Businesses Which are Likely to Perform Well Amid COVID-19 outbreak – RB., RTO, BNZL and ULVR

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Businesses Which are Likely to Perform Well Amid COVID-19 outbreak – RB., RTO, BNZL and ULVR

 Businesses Which are Likely to Perform Well Amid COVID-19 outbreak – RB., RTO, BNZL and ULVR

The deadly epidemic Coronavirus (Covid-19) outbreak started in Wuhan, China and further evolved into a pandemic. It has already claimed many lives across the globe and has started impacting the economy worldwide. China, which has a contribution of 16.66 per cent in the global trade, has been deeply impacted by the outbreak. Most of the countries are restricting visas for travel in the affected countries. Moreover, drug researchers and pharmaceutical companies are still working towards finding an effective method to contain this disease. Meanwhile, people are repeatedly advised about the preventive measures to safeguard against this fatal disease, through various mass communication channels.

However, the world is not really prepared to fight COVID-19. The Emerging economies are more prone in comparison to developed economies, according to the WHO in terms of preparedness to tackle the epidemic. According to media reports, intensive care units and Ventilators are running short of demand. The National Health Service is feeling the pressure to manage this crisis.

The coronavirus scare has severely impacted the revenue generation of the global travel & leisure industry since its outbreak. People are avoiding travel to affected countries, along with mass transit systems and common public places. People have been advised to practice cleanliness and avoid physical contact. As of now, prevention is the only cure, having said that, the prevention gear is in huge demand such as masks, gloves and hand sanitisers. The demand for these goods is rising due to several factors such as disruption in global supply, hoarding and panic buying according to the World Health Organisation. This shortage will not just impact the general public but also to the doctors. Shortage of protective gear will leave Healthcare workers dangerously ill-equipped to handle COVID-19 patients.

However, amid the growing concerns of the slowdown in industry and economy, there are entities which are into the business of manufacturing or supplying these protective gears, who are likely to benefit during the global turmoil caused by COVID-19. People are looking forward to homecare and personal care products to keep hygiene.

On 27th February 2020, Reckitt Benckiser Group Plc (LON: RB), released its full-year results for the Financial year 2019. According to the release, the company though, has not been able to assess the impact of the COVID-19 outbreak on its business operations. However, the company considers China as an important market and witnessed increased demand for Dettol and Lysol products. The physical supplies in China are though disrupted.

The United Kingdom-headquartered, Reckitt Benckiser Group Plc is a leading consumer health, homegroup and hygiene that produce and market household, health care and toiletry products under several famous brands like Dettol, Air Wick etc. The company recorded a surge in net revenue by 0.8 per cent at the constant exchange rate to £12,846 million in the fiscal year 2019. The company’s annual dividend surged to 174.6 pence in the fiscal year 2019 as against 170.7 pence in the fiscal year 2018. The company had a healthy cash conversion ratio (FY19: 0.87), which led to Free cash flow generation of £2,145 million.

On 6th March 2020, at the time of writing (before market close, GMT 12:26 PM), Reckitt Benckiser Group’s shares were trading at GBX 6,059. Stock's 52 weeks High and Low is GBX 6,744.00 /GBX 5,510.00. In the last three months, the stock price was up by 1.2 per cent.

Rentokil Initial Plc’s (LON: RTO) stock clocked its 52-week high on GBX 513.20 on 02nd March 2020. This record can be attributed to a terrific performance by the company in the fiscal year 2019. The company, in its Hygiene business, recorded 4.3 per cent growth in revenue on an organic basis. The company attained the highest growth rate in the last fifteen years (organic) of 4.5 per cent as reported in the company report for the period ended 31st December 2019.

Another reason for this 52-week spike could possibly be the impact of the surge in demand of the company’s pest control hygienic products due to coronavirus outbreak. The company witnessed a rise in customer enquiries for handwash and hand-sanitising services as per the financial report.

Rentokil Initial PLC (LON: RTO) is a Camberley, Surrey-headquartered commercial pest control company that seeks to provide services that protect people and enhance lives by offering a complete range of pest control services as well as a range of other specialist services.

On 6th March 2020, at the time of writing (before market close, GMT 12:32 PM), Rentokil Initial Plc’s shares were trading at GBX 503. Stock's 52 weeks High and Low is GBX 535.20 /GBX 343.40. In the last three months, the stock price was up by 14.21 per cent.

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Bunzl Plc (LON: BNZL), according to the 2018 data, the company has 12 per cent of its overall revenue contribution from Cleaning & Hygiene sector. The company is into the business of supplying cleansing and hygiene materials to contract cleaners, facilities management companies, and healthcare customers. The company provides cleaning solutions such as hygiene paper, washroom chemicals, protective clothing and other cleaning systems.

Although the company till now has not sensed any material impact on its supply chain, it is continuously monitoring the situation relating to the Coronavirus in China which might impact the imports of the company if the restrictions on manufacturing activities are not removed in due course of time.

On 6th March 2020, at the time of writing (before market close, GMT 12:35 PM), Bunzl Plc’s shares were trading at GBX 1,932. Stock's 52 weeks High and Low is GBX 2,554.60 /GBX 1,859.00. In the last one week, the stock price was up by 3.23 per cent.

Another FMCG company, Unilever Plc (LON: ULVR) is into the business of personal wellness products and household cleaning products. Though, the company had stated that its underlying sales growth is likely to be in the bottom half of the multi-year three to five per cent range in the current fiscal year. The company expects the improvement to transcend from the fourth quarter of 2019 into the first half of this year. However, the company is yet to assess the impact of the COVID-19 outbreak.

On 6th March 2020, at the time of writing (before market close, GMT 12:39 PM), Unilever Plc’s shares were trading at GBX 4,437.50. Stock's 52 weeks High and Low is GBX 5,333.00 /GBX 4,021.50. In the last one week, the stock price was up by 6.37 per cent.

Comparative share price chart of Reckitt Benckiser Group Plc, Rentokil Initial Plc, Bunzl Plc, Unilever Plc, and Cineworld Group Plc

(Source: Thomson Reuters)

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