Tag: Motley Fool

Investors were caught off guard yesterday after the Bank of Japan (BoJ) broke decades of monetary tradition.

The central bank’s decision to widen the acceptable band on the country’s risk-free rate was met with blood in equity markets. In response, Japan’s Nikkei 225 Index fell a considerable 2.5%. Meanwhile, our local S&P/ASX 200 Index (ASX: XJO) shaved off 1.5%.

You might be wondering why this decision created such a panic. The short answer is: it creates more questions than answers. Let’s delve into what that means exactly.

Final nail in the ultra-low-rate coffin

Japan’s central bank is one of only a handful that has implemented negative interest rates at some point over its existence. In 2016, the BoJ targeted a negative 0.1% rate to try and curb decades of deflation, evident by the country’s stagnant — at times falling — gross domestic product (GDP).

However, Japan proved yesterday that even its economy is experiencing levels of inflation that can no longer be ignored. In its statement, the BoJ revealed it would widen its target band on the 10-year bond to plus or minus 0.5%, up from 0.25%.

The decision comes at a time when many investors and economists are deliberating over whether more rate rises are to come in Australia and the United States. Earlier this month, Philip Lowe made the call to jack the Aussie cash rate up to 3.1%.

Yesterday’s BoJ decision could be interpreted as further rate rises to come. In fact, Exante Data founder and CEO, Jens Nordvig, went as far as saying:

Japan is a big investor in all kinds of markets, especially fixed-income markets around the world. We can see when there’s a shift in Japan, we’ve decided to have all yields globally shift up today from Europe to the United States. So it’s a big deal. And it’s not just today, right? This is a signal that they’re going in a certain direction, there are going to be almost guaranteed more steps in 2023 from the Bank of Japan.

The Bank of Japan made an impactful change to its bond yield policy, and now the $JPY is reaching its highest level against the $DXY in months.

Here’s how @jnordvig thinks this news will have an effect for market demand in the States. #jensonyen pic.twitter.com/aSySmaN5rI

— CNBC’s Fast Money (@CNBCFastMoney) December 20, 2022

https://platform.twitter.com/widgets.js

Further interest rate increases are not the words investors in share markets want to hear right now. As Nordvig points out, that would mean less liquidity available to invest, potentially depressing prices more.

Why is the Bank of Japan doing this?

The ‘why’ for loosening the target band on Japan’s 10-year yield depends on who you ask. According to the BoJ governor Haruhiko Kuroda the reason is to create a better functioning market, stating:

Today’s step is aimed at improving market functions, thereby helping enhance the effect of our monetary easing… It’s therefore not an interest rate hike.

However, with an inflation rate of 3.7% and central banks around the world hiking at a record pace — one could argue the conditions demanded policy tightening.

The Japanese Yen to the US dollar has eroded in value throughout the year, as shown above. Rising rates in other countries made foreign treasuries more appealing than holding Yen.

Given the country has a negative trade balance, Japan would effectively be importing more inflation to its country via its depreciated currency.

The post Why you should pay attention to the Bank of Japan appeared first on The Motley Fool Australia.

(function() {
function setButtonColorDefaults(param, property, defaultValue) {
if( !param || !param.includes(‘#’)) {
var button = document.getElementsByClassName(“pitch-snippet”)[0].getElementsByClassName(“pitch-button”)[0];
button.style[property] = defaultValue;
}
}

setButtonColorDefaults(“#43B02A”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#43B02A”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()

More reading

• Why European Lithium, Evolution, Medadvisor, and REA shares are charging higher
• Why did this ASX All Ordinaries share just crash 33%?
• Guess which ASX lithium share is rocketing 22% on a deal with BMW
• The worst investment decision I ever made (and what I learned from it)
• Guess which ASX tech billionaire just bought a million of their company’s shares

from The Motley Fool Australia https://ift.tt/MgzaQpP

In afternoon trade, the S&P/ASX 200 Index (ASX: XJO) has bounced back from yesterday’s selloff. At the time of writing, the benchmark index is up 1.3% to 7,117.2 points.

