Powerscourt

By Powerscourt on 24/11/2020

Powerscourt Coronavirus Briefing – 24 November 2020

ANALYSIS

It’s three cheers for vaccines; two for the so-called Oxford Vaccine.

The good news: final stage data from the so-called Oxford Vaccine, developed by AstraZeneca in partnership with the University of Oxford published yesterday following a large scale Phase III trial shows that the vaccine clearly meets the efficacy threshold to prevent COVID-19 at a population level.

In evidence which has puzzled scientists, the vaccine appears to show better efficacy when the initial jab is given at a half dose, with a full dose follow up a month later. Dosing at the full strength showed 62% efficacy – significantly lower.

AstraZeneca’s vaccine candidate has manifest advantages: it can be stored in a fridge, in contrast to the candidates from Pfizer and Moderna, both of which require complex subzero distribution chains. It’s also significantly cheaper.

This means its likely to be the vaccine of choice for low income and hotter countries, supporting a more equitable global rollout. It’s also good for the UK government which has put most of its eggs in this basket, having ordered enough to inoculate the entire population, and far more than its orders of two other candidates to have reported final efficacy data, from Pfizer/BioNTech, Moderna Inc. Russia’s Sputnik V vaccine also has stronger efficacy data (the UK government has not yet bought doses).

But there’s no getting away from the fact that the Oxford Vaccine has somewhat disappointing efficacy: all the other candidates to have published final data have shown efficacy clearly higher than 90%. And some analysts have questioned whether the shot will be approved at all in the US: the Phase III trials were halted there earlier this year after a patient suffered an adverse reaction.

The AstraZeneca data is, however, a validation for the Anglo-Swedish drugs giant and its bullish French Chief Executive, Pascal Soriot.

As the Daily Telegraph writes, this is a massive reversal of fortune for the company which – six years ago – found itself in the crosshairs of a contentious takeover bid from Pfizer worth £65 billion. Although AstraZeneca’s shares fell on the final data – which some analysts said undershot expectations – its market value is now comfortably above £100 billion and this has very much justified the rhetoric from the company and its cheerleaders at the time placed on the need to keep British science in Britain.

The UK government yesterday riffed on this theme as it lauded the vaccines developers, led by the scientists Adrian Hill and Sarah Gilbert, and Andrew Pollard, the Oxford professor who oversaw the trial.

Boris Johnson, flanked by his chief medical offer Chris Whitty, confirmed that there was finally light at the end of the tunnel for the UK population after almost nine months of restrictions.

Whitty agreed that it would now be possible to “pull back” from social distancing rules from spring 2021 onwards and that he hoped normal life would return in the summer.

On Monday, though, Boris Johnson was at pains to remind people of the need for continued vigilance.

“Tis the season to be jolly careful”, Johnson said in a gift-wrapped festive soundbite, announcing that from December 2, the UK will enter a tiered restriction regime allowing for more regional flexibility in dealing with the virus.

Under the new scheme, pubs and restaurants in the highest-level Tier 3 areas will only be allowed to serve takeaways, while in Tier 2 they can only serve alcohol with a substantial meal. All shops will be able to reopen in every tier, amateur sport and children’s activities will also be allowed to resume, and crowds of up to 4,000 will be allowed in sports stadiums. Hairdressers, gyms and beauty salons will also be excluded from the new regulations.

Vaccine optimism has fuelled another predictable market surge. Major US indices closed up on Monday, supported in part by President Trump’s apparent recognition that he has lost the US election: the President tweeted that his team would “do what needs to be done with regard to initial protocols” to allow the Biden administration to transition into government.

Real economic news is promising too. Germany on Tuesday reported GDP growth of a record 8.5%.

Markets opened strongly in Asia into Tuesday.

 

WHAT ARE COMPANIES SAYING?

Industrials

CRH
The diversified building materials businesses which manufacture and supply a wide range of products for the construction industry, announced a trading update for the nine month period ended 30 September 2020. Sales were down slightly by 3% to $20.6bn, after their North region being particularly impacted by COVID-19 restrictions earlier in the year. The Group reported $65 million of non-recurring COVID-19 related restructuring items in the first six months of the year and we expect to incur similar costs in the second half.

