Powerscourt

By Powerscourt on 11/11/2020

Powerscourt Coronavirus Briefing – 11 November 2020

ANALYSIS

The Wall Street Journal points out that COVID-19 is unlike typical vaccination programmes. Typically these roll out over multiple years and focus on specific demographics such as children or the elderly. The objective now for governments is to inoculate their entire populations in a matter of months – a tall order even for the world’s richest countries.

Major world nations have started this process. The US government has begun mapping out a campaign which involves working with state officials and has hired McKesson Corp to support with the distribution of vaccines. The WSJ reports that Pfizer, which is managing its distribution on its own, has built a huge distribution centre on Kalamazoo, Michigan, and will use this and an equivalent site in Belgium to ship doses of the vaccine. Pfizer has said it can produce 100 million in 2020 and up to 1.3 billion in 2021.

The UK’s department of health has fired the starting gun on preparations to roll the vaccine out via the National Health Service in December. The Times reports that the goal is for all over 65s to receive the jab by Easter.

Once the regulatory, political and infrastructure hurdles are out of the way, the real fun starts – distribution.

The Daily Telegraph points out that rolling out a vaccine is a “huge logistics problem”, not helped by the fact that many of the vaccine candidates – including Pfizer’s vaccine – need to be stored at roughly minus 80C to remain effective. Typical cold chain infrastructure for food and drugs is just below zero.

This is headache enough for developed nations with advanced cold chain infrastructure, but for developing or undeveloped nations, many of which happen to have hot climates, it’s potentially a huge rate-limiting step.

Despite the challenges, the good news is that the Pfizer news appears to have boosted support for vaccination in general, flying in the face of a recent history of mounting anti-vaccine sentiment. The Daily Mail published a poll which showed that three out of four people in the UK would happily take the vaccine.

Meanwhile, despite the euphoria on the markets over the past couple of days, it appears that a vaccine is not universally good news. Equity strategists have begun to evaluate which of the market sectors which have recently benefited from coronavirus will ride out that success in a post-vaccine world.

Anglo-Dutch consumer goods giant Reckitt Benckiser was a huge beneficiary of the coronavirus pandemic as general paranoia about the virus spurred a huge boom in hygiene and cleaning products such as disinfectant and hand sanitiser. Its stock soared and a TikTok campaign which originated in Dettol’s India-based marketing department, #handwashchallenge, has become the second most viewed campaign in the history of TikTok.

Reckitt Benckiser’s shares slid by as much as 9% on Monday as the rest of the world’s stock markets cheered the vaccine data. Nevertheless Miles Costello in the Times thinks ultimately the “accelerating trend towards greater cleanliness” will remain after we have a vaccine. Meanwhile a National Australia Bank strategist, Rodrigo Catril, has suggested that big tech, another major beneficiary of lockdowns, may fall out of favour as those companies which have been most affected by social distancing regain their footing.

Asian stocks remain buoyant into Wednesday amid continued positivity around the vaccine.

 

WHAT ARE COMPANIES SAYING?

 

Industrials

BAE Systems 
The British security, aerospace and defence systems company today released a market update announcing they have seen strong and resilient performance in line with their expectations for a strong second half. They have attributed this to the commitment and efficiency of their employees, having used Q2 to enhance resilience and deliver on customer priorities, all while staying covid-safe. The group’s full earnings per share are now expected to be slightly higher than previously anticipated with good operational performance and an expected lower tax rate offsetting the negative foreign exchange impact.

 

Consumer & Retail

Coca-Cola HBC AG
Coca-Cola HBC AG, a growth focused Consumer Packaged goods business and strategic bottling partner of The Coca-Cola Company, today announces its 2020 Q3 trading update. Their third quarter saw a strong improvement in trading with recovery in the out-of-home channel and growth in the at-home channel. Strong market share performance continues with 40bps of value share gained YTD and the majority of their markets gaining or maintaining share. The group remains extremely optimistic about the outlook for the future, particularly with the emerging markets segment growing 1.2% or 5.8% on a like-for-like basis.

