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ETFs ETFs

Betashares Global Sustainability Leaders ETF: ESG – Oriented global equities exposure with a distinctive returns Profile

Approach

ETHI tracks the Nasdaq Future Global Sustainable Leaders Index, a benchmark co-developed with BetaShares in November 2016. ETHI comprises 200 stocks that have above-average ESG characteristics. It uses a float-adjusted market-cap-weighted approach, starting with a universe of 6,000 stocks listed in North America, Europe, or Asia (ex-Australia). By adding ESG considerations, the index differs markedly from other passive and ESG indexes. A carbon screen identifies companies that lead in terms of carbon efficiency; these tend to be in the top one third of their industry for carbon efficiency. A minimum of five Scope 4 leaders is required in the index. A market cap and developed markets screen cuts the investable list to under 500. Analysts then perform negative screens until the 200-name portfolio is left.

Portfolio

A change in April 2020 has led to the portfolio providing exposure to the largest 200 global ex-AUS stocks by capitalisation that are considered climate change leaders. Further they must not be materially engaged in activities deemed inconsistent with responsible investment considerations. Stocks must have a market cap of more than USD 3 billion and three month trading volume of over USD 1 million. The index differs largely from other passive and active indexes with sector skews to healthcare, consumer cyclicals, financials and technology.

Top 10 Holdings

CompanyWeighting (%)
NIVDIA Crop 6.0%
Apple Inc. 4.3%
Home Depot3.8%
Visa Inc.3.4%
Adobe Inc.2.8%
Mastercard Inc.2.8%
ASML Holding NV2.7%
PayPal Holdings 2.6%
Toyota Motor Corp.2.3%
Cisco Systems Inc.2.3%
Sector Allocation.png

People

Nguyen was an equity analyst at Three Pillars Portfolio Managers, where his responsibilities included systems development, risk management, and securities analysis. The committee comprises Betashares co-founder David Nathanson and Adam Verwey, a managing director of large investor Future Super. In September 2020, Simon Sheikh stood down and was replaced with Kylie Charlton, managing director of Australian Impact Investments.

Performance

However, from its Feb. 21, 2020, peak the strategy actually fell 22.74% to March 23, 2020. Since then, the strategy has made a remarkable turnaround. ETHI closed the calendar year 2020 with a n absolute return of 24.94%. The rally continued into 2021 and as of Sept. 30, 2021, the fund’s returns for the calendar year are 20.85%.The fund has remained within the 15-basis-point tracking error and the bid/offer spread was indicated to have remained below 30 basis points, averaging around 20 basis points.

Performance.png

About the Fund

ETHI aims to track the performance of an index (before fees and expenses) that includes a portfolio of large global stocks identified as “Climate Leaders” that have also passed screens to exclude companies with direct or significant exposure to fossil fuels or engaged in activities deemed inconsistent with responsible investment considerations.

(Source: MorningStar)

General Advice Warning

Any advice/ information provided is general in nature only and does not take into account the personal financial situation, objectives or needs of any particular person.

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Currencies Trading Ideas & Charts

BetaShare Crypto Innovators: The First ASX crypto ETF make history on debut

BetaShares Crypto Innovators (CRYP) has broken trading records on its debut. After opening at $11.23 per unit the newly minted ETF finished the day at $11.19 per unit having climbed 11.19 per cent.

CRYP saw more than $8 million change hands in less than 15 minutes. By midday, trading volumes had soared to $24.5 million.

 The fund doesn’t directly invest in cryptocurrencies or digital assets, it invests in companies involved in those sectors, tracking the Bitwise Crypto Industry Innovators Index. CRYP’s index is intended to cover the complete range of the crypto ecosystem by offering exposure to pure-play crypto enterprises, companies with at least 75 percent of their balance sheets invested in crypto-assets, and diversified corporations with crypto-focused business lines. Its largest holding is in Silvergate Capital, followed by Marathon Digital Holdings and Galaxy Digital, which together represent just over one-third of CRYP’s total portfolio.

