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The National Australia Bank Ltd (ASX: NAB) share price is clawing back some of Wednesday’s decline.

In morning trade, the banking giant’s shares are up 1% to $30.60.

Why is the NAB share price rising?

The NAB share price is rising today thanks to the release of the bank’s first quarter update.

For the three months ended 31 December, the big four bank reported a 15% increase in revenue and an 18.7% jump in cash earnings to $2.15 billion.

This was driven by higher net interest margins (NIM), stronger Markets & Treasury income, and volume growth, partly offset by home lending competition.

In respect to NAB’s NIM, it improved by 12 basis points to 1.79% due to the benefits of the rising interest rate environment.

Broker reaction

Brokers have responded positively to NAB’s update. For example, Goldman Sachs highlights that this update implies that the bank is run-rating 3% ahead of its first half estimates. It commented:

NAB has released its 1Q23 trading update, with unaudited cash earnings from continuing operations of A$2.15 bn, up 18% on the previous period average, run-rating 3% above what is implied by our current 1H23E forecasts. The better than expected performance was driven by stronger revenues (Markets) and lower BDDs, partially offset by higher expenses. PPOP was up 23% on the previous period average, and also 3% ahead of GSe. NAB’s CET1 ratio of 11.3% was running in-line with our implied 1H23E forecasts.

The broker also suspects that the result could ease concerns about its margins following the update from Commonwealth Bank of Australia (ASX: CBA) yesterday. That update appeared to indicate that CBA’s NIM had peaked a year earlier than expected. Goldman doesn’t believe this is the case for NAB. It said:

We see NAB’s 1Q23 operating performance as a positive, particularly given the commentary CBA made at its 1H23 result, which suggested NIMs have peaked. While detailed commentary is not included in today’s update, NAB’s 1Q23 operating trends seem consistent with management commentary at its FY22 result (here), particularly it relates to NIMs. We note we currently forecast NAB’s NIM to rise 15 bp hoh in 1H23E, 4 bp in 2H23E, before beginning a steady path downwards.

Goldman has a buy rating and $35.60 price target on NAB’s shares.

The post NAB share price higher on stronger than expected Q1 update appeared first on The Motley Fool Australia.

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More reading

• NAB share price in focus following Q1 $2.15b cash profit
• Earnings preview: Here are the ASX shares reporting on Thursday
• 5 things to watch on the ASX 200 on Thursday
• Buy NAB and this ASX 200 dividend share for passive income: brokers
• If you invested $5,000 in NAB shares 5 years ago, here’s how much dividend income you’d have pocketed

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

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It’s fair to say that the Commonwealth Bank of Australia (ASX: CBA) share price had a horrid day yesterday. Wednesday’s session saw CBA shares plunge by a nasty 5.72%.

The ASX 200 bank share closed at $109.25 each on Tuesday. But by the end of yesterday’s session, those same shares were going for $103 on the dot.

Commonwealth Bank is the second-largest share by market capitalisation on the S&P/ASX 200 Index (ASX: XJO). As such, this dramatic fall had a big impact on the entire market.

It’s not really a mystery why CBA shares had such a hard day. The bank began Wednesday by releasing its latest half-year results for FY2023, covering the six months to 31 December 2022.

As we covered at the time, this saw CBA announce a 12% increase in operating income to $13.59 billion, as well as a 9% rise in cash earnings to $5.15 billion.

Investors were also treated to some rewards, including a 20% hike to CBA’s interim dividend to $2.10 per share, as well as a $1 billion extension of Commonwealth Bank’s share buyback program.

That all sounds great, so why did investors punish the CBA share price so convincingly?

Top ASX 200 bank share disappoints investors

Well, as my Fool colleague James went into yesterday, it could be “due to concerns that the bank’s net interest margin has already peaked. If this is the case, it has peaked well ahead of expectations”.

The net interest margin (NIM) is the difference between how much CBA is making in loan interest, and how much interest it is paying to depositors.

