Stocks Benefited from COVID-19 Outbreak: ZNO’s Share Up by 34x, A2M Sales Soar in China

Stocks Benefited from COVID-19 Outbreak: ZNO’s Share Up by 34x, A2M Sales Soar in China

Wait! What? 34x in the previous six months? Yes, you read it right, in only six months the shares of Zoono have soared by 34x after a successful test of its product against coronavirus.

While the coronavirus outbreak has negatively impacted most of the stocks, there are some which have benefitted from the virus spread.

In addition to the healthcare sector, an ASX-listed dairy nutritional company, The a2 Milk Company was also impacted favourably by the outbreak as it reported increased sales in China. Due to the coronavirus outbreak, the local dairy companies or infant formula makers were closed in China. Still, the a2 milk Company and its distributions partners continued to deliver the products to consumers.

In this article, we are underlining two ASX-listed players who have attained profit after the COVID-19 epidemic.

Also read Coronavirus Blackswan Turns 3 Healthcare Stocks to Multibaggers: ZNO up 6x, BIT & HCT Up 2x

Let us zoom lens on ZNO and A2M-

Zoono Group Limited (ASX:ZNO) up 8x in 3 Months & 34x in 6 Months!  

Stock performance

On 02 March 2020, stock of ZNO closed the day at $2.260, skyrocketing up by 19.261% from its previous close. With the market capitalisation of around $309.48 million, ZNO has nearly 163.31 million shares outstanding. The 52-weeks low and high price of the ZNO was observed at $0.063 and $2.440, respectively.

The stock of ZNO generated a positive return of 229.93% on a year to date basis and an excellent return of 3,324% in the previous six months.

ZNO’s Stock performance in the last six months:

About the Company

New Zealand-headquartered biotech company Zoono Group Limited is primarily into the development as well as the distribution of environmentally-friendly antimicrobial solutions that are suitable for surface sanitizers, skincare and mould remediation treatments. The verified antimicrobials of the Company include surface and hand sanitizers which have proven successful against coronavirus.

The products of the Company are based on a unique antimicrobial molecule known as the ‘zoono molecule’ that bonds to the surface and kills pathogens such as virus, bacteria, mould, algae etc.

Positive outcome from Z-71 Microbe Shield of Zoono Against COVID-19

On February 2020, Zoono group announced that it had received a report on the laboratory-based tests conducted against coronavirus. The results from the study demonstrated that Z-71 Microbe Shield of the Company was more than 99.99% effective against COVOID-19.

The Company’s products have been successfully examined against a variety of infectious agents for 24 hours on hands and for a month on surfaces.

The Group is delighted with the findings, which further proves the capability of the technology by Zoono to be part of the solution for avoiding the spread of the coronavirus.

Partnership with Eagle Health for China

Zoono Group unveiled its collaboration with Eagle Health Holdings Limited (ASX:EHH) on 20 February 2020 for the distribution of co-branded products (Zoono and Eagle) as well as offline retail sales in China. The Company provided further details of the collaboration in an announcement dated 28 February 2020.

The essential terms of this distribution agreement are:

  • Under the co-branding arrangement, formulations of Zoono having bilingual packaging, would carry the renowned and trusted logo of Eagle, and showing “powered by” Zoono.
  • The Company revealed that this partnership is for sale of co-branded products with Eagle and in offline retail in China. This term would, at first, be for a three-year term having five-year rights of renewal.
  • In the first 12 months, the minimum purchase volume is approximately NZ$1,500,000, NZ$2,300,000 in two years, and NZ$3,100,000 in three years.
  • This agreement provides Eagle with the right to sell Zoono’s branded products as a favored collaborator depending on good faith negotiations after one year in additional channels.
  • The first shipment from Zoono, about 4 tonnes of product, is being produced for air-freight and transport to Xiamen facility of Eagle and is scheduled to be dispatched from Auckland, on 28 February 2020.

Half-yearly performance FY20 (ended 31 December 2019)

On 19 February 2020, the Company updated the market with its half-yearly results on ASX, wherein the revenue was up by 144%. Quick highlights from the half-yearly update are:

  • Revenue from ordinary activities increased to NZ$1,012,408 by 144% due to increased orders received from current and new distributors.
  • Gross Profit achieved was NZ$893,443 includes 52.1 per cent of operating revenue.
  • Operating costs of the Company also decreased materially by approximately NZ$335,184 as a result of a review of all costs across the Group, with the significant decline of nearly NZ$248,483 coming from reduced employee expenses and fees paid to Directors.
  • Selling as well as marketing expenditures increased by NZ$131,533, but consistent with the rise in revenues.
  • At the end of the half-year, Zoono had a cash reserve of approximately NZ$2,706,792.

The a2 Milk Company Limited (ASX:A2M)

An infant formula firm, The a2 Milk Company Limited was founded in 2000 in New Zealand by Dr Corran McLachlan and is into commercialising A1 protein-free milk under the a2 and a2 MILK brands. A2M operates in New Zealand, Australia, the US, Vietnam, Korea, Singapore and China.

Half-yearly performance (first half ended 31 December 2019) Sales soar in China

  • The Company reported total revenue of approximately NZ$806.7 million, increased by 31.6% from the previous corresponding period.
  • EBITDA increased to NZ$263.2 million, up by 20.5 per cent.
  • Net profit after tax (NPAT) of the Company was recorder at NZ$184.9 million, up by 21.1% on pcp.
  • The Company recorded strong growth in China label infant nutrition, with sales increase by two to nearly NZ$146.7 million and distribution increased to 18,300 stores.
  • In the US, A2M reported that revenue has doubled up , and distribution grew to 17,500 stores. 
  • The Company mentioned that one more time it had achieved strong growth in its liquid milk businesses in Australia and the United States with sales across the Group totalling $104.4 million increased by 28.7%.
  • In Australia, liquid milk sales of A2M were up by 11.3 per cent to nearly NZ$74.7 million.
  • Balance sheet of the Company remains in a strong position with a significant cash balance and without any debt.
  • The a2 milk also revealed that it had developed assistance and support package valued at nearly NZ$3.0 million in response to COVID-19 outbreak.

Stock performance

On 02 March 2020, stock of A2M closed the day’s trade at $15.560, up by 0.908% from its previous close. With the market capitalisation of around $11.35 billion, A2M has nearly 735.88 million shares outstanding. The 52 weeks high and 52 weeks low price of the stock was observed at $17.300 and $11.280, respectively.

The A2M stock generated a positive return of 10.98% on a year to date basis and a positive return of 13.74% in the previous six months.

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