Cryptocurrency exchange platform Coinbase, bitcoin mining company Riot Blockchain, and business analytics provider Microstrategy are among CRYP’s holdings.

BetaShares said its portfolio has a year-to-date performance of nearly 133 per cent, with monthly performance of 28 per cent. In its information pack, however, the company said investment in CRYP should be considered “very high risk.”

General Advice Warning

Any advice/ information provided is general in nature only and does not take into account the personal financial situation, objectives or needs of any particular person.

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ipo IPO Watch

GO FASHION: NEW TRENDS TO SET

Go Fashion shares made a glamorous stock market entry on Tuesday, 30th November 2021. The stock opened for trading at ₹ 1,310 on the National Stock Exchange, up 89.86 per cent from its issue price of ₹ 690 per share. On the BSE, Go Fashion shares opened for trading at ₹ 1,316, up 91 per cent from the IPO price.

Go Fashion mopped up Rs 1,014 crore from the public issue that was subscribed 135.46 times during November 17-22. Non-institutional investors had put in bids 262.08 times the portion set aside for them and qualified institutional investors’ reserved portion was subscribed 100.73 times. Retail investors bought shares 49.70 times the portion reserved for them.

Go Fashions is the first company to launch a brand exclusively dedicated to the women’s bottom-wear category. It is a play on the unorganized to the modern retail shift. At the upper end of the price band, it is valued at 9.4 times, 14.6 times EV/sales for FY20, FY21, respectively.

The company has decided to allocate a total of 66,10,492 equity shares to 33 anchor investors at ₹690 apiece, aggregating the transaction size to ₹456.12 crore. Government of Singapore, Monetary Authority of Singapore, Nomura, Abu Dhabi Investment Authority, Fidelity, SBI Mutual Fund (MF), ICICI Prudential MF, HDFC MF, Axis MF, Aditya Birla Sun Life MF and SBI Life Insurance Company are among the anchor investors.

The company held an 8 percent share in the organised women’s bottom-wear market in FY20. It has a healthy, asset-light business model and had operating cash flows despite volatility in profit in the last three fiscals.

Go Colors has a strong brand value with altering revenues, while the company went into losses in FY21. As the number of working women is improving along with the advancing fashions, it is anticipated that the company can have a great growth drive. The company has a fantastic management team with a mixed bag of financials, and it is expected that it may perform good.

The business model of company looks good with strengths like efficient product portfolio and a good supply chain, but still the company is susceptible to factors like changing consumer spending patterns, unable to adjust to changing likings and a possible slowdown due to the new variant of COVID which has caused the markets to correct themselves.

Company Profile

Go Fashion (India) Limited, also popularly known as Go Colors, was incorporated on 09 September 2010. It is classified as a public limited company and is in Chennai, Tamil Nadu. The Company is one the best retail players in women’s apparel. The Company offers leggings, jeggings, palazzo, pants, tops, t-shirts, and diaper shorts. Go Fashion serves customers in India. 

(Source: Economics Times, Financial Express)

General Advice Warning

Any advice/ information provided is general in nature only and does not take into account the personal financial situation, objectives or needs of any particular person.

Categories
Funds Funds

Franklin Income Fund Class C- a solid yield generating fund

The fund seeks to maximize income, while maintaining prospects for capital appreciation, by investing in a diversified portfolio of stocks and bonds. The fund tracks Linked Blended 50% MSCI USA High Dividend Yield Index + 25% Bloomberg High Yield Very Liquid Index + 25% Bloomberg US Aggregate Index

Process:

This fund aims to deliver income and capital appreciation using a flexible, valuation-conscious approach. Management invests in a mix of dividend-paying stocks, bonds, bank loans, convertibles, and equity-linked securities. But a heavy reliance on credit risk and the lack of an identifiable edge warrant a Process rating of Average. Management has significant flexibility to shift the portfolio, relying on bottom-up security selection, and yield in particular, to drive asset allocation without regard to sector weights or credit quality. The portfolio has averaged roughly 40% in equities. Within equities, management gravitates toward large-cap dividend-payers, which often results in big slugs of utilities, materials, and energy stocks. While this approach has consistently produced a relatively high yield and, at times, solid total returns, it has done so by relying heavily on high-yield bonds.

