,000 each.

More reading

• Why I would buy CBA (ASX:CBA) and this beaten down ASX share
• How ASX shareholders are dudded by quarterly reports
• BrainChip (ASX:BRN) and Afterpay (ASX:APT) were among the most traded shares on the ASX last week
• 2 ASX shares to buy today for house price rise
• CBA, Macquarie face new $167m dirty cash allegations

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. 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 Westpac Banking Corp (ASX: WBC) share price will be on watch this morning after the banking giant provided an update on its dealings with AUSTRAC in relation to its Anti-Money Laundering and Counter-Terrorism and Financing Act 2006 (AML/CTF) contraventions.

What did Westpac announce?

This morning Westpac announced that it has reached an agreement with AUSTRAC to resolve the civil proceedings that were commenced in the Federal Court on 20 November 2019.

According to the release, Westpac will pay a civil penalty of $1.3 billion for the contraventions, pending court approval.

As part of the agreement, Westpac has admitted to additional contraventions, which contribute to the agreed penalty.

Westpac’s Chief Executive Officer, Peter King, once again apologised for the bank’s failings and vowed to not let them happen again.

He said: “I would like to apologise sincerely for the Bank’s failings. We are committed to fixing the issues to ensure that these mistakes do not happen again. This has been my number one priority. We have also closed down relevant products and reported all relevant historical transactions.”

“This agreement is an important step in the court process. It provides more certainty to all our stakeholders as we continue to implement the measures in our Response Plan and complete the implementation of recommendations from the reviews that have been conducted,” he added.

What next for Westpac?

Mr King advised that the bank is busy implementing all the recommendations of the Advisory Panel Report on governance and accountability.

He explained: “We are strengthening our financial crime capability. We acknowledge the important role Westpac must play in protecting the integrity of the financial system. As part of this process we are improving our end-to-end financial crime risk management processes and have established clearer accountabilities for AML/CTF compliance.”

The chief executive advised that Westpac has been investing heavily in “its systems, processes, and controls to detect and report suspicious transactions.” This includes the recruitment of “about 200 financial crime people to the group.”

How does this penalty compare to expectations?

In its first half results, Westpac provided an estimate of a $900 million penalty.

As a result, the bank will increase the provision in its accounts for the year ending 30 September 2020 by a further $404 million to account for the higher estimated penalty and for additional costs. This includes AUSTRAC’s legal costs of $3.75 million.

More reading

• Buy these ASX dividend shares if the RBA cuts rates
• More pain ahead for savers and retirees as Westpac forecasts an October interest rate slash to just 0.1%
• CBA, Macquarie face new $167m dirty cash allegations
• Macquarie says ASX value shares will outperform growth stocks from here
• ASX 200 Weekly Wrap: ASX 200 snaps 4 week losing streak… just

Motley Fool contributor James Mickleboro owns shares of Westpac Banking. 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 that there are some ASX shares are trading really cheaply and could be worth buying today.

COVID-19 has caused a lot of volatility over the past seven months. Many businesses have recovered strongly from the crash like JB Hi-Fi Limited (ASX: JBH). However, some other ASX shares haven’t rebounded with the same vigour. I think they could be buying opportunities if you take a medium-term outlook:

Vitalharvest Freehold Trust (ASX: VTH)

Vitalharvest is a agricultural real estate investment trust (REIT) which owns some of the largest berry and citrus farms in Australia.

Those farms are exclusively leased to the biggest horticultural company in Australia, Costa Group Holdings Ltd (ASX: CGC).

Vitalharvest generates rent from Costa in two different ways. It receives fixed rental income and it also receives variable rent in the form of a 25% share of the profit generated by those farms.

The last couple of years have been tough for those farms because of the Australian drought and also individual issues like crumbly berries and fruit flies. Problems like that are going to happen now and again, but I think it’s very unlikely that all of those things will happen simultaneously again for the ASX share.

I believe it’s a good time to buy when there are problems for a cyclical business. Based on the net asset value (NAV) per unit of $0.91 at 30 June 2020, the Vitalhavest share price is trading at a 15% discount to the NAV. It also offers a distribution yield of just over 6%.

I think the ASX share’s variable earnings will return closer to normal in FY21 and the new manager could acquire more food-related properties that would deliver more consistent rental income.  

NAOS Small Cap Opportunities Company Ltd (ASX: NSC)

This is a listed investment company (LIC) that invests in small caps, as the name might suggest. Generally, it targets ASX shares with market capitalisations between $250 million and $1 billion.

Some of its investments include businesses like MNF Group Ltd (ASX: MNF), Macquarie Telecom Group Ltd. (ASX: MAQ), BSA Limited (ASX: BSA), FINEOS Corporation Holdings PLC (ASX: FCL) and Over The Wire Holdings Ltd (ASX: OTW).

I think the above list of names is a quality group of ASX shares that collectively should be able to do well over the next few years.

The LIC is committed to paying a solid dividend. So even if the net tangible asset (NTA) discount doesn’t materially close up, investors can still receive a solid return just from the dividend income.

At the current Naos Small Cap share price it’s trading at a 18% discount to the pre-tax NTA at 31 August 2020. It also offers a grossed-up dividend yield of around 10%.

Brickworks Limited (ASX: BKW)

Brickworks could be one of the best value industrial ASX shares at the moment.

Looking at the projected earnings for FY22, the Brickworks share price is trading at around 11x FY22’s estimated earnings.

The company has a number of exciting factors that could make it a good buy today. Firstly, the industrial property trust that it owns half of is building two large warehouses for Coles Group Limited (ASX: COL) and Amazon. Completing these buildings will lead to a large increase in the asset value of the trust and will generate more rental income.

Whilst there is currently COVID-19 difficulties for the Australian and US economies, I expect that FY22 could be a good year for construction as economies rebound. This may be good news for Brickworks’ various building products divisions like bricks, precast, roofing and so on.

Finally, the ASX share is heavily invested in quality investment house Washington H. Soul Pattinson and Co. Ltd (ASX: SOL) which has been growing its asset value and dividend for Brickworks for decades. I think that Soul Patts could keep growing for many more decades to come.

As a bonus, Brickworks hasn’t cut its dividend for four decades and it currently offers a grossed-up dividend yield of 4.4%.

More reading

• 5 things to watch on the ASX 200 on Thursday
• 4 ASX shares rated as strong buys by brokers
• 3 ASX dividend shares to buy for 2021
• Why everyone should have Brickworks (ASX:BKW) and 1 other ASX share
• ASX 200 Weekly Wrap: ASX 200 snaps 4 week losing streak… just

Tristan Harrison owns shares of NAO SMLCAP FPO and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Over The Wire Holdings Ltd. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends FINEOS Holdings plc. The Motley Fool Australia owns shares of and has recommended Brickworks, COSTA GRP FPO, MNF Group Limited, and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia owns shares of COLESGROUP DEF SET. The Motley Fool Australia has recommended FINEOS Holdings plc and Over The Wire Holdings 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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