When people mentally start ranking the countries not based on economic growth but depending on the number of medical cases suffered, it is time to acknowledge that the world does not remain quite the same place.
Confounded by the appalling bulletin about unsurmountable damage, we realise that not a single section on news column is left untouched by the unnerving impact of Covid-19. From general political endeavours in response to coronavirus to the world economy, the pandemic appears to be the focal point of trending discussions. Even the easy-on-senses entertainment section brings information about the outbreak.
Trespassing all the international boundaries, the disease which began in Wuhan soon gripped the entire world, which writhes relentlessly to get out of the medical emergency chains, but to no avail. Cases as per the WHO situation report on 31 March 2020 reached 750,890 while Australia reportedly encountered a total of 4,359 confirmed cases. The mortality rate of the pandemic is another critical concern for the world, as globally, 36,405 lives have been lost due to Covid-19.
The medical emergency and the responsive stagnation of business activities are generating economic uncertainty, shaking the foundation of stock markets all across the world. As the uncertainty gripped Australia, return by S&P/ ASX 200 has dwindled by over 24% on a YTD basis, as on 31 March 2020. Ever since the pandemic has adopted a rapid pace, the level of activity in business zones has stifled. Amidst such times, while the working-age group worry about their job security, the child and aged group sectors are ridden with different difficulties.
In the middle of the crisis, Australian Government was witnessed to provide a range of relief programs to enhance economic stability while also providing aid to childcare and aged care players. Minister for Aged Care and Senior Australians, Richard Colbeck recently announced a provision of $444.6 million to the aged care sector, incorporating infection control training and retention bonus for aged care workers. Under the banner of “Protecting older Australians”, the government has provided new online learning modules along with instructions for ordering personal protective equipment supplies for the aged care sector.
The government to avoid the impact on healthcare system has advised that childcare centres would remain open. In order to minimise the Covid-19 impact on childcare, the Community Child Care Special Circumstances Fund of $14 million would be utilised for covering varying business-related costs.
For the families experiencing financial hardships amidst the outbreak, Additional Child Care Subsidy can be availed, which generally includes the full cost of childcare and is available for a maximum of 13 weeks. While within four working days, applications for less than $10,000 would be processed, the government has also implemented programs that are directed at streamlining the process for larger grants.
In the time of rising economic despair and bearish trends, the Australian Government has buckled up with a range of programs to ease the hardships of businesses and workers involved in the child and aged care sectors.
With this backdrop, let us look at few players and their performance in the same space.
Estia Health Limited (ASX: EHE)
Australia-based Estia Health Limited (ASX: EHE), guided by the set principles of family code, provides aged care services incorporating clinical care across the different parts of the country. The Company, in response to the uncertainty surrounding potential impact of coronavirus, has suspended its FY20 guidance. The Company reported that residents had experienced no cases of coronavirus and within its mature home portfolio, occupancy was noted at 93.8% as on 15 March 2020.
EHE highlighted its disciplined capital management and balance sheet strength as its primary element to face the potential challenges of the crisis. On 13 March 2020, net debt was approximate $106 million along with undrawn and committed facilities of approximately $216 million, and net RAD balance being ~$827 million.
On the stock market front, as on 1 April 2020 (AEDT 12:40 PM), EHE stock was trading at $1.300, down by 2.985%. The Company has a market capitalisation of $350.1 million and annual dividend yield of 9.85%. In the past three months and six months, the stock return declined by 45.08% and 50.55%, respectively.
Japara Healthcare Limited (ASX: JHC)
Japara Healthcare Limited (ASX: JHC) is engaged in providing aged care services by integrating clinical practices along with innovation. Amidst the growing uncertainty and rising financial market volatility due to coronavirus, the Company has withdrawn its market guidance. JHC has taken necessary planning and preparations directed towards Covid-19 while monitoring the government authorities’ communications regarding the outbreak.
The occupancy at its facilities on 26 March 2020 was 4,127 residents, which lie in line with the February 2020 reported occupancy. Notably, as on 1 April 2020 (AEDT), JHC stock price was declining by 1% to trade at $0.495, while returning -49.24% and -58.33% in the past three months and six months respectively. The Company with a market capitalisation of $133.62 has an annual dividend yield of 10.7%
Think Childcare Group (ASX: TNK)
Think Childcare Group (ASX: TNK) owns, operates and manages facilities for the long day childcare for children between the age group of six weeks to six years. It operates through more than 78 centres that are present across Australia.
The Company, on 11 March 2020, highlighted that occupancy movement has surged across 53 of its 72 services fully owned for the 2019 year on a like-for-like basis for the first 10 weeks of the year. The workforce flexibility amidst the epidemic would enable TNK to match its cost base with demand. The Company is ensuring the highest quality cleaning standards along with strictly adhering to the infection control policy.
TNK stock as on 1 April 2020 (AEDT 12:52 PM) was trading at $0.750, with a return of -47.18% and -42.53% in the past three months and six months, respectively. The Company has a market cap of $45.79 million, approximately 61.06 million outstanding shares and annual dividend yield of 18%.
Mayfield Childcare Limited (ASX: MFD)
Investing in delivering education fabricated with quality care in the Victoria region, Australia, Mayfield Childcare Limited (ASX: MFD) owns as well as operates long day care centres. The Company welcomed the new year 2020 with a rise in occupancy by 0.5% for the first 12 twelve weeks of the year on a like-for-like basis across its 21 centres. The acquisitions, along with the growth in the occupancy, have together contributed stable performance. The revenue of $5.6 million was up by 8.6% and EBIT of $0.5 million represented a rise of 11.4%.
Amidst the outbreak girdling with many economic uncertainties, the Company has deferred dividend payment from 27 March 2020 to 25 September 2020 and has also withdrawn the CY 20 earnings guidance. The dividend decision was taken with the prime focus on protecting the balance sheet and long-term shareholder’s value.
In the past three months and six months period, the stock price has fallen by 44% and 41.67%m respectively. MFD has a market capitalisation of $17.83 million and was trading at $0.600 on 1 April 2020 (AEDT 01:20 PM).
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