Four ASX shares that are climbing more than most today are listed below. Here’s why they are charging higher:

European Lithium Ltd (ASX: EUR)

The European Lithium share price is up 15% to 8.3 cents. Investors have been buying this lithium explorer’s shares after it announced a binding offtake agreement with auto giant BMW. From 2026, European Lithium will supply BMW with a total of 50,000 metric tonnes of battery grade lithium hydroxide from the Wolfsberg Lithium Project in Austria.

Evolution Mining Ltd (ASX: EVN)

The Evolution Mining share price is up 7% to $3.04. Evolution and other gold miners are charging higher today after the gold price rose strongly overnight. This has led to the S&P/ASX All Ordinaries Gold index rising an impressive 4.9% on Wednesday.

Medadvisor Ltd (ASX: MDR)

The Medadvisor share price is up 11% to 25 cents. This morning, the medtech company released its revenue guidance for the first half of FY 2023. Medadvisor revealed that it expects to report half year revenue between $58 million and $61 million. This will be up 50% to 60% on the prior corresponding period.

REA Group Limited (ASX: REA)

The REA share price is up 3% to $112.39. This may have been driven by a broker note out of Goldman Sachs this morning. According to the note, the broker has retained its conviction buy rating with a slightly trimmed price target of $158.00. Goldman commented: “Following the recent decline in share prices, REA/DHG are now trading on 19x/13x 12mf EBITDA, which we see as very attractive vs. historical levels (>20% discount).”

The post Why European Lithium, Evolution, Medadvisor, and REA shares are charging higher appeared first on The Motley Fool Australia.

(function() {
function setButtonColorDefaults(param, property, defaultValue) {
if( !param || !param.includes(‘#’)) {
var button = document.getElementsByClassName(“pitch-snippet”)[0].getElementsByClassName(“pitch-button”)[0];
button.style[property] = defaultValue;
}
}

setButtonColorDefaults(“#0095C8”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#0095C8”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()

More reading

• Guess which ASX lithium share is rocketing 22% on a deal with BMW
• 5 things to watch on the ASX 200 on Wednesday
• 5 things to watch on the ASX 200 on Tuesday
• Here are the top 10 ASX 200 shares today
• 5 things to watch on the ASX 200 on Thursday

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. owns shares of MedAdvisor. The Motley Fool Australia has recommended REA Group and Medadvisor. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

from The Motley Fool Australia https://ift.tt/QZ0eDYd

The All Ordinaries (ASX: XAO) index may be rising strongly but the same cannot be said for the Symbio Holdings Ltd (ASX: SYM) share price on Wednesday.

At the time of writing, the voice communications software provider’s shares are down a massive 33% to a 52-week low of $1.72.

This means the Symbio share price is now down a very disappointing 75% in 2022, as you can see below.

Why is this All Ords share being hammered?

Investors have been hitting the sell button today in response to the release of a trading update after the market close on Tuesday.

Unfortunately for Symbio, it appears that demand during the COVID pandemic is unravelling somewhat right now, which is weighing on its performance.

According to the release, the company now expects FY 2023 EBITDA to be between $26 million and $30 million. This compares to its previous guidance of between $36 million and $39 million, which represents a 25% downgrade based on the mid-point of the ranges.

What’s going on?

Management advised that the company’s Communications Platform-as-a-Service (CPaaS) division has been impacted by returns and slow sales progress.

In respect to the former, it notes that several US-based global software companies have returned unused phone number inventory in the second quarter following COVID-related bulk orders.

As for the latter, management highlights that new deals are taking longer to finalise. It revealed that there are approximately 400,000 Australian phone numbers that have been in the final stages of the contract process since 30 June. Positively, Symbio remains confident they will materialise.

The All Ordinaries share also advised that other business divisions, TaaS and UCaaS, are performing in line with previous expectations, albeit at a slightly slower pace due to some areas of softness in the economy.

