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Coronavirus outbreak has been one of the most severe epidemics of all times and has entailed huge costs on the social as well as on economic fronts. The outbreak of the epidemic has shaken international equity markets which have pared almost all the gains accumulated in recent months and have reached nadir, with increasing worries about the unabated spread of the virus.
Lately, the disease has spread to several Middle Eastern countries, with over 79,000 confirmed cases worldwide and has taken the lives of over 2,600 people globally, with a vast majority in China.
International markets have suffered the brunt from the disease spreading to the middle eastern region on Monday 24 February 2020. Even commodities have shed some lustre and investors have looked increasingly worried on Tuesday’s trade as well.
The S&P/ASX 200 dipped 1.63% today with most of the indices closing in the red zone only, experiencing a broad-based sell-off from the investors. Also, individual stocks remained prone to the news on coronavirus outbreak and have registered a fall in their prices during the day’s trade.
At the operational front, the performance of several stocks had been affected by the coronavirus outbreak, especially of the companies that have direct business with China, like those belonging to the tourism and education industries. Companies have clearly reported a hit in the earnings due to coronavirus and have also moderated their guidance.
BlueScope Steel Limited (ASX:BSL) a global leader in premium branded, coated and painted steel products and the third largest manufacturer of painted and coated steel products globally, mentioned that there is a prevailing uncertainty in key markets due to impacts of coronavirus and current macroeconomic conditions as applicable to its business.
Moreover, the company also believes that there shall be a considerable impact over its business due to the prevailing outbreak and outlook for the rate of recovery in the the second half of the year is clouded amidst the current situation.
Viewing the coronavirus impact, the company has placed its guidance for underlying EBIT for 2H FY2020 near to $302.4 million, which depends on other factors like the spread of the virus, foreign exchange and market conditions.
When big players like BlueScope take a hit due to the externalities in the business environment, it is bound to lower investor confidence and shake-up the market.
In such uncertain times, investors would look for stocks which provide diversification and reduce the risk in their investment portfolios. Let us find out some of the stocks that have managed to contain coronavirus impact on their businesses.
Fisher & Paykel Healthcare Corporation Limited (ASX:FPH)
Being a leading designer, manufacturer and marketer of health care products and systems, Fisher & Paykel Healthcare Corporation Limited experienced an increase in demand from China primarily because of the COVID-19 outbreak.
The company clarified that it has no manufacturing facility in China and only has some of its suppliers of raw materials based in China. The company currently expects no significant impact on supplies to its existing customers.
Moreover, the company looks forward to achieving full-year operating revenue of approximately $1.2 billion and net profit after tax of approximately $260 million to $270 million, based on the assumption that the NZ:US exchange rate remains approximately at 64 cents for the remaining of the financial year.
Other than this, Gold is regarded as a prominent safe-haven asset for the investors. We have recently seen how the gold prices spiked internationally with mounting uncertainties one after the other like the US-Iran tensions, the US-China trade war, bushfires and coronavirus outbreak.
Investors have been keeping Gold stocks on their watchlist with gold prices having been on a favourable trend for investors for quite some time.
Let us look at some of the gold stocks and their recent performances.
Gold producer and explorer, St Barbara Limited (ASX: SBM) reported a statutory profit after tax of $39 million for the half-year to 31 December 2019 with gold production of 181,728 ounces at a Group All-in Sustaining Cost of $1,391 per ounce.
SBM has three business units, which are managed separately due to their separate geographic regions, namely,
- Leonora operations
- Simberi operations
- Atlantic Gold operations
The recent financial results for the company had remained softer due to lower production at Gwalia and Simberi, while the Atlantic Gold has made a significant contribution to the Group on the back of its record gold production for the half.
The company has also declared an interim dividend of $0.04 per share, fully franked, and is payable in March 2020.
The SBM stock has delivered approximately 22.95% returns to its shareholders during the last three months.
Another mining player, Evolution Mining Limited (ASX: EVN) has delivered approximately 19.69% returns to its shareholders within the last three months till 24 February 2020 and has declared fully franked interim dividend of 7.0 cents per share, which is double as compared to 3.5 cents per share declared for the half-year ended 31 December 2018.
Moreover, EVN reported a statutory NPAT of $147.2 million and recorded an underlying net profit after tax amounting to $149.1 million for H1 FY20 ended 31 December 2019.
Other than this, Regis Resources Limited (ASX:RRL) recorded Net Profit of $93 million, representing an increase of 17% and an increase of 27% in EBITDA that stood at $186 million at the end of the half-year ended 31 December 2019.
Moreover, the company believes that the current production is on track to meet full-year guidance of 340,000oz to 370,000oz of gold and there is good progress on the underground mine development at Rosemont.
The company declared an interim dividend of 8 cents per share ($40.7 million) fully franked, which is 11% of H1 FY20 revenue and 22% of its EBITDA.
Moreover, the interim dividend announced by Northern Star Resources Ltd (ASX:NST) of 7.5cents per share fully franked was up 25% from prior corresponding period and the underlying net profit after tax was up 53% to $139.4 million for 1HFY20.
Moreover, the company’s EBITDA was up by 45% and stood at $322.3 million, reflecting upon the strength and quality of the business. Looking forward, the company expects to realize benefits of the KCGM acquisition, which is believed to steer substantial additional growth in NST’s net cashflow while maintaining strong overall financial returns.
Other than gold stocks, technology stocks, especially fintech stocks, have also remained unaffected by the coronavirus outbreak, since the companies have witnessed robust operational growth and expansion from domestic to international levels.
To name some, EML Payments Limited (ASX:EML) launched four new programs in the six months, including the following:
- bet365 for programs of Global Gaming Solutions in the USA;
- A lotteries winnings program with RoundPeak in the USA;
- Star Casino in Italy which expands the company’s relationship with betsson and SuperSports;
- SuperSports in Croatia is a new market for EML;
For the half-year period ended 31 December 2019, the company had Group Gross Debit Volume of $6.6 billion, up 59% over pcp and Group Revenue increased 25% over pcp to $59.2 million.
On the other hand, Codan Limited (ASX:CDA) recorded highest half-year profit in the company’s history during 1H FY20 with statutory and underlying net profit after tax of $30.4 million, an increase of 37%.
Also, the company declared an interim dividend of 7.5 cents per share, fully franked for its shareholders. The outstanding financial results across the business was due to both Minelab and Codan Communications achieving record results for the first-half of the year. This was to a large extent made possible by sustained market demand of gold detectors in Africa across several product segments, coupled with several other significant contracts executed in the Communications business vertical.
Another tech stock that has delivered 43.70% returns to its shareholders during the last three months is Bravura Solutions Limited (ASX:BVS) which achieved a revenue of $135.1 million during 1HFY20.
During the period, the company experienced growth coupled with continued operating leverage expansion, with the acquisition of Midwinter and FinoComp businesses. Both are currently performing as expected with strong sales pipelines.
Another tech stock and a technology solutions leader, Data#3 Limited (ASX: DTL) registered an increase of 11.6% in its revenues that amounted to 718.9 million during 1HFY20. The company believes that the market is in a growing phase as digital transformation is propelling the overall information technology spend and at the same time the results demonstrate the inherent strength and relevance of DTL’s solution offerings.
With the rapid growth in the company’s cloud-based business, the business earned $251.9 million of public cloud-based revenues, representing an increase of 76.5% over the prior corresponding period.
Moreover, DTL also declared an interim dividend of 5.10 cents per share, fully franked.
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