So no doubt CommBank’s veritable army of retail investors would be disappointed with what happened yesterday. But perhaps some value investors out there might see this as a buying opportunity for the ASX 200’s largest bank share.

So could CBA shares be in the buy zone after this large and sudden fall in value?

Is the CBA share price a buy after yesterday’s 5% fall?

Well, unfortunately, it’s hard to find an ASX broker who is exceedingly bullish on CBA shares right now.

Yesterday, we covered how broker Goldman Sachs rang the warning bell on CBA’s falling net interest margins. Here’s some of what Goldman had to say there:

Disclosure by CBA suggests that its monthly NIM peaked around the middle of 1H23, which likely implies our 1H24 peak half-year NIM forecast is optimistic.

Goldman already had a sell rating on CBA shares, with a 12-month share price target of just $92.56. So it’s highly doubtful this broker is going to start telling investors to buy with the CBA share price still above $100:

Last week, we also covered the views of Argonaut’s adviser and broker Harrison Massey. Massey was quoted as stating that “the bank offers attractive defensive qualities. However, at recent levels, it may be prudent to trim exposure and pocket a profit”.

So it seems that CBA shares have friends few and far between right now. No doubt ASX investors will be hoping the bank can turn things around. Perhaps even get back to the $110-plus share prices we had been seeing for most of February thus far. But we’ll have to wait and see what happens.

At the last CBA share price, this ASX 200 bank stock had a market capitalisation of $173.9 billion, with a dividend yield of 3.74%.

The post Is the CBA share price a buy following Wednesday’s 5% fall? appeared first on The Motley Fool Australia.

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More reading

• Earnings preview: Here are the ASX shares reporting on Thursday
• 5 things to watch on the ASX 200 on Thursday
• Will ASX 200 shares crash in 2023?
• ASX 200 in freefall as CBA’s prediction of a soft landing might have just been torpedoed by huge interest rate call
• Why CBA, Corporate Travel Management, Treasury Wine, and Westpac shares are dropping

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

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The Wesfarmers Ltd (ASX: WES) share price rose after reporting its FY23 half-year result yesterday. There were a number of elements that I liked about the result, though the share price is a separate question.

As a quick reminder, Wesfarmers is the business that owns Kmart, Bunnings, Officeworks, Priceline, Target, and other businesses.

What I liked about the result

Certainly, there were a number of pleasing aspects to the result.

First, overall growth was solid. Total revenue, excluding Wesfarmers Health, saw 11.4% growth. This helped profit growth. Earnings before interest and tax (EBIT) increased 13.4% to $2.16 billion, net profit after tax (NPAT) grew 14.1% to $1.38 billion, and operating cash flow jumped 26.7% to $1.97 billion.

Another positive factor was that cash returns to shareholders were bumped up – the interim dividend went up by 10% to 88 cents per share.

I was expecting Kmart and Target to reveal a good turnaround because the first half of FY22 saw COVID-19 lockdowns, hurting bricks and mortar retailers. With lockdowns no longer happening, Kmart Group managed to grow earnings before tax (EBT) by 114% to $475 million. That was a strong result, considering the uncertain economic times, though Kmart could excel when customers are looking for value.

The performance of other divisions was particularly impressive, in my opinion. Officeworks saw EBT grow by 3.7% to $85 million.

While Bunnings only grew EBT by 1.5% to $1.28 billion, the fact that it achieved any growth is impressive in my opinion. Seeing as Bunnings makes most of the ASX 200 share’s profit, it can have the biggest influence on the Wesfarmers share price. Management noted strong growth from commercial customers and resilient customer demand. Bunnings focused on “delivering great value for customers”.

Bunnings expanded Tool Kit Depot into the east coast of Australia, while a new frame and truss plant was opened in Victoria during the half.

Wesfarmers’ chemicals, energy, and fertilisers division (WesCEF) experienced an earnings jump of 48.6% to $324 million. It’s benefiting from favourable global commodity prices for LPG, ammonia, and related products, together with increased ammonia production and strong plant operating performances.