In response, Symbio has reduced its capital expenditure plans, cut discretionary spending on travel and marketing, and suspended recruiting. It is also exploring additional measures and opportunities to reduce its cost base.

Symbio co-founder and CEO, Rene Sugo, commented:

Despite a positive Q1’23, which tracked in line with our expectations, some unexpected customer activity during Q2’23 has impacted trading. As a result, we have revised our expected FY23 EBITDA guidance to $26 million to $30 million.

Symbio has acted quickly in response, reducing capex and opex to preserve our strong balance sheet. We are continuing to efficiently execute our strategy and remain committed to our APAC expansion plans. Singapore is performing well and at this stage, our focus is now on launching operations in Malaysia and Taiwan. Once we are cash flow positive in all three countries, we will then expand further into the APAC region as outlined in our 2030 vision.

The post Why did this ASX All Ordinaries share just crash 33%? appeared first on The Motley Fool Australia.

(function() {
function setButtonColorDefaults(param, property, defaultValue) {
if( !param || !param.includes(‘#’)) {
var button = document.getElementsByClassName(“pitch-snippet”)[0].getElementsByClassName(“pitch-button”)[0];
button.style[property] = defaultValue;
}
}

setButtonColorDefaults(“#0095C8”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#0095C8”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()

More reading

• Guess which ASX lithium share is rocketing 22% on a deal with BMW
• The worst investment decision I ever made (and what I learned from it)
• Guess which ASX tech billionaire just bought a million of their company’s shares
• Is there something strange going on with ANZ shares today?
• Why is the Fortescue dividend yield so high?

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. owns and has recommended Symbio Holdings Limited. The Motley Fool Australia owns and has recommended Symbio Holdings Limited. . The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

from The Motley Fool Australia https://ift.tt/kh1PneC

A whopping insider buy just went down with shares in technology-focused listed investment company (LIC) Thorney Technologies Ltd (ASX: TEK). Perhaps more excitingly, the purchase was made by a rich lister who boasts a billion-dollar fortune built through investing.

Right now, the Thorney Technologies share price is 21 cents. It has fallen 51% year to date. That leaves the LIC with an $89 million market capitalisation.

For comparison, the benchmark All Ordinaries Index (ASX: XAO) has dropped 8% since the start of 2022.

So, which Aussie billionaire seemingly thinks now is a good time to buy into the ASX tech-focused share? Let’s take a look.

This insider just bought a million shares in their tech-focused LIC

Famous investor Peter Lynch is widely quoted as having said:

Insiders might sell their shares for any number of reasons, but they buy them for only one: they think the price will rise.

Thus, it might be a good sign that billionaire investor and Thorney Technologies chair Alex Waislitz snapped up another million shares in the LIC yesterday.

Waislitz, who has previously been dubbed ‘Australia’s Warren Buffett’ by some, now boasts a 23% stake in the ASX-listed tech-focused investment company.

He paid 20.92 cents per share for his latest buy, forking out a total of $209,200.

Waislitz sits at number 91 on the Australian Financial Review’s 2022 Rich List, commanding a $1.5 billion fortune.

He is also the person behind Thorney Investment Group, which is in turn the manager of the Thorney Technologies LIC. The group is Waislitz’s private investment vehicle.

Among Thorney Technologies’ major investments are Nitro Software Ltd (ASX: NTO), Imugene Limited (ASX: IMU), and Calix Ltd (ASX: CXL).

And yesterday wasn’t the first time the billionaire bought into the ASX tech-focused share in December. He forked out $38,412 on 16 December to buy 192,062 shares in Thorney Technologies for 20 cents apiece.

The post Guess which ASX tech billionaire just bought a million of their company’s shares appeared first on The Motley Fool Australia.

