By Powerscourt on 21/01/2021
Powerscourt Coronavirus Briefing – 21 January 2021
ANALYSIS
The US has been rudderless in the battle against the COVID-19 pandemic since Donald Trump lost the election on November 3. Over the intervening period, he devoted his considerable energies to pursuing conspiracy theories that would enable him to overturn the result. The reset button has been pressed following the inauguration of Joe Biden. The new President has nominated Jeff Zients, a management consultant and former senior official, to oversee the US’ response to the pandemic, which includes the nationwide rollout of vaccines and a push for the greater use of masks. Biden has also rescinded the previous administration’s decision to leave the World Health Organisation.
There is a big read in the Financial Times outlining the challenges facing the Biden administration. When Barack Obama took office in January 2009, he was considered a wartime president because it was in the midst of a financial crisis. Biden faces a once-in-a-century pandemic, an economic meltdown and a deeply polarised country.
Trump’s desperation to cling onto the White House may be partially explained by a story on Bloomberg – he could need a job. The latest company filings show the pandemic has wreaked havoc across Trump’s golf resorts and hotels.
There was good news for Biden on day one, with the announcement that the Pfizer/BioNTech vaccine is found to be effective against the new strains of the coronavirus, just one of a number of stories about the Pfizer jab across today’s newspapers. Doctors have written to the UK government warning about the delay between the first and second jabs. The original guidance had been to give the second dose three weeks after the first, but the government extended this to a twelve-week interval as part of an overall strategy to at least partially inoculate as much of the population in the near term. However, a report out of Israel shows that the first dose of the Pfizer vaccine is not nearly as effective as originally expected and a number of people had contracted the virus while waiting for the second jab.
The Times reports that the Doctors’ Association UK (DAUK), which represents front line medics, has written to Matt Hancock, the Health Secretary, criticising the lack of guidance around the decision to change the timing of the second jab from three to twelve weeks. They also warned about the increased risks of people not getting the second jab because of the extended time lag.
The EU is not happy with Pfizer with some member states threatening legal action. There was an initial standoff between the bloc and the pharma giant over its decision to reduce production at its Belgian facility so that work could be carried out to increase overall capacity. The move temporarily reduces supplies to European countries. However, Pfizer’s decision to reduce the number of vials per consignment to EU countries has prompted a furious backlash. The European Medicines Agency recently ruled that six doses could be extracted from each vial instead of five as originally planned. Pfizer responded by reducing the number of overall vials delivered. Italy is now threatening to sue Pfizer amid claims that it is undermining its vaccine rollout programme.
The Times has marked exclusive its report that a new German initiative could see all Britons banned from entering the EU. The proposal, backed by Angela Merkel, will be discussed by EU leaders via video conference today. Although the bans would be temporary, under existing rules they would remain in place until Britain could satisfy the EU that the spread of the new virus variant was under control and infections were falling.
Equity markets soared to record highs amid optimism that the new Biden administration will steer the US economy out of the downturn. Hopes were buoyed by reports that Republican Party members of Congress are willing to work with the new President on a €1.9 trillion fiscal stimulus package.
WHAT ARE COMPANIES SAYING?
Industrials & Transport
Energean plc
The international, gas-focused, exploration and production company today provides an update on recent operations and the Group’s trading performance in the 12-months to 31 December 2020. The Company completed its first phase of its transition to become the leading independent gas-producer in the Mediterranean with the completion of the acquisition of Edison E&P. Net production of at least 200 kboed, revenues of $2 billion and a >70% reduction in carbon intensity were also all achieved. 2021 working interest production is expected to be 35.0 – 40.0 kboed and development and production capital expenditure is expected to be $515-590 million. Chief Executive Mathios Rigas said “2020 was clearly a challenging year but nevertheless a successful one for Energean.”
Consumer & Retail
Pets at Home Group Plc
The UK’s leading pet care business Pets at Home, reports accelerated growth across its Retail and Veterinary operations in its Q3 FY21 Trading Statement announced this morning. Total Group revenue grew 18% despite COVID-19 related restrictions on both a regional and national level in the period. Although faced with a second lockdown in England across four weeks of the quarter, retail growth was broad-based across categories and channels. Chief Executive Officer Peter Pritchard cites the Group’s “scalable omnichannel pet care platform” and “unique joint venture veterinary model” as driving forces behind the robust balance sheet reported today.
Entain plc
The global sports-betting and gaming entertainment group Entain has reported today strong delivery across the year in its Q4 trading update. With retail being impacted by restrictions and shop closures in response to COVID-19, full year online net gaming revenue grew 41% in Q4. The Group’s US joint venture with MGM Reports, BetMGM, continues to grow and is now live in 11 states including West Virginia, Colorado, Indiana, Tennessee and Pennsylvania. Outgoing CEO Shay Segev commented “in an exceptionally challenging year, our strong performance has been driven by a business model that is highly diversified across a wide range of products, brands, territories and channels.”
4imprint Group plc
The international direct marketer of promotional products today provides a trading update reporting that order intake for Q4 was recovering on a like-for-like basis of 70% of the prior year. Unaudited Group revenue for the year ended 2 January 2021 was around $560 million, a decrease of 35% compared to 2019 however, the Group remains in a strong financial position with ample liquidity. Whilst pandemic-related uncertainty remains a challenge, the Board is reportedly proud of the resilience and flexibility of the Group’s people and business operations.