Mt Holland, Wesfarmers’ lithium project, continues to see progress. It will be very helpful for earnings once it’s completed.

Is the Wesfarmers share price a buy?

Retail trading results at the start of the second half of FY23 showed growth for the ASX 200 share, particularly in areas affected by the Omicron variant.

I think the business has proven over the last three years that it can perform in almost any economic conditions. It sells products that are nearly always in demand, at a price that is winning customers.

The fact that Wesfarmers is continuing to expand its business is very promising for the long term in my opinion. The healthcare sector has long-term tailwinds, such as ageing demographics, so I think it makes sense for Wesfarmers to grow in this area, starting with Priceline and Clear Skincare Clinics.

I think it’s one of the best ASX 200 shares around – it has high-quality businesses, growth potential with each division, and a focus on returns to shareholders. I believe that Wesfarmers shares are a long-term buy. Indeed, Macquarie just increased its target price on Wesfarmers to $56.70, according to reporting by The Australian. That suggests further rises are possible.

The post Are Wesfarmers shares a buy following the ASX 200 giant’s latest earnings result? appeared first on The Motley Fool Australia.

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More reading

• Will ASX 200 shares crash in 2023?
• ASX 200 in freefall as CBA’s prediction of a soft landing might have just been torpedoed by huge interest rate call
• Why Cochlear, GUD, Netwealth, and Wesfarmers shares are charging higher
• Everything you need to know about the boosted Wesfarmers dividend
• Wesfarmers shares take off as bargain hunting sees Kmart earnings add 110%

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has positions in and has recommended Wesfarmers. 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 Insurance Australia Group Ltd (ASX: IAG) share price is in the woes this morning. The stock is falling 1.9% to trade at $4.74.

For comparison, the S&P/ASX 200 Index (ASX: XJO) is in the green, lifting 0.14%.

But there’s a simple explanation behind the IAG share price’s slump. The insurance giant is trading ex-dividend.

IAG stock slumps 2% on ex-dividend date

I’ve got bad news for anyone still on the fence about buying IAG stocks for the company’s upcoming dividend.

As of yesterday’s close, new investors buying into the stock won’t receive the payout. It will instead go to the stock’s former owner.

And the IAG share price is falling in turn. That’s because the market can no longer factor the 6 cents per share offering into the value of its stock.

IAG announced the 30% franked dividend on Monday alongside its earnings for the first half of financial year 2023.

It posted a $468 million net profit after tax (NPAT) – a 171% year-on-year improvement, while its gross written premium lifted 7.5% to around $7.1 billion.

Meanwhile, the 6 cents per share dividend was flat on its previous interim offering. Though, this time it’s fully franked at 30%.

Considering its newly declared dividend alongside its previous full-year offering, IAG shares boast a 2.3% dividend yield at their current price.

But eager investors might want to hedge their excitement for now.

The payout won’t be paid out until 23 March – meaning they still have six weeks to wait before seeing the distribution.

IAG share price snapshot

The IAG share price has been underperforming in recent times.

The stock has gained 2% this year while the ASX 200 has leapt 6%.

Looking further back, IAG shares have risen around 1% since this time last year – in line with the index’s performance.

The post Why is the IAG share price sliding lower on Thursday? appeared first on The Motley Fool Australia.

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More reading

• 3 ASX 200 shares trading ex-dividend before the end of this week
• Here are the top 10 ASX 200 shares today
• Why Audinate, Endeavour, IAG, and Vitura Health shares are charging higher
• IAG share price marching higher on 25% profit boost
• 5 things to watch on the ASX 200 on Monday

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

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The Origin Energy Ltd (ASX: ORG) share price is in the red on Thursday after the company released its earnings for the first half of financial year 2023.

Shares in the S&P/ASX 200 Index (ASX: XJO) energy producer and provider are currently 0.84% lower at $7.05 per share.

The company also reiterated that, despite due diligence dragging on longer than expected, a takeover bid posed by a consortium still stands. The consortium has now substantially completed due diligence.