People:

This fund is backed by veterans, but the team doesn’t possess a clear advantage. Its People rating remains Average. Lead manager Edward Perks has helmed this fund since 2002 and Franklin Managed Income FBLAX since 2006. His comanagers possess complementary experience.

The equity and credit analyst teams the managers rely on for ideas boast a wealth of experience, but our confidence in them is muted. And Franklin Equity Income FISEX, an all-stock fund that invests in some of the same dividend-payers as this offering, is backed by the equity analyst team that generates ideas for a broad range of mandates rather than tailored recommendations.

Performance:

This fund’s substantial risks have resulted in high volatility relative to peers and middling risk-adjusted returns. This fund tends to be much more sensitive to equity markets than its typical allocation – 30% to 50% equity category peer because of its hefty dose of credit risk and its often-double-digit combined stake in equity linked notes and convertible bonds.

Price:

The expenses are critical to evaluate as they come directly come out of the expense. The analysts at Morningstar suggest that this share class will not be able to generate positive alpha relative to the benchmark index.

Asset Allocation:

About Fund:

The Fund aims to maximise income while maintaining prospects for capital appreciation by investing primarily in equity securities and long & short-term debt securities. The Fund may invest up to 25% of its net assets in non-U.S. securities. It’s three properties are: a balanced portfolio with exposure to the US markets, best of equity and fixed income teams and attention to risk elements.

(Source: Morningstar)

General Advice Warning

Any advice/ information provided is general in nature only and does not take into account the personal financial situation, objectives or needs of any particular person.

Categories
Currencies Trading Ideas & Charts

Omicron crypto surges over 200% after being named as new Covid-19 variant

Shortly after the World Health Organization (WHO) named Omicron as the new variant of concern for the recent mutation first found in Africa, investors fled to the new meme cryptocurrency Omicron (OMIC). 

The Omicron cryptocurrency gained 231% in the past 24 hours and reached an intraday’s high at $689. Despite the rising popularity of the coronavirus-themed coin, the market capitalization of OMIC remains unknown and only $496,407 was traded in the past day.

The Omicron token powers a decentralized reserve currency protocol on the Arbitrum Network, backed by a basket of assets, including USD coin (USDC) and liquidity provider tokens tied to MIM (Magic Internet Money).

The token was created in early November as a fork of OlympusDAO on the Arbitrum network and its protocol relies on stakers and bonders to ensure a return over a specified period of time. 

The Omicron token could continue surging if investors contribute to its yield farm by depositing funds within its protocols. Roughly $700,00 has been deposited within its protocols, which led to annual yields of around 70,000% for stakers unless the developers back out of the project.

According to the crypto project’s official documentation, the digital asset was created a few weeks before the World Health Organization named the variant Omicron. The project’s initial announcements do not mention anything about the coronavirus.

Omicron appears to be only available for purchase through decentralized exchange SushiSwap. Centralized exchanges have not started to support trading of the OMIC token yet.

(Source: FXStreet.com)

General Advice Warning

Any advice/ information provided is general in nature only and does not take into account the personal financial situation, objectives or needs of any particular person.

Categories
ipo IPO Watch

Radiopharm Theranostics debuts on the ASX, raises AU$50M via IPO

Radiopharm Theranostics Limited issued 83.33 million shares at an offer price of AU$0.60 a piece, giving a market capitalisation of AU$152 million at the issue price.

The Offer comprises: 

(a) the Broker Firm Offer, which is available to Australian resident retail clients of Brokers who have been assigned a firm allocation of Shares by their Broker.

(b) the Institutional Offer, which is an invitation to Institutional Investors in Australia and a number of other eligible jurisdictions to apply for Shares; and 

(c) the Chairman’s List Offer, which is an invitation to selected Australian investors who have received an invitation from the Chairman or the Company to apply for Shares.