(function() {
function setButtonColorDefaults(param, property, defaultValue) {
if( !param || !param.includes(‘#’)) {
var button = document.getElementsByClassName(“pitch-snippet”)[0].getElementsByClassName(“pitch-button”)[0];
button.style[property] = defaultValue;
}
}

setButtonColorDefaults(“#0095C8”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#0095C8”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()

More reading

• Guess which ASX lithium share is rocketing 22% on a deal with BMW
• The worst investment decision I ever made (and what I learned from it)
• Is there something strange going on with ANZ shares today?
• Why is the Fortescue dividend yield so high?
• Novonix share price sinks on surprise production guidance downgrade

from The Motley Fool Australia https://ift.tt/ITcXV54

The market may be charging higher today but that is nothing compared to the gains being recorded by the European Lithium Ltd (ASX: EUR) share price.

In morning trade, the lithium explorer’s shares were up as much as 22% to 8.8 cents.

The European Lithium share price has pulled back a touch since then but remains up 15% at 8.3 cents.

Why is this lithium share racing higher?

Investors have been scrambling to buy the company’s shares this morning after it announced a binding offtake agreement with auto giant BMW.

According to the release, European Lithium will supply BMW with a total of 50,000 metric tonnes of battery grade lithium hydroxide from the Wolfsberg Lithium Project in Austria.

This is expected to begin in 2026 and continue for six years until 2031, at which point the offtake agreement can be extended for three years. The first year will see the supply of 5,000 metric tonnes to BMW. After which, the agreement is for 9,000 metric tonnes of battery grade lithium hydroxide each year.

Pricing will be based on Fastmarket spot prices for lithium hydroxide with an unspecified discount applied. Though, before all that happens, the agreement is conditional upon the successful start of commercial production and full product qualification and certification.

The release also notes that BMW will make an advanced payment of US$15 million, which will be repaid through equal set offs against the supply delivered to BMW.

‘A key milestone’

European Lithium’s executive chairman, Tony Sage, appeared to be very pleased with the news. He said:

With the signing of the binding offtake agreement with BMW, our first offtake is secured, and we look forward to partnering with BMW in the future.

The company added:

Securing its first offtake is a key milestone which will allow the Company to focus on the final steps of development and construction of the Wolfsberg Project while it looks to the future and builds a portfolio of prospective battery metals projects located in Europe.

The post Guess which ASX lithium share is rocketing 22% on a deal with BMW appeared first on The Motley Fool Australia.

(function() {
function setButtonColorDefaults(param, property, defaultValue) {
if( !param || !param.includes(‘#’)) {
var button = document.getElementsByClassName(“pitch-snippet”)[0].getElementsByClassName(“pitch-button”)[0];
button.style[property] = defaultValue;
}
}

setButtonColorDefaults(“#0095C8”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#0095C8”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()

More reading

• The worst investment decision I ever made (and what I learned from it)
• Is there something strange going on with ANZ shares today?
• Why is the Fortescue dividend yield so high?
• Novonix share price sinks on surprise production guidance downgrade
• Pilbara Minerals share price leaps on positive lithium price update

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.

from The Motley Fool Australia https://ift.tt/a1oSUCB

Since I started investing, I’ve been lucky that only a few of my own ASX share investments have gone down heavily. But, the one that did the worst hurt and taught me a lot was Slater & Gordon Limited (ASX: SGH).

Thankfully it was only a small amount of money lost as it was near the start of my investment journey.

There were a number of things that seemed promising about the lawyer business as an investment, before its big acquisition in the United Kingdom. And then everything went wrong.

It was delivering revenue growth, including organic revenue growth, and net profit after tax (NPAT) growth. The dividend was being grown strongly by the board.

One of the most promising elements of the business (at the time) was that it was expanding in the UK with bolt-on acquisitions. Growth of its addressable market and scale seemed compelling.

But then it made a $1.2 billion acquisition of UK business Quindell’s professional services division. In time, it had to write off a huge amount of that value, with personal injury laws proposed to be changed in the UK which would impact compensation claims about minor motor accident injuries.

