Last week saw extreme volatility take hold of the ASX as the coronavirus crisis reached new levels in Australia. The S&P/ASX 200 Index (ASX: XJO) fluctuated widely but ended the week down 13.1%. Over the past month, the ASX 200 has fallen 32.8% from its high of 7162.50 on 20 February, closing at 4816.60 on Friday.
Last week, the RBA slashed the cash rate to a new record low of 0.25% as governments introduced strict new travel restrictions and social distancing requirements. The Australian dollar fell to an 18-year low on Thursday, buying just 55 US cents, before rebounding to above 59 cents on Friday.
Shares swung widely as fears of a recession took hold and economic shocks continued. Here we take a look at the 5 biggest share price fallers last week.
Southern Cross Media Group Ltd (ASX: SXL)
Southern Cross Media shares fell 52.9% last week to finish the week at 24.5 cents. As fears of a recession take hold, investors are concerned that demand for advertising will sink. This will impact the earnings of Southern Cross Media and its ilk.
Fellow ASX entertainment share Nine Entertainment Co Holdings Ltd (ASX: NEC) withdrew its FY20 guidance last week. The media company said the rapid progression of COVID-19 was beginning to have an impact on its markets.
The forward ad market is becoming increasingly difficult to predict, resulting in significant uncertainty around the earnings of Southern Cross Media. While the company has not released an update addressing the impacts of coronavirus on its business, investors may also be concerned about the impact of any drop in earnings given Southern Cross Media’s level of debt.
The company increased debt levels significantly last calendar year due to its acquisition of Redwave Media. Net debt was $330.5 million at the end of 2019, up from $295.1 million at the end of 2018. This gave the company a leverage ratio of 2.29x and an interest cover ratio of 11.47x.
Flight Centre Travel Group Ltd (ASX: FLT)
Flight Centre shares fell 48.3% last week to finish the week at $9.91. Shares in Flight Centre have now fallen by 75% from above $40 in February and are currently suspended.
Flight Centre announced last week that it has accelerated its urgent business review to identify further cost and cash saving initiatives. The unprecedented government-imposed restrictions on international travel and major reductions in airline capacity have had a significant impact on the company.
Flight Centre previously scrapped its earnings guidance and announced plans to close up to 100 stores, warning of ‘inevitable’ job losses. It is holding talks with stakeholders including landlords, suppliers, vendors, insurers, and banks on ways to manage the precipitous drop in travel activity in the near-term.
The company has also initiated talks with the Federal Government to discuss broader industry assistance packages, following support being made available to airlines.
Credit Corp Group Limited (ASX: CCP)
Credit Corp shares shed 47.7% last week to close the week at $9.83. The company withdrew its 2020 earnings guidance last week due to uncertain impacts arising from the spread of coronavirus.
The impacts include the potential for increased restrictions on the availability of Credit Corp’s workforce as well as the prospect of a deterioration in economic conditions which may reduce the capacity of customers to make repayments.
Credit Corp emphasised that it has performed strongly over recent weeks and no material impacts from coronavirus have yet been observed in operating results.
Gearing remains conservative, according to the company, and its balance sheet and funding positions are strong. Credit Corp Group has $170 million in cash and undrawn credit lines available under facility agreements that expire in 2022 and 2023.
Afterpay Ltd (ASX: APT)
Afterpay shares fell 46.5% last week to close at $12.44. The buy now, pay later company saw a remarkable rally in its share price on Friday, with the price surging up to a high of $15.80 after closing at $9.70 on Thursday. Still, at the time of writing, Afterpay shares are down nearly 70% from an all-time high of $41.14 in February.
Last week, Afterpay released a letter seeking to reassure shareholders shell shocked by the slide in the share price. The company told investors its business model, balance sheet, and customer base created a level of protection in times of uncertainty.
Afterpay said it has not seen any material impact on its business activity, the timing of instalment repayments, or transaction losses to date. The company emphasised that its robust balance sheet and liquidity position provided it with the capacity to continue to fund operating expenditure plus significantly expand its business activities in the medium term.
CEO Anthony Eisen said Afterpay’s service “promotes budgeting by responsible customers,” emphasising that the service is unable to be accessed by customers that have a single overdue repayment. Over 90% of monthly underlying sales are generated by repeat customers. “We believe the appeal of Afterpay as a disciplined budgeting tool will not be diminished and may be enhanced with changing market conditions,” Eisen told shareholders.
Stockland Corporation Ltd (ASX: SGP)
The Stockland share price fell 46.2% last week to finish the week at $2.14. Stockland operates over 30 retail centres as well as logistics and business parks, retirement villages, and residential developments.
Stockland’s retail centres look set to be negatively impacted by the coronavirus pandemic, which is hurting its retailer tenants. Stockland says it will continue to review the situation and support required for businesses as the situation develops. “We are committed to working with our retailers to help support their ongoing trading during these challenging times,” Stockland said last week.
Nonetheless, Stockland is gambling on a strong market recovery having forked out $415 million last week to buy into a Sydney residential estate. Stockland bought an undeveloped portion of ‘The Gables’ in Box Hill, with plans to deliver approximately 1,900 dwellings.
Stockland CEO Andrew Whitson said, “we will start selling land at The Gables immediately after settling on the project in April, and expect to realize operating profit from FY21.”
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Motley Fool contributor Kate O'Brien has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Flight Centre Travel Group Limited. The Motley Fool Australia owns shares of AFTERPAY T FPO. 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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