Use of funds

 (a) make payments under the Licence Agreements 

 (b) conduct research and development into other cancer targets

 (c) provide working capital; and 

 (d) set up commercial and academic collaborations.

Important dates

EventsDates
Prospectus dateThursday, 14 October 2021
Offer opensFriday, 22 October 2021
Offer closes Friday, 5 November 2021
Anticipated date of allotmentTuesday, 16 November 2021
Shareholding statements expected to be dispatchedFriday, 19 November 2021
Anticipated commencement of ASX tradingThursday, 25 November 2021

Subscription Status:  The shares of  Radiopharm Theranostics Limited  were oversubscribed.

Company Profile:

Formed in February 2021, the homegrown health care company focuses on the development of radiopharmaceutical products for diagnostic and therapeutic uses in areas of high unmet medical needs. The Company aims to become an industry leader in the development of radiopharmaceutical products, targeting some of the largest markets in cancer.

The Company has a balanced portfolio of four licensed platform technologies, with diagnostic and therapeutic applications in both pre-clinical and clinical stages of development, from some of the world’s leading universities and institutes such as Imperial College London and Memorial Sloan Kettering.

The portfolio comprises five Phase 2 clinical trials and two Phase 1 trials, which are underway along with five Phase 1 trials, which have been wrapped up across hospitals and medical centres globally. The clinical trials target a range of cancers including that of breast, lung, kidney, head & neck, pancreatic and brain.

( Source:  https://www.radiopharmtheranostics.com/)

General Advice Warning

Any advice/ information provided is general in nature only and does not take into account the personal financial situation, objectives or needs of any particular person.

Categories
Global stocks

HALMA Plc: Private Equity with a Purpose

Investment Thesis:

  • High quality company with a history of earnings and dividend growth.
  • Management is looking to double EPS every five years. HLMA’s group earnings growth model is driven by organic and acquired growth. 
  • HLMA earnings are defensive as HLMA is exposed to attractive end markets which are niche and regulated in some shape or form – such as safety, medical and infrastructure.
  • HLMA consists of a strong diversified portfolio of companies (currently 45 companies). 
  • Strong management team with strong corporate culture. 
  • “Private Equity firm with a purpose” – the Company is not limited by a timeframe to exit positions. 
  • HLMA operates a decentralized operating structure with operating companies and management teams left to run their businesses. 
  • Scores well on ESG metrics – targeting a science-based emission target (1.5 degree-aligned 2030 target for Scope 1 & 2 emissions), a net zero target (scope 1 & 2 by 2040) and transitioning towards a circular economy. 

Key Risks:

  • Execution risk – specifically around acquired growth or the inability to source enough deals as the group grows larger.
  • Deterioration in global growth or consumption.
  • Turnover in senior management team. 

Key highlights:

HLMA can be thought of as a private equity company with a purpose, having a highly sustainable financial model, which focuses on maintaining portfolio companies’ growth and returns over the longer term (management aspires to double the size of the Group every 5-6 years), while delivering performance in the shorter term, through a combination of acquisition, venture partnerships and organic growth.

  • Strong top and bottom-line growth – Management prefers to be in markets delivering +3-5% year on year growth and invests in business that are typically one of top 3 players in their respective niches (market share can vary between 10-80% but on average market share across the group is 20%) which leads to strong top line growth, which combined with differentiated products leads to high gross margins (>60%) and strong EBIT margins (>20%). 
  • High return on capital – The Company remains capital light given it’s a final fixed assembler (don’t have huge production facilities with on average a production facility of 100-200 people) thus providing very high return on average capital across the group (70-75% return on average capital across the group and after intangibles and taxes its ~15% return on total capital in group). 
  • Strong cash flows making it self-funded – The Company has a self-funded model (doesn’t go to market for dilutive capital raise) and uses its strong cashflow (targets cash conversion of >90%) to first invest organically, and then to make further acquisitions to expand the addressable market and pay shareholder returns via dividends (+5-7% growth year on year. 

