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ASX 200 rises 1%, Cimic (ASX:CIM) up 8% on sale

ASX 200
Credit: Cimexus

The S&P/ASX 200 Index (ASX: XJO) went up by around 1% today to 6,229 points.

Here are some of the highlights from the ASX:

Cimic Group Ltd (ASX: CIM)

The engineering business announced today that it was selling half of its Thiess business to Elliot.

Thiess is described as the world’s largest mining services provider. It delivers open cut and underground mining in Australia, Asia, Africa and the Americas. It provides services to 25 projects across a range of commodities with 14,000 employees and annual revenue of more than $4.1 billion.

Cimic and Elliot will jointly control Thiess after it passes the usual conditions including financing and relevant regulatory approvals.

The sale price implies an enterprise value of approximately $4.3 billion for Thiess.

The money will be used to strengthen Cimic’s balance sheet with cash proceeds of between $1.7 billion to $1.9 billion as well as reducing Cimic’s factoring balance by approximately $700 million and Cimic’s lease liability balance by approximately $500 million.

Cimic expects the transaction to generate a pre-tax gain for Cimic of around $2.2 billion and a post-tax gain of around $1.4 billion.

Cimic Group’s executive Chair Marcelino Fernandez Verdes said: “The sale agreement reflects Thiess’ ongoing strategic importance as a core activity for Cimic. It capitalises on the robust outlook for the mining sector and, together with Elliot, we will pursue market opportunities in line with Thiess’ growth and diversification strategy.”

The Cimic share price rose around 8% today. It was the best performer in the ASX 200.

Crown Resorts Ltd (ASX: CWN)

The large casino operator announced an AUSTRAC enforcement investigation today.

Crown said today it had been informed by AUSTRAC’s regulatory operations branch that it has identified potential non-compliance by Crown Melbourne Limited with anti-money laundering and counter-terrorism financing laws.

The ASX 200 casino operator said that the potential non-compliance includes concerns in relation to ongoing consumer due diligence, and adopting, maintaining and complying with an anti-money laundering and counter-terrorism financing program.

These concerns were identified in the course of a compliance assessment that commenced in September 2019 and focused on Crown Melbourne’s management of customers identified as high risk and politically exposed persons.

This matter has been referred to AUSTRAC’s enforcement team, which has initiated a formal enforcement investigation into the compliance of Crown Melbourne. Crown said that it will respond to all information requests in support of the investigation and fully co-operate with AUSTRAC.

The Crown share price dropped around 8% in response to this news.

Dicker Data Ltd (ASX: DDR)

IT wholesaler business Dicker Data announced its FY20 third quarter update today.

Dicker Data said that in the nine months to 30 September 2020, its revenue increased by 14.9% to $1.48 billion and its profit before tax rose by 28.3% to $60.8 million.

Gross margins were maintained in line with the half year results and some operating cost leverage was achieved, according to the company. It said that it continues to prove resilient to the negative economic impacts of COVID-19.

Management said that the company is experiencing better-than-forecast revenue growth off the back of a significant mobilisation to working from home. However, growth is stabilising in the second half to expected levels.

Dicker Data will also be able to help businesses with back-to-work strategies. It’s seeing increased quoting activity and the resumption of larger infrastructure projects which were previously put on hold.

Looking ahead to the next year or two, Dicker Data said that the rollout of 5G will have a revolutionary effect within the technology industry. Management think this is a tremendous opportunity to service the small and medium business market.

Dicker Data said that its new distribution centre is on track to be completed by the end of the year. It will increase capacity by around 80%.

The Dicker Data share price went up around 7% in reaction to this news.

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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Dicker Data Limited. The Motley Fool Australia has recommended Crown Resorts Limited. 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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