Stocks that are benefiting from the COVID-19 scenario: CLV, JAT, ANN

  • May 20, 2020 AEST
  • Team Kalkine
Stocks that are benefiting from the COVID-19 scenario: CLV, JAT, ANN

In a period where economies have struggled due to the pandemic, some sectors have had a favourable impact on their respective performances. As countries implemented lockdowns, households started panic buying that has shaped a one-off spike in demand in most of the essential categories.

Businesses that are engaged in essential goods have experienced strong demand over the past months. However, supply chain restrictions and public health measures imposed by countries have also impacted the distribution system.

In this article, we will discuss three ASX-listed stocks that are benefitting from the COVID-19 situation and their latest updates.

Clover Corporation Limited (ASX:CLV)

Clover Corporation has joined the list of businesses that have reported a surge in demand majorly due to COVID-19. It is in the business of developing products/ingredients that are used in infant formula products, health bars, tablets, and gummies, among others.

In March, CLV released half-year results and noted that the new products are gaining consumer traction as manufacturers attempt to deliver Omega 3 through food instead of tablets. The company was also running trials of its products on drink applications and highlighted there are several products in the pipeline for development in the future.

Now, the company has reported a surge in demand for consumer essentials induced additional orders from the clients as supermarkets met a one-off event of heavy buying by consumers.

Since the first-half results, the business saw increasing demand for its products globally, especially in the infant formula space. CLV notes that heavy buying by consumers has reduced inventories at the retail stores as well as in distribution.

Meanwhile, a lower AUD against USD resulted in short term gains in margins of the business. Due to a higher level of inventory position at the half year end, the company did not purchase in large volumes, which are transacted in USD. Most of the inventory would be used over the second half of the fiscal.

Clover Corporation has continued to support its customers during the pandemic, primarily due to higher inventory levels. Further, it also implemented necessary protocols at workplace ensure the safety of its employees.

It was said that a higher level of demand primarily indicates the resumption of demand from China as retailers refilled inventory, which was depleted due to COVID-19.

At the same time, higher demand is not just limited to China as most of the countries are in lockdown, the consumer demand has increased. Moreover, CLV expects that normal demand levels will likely return in the next financial year. Clover Corporation also upgraded its second-half outlook that would be better than first-half results, assuming that existing situation persists, and demand is met.

On 20 May 2020, CLV last traded at AU$2.530, up by 12.946% from the previous close.

Jatenergy Limited (ASX:JAT)

In May, the company has reported that it has established a new brand – Abbeyard. The new brand would be used by its Chinese partner, Hipac – largest B2B e-commerce platforming in the country.

Abbeyard first product, A2 protein powder for children, is expected to be delivered to Hipac in mid-June 2020. Also, Hipac intends to order AU$4.8 million worth of the new product over the 12 months. JAT aims to develop more products under this brand.

Also, the company sold initial orders of two new products that types of camel milk powder with lactoferrin. It was also noted that the products are only ones in the category - camel milk powder with lactoferrin.

Camel milk-based products were delivered in Australian stores and shipped to China. The firm has received orders for June and July 2020. Due to continued demand, the company’s manufacturing facility (ANMA) is operating 24 hours a day in three shifts for two days a week.

In the March quarter, the company generated AU$1.65 million in net cash from operations with total cash receipts of AU$18.5 million. It was noted that revenue would be stable over the coming months because of:

  • Sales were driven by COVID-19.
  • New products by the business and subsidiaries.
  • Ramp up in manufacturing facility of the company.
  • Additional orders from Ocker.
  • Further agreements with new business partners.

During the quarter, the company has formed a partnership with the University of Sydney to develop innovative products. It was progressing on the plant-based meat products. As of 31 March 2020, JAT had AU$10.5 million in cash balance, and later it secured AU$5 million for funding new capex and working capital.

On 20 May 2020, JAT last traded at AU$0.042, down by 4.545% from the previous close.

Ansell Limited (ASX:ANN)

Shares of Ansell Limited are trading at levels never seen in the past ten years, also hovering around their 52-week highs.

Ansell Limited is a historical business, which dates back to 1893 when a tyre manufacturing plant was started in Melbourne by Dunlop UK. Since entering in gloves business in 1946, the company has transformed into a business with diverse products and global presence.

In early April, the company noted that it is working with Governments and Global health organisation to ensure hassle-free supply of personal protective equipment (PPE) during the pandemic.

Due to lockdown, the manufacturing capacities of the business of production of PPE was compromised, which also resulted in a shortage of PPE products worldwide.

ANN has expanded its capacity to manufacture PPE that are critical to the healthcare industry and essential services industry during the pandemic. It was able to operate maximum capabilities with the help of local authorities.

However, it was said that suppliers of the company were impacted due to measures introduced by various Governments. And some countries implemented controls on shipments, which was affecting its business. ANN urged for a global co-operation between PPE manufacturers, suppliers, and Government to ensure seamless movement of PPE goods and supplies.

In late March, the company has reaffirmed its guidance for the full year. It expects to deliver EPS between US$1.12 and US$1.22 and continues to monitor the COVID-19 situation.

It was understood that business is experiencing high demand in the PPE category, especially in the hand and body products. But the company was expecting lower revenues from other products due to lockdowns, export restrictions.

On 20 May 2020, ANN last traded at AU$34.530, up by 1.231% from the previous close.


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