There were a few different things I learned from this experience. The Slater & Gordon share price didn’t go to $0, but it was smashed and has remained down heavily.

Cash flow is extremely important

Ensuring that operating businesses have a good cash flow profile is important.

Achieving net profit after tax (NPAT), and growth, is important. But, I think NPAT is not as good an indicator of profitability as cash flow. Revenue and cost recognition can vary in different businesses and industries.

The company said that its normalised net operating cash flow to NPAT ratio was 86.3% in FY14 and just 73.6% in FY15. Ideally, a company’s cash flow should fairly closely match (underlying) net profit year to year.

Good cash flow allows the ASX share to organically fund its own growth, rather than issuing lots of new shares or taking on a lot of debt.

Major takeovers can destroy value

I’m not going to go over everything that went wrong with the Quindell acquisition – though there were several elements to it. Slater & Gordon was also unlucky with the timing of the law change.

With this deal, the ASX share was hoping to become the leading personal injury law group in the UK.

There is a real danger that if a business overpays for an acquisition and/or buys the wrong business, it can torch lots of shareholder value.

With individual shareholders not having access to the same due diligence materials as management when considering a deal, investors have to hope that the company is looking at the right things and being prudent.

A huge acquisition that goes bad can be dilutive if funded from new shares. If it’s funded by debt and goes bad it can destroy the business.

The attitude and prudence of management are key when it comes to takeovers.

Debt can be very dangerous

Not only does debt have an interest cost, but if there’s too much debt, it can end an ASX share if it isn’t able to repay that debt.

With interest rates so much higher now, businesses that rely on debt now face a very different landscape.

Being able to afford to pay their interest and repay the principal amount is essential.

Debt can be useful, particularly for the right asset. But, I think it’s good to focus on operating companies that have a balance sheet with a net cash position. That means the business has more cash than debt.

That’s not usually applicable for a real estate investment trust (REIT), but I think they deserve to be treated a little differently – they do have large asset backing with the property portfolio.

Generally, if debt is part of the picture, I want to see that a potential investment has low (or no) debt, has plenty of cash flow to afford the interest payments, and that the overall level of debt is relatively small compared to the size of the ASX share.

The post The worst investment decision I ever made (and what I learned from it) appeared first on The Motley Fool Australia.

(function() {
function setButtonColorDefaults(param, property, defaultValue) {
if( !param || !param.includes(‘#’)) {
var button = document.getElementsByClassName(“pitch-snippet”)[0].getElementsByClassName(“pitch-button”)[0];
button.style[property] = defaultValue;
}
}

setButtonColorDefaults(“#0095C8”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#0095C8”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()

More reading

• Guess which ASX lithium share is rocketing 22% on a deal with BMW
• Is there something strange going on with ANZ shares today?
• Why is the Fortescue dividend yield so high?
• Novonix share price sinks on surprise production guidance downgrade
• Pilbara Minerals share price leaps on positive lithium price update

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

from The Motley Fool Australia https://ift.tt/PDfh8EB

If you’re looking for Australia and New Zealand Banking Group Ltd (ASX: ANZ) shares today you may be running into some issues.

For example, on Australia’s most popular brokerage platform, CommSec, the bank’s shares are nowhere to be seen at first glance.

But don’t worry, they’re still there!

Is something strange happening with ANZ shares?

On Tuesday, the big four bank revealed that its scheme of arrangement was now effective.

This scheme of arrangement sees the company establish ANZ Group Holdings Limited (ANZ NOHC) as the new listed parent company of the ANZ group. It has also separated ANZ’s banking and certain non-banking businesses into two groups.

At its scheme meeting earlier this month, ANZ chair, Paul O’Sullivan, explained the rationale for the change. He said:

Customers are demanding more from their banks. Better services, better products and better digital solutions. Consistent with this, traditional banking is facing significant disruption from new non-bank competitors, mainly global technology companies launching financial services products.