Financials & Real Estate
IG Group Holdings plc
A global leader in online trading, IG Group, has reported this morning, a record performance in H1 FY21 announcing net trading revenue to be up 67% to £416.9 million. With active clients rising 55% and 64,000 new clients being onboarded, new client retention rates are reported as being comparable to historical averages. The acquisition of tastytrade expands and diversities IG’s growth drivers into US options and futures, through entry into the largest listed derivatives market in the world. In an effort to support the Company’s broader communities through ESG activities, £1 million from the fund was distributed to selected charities in need of COVID-19 pandemic relief.
Countryside Properties PLC
The UK’s leading mixed-tenure developer is issuing today a trading update for the 13 week period ended 31 December 2020. First quarter trading was in line with expectations with the Group being around 80% forward sold for 2021. Including those homes that were delayed by the 2020 lockdown, the Group reports completion of 1,280 homes. Although economic uncertainty remains as a results of the COVID-19 pandemic and new UK-EU trading agreements, the Group remains positive due to sustained levels of strong demand for its homes across all tenures. Group Chief Executive Iain McPherson commented “we have entered the new financial year with a strong forward sales position which underpins our guidance for FY21.”
Close Brothers
The British merchant banking group issues today its scheduled pre-close trading update ahead of its 2021 half year end. Despite current market conditions, a strong performance has been delivered due to high new business volumes in the lending division, solid net inflows in Asset Management and a very strong trading performance in Winterflood. The demand for the UK support scheme CBILS has continued resulting in Close Brothers’ loan book increasing 6.5% to £8.1 billion. Despite a proven and resilient model, the impact of further UK lockdown restrictions leaves future loan book growth and credit performance highly uncertain.
Ibstock plc
One of the UK’s leading manufacturers of clay bricks and concrete products has seen a continuation in previous market trends during the final quarter of 2020, reporting promising activity levels in all key end-market segments. Due to higher-than-expected demand in new build housing and the Repairs, Maintenance and Improvement markets, the Group has achieved revenues of around £315 million for the full year. Resulting from a strong Q4 trading performance and the positive impact of cost reduction actions taken throughout the year, Ibstock are expecting to report adjusted EBITDA for 2020 modestly above the previous guidance of £50 million. CEO of Ibstock plc Joe Hudson commented “whilst we are mindful of the ongoing uncertainties relating to COVID-19, we are encouraged by the continuing recovery of our markets through the end of 2020.
AJ Bell
One of the UK’s largest investment platforms has issued today its Q1 trading update, reporting total assets under administration increased to £62.5bn, up 11% in the quarter. Total customer numbers increased to 312,309, up 30% in the last 12 months, with total net inflows in the quarter of £1.6 billion – double the level reported in Q1 2019. AJ Bell Investments’ asset under management was £1 billion with net inflows at £417 million. Andy Bell, Chief Executive Officer, said “we have had a strong start to our financial year as customer numbers, net inflows, AUA and AUM all showed significant growth in the quarter.”
TMT
Sensyne Health
The UK Clinical AI company, today announces its Interim Results for the six months ended 31 October 2020 reporting total revenues of £2.3 million. Four new strategic research agreements with NHS Trusts have been signed as well as a data access agreement with NHS Greater Glasgow and Clyde NHS Trust. Total research and development expenditure was reported at £7.7 million. The Group completed a £27.5 million fundraise post period end in January 2021 which should enable the industrialisation of data analytics capability. CEO Lord Drayson said he was “particularly pleased with the results we have been able to achieve during the COVID-19 pandemic.”
Daily Mail & General Trust plc
DMGT reported its first quarter trading update FY21 today, announcing revenues to be in line with management expectations despite the continuing uncertainty of the trading environment. Group revenue was down an underlying 15% to £304 million with Consumer Media and Events & Exhibitions being particularly impacted by the COVID-19 pandemic. Group outlook reports states that the duration and severity of the COVID-19 pandemic remains unclear, despite the vaccination programmes. Therefore, the short-term outlook for the UK Property Information, Consumer Media and Events & Exhibitions businesses remains difficult to predict.
Sage Group plc
The British multinational enterprise software company Sage, is issuing today its trading update for the three months ended 31 December 2020. Performing inline with expectations in the first quarter, total Group revenue increased by 1.4% to £447 million. A good performance from Sage Intacct saw recurring revenue grow by 6.4% to £160 million in North America and a by 3.3% to £96 million in Northern Europe. Sage is progressively increasing investment in product development and sales and marketing during FY21 in order to drive further growth in recurring revenue. The level of this investment may be altered in the course of the year, in response to trading conditions. Jonathan Howell, Chief Financial Officer said “while the pandemic increases uncertainty in the near term, we continue to expect that out investment in Sage Business Cloud will drive the growth and long-term success of Sage.”
IN THE NEWS
‘Insane’ to lift Covid lockdown too soon, Sir Patrick Vallance warns public – The Times
Covid vaccination sites out of reach for hundreds of thousands in England – Financial Times
Oxford scientists preparing new vaccine versions to combat emerging Covid strains – The Telegraph
