The S&P/ASX 200 Index (ASX: XJO) ended last week down 4.5%, the first weekly fall since the low of 23 March. At the time of writing, the ASX 200 is now 15.3% above its March low but still 26.8% down from its February high.
The coronavirus market meltdown was the most rapid in history, with the market falling 36% over 22 days in February and March. By comparison, it took the market 16 months to fall 50% during the GFC.
The start of last week was marked by falls as oil prices turned negative. Virgin Australia Holdings Ltd (ASX: VAH) entered administration owing some $6.8 billion to creditors. Employment figures showed some 800,000 Australians have lost jobs since the country reported its 100th coronavirus case.
Business confidence is low, having plunged to -66 in March from -4 in February. Yet as Australia completed its fourth week in lockdown, hope that restrictions could be eased emerged.
Amidst all of this, these 5 ASX 200 shares suffered major falls last week.
Metcash Limited (ASX: MTS)
Shares in Metcash crashed 17.1% lower last week to finish the week at $2.52. Metcash surprised the share market on Monday with a snap capital raise.
The capital raising consisted of a $300 million placement to institutional investors plus a $30 million share purchase plan for eligible shareholders. The raising was conducted at $2.80 per share, a 7.9% discount to the previous closing price.
Proceeds from the raising will go to pay down debts. This will help Metcash stay on track with its turnaround strategy. The 5-year strategy includes plans to invest $270 million into supporting its independent retailers, but parts of the plan have had to be put on hold due to the coronavirus pandemic.
Initiatives such as store refreshes have had to be halted due to social distancing. But Metcash intends to proceed with acquisitions. Three bolt-on acquisitions are expected in the first half of next financial year across Metcash’s liquor and hardware divisions.
Metcash shares were trading well above $3 in late March but crashed lower as it announced lower food sales than expected alongside the capital raising. Last week, the grocery retailer revealed food sales for the 5 months ending in March rose 4.3%, well below analysts’ expectations of a 7% rise.
SkyCity Entertainment Group Limited (ASX: SKC)
SkyCity shares finished last week down 17.1% at $1.99. At the time of writing, shares in SkyCity are now down 50% from February highs as its properties remain closed.
SkyCity closed its Adelaide casino and New Zealand casino and entertainment facilities in late March. As a result, the company withdrew its earnings guidance for FY20. SkyCity is facing $90 million in lost revenue per month whilst still incurring costs.
The impact of coronavirus is not limited to short term costs associated with closure. Even when allowed to reopen, it is reasonable to assume weaker economies, changed entertainment habits, and longer term travel restrictions will continue to impact the business. This will result in SkyCity recommencing a smaller, more domestically focused business.
Capital expenditure has been slashed and redundancies flagged, however construction of the Adelaide expansion is continuing. Redundancies have taken place in New Zealand and around 90% of the Australian workforce has been stood down.
Credit Corp Group Limited (ASX: CCP)
Shares in Credit Corp Group fell 16.6% last week to close the week at $13.52. There was no news out of the company to prompt the fall, however shares in Credit Corp had previously increased 80% from March lows.
Credit Corp withdrew its 2020 earnings guidance in March due to uncertain impacts arising from the spread of coronavirus. The impacts include 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 had performed strongly over recent weeks and no material impacts from coronavirus had 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.
EML Payments Limited (ASX: EML)
EML Payments’ shares dived 16.5% last week, finishing up at $2.23. There was no news out of the payment solutions provider to prompt the fall, which is likely to have been caused by profit taking.
Shares in EML Payments increased 112% between 23 March and 15 April. EML had suspended its forward earnings guidance on 19 March, citing an unpredictable trading environment. A number of the company’s major customers including shopping mall property owners and gaming customers have been significantly negatively impacted by social distancing requirement. This prompted a sell off of EML Payments’ shares.
In the period since, EML Payments renegotiated its purchase of Prepaid Financial Services. The acquisition, which will make EML Payments one of the world’s largest global fintech enablers, will proceed at an enterprise valuation of £131.5 million, down from £226 million.
The renegotiated terms prompted a rally in EML Payment’s share price which profit takers sought to take advantage of last week.
Southern Cross Media Group Ltd (ASX: SXL)
Shares in Southern Cross Media closed last week down 16.1% at 13 cents. There was no news out of the broadcaster last week to prompt the price fall, however Southern Cross Media has had a rocky few weeks.
In early April, the broadcaster launched an emergency $170 million capital raising to help it keep the lights on through the pandemic. Proceeds from the raising were earmarked to pay down debt. The raising was conducted at 9 cents per share, a steep discount to the 16.5 cents a share Southern Cross had been trading at before the raising.
The broadcaster has also implemented a range of cost saving initiatives. Operating expenditure is being slashed by $40–$45 million in calendar year 2020. Capital expenditure has been reduced to $17–$18 million in FY20, down from $19–$21 million.
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Kate O'Brien has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of Emerchants Limited. The Motley Fool Australia has recommended Emerchants Limited and Sky City Entertainment Group Ltd. 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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