Understandably, these businesses are not regulated in the same way as banks like ANZ. This new NOHC will allow ANZ to partner with technology companies on a level playing field. Essentially, the restructure is about making our banking business more efficient by creating a better structure for investing in our non-bank partners. It will provide greater strategic and operational flexibility.

O’Sullivan also points out that this NOHC setup isn’t new. It is used by the likes of Macquarie Group Ltd (ASX: MQG) and Suncorp Group Ltd (ASX: SUN) in Australia and Bank of America, JP Morgan, HSBC, and Barclays internationally.

Importantly, your dividends will not be impacted by the change and shareholders will receive one ANZ NOHC share for each ANZ share they hold.

So what’s happening today?

As the scheme is now legally effective, ANZ shares on the ASX and NZX have been suspended and ANZ NOHC shares are trading in their place on a deferred settlement basis.

This will remain the case until 4 January, when ANZ NOHC will commence normal trading at long last.

In the meantime, you can find ANZ shares on some brokerage platforms under the ANZDA ticker code.

The post Is there something strange going on with ANZ shares today? appeared first on The Motley Fool Australia.

(function() {
function setButtonColorDefaults(param, property, defaultValue) {
if( !param || !param.includes(‘#’)) {
var button = document.getElementsByClassName(“pitch-snippet”)[0].getElementsByClassName(“pitch-button”)[0];
button.style[property] = defaultValue;
}
}

setButtonColorDefaults(“#0095C8”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#0095C8”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()

More reading

• Here are the top 10 ASX 200 shares today
• Little downside protection for popular ASX 200 shares as 2023 looms a much tougher year for blue chip stocks
• Buy ANZ Bank and this ASX 200 dividend share: brokers
• What’s with the ANZ share price on Thursday?
• The ANZ dividend is being delivered today. Here’s what you need to know

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 recommended Macquarie Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

from The Motley Fool Australia https://ift.tt/o9bB0Ze

Fortescue Metals Group Limited (ASX: FMG) shares pay a very high dividend yield to investors. But how is the ASX iron ore share managing to do this?

Fortescue is one of the largest iron ore miners in the world with a market cap of $62 billion, according to the ASX.

It’s a bit bigger than it was a few weeks ago. The Fortescue share price is up over 20% in the last two months.

Fortescue is known for its large dividend payouts to shareholders. Not just in dollar terms, but also in terms of the dividend yield.

Another big dividend is expected in FY23 according to CommSec, with a projected payout of $1.41 per share. This translates into a forward grossed-up dividend yield of 10% at the current Fortescue share price.

How is the business managing to pay such a good dividend while investing in its green energy endeavours? I think it mainly comes down to two things.

High dividend payout ratio

The more of a company’s net profit after tax (NPAT) it pays out as a dividend, the bigger the dividend yield.

Fortescue has a dividend policy of having a dividend payout ratio of between 50% and 80% of its NPAT.

In FY22 it paid an annual dividend per share of $2.07 per share, representing a dividend payout ratio of 75%.

Using the estimates on CommSec for FY23, the ASX iron ore share is expected to have a dividend payout ratio of 70.8%.

This means there is still plenty of cash left for Fortescue to put some of the retained profit into its green hydrogen goals and some into funding mining-based growth for the business.

Low earnings multiple

It’s important to know that even if two businesses have the same dividend payout ratio, they can have different dividend yields, because the valuation of the business is different.

The higher the price-to-earnings (p/e) ratio, the lower the dividend yield. This works in the opposite way as well, when the p/e ratio is lower, it boosts the dividend yield. But, a low p/e ratio doesn’t necessarily mean it’s good value or a reliable business.

Fortescue usually has a low p/e ratio, naturally boosting the dividend yield. Iron ore prices can be volatile, so miner earnings aren’t expected to be consistent year to year. In the good times, the iron ore miner makes tons of profit, and the p/e ratio is typically low. When the iron ore price is low Fortescue shares can sometimes trade on a higher p/e ratio.

