The S&P/ASX 200 Index (ASX: XJO) ended up 1.9% last week to finish the week at 6033.6. The market was boosted mid-week on hopes of a coronavirus vaccine, and seems to be pricing in an accelerated recovery from COVID-19. Experts, however, have warned impacts will be ongoing, with a vaccine unlikely to be widely available for at least a year.
Investors moved out of high flying technology shares such as Afterpay Ltd (ASX: APT) last week, possibly locking in gains from recent meteoric share price rises. The S&P/ASX 200 Information Technology Index (ASX: XIJ) ended the week down 4.5%. Hurdles to economic recovery may prompt higher volatility as investors look to cash in on share price rises since March.
The share market was buoyed by healthcare and the miners last week. The S&P/ASX 200 Health Care Index (ASX: XHJ) gained 0.8%, with Ansell Limited (ASX: ANN) gaining 2.2%. BHP Group Ltd (ASX: BHP) was up 3.5%, and Rio Tinto Limited (ASX: RIO) rose nearly 5%.
We take a look at the 5 top performing ASX 200 shares last week.
Alumina Limited (ASX: AWC)
The Alumina share price rose 12.9% last week to finish the week at $1.80 following strong second quarter earnings. Alumina has interests in bauxite mining, alumina refining, and aluminium smelting operations via a joint venture. The share price rose when Alumina announced it had received $58.6 million in distributions from the joint venture, which was above analyst expectations. This was an 87% increase on the $31.3 million received the previous quarter.
Alumina prices have risen from their lows of $225 a tonne in April. Increased importing by China has seen prices rise to $284 a tonne. Commenting on the rebounding commodity price, CEO Mike Ferraro said:
Global demand for smelter-grade alumina so far in 2020 is slightly higher than 2019 volumes. Market sentiment globally has improved and there are signs of a promising economic recovery in China. However, it is still to be seen how the economic impact of the pandemic will pan out.
Credit Corp Group Limited (ASX: CCP)
The Credit Corp Group share price gained 10.8% last week to finish the week at $16.91. The debt collection group announced its unaudited FY20 results last week, revealing FY20 net profit after tax is expected to be $10 million–$15 million. This includes impairment charges relating to purchased debt ledger assets and additional provisioning from the impact of the COVID pandemic. Net profit before these adjustments is expected to be $75 million–$80 million.
Credit Corp reports its customers have been less prepared to agree and maintain longer-term repayment plans since the implementation of isolation measures. This initially produced a sharp decline in collections and rising loan book arrears. More recently, willingness to make one-off payments has brought collections for May and June closer to pre-COVID levels. Persistently elevated levels of unemployment will likely see loan book arrears rise. Nonetheless, Credit Corp reports increased interest in debt sales.
With a strong capital position including no net debt and undrawn funding lines of $375 million, Credit Corp will be able to maximise investment opportunities as they arise.
Cooper Energy Ltd (ASX: COE)
The Cooper Energy share price rose 10.5% last week to close the week at 42 cents. Cooper Energy is an oil and gas company supplying customers including AGL Energy Limited (ASX: AGL) and Origin Energy Ltd (ASX: ORG). Gas is produced in the Otway basin and accounts for the major share of the company’s sales revenue, production, and reserves.
There was no news out of Cooper Energy last week to account for the rise in share price, however the company has a number of projects under development which could add value and increase gas production.
Gas prices have trended lower recently, led by LNG prices. This is expected to improve in July, however, and in the southern states production from existing and committed sources is expected to fall short of demand by 2021. With capital spending being reduced in FY20 and FY21, this shortfall could widen, leading to the need for new sources of supply.
Fortescue Metals Group Limited (ASX: FMG)
The Fortescue Metals share price climbed 10.4% last week to finish the week at $16.39 with the miner benefitting from a soaring iron ore price. Iron ore rose to $110 a tonne in July, its highest point since August 2019. The surge in coronavirus infections in Brazil triggered concerns of a supply disruption, as demand from China rises. The Chinese Government has pledged to increase infrastructure spending to offset the impact of coronavirus on the economy.
In the March quarter Fortescue reported record iron ore shipments of $32.3 million tonnes, 10% high than Q3 FY19. Year-to-date shipments were a record $130.9 million tonnes. Costs were 2% lower than 3Q FY19. Strong free cash flow generation resulted in cash on hand of US$4.2 billion at 31 March 2020 and net cash of US$0.1 billion, compared to net debt of US$2.9 billion at 31 March 2019.
Orocobre Limited (ASX: ORE)
The Orocobre share price rose 9.4% last week to finish the week at $2.80. Orocobre is a mineral resource company focused on lithium and borax mining operations. There was no news out of the company to prompt the price rise last week and lithium prices remain at record lows. Demand continues to be subdued in China’s lithium market, despite the resumption of economic activity. Nonetheless, investors may be buying into Orocobre now as lithium prices are poised to rally in the next few years as electric vehicle sales accelerate. This will be driven by government efforts globally to shift toward cleaner modes of mobility.
In the June quarter, Orocobre sold approximately 1,600 tonnes of lithium carbonate at around US$4,105 a tonne. COVID-19 restrictions limited the ability to complete sales during the quarter. While most logistical issues have been addressed, delivery of product is yet to return to normal levels as customers delay shipments due to lower production and excess inventory.
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Motley Fool contributor Kate O'Brien has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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