The post-COVID-19 rally came to a halt last week as the Australian share market fell. The S&P/ASX 200 Index (ASX: XJO) dropped 2.5% to finish the week at 5847.8. The 4-day trading week started positively, with the ASX following the US market higher. But early gains were erased later in the week as the US Federal Reserve Chairman warned economic recovery could take significant time.
In just over 2 months, the coronavirus pandemic took the United States from the lowest unemployment rate in 50 years to the highest in 90 years. The Australian unemployment rate hit 6.2% last month, above the 5.9% jobless peak during the Global Financial Crisis.
Fears of a second wave of infections both domestically and abroad caused investors to take a more risk averse approach. Travel shares were hit hard with Webjet Limited (ASX: WEB) shares falling 12%, Flight Centre Travel Group Ltd (ASX: FLT) shares down 7.1%, and Corporate Travel Management Ltd (ASX: CTD) shares down 4.4%.
Let’s take a look at the 5 ASX shares with the biggest share price losses last week.
Unibail-Rodamco-Westfield (ASX: URW)
Shares in Unibail fell 14.2% last week to finish the week at $4.55. The property company was removed from the S&P/ASX 100 last week following the quarterly rebalance of the S&P/ASX indexes.
Unibail operates shopping centres, offices, and convention and exhibition centres across Europe, the US, and UK. It was heavily impacted by coronavirus lockdowns, which forced the closure of many properties. Properties are reopening as restrictions ease, but fears of a second wave of infections could have shaken investors.
Earlier this month, Unibail announced that 65 of its 90 shopping centres have reopened as a result of eased restrictions. The company expects to have 87% of its shopping centres open by mid June following openings in Spain and London.
In Germany and Austria, where shopping centres have been open since late April and early May, footfall is at or above 80% of levels the prior year. COVID-19 had a limited effect on the group’s March quarter turnover as rents are paid quarterly in advance in most of Europe and monthly in the US. The impact of the epidemic will be felt in the current quarter and may be significant.
Estia Health Ltd (ASX: EHE)
Estia Health shares fell 13.7% last week to close at $1.415. Estia was dropped from the ASX 200 as part of the quarterly rebalance. The aged care provider abandoned earnings guidance at the onset of the coronavirus crisis and enacted measures to manage the risk.
Estia operates 69 aged care homes across NSW, Victoria, Queensland and South Australia. In its latest trading update, Estia reported none of its residents had tested positive for coronavirus. Occupancy initially fell during the early stages of the COVID-19 lockdown, falling from 93.8% on 17 March to 91.7% on 26 April where it has stabilised.
Government temporary funding is expected to contribute approximately $1.2 million to revenue in FY20. The government has also announced a one-off payment to residential aged care providers of either $900 or $1,350 (depending on location) for each resident. This is expected to contribute $5.2 million in additional revenue.
The company is continuing to see increases in staff costs, Personal Protective Equipment, and medical supply costs. Several refurbishment and development projects have been deferred in order to manage capital.
Southern Cross Media Group Ltd (ASX: SXL)
Shares in Southern Cross Media fell 13% last week to finish the week at 20 cents. The radio broadcaster’s shares are down around 80% over the past year. Weak advertising markets and the onset of COVID-19 have taken their toll.
Southern Cross completed a $169 million capital raising in May, with proceeds used to pay down debt. The capital raising was conducted at just 9 cents a share, compared to the 90 cents Southern Cross was trading at a year prior.
The broadcaster has instituted sweeping cost reductions with $40 – $45 million in operating expenditure savings to be realised in CY20. Capital expenditure is being reduced by $3–6 million over FY20 and FY21. The FY20 interim dividend was cancelled and no final dividend will be paid.
Following the receipt of the full proceeds of the capital raising, Southern Cross Media’s net debt stood at $161.8 million in early May. Southern Cross managed to achieve positive earnings before interest, tax, depreciation and amortisation (EBITDA) in April, with revenue declines partially offset by operating cost reductions. Southern Cross Media has, however, warned however that bad and doubtful debt provisions could reach $5 million in H2 FY20.
Mayne Pharma Group Ltd (ASX: MYX)
Mayne Pharma Group shares fell 12.9% last week to finish the week at 40.5 cents. Mayne Pharma was another ASX share removed from the S&P/ASX 200 in the quarterly rebalance. The drug maker has, nonetheless, regained 100% from its March low of 20 cents per share.
The pharmaceutical company had a disappointing first half performance which saw revenues decline 17%. EBITDA fell 47% to $34.6 million. A net loss after tax of $17.5 million was also reported, driven by lower earnings and restructuring costs.
Mayne Pharma has faced strong competition on its key generic products. The US generic market has been challenging with aggressive contracting behaviours driving price deflation. The company has been focused on reducing its cost base and rationalising its generic portfolio. Annualised savings of $20 million have so far been recorded.
Orocobre Limited (ASX: ORE)
Shares in Orocobre fell 12.9% last week to close the week at $2.44. There was no news out of the lithium miner last week to prompt the price fall, however lithium markets are expected to remain subdued as global economies recover from the pandemic.
Lithium is a key component in batteries used to power electric vehicles. Lithium prices plummeted last year due to oversupply and slowing growth in electric vehicles. Orocobre’s Olaroz lithium facility stopped production during the March quarter due to Argentinian COVID-19 restrictions. The shutdown, combined with planned maintenance, resulted in 21 days of lost production.
Production for the quarter was down 11% on the prior corresponding period, due to the shutdown. March quarter product pricing was also below that of the December quarter with continuing weak demand and aggressive competitor behaviour. Sales revenue was down 32%, QoQ, to US$12.1 million.
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Motley Fool contributor Kate O’Brien has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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