According to CommSec, the Fortescue share price is valued at 10x FY23’s estimated earnings.

Foolish takeaway

The Fortescue dividend yield could remain high for at least the next 12 months. If the iron ore price remains above US$100 per tonne, Fortescue could continue to pay good dividends in the medium term. However, investors may be able to grab an even higher dividend yield if they can jump on Fortescue shares when it goes through a significant dip.

The post Why is the Fortescue dividend yield so high? appeared first on The Motley Fool Australia.

(function() {
function setButtonColorDefaults(param, property, defaultValue) {
if( !param || !param.includes(‘#’)) {
var button = document.getElementsByClassName(“pitch-snippet”)[0].getElementsByClassName(“pitch-button”)[0];
button.style[property] = defaultValue;
}
}

setButtonColorDefaults(“#43B02A”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#43B02A”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()

More reading

• 2 reasons I think the Fortescue share price can keep rising (and 2 why it can’t)
• Why did the iron ore price just hit a 6-month high?
• What’s going on with the Fortescue share price on Friday?
• Why is the Fortescue share price having another day to forget?
• Lithium, miners, and tech shares, oh my! Here’s where Aussies put their ASX money in 2022

Motley Fool contributor Tristan Harrison has positions in Fortescue Metals Group. 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.

from The Motley Fool Australia https://ift.tt/ipjcJlz

The Novonix Ltd (ASX: NVX) share price is sinking again on Wednesday.

In morning trade, the battery materials technology company’s shares are down 5% to a new 52-week low of $1.59.

This means the Novonix share price is now down over 85% in 2022, as you can see below.

Why is the Novonix share price falling?

Investors have been selling down the Novonix share price today despite the company announcing a major offtake agreement.

According to the release, the company is expanding its high-performance synthetic graphite anode materials production at its Riverside facility in the United States in order to support a 10,000 tonnes per annum (tpa) offtake requirement from energy storage company KORE Power.

This follows news that KORE Power has secured financing for its lithium-ion battery cell production gigafactory. Novonix signed an agreement with KORE Power last year to be its exclusive supplier of graphite anode material.

Novonix intends to begin production at a rate of approximately 3,000 tpa in 2024, before ramping up to approximately 12,000 tpa in 2028.

So why the selling?

While the above sounds very positive at first glance, it’s actually a production guidance downgrade when you read between the lines.

Novonix was previously guiding to production of 10,000 tpa in 2023 but now only expects 3,000 tpa a year later in 2024.

In fact, it was approximately two months ago that management said:

The Company is on track for reaching annual production capacity of 10,000 tpa of synthetic graphite in 2023 at its existing Riverside facility.

In light of this, meaningful revenue generation could still be some way off for Novonix.

Management commentary

Novonix’s co-founder and CEO, Dr Chris Burns, didn’t speak about the production guidance downgrade and focused only on the offtake agreement. He said:

I am excited to begin delivery of our high-performance synthetic graphite from our Riverside facility to KORE in 2024, our first significant volume offtake. We are pleased with the progress at our Riverside facility as we start to bring production online to support mass production qualification with KORE and other customers.

Dr Burns also revealed that the company won’t be stopping at production of 12,000tpa and is already planning the next facility to boost its output. He concludes:

As we commence our production ramp schedule for Riverside, we plan to begin construction of our next production facility in the first half of 2023 to bring an additional 30,000 tonnes of annual production. We are one of the only companies scaling production of battery-grade graphite in North America, and we are confident in our position to meet growing battery demand for the electric vehicle and energy storage sectors.

The post Novonix share price sinks on surprise production guidance downgrade appeared first on The Motley Fool Australia.

