Penny stocks benefitting post Coronavirus outbreak; ZNO, BIT & JAT

Penny stocks benefitting post Coronavirus outbreak; ZNO, BIT & JAT

Coronavirus is a threat to Chinese economic growth, also hampering global growth prospects, and the time spent on formulating necessary cure is likely to result in a variable magnitude of the impact to GDP.

However, the economic damage caused by a healthcare outbreak could be far-reaching rather than just gross domestic product, such as a potential spike in claims for health insurers, dip in global travel industry, challenges faced in retail sector and unexpected necessary spending for households.

In this article, we discuss three penny stocks from the ASX-universe that are witnessing tailwinds as a result of the coronavirus outbreak globally.

Zoono Group Limited (ASX:ZNO)

On 30 January 2020, the company, involved in the development and sale of antimicrobial products, reported an update stating that it had received enquiries from shareholders and public related to the effectiveness of the company’s products to remediate the coronavirus outbreak.

It was noted that the company is confident and well positioned to be part of the solution to both coronavirus as well as other new virus threats. ZNO’s technology provides an ideal solution, especially in longevity and killing methodology.

In 2014, its surface sanitiser had shown an over 99 per cent efficacy in five minutes when it was tested against bovine coronavirus, which is a surrogate accredited by the World Health Organisation for other members of the coronaviridae family.

Recently, the company’s surface sanitiser and GermFree24 sanitiser were sent for testing purposes to a laboratory in Germany against the latest coronavirus, which was traced in China.

The new strain of coronavirus from China was not tested before, and the company was confident that both of its products would have a similar of efficacy, which was depicted in successful test results in 2014.

Also, it was said that both contain the same active ingredient, and the results from the latest testing are expected to be out in the next four to six weeks.

In January 2020, the company undertook a crucial decision to revamp production of the key active ingredients and its surface sanitiser and GermFree24 in the wake of the emergence of coronavirus in China.

Meanwhile, the company has booked orders of over NZD 1 million in the last two weeks of January, which were mostly from China & Hong Kong. Its online sales recorded the highest ever sales in a day of $49k.

In addition, the forward orders and product enquiries remain strong, especially the interest from major companies in new distribution agreements and the launch of the company’s products in different verticals.

On 6 February 2020, ZNO was trading at $0.89, up by 5.95 per cent from the previous close.

Biotron Limited (ASX:BIT)

On 6 February 2020, Biotron reported that it is the process of evaluating numerous promising compounds for activity against coronavirus, including the latest novel referred to as 2019-nCoV.

The company has over 30 compounds with good activity against a range of coronaviruses in its proprietary small molecule library. Its library includes human coronavirus that causes mild and cold-like symptoms as well as the SARS coronavirus.

It reckons that the compounds could reduce the coronavirus levels by 90-100 per cent in infected cells cultures, and some compounds have broad-spectrum activity against multiple strains of coronaviruses.

As a result of the coronavirus outbreak in China, the company is looking to test some select compounds against the newly discovered 2019-nCoV. It is expected that testing would be conducted under contract in specialist laboratories, having access to the new coronavirus.

2019-nCoV has been isolated and made available for studies in recent days, and the company is prioritising the testing of its compounds that have depicted a broad-spectrum activity against different coronaviruses.

BIT’s core competencies include the design and development of drugs targeting virus-encoded proteins known as viroporins. Its scientists were the first to publish data indicating that E-protein of the coronavirus is viroporin and a good target for antiviral drugs.

Its emphasis has been on its lead clinical HIV-1 eradication and its encouraging preclinical Hepatitis B virus programs. Also, the company has continued to progress earlier stage research on the formulation of drugs to target respiratory infections, including coronaviruses.

On 6 February 2020, BIT was trading at $0.100, up by 21.95 per cent from the previous close.

Jatenergy Limited (ASX:JAT)

On 3 February 2020, the company announced that it had developed health and wellness products to promote better health and living product to the public since 2018, thus developing a range lactoferrin dairy products in the process.

Lactoferrin plays an important role in influencing the immune systems, scientifically as well as through the gastrointestinal tract. Its iron building capabilities help to deprive pathogens of iron which is an essential nutrient for their growth and replication, especially pathogens like bacteria, fungi, viruses.

Since December 2019, the company has witnessed unprecedented demand in China for its Neurio ranges of dairy products with ingredients like lactoferrin, and this demand could be driven by the emergence of the coronavirus.

In January 2020, the company recorded sales of $3.44 million in Neurio lactoferrin brands as against the sales of $407k in the previous corresponding period. During the six months to 31 December 2019, the sales of Neurio products was $9.4 million.

Also, the demand for the company’s products from the distributors in China has continued with orders for February and March at levels far in excess of previous periods.

It was noted that the orders so far in February 2020 reached $2 million as against around $1 million in the previous corresponding period, with March 2020 orders at $1.8 million as against around $388k in previous corresponding period.

The company’s distributors have not advised that the restrictions on people movement would prevent any sales and distribution of the Neurio products to consumers.

Further, it is making efforts to upscale production to meet the demand. Neurio continues to be manufactured by a third-party manufacturer, and the production would be moved to ANMA once the construction project is completed in late February 2020.

The company’s ANMA factory has also seen an increase in orders from those customers which produce dairy products with lactoferrin as an ingredient. And, the factory is increasing production to meet the orders from JAT.

It was noted that the disruption caused by Coronavirus in China would not impact the company’s Maternity and Infant Boutique to open in Shanghai in March 2020. And, it was noted that the fitouts at the site would commence on 9 February 2019.

The Shanghai boutique of the company would be stocked with a broad range of JAT products as well as Neurio and other lactoferrin ranges.

On 6 February 2020, JAT was trading at $0.050, up 2.04%.

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Penny stocks have been known to attract investors who are looking for explosive gains and it is possible to get lucky with these typically speculative investments. Just as the name suggests, penny stocks trade at low prices and are common shares of small public companies.

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