Origin Energy share price gains as dividend grows 32%

Here are the highlights of the first-half report:

• $399 million statutory profit – an improvement on the prior comparable period’s (pcp) $131 million loss
• $44 million underlying profit – an 83% fall on that of the pcp
• $1.06 billion of underlying earnings before interest, tax, depreciation, and amortisation (EBITDA) – a 4% decrease
• Free cash flow came in at a $429 million loss – down from a $112 million loss
• 16.5 cents per share fully franked interim dividend declared – a 32% increase on the pcp’s unfranked offering

The company posted a mixed result this morning as its gas business outperformed while its energy markets business weighed.

The former posted $954 million of underlying EBITDA – a 10% improvement, while that of the latter fell 45% to $148 million.

Though, production at the gas business slipped 5% amid wet weather and unplanned outages, with a recovery underway.

Meanwhile, earnings at the energy markets business were hit by the under-recovery of wholesale energy costs in customer tariffs and higher fuel costs. Its retail leg continued to grow, adding 30,000 customer accounts to reach 4.5 million last half.

Australia Pacific LNG (APLNG) delivered $783 million to the ASX 200 energy giant.

What else happened last half?

Of course, the major news driving the Origin share price last half was the $18.4 billion takeover offer from a consortium including Brookfield Asset Management and MidOcean Energy.

The group put forward a $9 per share bid in November and was granted due diligence. However, its exclusivity period was twice extended before expiring, likely sparking worry among investors.

The company also sold its interest in the Beetaloo Basin last half.

What did management say?

Origin CEO Frank Calabria commented on the results driving the company’s share price today, saying:

Origin has an advantaged portfolio, is positioned for growth, and provides the ideal platform for investment into the energy transition, enabling the company to capture value and continue delivering good outcomes for our millions of customers, our communities, and shareholders.

What’s next?

The company expected to post higher free cash flow in the second half, helped by higher energy markets earnings and strong distributions from APLNG.

It recently revealed its energy markets business is on track to post between $600 million and $730 million of underlying EBITDA this financial year. It now expects that to come in at the higher end of guidance and to grow further in financial year 2024.

The transformation of its retail business is also progressing, with customer migrations to the Kraken platform to complete this quarter. Origin is targeting $200 million to $250 million of cash cost savings on a financial year 2028 baseline by 2024.

It’s also expecting to exit its interests in the Canning Basin in the current half.

Origin share price snapshot

The Origin Energy share price is currently 5% lower than it started 2023. Though, it’s still 18% higher than it was this time last year.

For comparison, the ASX 200 has risen 6% year to date and 1% over the last 12 months.

The post Origin Energy share price drops on underlying profit tumbling 83% appeared first on The Motley Fool Australia.

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More reading

• Why Liontown, Megaport, Origin, and Tyro shares are pushing higher today
• Origin share price higher on earnings guidance upgrade
• Why Baby Bunting, Origin, Rio Tinto, and South32 shares are dropping today
• Buy ‘underappreciated’ Origin Energy shares for 20% upside: Morgan Stanley

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

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The Telstra Group Ltd (ASX: TLS) share price is rising on Thursday.

In morning trade, the telco giant’s shares are up 0.5% to $4.16.

Why is the Telstra share price rising?

Investors have been bidding the Telstra share price following the release of the company’s half year results.

For the six months ended 31 December, Telstra reported a 6.4% increase in total income to $11.6 billion and an 11.4% jump in earnings before interest, tax, depreciation and amortisation (EBITDA) to $3.9 billion.

This was underpinned by momentum from its mobiles business and support from the acquisition of Digicel Pacific.

In light of its strong form, the Telstra board elected to increase its fully franked interim dividend by 6.3% to 8.5 cents per share.

The company also reaffirmed its FY 2023 guidance. Though, it did suggest its total income would be at low end of its $23 billion to $25 billion guidance range due to mobile hardware and fixed product revenues being lower than expected.