(function() {
function setButtonColorDefaults(param, property, defaultValue) {
if( !param || !param.includes(‘#’)) {
var button = document.getElementsByClassName(“pitch-snippet”)[0].getElementsByClassName(“pitch-button”)[0];
button.style[property] = defaultValue;
}
}

setButtonColorDefaults(“#0095C8”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#0095C8”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()

More reading

• Is Novonix’s 80% share price crash in 2022 justified?
• Why did the Novonix share price have such a stellar run today?
• Here are the top 10 ASX 200 shares today
• The Novonix share price has crashed another 14% already this week. What’s going on?
• Why did the Novonix share price crash 16% in November?

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.

from The Motley Fool Australia https://ift.tt/T6Dw2sg

The Pilbara Minerals Ltd (ASX: PLS) share price is in the green on Wednesday on news of the company’s lithium offtake pricing and its project expansions.

The S&P/ASX 200 Index (ASX: XJO) lithium favourite announced good news of pricing with major offtake customers and updated the market on its expansion activities.

The Pilbara Minerals share price is up 2.85%, trading at $3.97 at the time of writing.

Let’s take a closer look at today’s news from the ASX 200 lithium producer.

What’s driving the Pilbara Minerals share price today?

Offtake pricing increased

Pilbara Minerals today revealed an increase in the price it will sell its lithium products to major offtakers.

Its new average price will equate to around US$6,300 per dry metric tonne (CIF China) on a SC6.0 (6% lithia content) equivalent basis, based on today’s market pricing reference data.

The increased pricing applies to all shipments the company sends to its major offtake customers from December.

For reference, Pilbara Minerals’ realised sales price over the September quarter equated to a reference price of US$4,813 per dry metric tonne on a SC6.0 basis.

Meanwhile, its latest Battery Materials Exchange auction heralded a bid equivalent to US$8,299 per dry metric tonne, inclusive of freight, on a SC6.0 basis.

Pilbara Minerals CEO and managing director Dale Henderson commented:

The improved pricing outcomes are expected to further improve cash-flow generation from the Pilgangoora Project, helping the business to continue on its rapid growth trajectory into 2023 and beyond.

Pilgangoora expansion update

The Pilbara Minerals share price might also be getting a boost from news of its expansion project.

The P680 expansion project aims to increase Pilgangoora’s annual nameplate production capacity from around 580,000 tonnes to 680,000 tonnes. The company green-lit the project in June.

Today, however, the company announced the expected cost of the expansion has jumped 36%. It’s now expected to cost around $404 million – up from previous estimates of $297.5 million.

That’s mainly due to higher material and equipment costs, costs to maintain its delivery schedule, greater engineering work, and a tight labour market. Henderson said:

Our strong balance sheet and the current cash generating capacity of the Pilgangoora Project enables the company to continue the timely delivery of the P680 project, notwithstanding the capital escalation.

The expansion’s primary rejection facility is on track for completion in the 2023 September quarter. After that, the crushing and ore sorting facility is expected to kick off in the 2024 March quarter.

Finally, Pilbara Minerals has approved $38.3 million of pre-final investment decision funding for the P1000 Expansion Project.

The expansion could see the Pilgangoora Project’s total spodumene concentrate production capacity reach a million tonnes annually. A final investment decision has been flagged for the upcoming March quarter.

The post Pilbara Minerals share price leaps on positive lithium price update appeared first on The Motley Fool Australia.

(function() {
function setButtonColorDefaults(param, property, defaultValue) {
if( !param || !param.includes(‘#’)) {
var button = document.getElementsByClassName(“pitch-snippet”)[0].getElementsByClassName(“pitch-button”)[0];
button.style[property] = defaultValue;
}
}

setButtonColorDefaults(“#0095C8”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#0095C8”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()

More reading

• Here are the 3 most heavily traded ASX 200 shares on Tuesday
• While the ASX 200 struggled in 2022, investors doubled down on lithium shares. Here’s why
• Here are the 3 most heavily traded ASX 200 shares on Monday
• ASX lithium shares have just been crunched. Time to buy?
• Top brokers name 3 ASX shares to buy next week

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.

from The Motley Fool Australia https://ift.tt/ZEgMBCJ