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ASX 200 finishes flat, ASX travel shares drop

ASX 200
Credit: Cimexus

The S&P/ASX 200 Index (ASX: XJO) essentially finished flat today, it rose 0.03% to 5,945 points.

The Victorian COVID-19 outbreak is causing angst for some parts of the share market on fears that the infection resurgence could cause a delay for an opening of state borders. There was one particular industry that saw a selloff:

ASX travel shares decline

The share price of Corporate Travel Management Ltd (ASX: CTD) fell by 8% today.

Webjet Limited (ASX: WEB) saw its share price fall by 5%.

The Qantas Airways Limited (ASX: QAN) share price dropped by 4%.

Infrastructure business Sydney Airport Holdings Pty Ltd (ASX: SYD) suffered a 1.6% share price drop.

The Flight Centre Travel Group Ltd (ASX: FLT) share price fell 4.1%.

New Zealand travel shares also suffered today. The Auckland International Airport Limited (ASX: AIA) share price dropped 1.9%, the Air New Zealand Limited (ASX: AIZ) share price fell 3.2% and the Serko Ltd (ASX: SKO) share price fell 3.2%.  

Challenger Ltd (ASX: CGF) announces a capital raising

Challenger is looking to raise capital from the market. 

The institutional part of the capital raising will amount to $270 million. The second part is a non-underwritten share purchase plan (SPP) which is looking to raise up to $30 million.

The placement will be conducted at a fixed price of $4.89 per new share, which represents an 8.1% discount to the last traded price of $5.32.

The placement will mean 55 million new shares will be issued. This is approximately 9% of Challenger’s existing shares on issue.

According to reporting by the Australian Financial Review, the $270 million placement was covered by institutional investors by early afternoon.

The ASX 200 business said that investment grade fixed income asset risk premiums have widened significantly following the COVID-19 pandemic market sell-off. The annuity company thinks that there is a significant opportunity to generate pre-tax return on equity (ROE) returns of more than 20% on the capital backing the investments. The capital will be progressively deployed and expected to be ROE accretive once fully deployed.

The equity raise will strengthen Challenger Life’s capital position during this period of market uncertainty, with $300 million to be used as common equity tier 1 (CET1) regulatory capital.

Transurban Group (ASX: TCL) share price drops 4% on update

The ASX 200 toll road business announced an update today.

It announced a distribution of 16 cents per stapled security for the half-year to 30 June 2020. This brings the total FY20 distribution to 47 cents per stapled security. The FY21 distribution will be in line with free cash, excluding capital releases.

There has been a progressive traffic recovery in line with easing government restrictions. Australian markets are improving “significantly” from the peak impacts in April. The rate of recovery differs across different markets with the removal of restrictions.

GWA Express Lanes traffic is recovering slower, reflecting the government restrictions in the Greater Washington Area.

In the week of 7 June 2020, total Transurban traffic was down 23% compared to the prior corresponding period. In the week of 14 June 2020, total Transurban traffic was down 21%. There has been a clear and steady recovery of traffic since Easter.

Metcash Limited (ASX: MTS) report

Metcash has reported its result for the full year to 30 April 2020.

The ASX 200 business saw its share price rise 1% in reaction to this news. 

Total revenue increased by 2.9% to $13 billion. Including charge through sales, there was 2% growth to $14.9 billion.

The food division delivered sales growth. It achieved growth even if the positive uplift in sales due to COVID-19 in March and April is excluded. This is the first time supermarkets wholesale sales (excluding tobacco) reported underlying sales growth since FY12.

The liquor division delivered its seventh consecutive years of sales growth despite closures.

The hardware segment returned to positive sales growth in the second half of FY20 with strong DIY sales.

Group underlying earnings before interest and tax (EBIT), before AASB16, was $324.2 million. Excluding the impact of the loss of the Drakes supply and a lower contribution from lease resolutions, this was an improvement of around $12 million on last year.

The statutory loss after tax, after AASB16, of $56.8 million includes the impairment to goodwill and other assets of $242.4 million.

The Metcash board has decided to pay a final dividend of 6.5 cents per share, which brings the total dividend to 12.5 cents per share.

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Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of Serko Ltd. The Motley Fool Australia owns shares of and has recommended Corporate Travel Management Limited and Webjet Ltd. The Motley Fool Australia owns shares of Transurban Group. The Motley Fool Australia has recommended Serko Ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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