Company Description: 

Halma Plc (HLMA), listed on the London Stock Exchange, looks to acquire, and grow businesses in niche markets with a global reach. The Company focuses on markets such as medical, safety and environment. Management believes the earnings profile of these markets have a high degree of defensibility and long-term growth drivers. The Company is not like a Private Equity firm which looks to acquire businesses, reduce costs (to improve earnings profile) and then sell within a 5-year timeframe. HLMA looks to buy and hold companies over the long-term. They manage the mix of businesses in group portfolio to drive sustainable growth and returns over the long term. HLMA looks to acquire businesses to accelerate penetration of more markets, merge businesses where it markets sense, and exit markets if they become less attractive from a long-term growth and returns perspective.  

(Source: Banyantree)

General Advice Warning

Any advice/ information provided is general in nature only and does not take into account the personal financial situation, objectives or needs of any particular person.

Categories
IPO Watch

Bootstrapped company Latent View debuts on exchange with 169.04% premium

Latent View Analytics is a pure-play data analytics services company in India that offers consulting services, data engineering, business analytics and digital solutions. Its IPO was open for subscription from November 10 to November12, 2021 with issue price-band ranging from INR 190-197 and lot size of 76 shares.

Latent View has received subscription for 572.18 crore shares worth Rs 1.12 lakh crore against its requirement of INR 600 Crores. It was oversubscribed by 338 times, much higher than the high-profile IPOs that were previously listed. The qualified institutional investors subscribed 145.48 times, Non-institutional buyers subscribed 850.66 times and retail investors subscribed 119.44 times.

The stock was listed on exchange on 23rd November 2021 at INR 530, which was a whopping 169.04% premium above its issue price. At the issue price, the company commanded a market capital of Rs 3,896 crore, which shot up to Rs 10,484.16 crore.

The proceeds from the IPO are expected to be used inorganic growth initiatives (to the tune of Rs 147 crore), investment in the subsidiaries (Rs 130 crore) and funding working capital requirements of a material subsidiary Latent View Analytics Corporation.

The company has never raised external capital and has been completely bootstrapped. It operates as per the age old traditions and finds it suitable for itself. Currently the promoters hold 68% of the total equity, which earlier was 80%. 

The company reported a CAGR of 3 per cent during FY19-21 but saw a 20 per cent growth in EBITDA and 24 percent in growth of PAT. Since the company’s existence, it has witnessed loss in only a single period i.e. in 2010 due to financial crisis.

About the company:

Founded in 2006, Latent View offers data analytics services, consulting, and data engineering solutions to customers across the banking, technology, industrial, and retail verticals, among others. In its 15 years of existence, the company has reported a loss only for one quarter, in early 2010. Viswanathan, an alumnus of IIT Madras and IIM Kolkata, is the founder of Latent View Analytics Ltd.

(Source: economictimes.com, Moneycontrol)

General Advice Warning

Any advice/ information provided is general in nature only and does not take into account the personal financial situation, objectives or needs of any particular person.

Categories
Commodities Trading Ideas & Charts

Another Extreme Texas Winter could Freeze Vistra’s Buyback Plan

Business Strategy and Outlook 

Vistra Energy’s emergence from the Energy Future Holdings bankruptcy in 2016 has been a success for the most part. Despite Vistra’s sensitivity to volatile commodity prices and legacy fossil fuel generation, it has produced solid returns. The only significant bump in the road has been winter storm Uri that hit Texas in February 2021, causing more than $2 billion of losses.

Vistra’s clean post bankruptcy balance sheet allowed it to acquire Dynegy in 2018 for $2.27 billion, more than tripling the size of its generation fleet and introducing Vistra to power markets outside Texas, notably the Midwest and Northeast. The rock-bottom price Vistra paid and cost synergies have made the deal value-accretive. Vistra produces substantial free cash flow before growth given minimal core investment needs. Management is expanding the retail energy business to hedge its wholesale generation market exposure and is investing in clean energy projects like utility-scale solar and batteries.