Broker reaction

Goldman Sachs has responded positively to the Telstra result, noting that its revenue and earnings were ahead of its estimates. It commented:

Telstra has reported 1H23 Revenue/EBITDA/NPAT of A$11.6bn/A$3.9bn/A$935mn, which was +2%/+1%/+4% vs. our estimates. Telstra’s gearing increased to 1.9X at 1H23 (1.8X at FY22, comfort band 1.5-2X), given a working capital build drove softer FCF (-39% vs. PcP). An interim dividend of 8.5¢ps was declared, inline with our estimate of 8.5¢ps, (representing 105% of EPS Excl. one-offs and 139% of FCF, noting typical 2H FCF skew).

Looking ahead, the broker believes that Telstra is tracking towards the upper end of its earnings guidance for FY 2023.

Despite Telstra re-iterating FY23/T25 guidance, we believe that based on annualising 1H23 underlying EBITDA, and the stronger (sequentially mobile and NAS businesses, the full year result is tracking above the mid-point of its $7.8-8.0bn range.

Goldman currently has a buy rating and $4.60 price target on Telstra’s shares.

The post Telstra share price higher on half-year revenue and earnings beat appeared first on The Motley Fool Australia.

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More reading

• Telstra share price on watch amid strong half-year profit growth
• 5 things to watch on the ASX 200 on Thursday
• Here are the 3 most heavily traded ASX 200 shares on Wednesday
• If I invest $2,000 in Telstra shares now, what could my return be in 2023?
• Here are the 3 most heavily traded ASX 200 shares on Monday

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has positions in and has recommended Telstra Group. 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 Newcrest Mining Ltd (ASX: NCM) share price is on watch this morning.

This comes after the S&P/ASX 200 Index (ASX: XJO) gold miner rejected the takeover offer from US gold giant Newmont and released its half-year results for the six months ending 31 December.

First, the takeover offer…

Newcrest share price in focus as takeover offer rebuffed

On 6 February, the Newcrest share price leapt 14% following news of Newmont’s conditional, non-binding, and indicative proposal to acquire 100% of Newcrest by way of a scheme of arrangement.

Newmont offered 0.380 Newmont shares for each Newcrest share held.

At that time, the offer represented a 22% upside to the Newcrest share price.

Today the Newcrest board announced it had unanimously rejected the offer, saying it doesn’t “represent sufficient value” for Newcrest shareholders.

The board said it considers “Newcrest to be uniquely positioned with a portfolio of long-life Tier 1 gold and copper assets, with increasing copper exposure and a high-quality development pipeline”.

Management said they’re happy to consider an improved proposal from Newmont but stressed there’s no certainty one will be forthcoming.

What did the ASX 200 gold miner report for the half year

The Newcrest share prise is also on watch today after the ASX 200 gold miner reported its half-year results (1H FY23).

Highlights include:

• Gold production of 1.04 million ounces, up 25% from 1H FY22
• Copper production of 67,023 tonnes, up 32%
• Revenue of $2.12 billion, up 24%
• Earnings before interest, taxes, depreciation and amortisation (EBITDA) of $919 million, up 24%
• Statutory and underlying profit of $293 million, down 2% from 1H FY22
• All-In Sustaining Cost (AISC) of $1,089 per ounce, delivering an AISC margin of $585/oz
• Interim dividend of US 15 cents per share (cps) and special dividend of US 20 cps, both fully franked

What did management say

Commenting on the results that have the Newcrest share price on watch this morning, CEO Sherry Duhe said:

We made significant progress on the execution of our growth strategy during the first half. We were very pleased to progress the Cadia PC1-2 and Lihir Phase 14A studies to execution, as well as completing the two-stage plant expansion at Cadia and further extending the mine life at Telfer.

Our global gold and copper portfolio is well placed for the future, with our transformation program delivering excellent progress at Brucejack, activities underway to maximise the value of our Red Chris and Havieron projects, and ongoing exploration success highlighting the potential for significant resource growth across our key target areas.

