How are ASX Stocks reacting to Covid fears?

Several countries have started to report an increasing number of coronavirus cases in their jurisdictions. The spike in the numbers of South Korea, Iran and Italy have further increased the tensions all over the world. Coronavirus fear has caused the ASX 200 index to decline by over 2% today. S&P/ASX 20, S&P/ASX 50 and S&P/ASX 100 are all down on ASX today. Further, S&P/ASX MIDCAP 50 declined by almost 250 points today.

Air New Zealand (ASX: AIZ)

Travel restrictions in several countries due to the rising coronavirus fear has impacted the operations of several travel companies all around the globe. Recently, an airline company -Air New Zealand warned the market that the revenue outlook for the remainder of the year is expected to be adversely impacted as a result of softer demand for travel to and from Asian destinations and it expects a net negative impact to earnings in the range of $35 million to $75 million as a result of coronavirus.

Air New Zealand has taken number of steps to reduce down the impact of lower demand, including adjustments to capacity across the Asia, Tasman as well as Domestic networks and is planning to increase market development investment to drive additional demand, specifically across its Domestic as well as Tasman markets.

The company is planning to release its 2020 Interim Results on 27 February 2020. AIZ stock declined by 5.344% during today’s day’s trading. The company currently has a market cap of around ~2.94 billion as per ASX.

Bluescope Steel Limited (ASX: BSL)

Australian Steel producer, Bluescope Steel Limited is among the top losers on ASX today, failing by 7.877% to $12.630. The company today has released its half year results wherein it reported a NPAT of $185.8 million for the period, down 70% on 1H FY2019 and an Underlying EBIT of $302.4 million down on 1H FY2019, driven by the decline in commodity steel spreads which we flagged in August last year.

For the half year period, the company has approved a 6 cents per share interim dividend and the extension of the on-market buy-back, to buy up to $100 million during 2H FY2020, reflecting the right balance of returning funds to shareholders and investing for the future in key projects such as the North Star expansion.

The company is aware of some impacts to its supply chains which, to date, have been mitigated and has advised that the economic impact of COVID-19 has created uncertainty for the company’s Asian businesses and Asian steel spreads in the near term. The company expects 2H FY2020 underlying EBIT similar to 1H FY2020, subject to spread, foreign exchange and market conditions – including potential impacts from COVID-19.

Village Roadshow Limited (ASX: VRL)

Village Roadshow Limited (ASX:VRL), which is into cinema exhibition, film distribution, theme Parks and marketing solutions business, recently interim results for the period ending 31 December 2019, wherein it highlighted extreme weather and coronavirus are expected to have an unfavorable impact of approximately $3 million on 2H20 results of theme parks.

For the period, the company reported a strong balance sheet with reduction of net debt from $219.6 million to $198.4 million. This resulted in the leverage to improve to 1.67x from 1.76x at 30 June 2019. During 1H20, EBITDA of the company stood at $83.6 million, up from $65 million in 1H19. The company has informed that its parks have been impacted by flooding with major parks being closed for two days and the effect of international tourists not visiting due to the coronavirus.

The stock today has declined by 1.554% and is trading at $3.800, near to its 52 weeks high price of $4.100.

Reliance Worldwide Corporation Limited (ASX: RWC)

Plumbing solutions provider, Reliance Worldwide Corporation Limited (ASX: RWC) witnessed a decline of 26.452% during today’s trade. For the half-year period, the company reported Adjusted NPAT of $63.7 million, down by 21% on previous corresponding period. During the year, the company witnessed lower production volumes, particularly for intercompany sales to the Americas, as well as unfavourable mix in Continental Europe. Over the period, the company’ s UK specialty product sales were lower due to subdued trading conditions. Further, the sales to the Automotive sector were lower due to the continued withdrawal from that market which was exacerbated by broader sector weakness.

While providing an update on the impacts of coronavirus, the company told that the coronavirus will have minimal impact in the short term. The company is assessing the longer-term impact with suppliers and is working with its supply base to prioritise production to restock products that have lower inventory levels.

The company has amended its earnings guidance for FY2020 to incorporate the impact of the first half financial performance. For FY20, the company expects its Adjusted NPAT to be in between $140 million- $150 million.

Although many companies have updated about the negative impact of coronavirus, there are several companies which have assured that their operations have not been impacted, this includes, Bubs Australia Limited (ASX: BUB) which has advised that there has been no interruptions to its supply chain or change to its sales demand forecast or outlook to date, due to the outbreak of Coronavirus. In the first half of FY20, Bubs witnessed 19% increase in its direct sales to China owing to new partnerships with Alibaba Tmall and Beingmate, and deployment of increased marketing resources. In the past six months, BUB stock price has declined by 30.22%.

Australian infant nutrition company, The A2 Milk Company Limited (ASX: A2M) recently provided an update on coronavirus wherein it confirmed that its business performance remains strong and it continues to be in compliance with its continuous disclosure obligations. A2M stock declined by 5% during today’s trade. At market close on 24 February 2020, A2M was trading at $14.840 with a market cap of $11.5 billion.