Coronavirus Outbreak: Swings and Roundabouts

Coronavirus Outbreak: Swings and Roundabouts

With more than 37,000 confirmed cases of novel coronavirus (nCoV) and over 900 reported deaths across the world, coronavirus has undoubtedly become a head throbbing matter for the health ministries. The Australian government has so far validated 15 cases of novel coronavirus in the nation – five in Queensland, four each in Victoria and New South Wales, and two in South Australia.

ALSO READ: RBA Stays Optimistic Over Economic Outlook, Considers Coronavirus Outbreak a Near-Term Risk

A recent study conducted in a UK University has placed Australia at 10th rank in the list of countries at-high risk from the 2019 novel coronavirus. Though several Australian companies, especially those in travel and education sectors, are expected to lose considerably from the coronavirus outbreak, some are expected to benefit from the disease such as pharmaceutical players.

One such biotech company, whose products are expected to benefit in combatting the spread of the coronavirus is Zoono Group Limited (ASX:ZNO). The ASX-listed global biotech company observed a surge of about 35 per cent in its share prices on 10th February 2020, following the release of its announcement on an anti-virus supply contract.

Let’s take a closer look at the Company’s announcement:

Zoono Shares Surge by 35% on Anti-Virus Supply Contract

The Company has recently notified that it has entered into a five-year term exclusive distribution agreement with Beijing Youmeng Technology and Development Limited for the hotel and the childcare sectors in China.

This is the fourth distribution agreement signed by the Company in the last six months for an industry sector in the Chinese market, including the agreements with:

  • Guangzhou Sanchengyun Trade Co., Ltd for the sale of Zoono branded products online in China in September 2019.
  • Zoono China International Trading Ltd in December 2019.

The agreement represents a step towards the Company’s strategy to concentrate on particular sectors and on the appointment of reliable distributors with specific expertise in hotel and the childcare market segments.

Key terms of the agreement:

  • An initial term of five years;
  • Superiority in all hotel and childcare markets in China;
  • Minimum purchase volumes of NZD 1.5 million in the first 18 months, NZD 2.3 million in year two and NZD 3.0 million in year three, and subsequently raising by 10 per cent per annum; and
  • Full payment is mandatory for all product orders before shipping.

The Company has already received an initial payment of NZD 775K from the Chinese distributor.

It is worth noting that there has been an exceptional interest in the Company’s technology following the coronavirus outbreak, given its proven efficacy against bacteria and viruses and the ability to avert cross contamination. The Company’s unaudited revenues for the quarter to date amounts to NZD 2.4 million, with on-line sales in New Zealand and Australia contributing strongly.

Zoono is Gearing Up to Deal with Coronavirus

The longevity and killing methodology of Zoono’s technology is believed to deliver an ideal solution against viruses. The Company’s Z71 Microbe Shield Surface Sanitiser was tested successfully against bovine coronavirus in 2014, whose test results validated a 99.99 per cent efficacy in 5 minutes.

Recently, the Company sent its GermFree24 Hand Sanitiser and Microbe Shield Surface Sanitiser (Z71) products to a German laboratory for testing against the coronavirus (2019-nCoV). The Company is confident that its both products would have a similar efficacy level to that achieved in 2014 testing against the current strain of the coronavirus, as both contain the identical active ingredient.

Moreover, the Company has already ramped up the production of GermFree24 Hand Sanitiser and Z71 Microbe Shield Surface Sanitiser finished goods.

In the last two weeks of January 2020, the Company received product orders worth over NZD 1 million, especially from Hong Kong and China. In addition, its online consumer sales jumped considerably, with company observing a record day of $49,000 in one day last month.

Several major companies showed interest in the launch of the Company’s products into various vertical markets and new distribution arrangements last month. Zoono is confident of fighting the novel coronavirus outbreak and seems to benefit from the disease that is shaking the globe.

ALSO READ: Coronavirus could be more dangerous than thought initially; Outbreak impacts global markets

Demand for Holista’s Sanitisers Increase Amidst Spread of Coronavirus

The Australian-headquartered research-driven biotech company, Holista CollTech Ltd (ASX:HCT) has recently notified that will ship a further 90k NatShield™ sanitisers, just days after the first 60k units were sold out in the wake of rising concerns of the spread of the fatal coronavirus.

The Company has received fresh orders from Australia, Malaysia and other parts of Asia. Its NatShield™ sanitisers contain a plant-based active ingredient, Path-Away®, which is proven to kill previously known corona-type viruses and more than 170 pathogens.

Last week, the Company has received orders for 60k units of NatShield™ sanitisers from a Southeast Asian distributor (30,000) and Australia (30,000 bottles). The total confirmed orders stand at 107,000 units as at February 8.

The Company has also accelerated the development of a nasal balm version of the sanitser and intends to file a global patent for the product by March 2020, with product expected to be available in the market by July 2020.

Following the release of the announcement, HCT stock witnessed a gain of 21.7 per cent on 10th February 2020.

Coronavirus Impacting Early 2H Travel Patterns, Said Travel Company FLT

On the one hand, the biotech players appear to be at an advantage from the coronavirus outbreak, while on the other hand, travel companies like Flight Centre Travel Group (ASX:FLT) are at a disadvantage.

In a recent update on the ASX, travel group FLT notified the coronavirus outbreak has made it more difficult to deliver the solid 2H earnings. The Company added that the disease is impacting its 2H travel patterns, especially in Asia, weighting implied in its full year guidance which is in the range of $310 million to $350 million now.

The Company mentioned that the virus had already adversely affected its small corporate travel operations in Singapore, Malaysia and China, which generated around $625 million in TTV together during FY19.

The virus’s impact has been largely felt in the Company’s Greater China corporate travel businesses so far, given that Australia’s outbound and inbound travel sectors and business activity have shut down temporarily as part of the focus on controlling the virus.

The Company expects the virus to affect the following areas in the upcoming months:

  • Leisure travel: Though the virus has not yet considerably impacted the demand for travel to other countries to date, the travellers could alter travel plans if bigger scale outbreaks were discovered elsewhere in the world.
  • Corporate travel: Many companies across the world have amended their travel policies to avert travel to China in the near-term.
  • Resorts and Cross Hotels: The outbound travellers in China are a key target market for FLT’s hotel management business.

The Company continues to monitor the impact of the virus on its Singapore and Greater China corporate travel businesses in the short-run and its potential effects on corporate travel and broader leisure patterns in the coming months, that are the year’s peak booking periods.

However, the Company believes that it is too early to assess the full year impact of the virus on its leisure and corporate travel or business in general. The Company expects the virus to affect the travel patterns to a certain extent in the near-term.

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