The novel coronavirus, COVID 19 continues to wreak havoc across the globe, disrupting financial markets, unsettling business activities, causing drastic changes in the world economy, demonstrating bearish trends and market volatility etc. But most importantly, the pandemic is first and foremost the invisible enemy to global health.
According to the World Health Organization (WHO), there are currently 2.5 million confirmed cases of COVID 19 across the globe in 213 countries and over 175k deaths. The Organization believes that the virus will be with us for a long time. It has been constantly stating that combating the virus needs an “all-of-society approach”.
In such unprecedented times, the support of governments, organisations and support groups is paramount. Another pivotal role is of companies that manufacture and supply products and services that help in curbing the virus spread and facilitate hygiene- a requisite to keep coronaviruses away.
In this backdrop, we introduce to you, Australia and New Zealand’s consumer powerhouse, Pental Limited (ASX:PTL) which updated the market today concerning its expected unaudited financial results for FY20, primarily driven by elevated levels of consumer demand for Pental products.
Let us deep dive-
Demand for Pental Products Soars
White King disinfectant cleaning products, new Country Life anti-bacterial soaps, Pears soaps and battery products of Company are among those that are very much in demand currently. For the first two, increase in demand has seen sales revenue increase over the last 2 months while for the battery products, the Duracell partnership has continued to produce above average returns.
Most in-demand PTL Products
Why is Product Demand Soaring?
According to data from a JHU CSSE dashboard, as on 24 April 2020, Australia had over 6.6k confirmed COVID 19 cases along with 75 deaths.
One of COVID 19’s most important safety measure is preserving good hygiene and keeping environments clean to reduce the virus’ impact as people practice self-isolation and social distancing in Australia. This calls for an alteration, rather betterment in the consumer cleaning habits. To facilitate the same, Australians are bound to hunt for trusted products that will lift their home’s hygiene, and which brand is better than Pental that offers “Trusted brands since 1856”
Therefore, adhering to the tips of hygiene advisories, Australians have been visibly choosing Pental products as they battle COVID 19 along with the world.
Pental’s Profit Forecast
The Company intimated that its sales revenue will be up compared to FY19. Subject to any adjustments arising from the audit process, it will translate into an underlying EBIT increase of between the range of 25% and 35%.
PTL’s EBIT Forecast (Source: Company Report)
PTL’s Take on Supply Chain Disruption
The Company acknowledges facing challenges in sourcing packaging materials driven by the disruptions in global supply chains amid the pandemic situation. However, it is confident in being able to meet demand if no additional government-mandated restrictions and additional supply chain disruptions occur.
PTL mentioned that the long-term sustained impact of COVID 19 on demand is still unclear. Nonetheless, early indications favour sustained levels of demand for robust germ-killing cleaning and soap products in the long run.
Building on to investor sentiment positively after close of business on 24 April 2020 and continuing with the same, PTL is quoted $0.40 as on 28 April 2020 (AEST: 11:55am). The stock has an annual dividend yield of 5 per cent and has delivered returns of 29.03 per cent in the last six months.
With soared demand amid the ongoing crisis situation and a steady business approach, PTL seems to be on the right business trajectory. Market participants eagerly await the Company’s FY20 results in August 2020.