Financial Strength

After the setback from the Texas winter storm losses in February 2021, Vistra’s quest to earn investment-grade credit ratings and reach 2.5 net debt/EBITDA stalled. However, it remains in a solid financial position with plenty of liquidity. Management has shifted its focus toward returning capital to shareholders through stock buybacks and dividends rather than earning investment-grade credit ratings immediately. Vistra’s $1 billion preferred issuance in late 2021 with an 8% dividend floor all but ensures it will take several more years to earn investment-grade ratings. 

The board authorized a $2 billion share repurchase plan in late 2021, replacing a largely unused $1.5 billion plan from 2020. The combination of stock buybacks and $300 million annual allocation to the dividend means the dividend could top $1.00 per share by 2025, up from $0.50 when the board initiated the dividend in 2019 and surpassing management’s initial 6%-8% annual growth target. Vistra exited bankruptcy in 2016 with just $4.5 billion of medium-term debt. Consolidated debt grew to $11 billion after the 2018 Dynegy acquisition before Vistra began reducing its leverage.

Bulls Say’s

  • Vistra’s debt reduction in 2019-20 gives it financial flexibility to repurchase stock, raise the dividend, and invest in growth projects in 2022 and beyond. 
  • Vistra’s gas fleet benefits from historically low gas prices in most of the regions where it operates, allowing for higher operating margins. 
  • The retail-wholesale integrated business model reduces risk and market transaction costs, allowing Vistra to be a low-cost provider, especially in its primary Texas market.

Company Profile 

Vistra Energy emerged from the Energy Future Holdings bankruptcy as a stand-alone entity in 2016. Vistra is one of the largest power producers and retail energy providers in the U.S. It owns and operates 38 gigawatts of nuclear, coal, and natural gas generation in its wholesale generation segment after acquiring Dynegy in 2018. Its retail electricity segment serves 5 million customers in 20 states. Vistra’s retail business serves almost one third of all Texas electricity consumers

(Source: MorningStar)

General Advice Warning

Any advice/ information provided is general in nature only and does not take into account the personal financial situation, objectives or needs of any particular person.

Categories
Dividend Stocks

Orora Ltd. reported solid operating earnings of $369.3m, up by 11.5%

Investment Thesis:

  • Trading on fair value relative to our valuation
  • Exposure to both developed and emerging markets’ growth 
  • Near-term headwinds should be in the price
  • Revised strategy following recent strategic review
  • Bolt-on acquisitions (and associated synergies) provide opportunity to supplement organic growth 
  • Leveraged to a falling AUD/USD 
  • Potential corporate activity
  • Capital management (current on-market share buyback plus potential for additional initiatives)

Key Risks:

  • Competitive pressures leading to margin erosion 
  • Input cost pressures which the company is unable to pass on to customers 
  • Deterioration in economic conditions in US, EM and Australia
  • Emerging markets risk 
  • Adverse movements in AUD/USD
  • Declining OCC prices

Key highlights:

  • ORA delivered a solid FY21 result, which came in ahead of consensus expectations – revenue of $3,538m was up +7.8% YoY
  • Operating earnings (EBITDA) of $369.3m was up +11.5% YoY
  • NPAT of $156.7m was up +34.1% YoY
  • EPS up +29% to 16.9cps (also driven by the on-market share buyback) and full year dividend of 14cps up +16.7% on pcp (representing a payout ratio of ~80% vs target range 60-80%)
  • Strong performance in the North America business, which delivered revenue growth of +8.2% and EBIT growth of +43.0% year-on-year (YoY) in constant currency
  • Leverage increased from 0.9x to 1.5x, driven by the impact of the on-market share buyback
  • With a strong balance sheet, the Company is looking to invest to drive growth
  • Australasia segment revenue was up +6.1% to $834
  • North America segment revenue was up +8.2% to US$2,019.8m and EBIT was up +43.0% to US$73.8m

Company Description: 

Orora Limited (ORA) provides packaging products and services. The Company offers fiber, glass and beverage can packaging materials in Australia and Asia and packaging distribution services in North America and Australia.

(Source: Banyantree)

General Advice Warning

Any advice/ information provided is general in nature only and does not take into account the personal financial situation, objectives or needs of any particular person.