Informa PLC
The British multinational publishing, business intelligence and exhibitions group today released an update on their COVID-19 action plan, confirming the completion of its programme of financing activities, following the issue of a follow-on £150m bond and the cancellation of its short-term Surplus Credit Facility and US Private Placement loan notes. Group Chief Executive, Stephen Carter, said “Informa continues to build stability and security through 2021 and beyond”, with the efficacy of the Company’s action plan being the main driving factor behind this.

Wetherspoon (J.D) PLC
The national chain of award winning pubs and hotels today released a trading update for the 15 weeks up to 8 November 2020, comprising Q1 and a further fortnight. For the 15 weeks to 8 November 2020, like-for-lie sales decreased by 27.6%. This was by and large due to the new restrictions in October implemented in response to the COVID-19 pandemic, with a 10pm curfew, a requirement to order all food and drink ‘at the table’ and the mandatory use of face masks all affecting performance. As of today, 756 pubs in England, Northern Ireland and Ireland remain closed as the Company waits for permission from the government to re-open. As it stands, 64 trading pubs and 51 in Wales remain open, and pent-up demand remains high. There remains anxiety regarding the impact these regulations will have on the hospitality industry but as it is recognised that while these restrictions are ‘temporary’, some may be carried on after concerns around the pandemic have been assuaged.

Flutter Entertainment PLC
The global sports betting, gaming and entertainment provider today announced a very positive trading update for Q3 2020. In tandem with the return of professional sports after a lengthy coronavirus-induced break, group online revenue grew 33%, with average daily customers growing 41% globally and double digit growth across all key regions. In the UK & Ireland, this was particularly due to the Paddy Power and SBG brands specifically taking share, with revenue growing 32% and 26% respectively. This places the Group in a strong position for 2021, with the US number one position retained and a 46% online sportsbook market share.

 

Financials & Real Estate

Workspace Group Ltd
London’s leading commercial property company today announced its half year results for the period to 30 September 2020. While covid-19 has, of course, presented challenges, Workspace Group have posted resilient half-year results, due by-and-large to its flexible customer-focusing offering and freehold ownership model. They saw a pre-tax loss of £110.4m, reflecting a fall in the property valuation, along with a decline in like-for-like occupancy of 7.8% to 85.5%. They remain wary of an increase in customers vacating or downsizing due to covid-19.

3i Infrastructure PLC
One of the UK’s leading international investors with a focus on mid-market private equity and infrastructure today released their half year results to 30 September 2020. Citing its ‘resilient portfolio’, the Group was able to deliver growth in their Net Asset Value (NAV) to see a total return of £84m, a 3.8% increase. As a result, they are on track to deliver their FY21 dividend target, 6.5% higher than FY20. The company delivered a Total Shareholder Return of 18.9% and will pay out an interim dividend of 4.9p per share on 11 January 2021.

Great Portland Estates
The British property development and investment company today announced its half year results for the period ending 30 September 2020. The company is pleased with its performance in the face of one of the most extraordinary crises in modern history. The group anticipates that the impacts of COVID-19 will continue longer than initially expected, particularly due to an increase in unemployment leading to lower rents and capital values in London. However, they remain encouraged by the level of new enquiries they continue to receive from prospective occupiers. Overall, rental values were down 3.9% with a total property return of -5.1%. After revaluation deficit, the Company posted an IFRS loss after tax of £154.8m, but remain cautiously optimistic for 2021, despite being aware of the persistence of the coronavirus-related uncertainty.

 

IN THE NEWS

How coronavirus will change the world forever – THE TIMES

Record surge in redundancies pushes UK unemployment to 4.8% – FINANCIAL TIMES

NHS told to prepare for Covid mass vaccinations from December 1 – THE TELEGRAPH




DAILY CORONAVIRUS BRIEFING - How business is responding to the crisis MENU