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S&P/ASX 200 Index witness an increase of 18.5 percent as on 9 April 2020, from its sharpest dip of 4,546.03 for the year on 23 March 2020, until when the index had a negative year to date return of 31.98%.
The similar pattern is seen on NASDAQ Composite index which fell by 25 percent on YTD basis until 23 March 2020. Since then, the revival has started with a positive return of about 19 percent as on 9 April 2020.
Rationale for the market recovery may pertain to strong measures being taken by respective governments around the globe leading to changing sentiments amongst the investors. Governments are on their toes to implement measures such as Wage subsidy, introduced by the Australian Federal Government which obliges employers to pass full benefit to employees and secure their jobs (as discussed in the article below). The news of getting a flattering growth curve of the virus infection and institutions engaged in discovering a treatment or vaccine, due for human trails, have somehow generated positive energy.
Let’s have a look at 3 stocks from varied sectors and witness their business update as an effect of COVID.
A snapshot of various attributes affected due to coronavirus for these three stocks – TAH, QUB and HT1
Tabcorp Holdings Limited (ASX: TAH)
ASX-listed consumer discretionary company, Tabcorp Holdings which provides diversified gambling entertainment ended 9 April 2020 at $2.860, up by 3.623 percent from its previous close.
Tabcorp has been providing a regular update of COVID-19 potential impact on its business operations and measures undertaken in response.
The Company mentions its financial position as follows.
- TAH increased its banking facilities in late March 2020 via an additional short-term facility of $226 million which is payable in July 2021.
- As at 3 April 2020, the Company has $649 million as unrestricted cash and $100 million in undrawn facilities.
- The fully hedged debt facility, US Private Placement of $171.5 million has a due date in December 2020 whereas no other debt matures before April 2022.
Regarding business operations, TAB agencies and Australian licensed venues (clubs and hotels) are temporarily closed. The major sports events around the globe are postponed and/or cancelled. Whereas, the lotteries retail network of newsagents, convenience stores, and other outlets along with Lotteries & Keno and digital channels (Wagering & Media) continue to run.
In response to COVID, specific actions are taken by TAH.
- Around 700 employees from Group’s businesses, are on a temporary stand down, owning to no work due to shutdowns till 30 June 2020.
- The Company is exploring the option for Job Keeper Wage Subsidy introduced by the Federal Government.
- From 6 April 2020 until 30 June 2020, full-time employees are asked to take a minimum of one leave / week.
- Until 30 June 2020, David Attenborough, TAB’s MD & CEO has taken a 20 percent decrease in his fixed remuneration. Also, about 10% fees of the Board Chairman and Non-Executive Director have been lowered.
Considering that it is difficult to quantify the COVID’s impact on Group’s business, TAB is not providing any specific earnings guidance for FY 2020 and FY 2021.
The Company revised its capital expenditure program mentioning that in second half FY 2020 business CapEx is likely to be c.$120 million which was previously estimated to be c.$160 million.
Qube Holdings Limited (ASX: QUB)
ASX-listed Industrials company, Qube Holdings offering export and import logistics services settled at $2.330 as on 9 April 2020, up by 4.955 percent from its previous close. The Company has been able to generate positive earnings despite falling volumes in some of its businesses because of variability in its cost base and its diversified operations.
QUB holds a strong financial position as follows.
- Liquidity of more than $450 million as cash and available undrawn facilities.
- No major undrawn amount of a facility to its covenants and nearby debt maturities.
Most of the QUB’s essential services from logistics and freight sector will continue in the same manner during the Coronavirus impact.
Outcome of the Company’s activities up to 31 March 2020 in different sectors are mentioned below.
- In New Zealand, the forestry related logistics activities have shown solid volumes. Although the activity will be affected by recent closure of one month as directed by the NZ Government.
- With negligible disruptions or slowdowns, bulk activities continue to have normal volumes.
- After the ramp up of new Shell contract, QUB’s oil and gas activities have been benefitted with a steady performance.
- Operations for other products including general cargo, bulk (such as fertilisers, cement), vehicles have been lower.
- Container volumes across the Company’s operations have been weaker, indicating the following.
- The slowdown in Australia’s economic activity even before Covid-19.
- Disruptions in the global supply chain.
- The port closures and manufacturing suspensions impact in China, specifically in February 2020.
For reducing the cost, several initiatives are undertaken by the Company. QUB’s MD and Board have chosen to cut their fixed remuneration by 50 percent.
For a material part of Moorebank Precinct West, the terms of agreements with a potential main tenant have now been completed. Due to the current environment, QUB expects a delay in the agreement acceptance which is presently under consideration by the counterparty’s Board for approval.
As a prudent approach, Qube has suspended its previously provided guidance and is not forecasting its underlying earnings for FY 2020.
HT&E Limited (ASX: HT1)
A media & entertainment company, HT&E abbreviation of Here, There and Everywhere has closed the day’s trade up by 2.419 percent to $1.27 on 9 April 2020.
Due to Coronavirus, there is a massive fall in advertising and marketing activity. HT&E mentions that it is very hard to foresee the forward advertising market thus is not presenting its earnings forecasts.
The Company holds a strong financial position having $250 million of undrawn debt facilities and $111 million of net cash, as at 31 December 2019. In 2020, $10.5 million will be saved from the total non-repeat operational costs.
Certain measures undertook by the Company regarding its cost management are as follows.
- HT1’s CEO, Board and management team are accepting a 20 percent reduction in their payments along with foregoing all incentive payments for this year.
- Other measures taken by the Company includes the reduction of employees’ working hours. Also, asking the employees to utilize the excess of annual leaves and take pay-cuts for a short while. This is expected to produce cost savings of circa $1 million / month.
- For the benefit of its employees’, the Company is evaluating the Job Keeper package benefits.
- Till date, the Company has not announced any redundancies and is assessing its performance on an on-going basis.
To prevent COVID-19 impact and political unrest, HT1’s Hong Kong-based outdoor advertising firm, Cody is applying for cost cutting programme in Hong Kong.
HT&E’s Australian Radio Network (ARN) in audio landscape broadcasting across Australia. Work from home policy is making sure that the operations are under control and radio broadcast is unaffected. Radio is one of the most effective mediums of communication, which is also proved through iHeartRadio increased usage, ARN’s digital platform.