The post Newcrest share price on watch amid results and takeover rejection appeared first on The Motley Fool Australia.

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More reading

• How do I cash in my Newcrest shares if US giant Newmont takes over?
• 5 things to watch on the ASX 200 on Friday
• Takeover bid undervalues Newcrest shares: Citi analysts
• Here are the top 10 ASX 200 shares today
• Here are the 3 most heavily traded ASX 200 shares on Monday

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

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The National Australia Bank Ltd (ASX: NAB) share price will be in focus on Thursday.

This follows the release of the banking giant’s unaudited first quarter trading update this morning.

NAB share price on watch

• Cash earnings up 18.7% to $2.15 billion
• Statutory net profit of $2.05 billion
• CET1 ratio of 11.3%
• Net interest margin (NIM) up 12 basis points to 1.79%

What happened during the quarter?

For the three months ended 31 December, NAB reported a 15% increase in revenue thanks to higher margins, stronger Markets & Treasury income, and volume growth. Excluding Markets & Treasury, NAB’s revenue rose 12%.

The bank’s NIM rose 12 basis points to 1.79%. Excluding Markets & Treasury and the impact of liquids, NIM rose 15 bps to 1.82%. This reflects the benefits of the rising interest rate environment partly offset by home lending competition.

NAB advised that its expenses rose significantly slower than its revenue at 4%, or 3% excluding the Citi consumer business. This was driven by higher staff-related costs, partly offset by productivity and lower remediation charges.

Finally, the bank’s asset quality remains very strong. While NAB reported a $158 million credit impairment charge due partly to lower house prices, its 90+ days past due and gross impaired assets to gross loans and acceptances ratio fell 4 basis points to 0.62%. The latter reflects continued improvement across the Australian home loan portfolio, along with a continued low level of impaired assets in the business lending portfolio.

Management commentary

NAB’s CEO, Ross McEwan, was pleased with the bank’s start to FY 2023. He said:

We have started FY23 with a strong financial performance and our strategy is continuing to drive targeted growth across our business. Lending and deposits both increased by 1% over the December quarter including above system growth in Australian SME business lending.

1Q23 cash earnings rose 18% compared with the 2H22 quarterly average. The higher interest rate environment, resulting from central bank actions to curb inflation, has benefitted our revenue this period. But this is also causing economic growth and house prices to soften, and loan repayments to increase.

Outlook

McEwan believes the bank is well-placed for the remainder of FY 2023. He added:

Our business is in good shape for this environment. Capital and provisioning remain strong and we are well advanced on our FY23 term wholesale funding task with $20 billion issued by 10 February. We are investing to deliver simpler, more digital experiences for customers and colleagues and continue to target productivity benefits of approximately $400 million in FY23.

Executing our strategy remains our key priority. We are focused on getting the basics right, maintaining cost discipline, managing our bank safely and improving customer and colleague outcomes to deliver sustainable growth and improved shareholder returns.

The post NAB share price in focus following Q1 $2.15b cash profit appeared first on The Motley Fool Australia.

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

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China, as the second largest economy in the world, has a huge influence on the fortunes of many ASX shares.

On top of this, the country has also been very topical among investors to start 2023 as it has recently made many significant policy changes.

Towards the end of last year, the ruling Chinese Communist Party backed down from its strict zero-COVID stance. While spurring a surge in coronavirus cases in the short term, the move is expected to be economically beneficial in the longer run.

The analysts at Firetrail, in a memo to clients, also noted other announcements following that reopening.

“President Xi wants the population ‘to consume based on a stable income, dare to consume without worries, and have a good consumption environment with a strong sense of gain and strong willingness to consume’, which could benefit Australian companies selling [products] into China.”

50% fewer Chinese students in Australia now than pre-pandemic

The thawing of diplomatic relations between Australia and China will also potentially restore exports of items like lobsters and wine. 

But one export channel that has already opened up is education, thanks to a massive ruling out of Beijing.