Pennon
The water utility and waste management company posted their half year results for the period ended 30 September 2020. The Group reported resilient Covid-19 operations, with limited financial impact. For example, cash collections for South West Water and Pennon Water Services remained robust. Pennon posted £86.7 million continuing Group underlying profit before tax and 17.9p underlying earnings per share, down from 20.1p in the previous year.

 

Financials & Real Estate 

Caledonia Investments
The investment trust company announced half-year results for the six months ended 30 September 2020. Net asset value per share increased 9.0% to 3527p and net assets at 30 September 2020 were £1,959.6mn. Income for the half year fell by 34% to £15.7m. Will Wyatt, Chief Executive, commented: “The pressures of 2020 have shown the benefits of this strategy, which has helped to mitigate the worst effects of the Covid-19 pandemic and largely protected shareholders’ capital from much of the volatility seen elsewhere.”

 

Consumer & Retail

Cranswick
The leading UK food producer, today announces its unaudited results for the 26 weeks ended 26 September 2020. Statutory profit before tax is 13.3% higher at £53.7m and interim dividend increased by 12.0% to 18.7p. Adam Couch, Cranswick’s Chief Executive Officer commented: “We have made a strong start to the year. Although we remain cautious about the longer-term economic impact of COVID-19 and the continued uncertainty surrounding the ongoing Brexit negotiations, we are well positioned to address these challenges.

UDG Healthcare
The leading international healthcare services provider, announced its results for the year ended 30 September 2020, in which the Group delivered a strong and resilient trading performance despite the challenges presented by COVID-19. Group net revenue increased by 5% and Group adjusted operating profit increased by 7%, driven by an exceptionally strong performance from Sharp with adjusted operating profit increasing by 34%. Chief Executive Officer, Brendan McAtamney commented: “We are pleased to report a strong and resilient trading performance for FY20, which was ahead of our EPS guidance. I’d like to thank all of our people for their continued resilience, adaptability and commitment throughout the pandemic.”

Greencore
The leading manufacturer of convenience foods announced the successful pricing of the non-pre-emptive placing of ordinary shares in the capital of the Company announced this morning. Together, the Placing and Subscription of 80,357,142 New Shares will raise gross proceeds of approximately £90 million. The Placing Price of 112 pence represents a discount of 5.7 per cent to the closing share price of 118.8 pence on 23 November 2020

Compass Group
The contract food service company posted a full year results announcement for the year ended 30 September 2020. Revenue was doing 18.8% to £20.2bn and operating profits fell 69.7% to £561mn. Dominic Blakemore, Group Chief Executive, said: “Importantly, in the fourth quarter we returned the business to profitability and are now cash neutral. This was achieved mainly through contract renegotiations to reflect the difficult trading environment, continued discipline in terms of costs and some improvement in volumes.”

AO World
AO World plc, a leading European online electrical retailer, today announces its unaudited interim financial results for the six months ended 30 September 2020. Benefitting from the shift to online shopping due to Covid-19, the group posted strong revenue growth with total revenue for the period increasing 53.2% to £717.0m. Group Profit Before Tax increased to £18.3m from a loss of £5.9m in the prior year period.

Pets at Home
The pet supplies retailer announced interim results for the 28 week period to 08 October 2020. The company reported total Group revenue growth of 5.1% to £574.4m, but a decline in Group underlying profit before tax of 5.1% to £39.6m. Peter Pritchard, Group Chief Executive Officer: “The market in which we operate remains resilient, with recent changes to our work and leisure patterns supporting rising levels of pet ownership, a good proxy for future growth in both the underlying market and our business.”

 

IN THE NEWS

Coronavirus curbs should be over by Easter, Chris Whitty says – The Times

Europe staves off mass unemployment but needs to redeploy workers – Financial Times

What are the new Covid tier rules after lockdown? – The Telegraph




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