“China will no longer recognise academic degrees and diplomas achieved through online study, which could increase the flow of students to Australian universities,” read the Firetrail memo.

According to Shaw and Partners portfolio manager James Gerrish, there is one particular stock that could see a windfall from this development.

“We like IDP Education Ltd (ASX: IEL), this global student placement business, moving into 2023 as the world moves on from COVID and Chinese students return to Australian classes,” he said in a Market Matters Q&A.

The IDP share price has already risen around 17% since 20 December.

But Gerrish believes there is still plenty of upside to be fulfilled.

“There are 50% fewer Chinese students in Australia than in 2019, illustrating the huge room for improvement.”

The stock closed Wednesday at $31.07. Gerrish favours buying at this price.

“We like the risk-reward on IDP Education below $32 targeting a move back towards $40, or 25% higher.”

The post Double the customers in 2023? The ASX share one expert would pounce on now appeared first on The Motley Fool Australia.

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Motley Fool contributor Tony Yoo has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended IDP Education. The Motley Fool Australia has recommended IDP Education. 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 Telstra Group Ltd (ASX: TLS) share price will be one to watch this morning.

That’s because the telco giant has just released its half year results.

Telstra share price on watch

• Total income up 6.4% to $11.6 billion
• Earnings before interest, tax, depreciation and amortisation (EBITDA) up 11.4% to $3.9 billion
• Net profit after tax up 25.7% to $0.9 billion
• Earnings per share up 27.1% to 7.5 cents per share
• Free cash flow after lease payments (FCFaL) of $1 billion
• Fully franked interim dividend up 6.3% to 8.5 cents per share

What happened during the half?

For the six months ended 31 December, Telstra reported a 6.4% increase in total income to $11.6 billion. This was driven by momentum from its mobiles business and support from the acquisition of Digicel Pacific.

The star of the show was Telstra’s mobile business, which reported continued growth in revenue, average revenue per users (ARPU), services in operation (SIO), and earnings. Mobile services revenue was up 9.3%, assisted by the return of international roaming. Postpaid handheld ARPU was up 4.5% and SIOs up a net 68,000. Prepaid handheld revenue was up 28.7% with unique users up 137,000.

This was supported by growth in the Fixed Consumer and Small Businesses, InfraCo Fixed, and International businesses, and partially offset by weakness in the Fixed Enterprise business due to impacts from ongoing disruption from technology change and competition.

And although inflation is having an impact on Telstra’s operations, it has been using cost mitigants and revenue levers to offset this.

On the bottom line, Telstra reported a 25.7% increase in net profit after tax to $0.9 billion. This allowed the company’s board to increase its dividend by 6.3% to 8.5 cents per share. This will be paid to shareholders on 31 March.

Management commentary

Telstra’s new CEO, Vicki Brady, was pleased with the half. She said:

We are a growing business with a lot to be excited about in our future, and our T25 strategy provides a clear roadmap to get us there. On the back of our continued growth, the Board resolved to pay a fully franked interim dividend of 8.5 cents per share representing a 6.3 percent increase on the prior corresponding period, and in line with the second half of last financial year. The interim dividend is consistent with our policy to maximise the fully franked dividend and seek to grow it over time.

Outlook

Telstra has reaffirmed its guidance for FY 2023 across all measures.

However, it now expects its income to be at the bottom end of guidance due to mobile hardware and fixed product revenues being lower than expected.

Telstra’s guidance is for:

• Total income of $23 billion to $25 billion
• Underlying EBITDA of $7.8 billion to $8 billion
• Capex $3.5 billion to $3.7 billion
• FCFaL of $2.6 billion to $3.1 billion

Looking further ahead, management has reiterated its commitment to its $500 million FY 2025 cost out ambition.

The post Telstra share price on watch amid strong half-year profit growth appeared first on The Motley Fool Australia.

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More reading

• 5 things to watch on the ASX 200 on Thursday
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• Macquarie has these ASX 200 dividend shares in its income portfolio

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has positions in and has recommended Telstra Group. 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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